If you are new to property investment in Vietnam, a common question many new investors ask themselves is wether they should buy a property to let or to sell. The reality is that there is no right or wrong answer, it will all depend on your investment goals and your particular needs at that time.
However, to make an informed decision, there are some things you should keep in mind.
Rental Income vs Capital Gain
When you buy a property in Vietnam, developers and agents will give you an estimate of how much rental yield you will earn once your property has been rented out. As you probably already know, Vietnam counts with one of the highest yield averages in the Asian continent, so on paper, buying to let might be a good choice. However, there are many factors that can affect the market, specially supply & demand, so the reality of the yields might be different after all.
Once the property has been handed over to you, check the conditions of the rental market and make a calculation of the rental yield. If its high enough then keeping the unit for some time and earning on monthly rental might be a profitable investment. On the other hand, if the yield is very low and the sales market is strong, then it would make more sense to sell your unit for a high capital gain in return.
Renting and selling your property have different tax implications. Consult with your property agent to know the taxes you need to pay for each scenario.
Some areas in the city are more suited for rental properties and some others for selling properties. Make sure to analyze the location of your property to know the demand from tenants and buyers. In Vietnam, properties in developing areas tend to have a higher demand from buyers and properties on already established living communities tend to have a higher demand for rentals.
Big apartments (3 bedrooms & higher) have a stable demand of both, renters and buyers. However, smaller layouts tend to have a higher demand of renters.
If you rent a property you will have to bare the costs of management fee and tax, whereas if you sell your property you need to bare the cost of tax, notary fee, and agency fee.
So what should you do?
Your own personal circumstances will dictate whether it’s better to buy to let or buy to sell, as well as the specifics of the property itself and the current conditions of the market. However, as you can see, there are a number of factors you can use to help guide your decision.