Making the case for NOT buying a Condo

[Sa-teef 44]

"I thought Shilo's comment on not giving a rat's ass on what he left behind for his kids was a little harsh.I thought that he was going to follow up by saying that he had no kids and thats why he didn't care............apparently not.....lol

I guess i'll never understand the mindset of many Americans that i encounter on this board."

 

I think it is entirely Shilo's perogative what he does with his money.

 

And I think there is an entire separate section open to Yank-bashing for you!

 

If I buy real estate at all in LOS I would never dump it on my kids to dispose of it. Far better to give it to a local charity in my mind, but always UP2U.

 

With the exception of inflation in rents paid and posible appreciation in real estate owned, I think your assumptions are very good Shilo. Approaching a major decision like owning property should be done with care. You've got the right idea.

 

 

~Sa-teef

[Gary 4,100]

1) Gary, is trash pickup normally part of a condo owners' association/maintenance fee? Was that a special deal or a normal part of your 600b/month ante.

 

2) Bill Gates has said he doesn't plan to leave much money to his kids. He does not think it would be good for them. He may be right.

I really don't know how other condos do it. I was pleased to find I had a lot of benefits I didn't know about when I bought the unit.

[Shilo 371]

I think that if you're American or a US Dollar user then probably better to buy a condo (while your dollar is still worth something internationally) than long-term rent.

 

 

I thought Shilo's comment on not giving a rat's ass on what he left behind for his kids was a little harsh.I thought that he was going to follow up by saying that he had no kids and thats why he didn't care............apparently not.....lol

I guess i'll never understand the mindset of many Americans that i encounter on this board. 

Sa-teef

 

Thanks for taking up my defense but it really isn't needed

 

 

Touristman,

 

Two quick points... don't mistake the current value of the US currency with it's long term prospects. There are number of reasons why the dollar is under pressure at the moment...mostly because the US government wants it that way. A weaker dollar in many ways is better for the US economy. I would be MUCH more worried about the long term effect the strong euro is going to have on Europes growth and employment situation. But again, that's a subject for another thread.

 

But as for what any of us leave to our kids... I guess that maybe there is a difference between the way we look at it in the states and over in your neck of the woods. I've been divorced twice, once when I was very young and a second time about 10 years ago after a marriage of about 15 years. In total I have 3 children between the two marriages and unlike too many men, I didn't walk away nor allow myself to be turned into a "glorified uncle" with weekends and every other holiday. My heart goes out to the guys who have gone through the latter and I have little use for the blokes who chose the former.

 

At the moment, I'm sitting here by myself in a three bedroom house, looking forward to attending my son's (the youngest) high school graduation tomorrow. Later this fall he will start his first year of college. I stayed in this house in part so my son (while he was still young) had a home to share with his father. There's a college savings account that I have funded for many years that will see him through the rest of his education. And in 4 or so years I look forward to attending my last graduation.

 

But I'll have to fly back to the states for that one because I plan to be living in Thailand by the end of the next 2 years.

 

I think (know) that a parent has an obligation to his (her) child when they bring them into the world. My kids have always had a dinner on the table, a roof over their heads, decent clothes on their backs, and a swift kick in the butt to get them to take their education seriously.

 

My eldest is 34 and my youngest is 18. I could have walked away years ago but I stayed and did the right thing.

 

When I die they will be grown adults, hopefully in the late 40's to mid 50's. What prey tell would you say that I owe them at that point other then my love?

 

As I said before, my parents left me nothing but some old photos and some good memories when they passed away. And I had no problems with that.... if my kids think any differently of me if I do the same, then I will have felt that I failed as a father.

 

Shilo

[jackcorbett 2]

Here's my thinking that led to my buying this condo here at Wongamat Beach. First, I loved the area as it is quiet and very colorful with many flowers on my walking/jogging routes meaning that the area's atmosphere is vastly different from the noisiness and boisterness of Central Pattaya. So if I want to immerge myself in what Central Pattaya has to offer, I can go there within minutes, but if I want more tranquil surroundings--well....that's where I will live. So I can have the best of both worlds. Moreover, Pattaya should be an excellent base out of which I can travel throughout Asia at much cheaper airfares than I can get out of the U.S. So I should never be bored through the years. Ok....so it makes sense to retire in this area where I can have the best of two worlds.

 

Now if I would have remained in the U.S. facing rapidly increasing gasoline and health care costs, I would probably have remained in that stunning apartment I was renting in the St. Louis area. But within one year my rent would have edged up to $150 more per month than my debt service and maintainance fees are for the condo I've bought. But each year the monthly rent increases by $25.00 per month. So in 10 years I would be paying $400 more per month to live in this apartment over the condo I ultimately bought. Moreover, I am now living 200 yards from the ocean and have 200 more square feet than I had in my apartment. However, the particular apartment I had was a one of a kind unit. There was no other like it in the entire complex (eg. it was the only unit with its own heated garage) while the entire complex was of much better quality than anything else in the entire area at the kind of price levels we were paying in rent. Within two years there would be a new shopping center within one mile of the complex so it was likely that this would driven rents up even higher than they had been going up so I felt there was a good chance that my ten year rent increase projections would actually be met in five years.

 

At 59 years of age, for me the cost of health care in the U.S. is going through the roof. Each year health insurance climbs 25 %. I had been paying $300 U.S. per month or $3600 per year and that's with a $5000 deductible. So if I required even the smallest surgery procedure, say another hernia operation, my annual medical costs for that year would be $8600. Keeping in mind that I'm currently 59, there is likely to be more and more things going wrong with me with each passing year. So by remaining in the U.S., I'm setting myself up for a grand fleecing.

 

When I left the U.S. the price of gasoline was skyrocketing. And the cost of a replacement car for when my vehicle needed replacing was getting just a little too high.

 

So I did a little analysis. Sure, I love the women here in Pattaya and yes, I have a keen appreciation for getting cheap access to them. But let's suppose the THais cleaned out all the go-go and beer bars and all the dancers and beer bar girls left town. Would I still prefer living in Pattaya to living in the U.S.? What? Saving all that health care money, not having to buy a car or all of that expensive gasoliine, while living just off the beach and not being very far to all those other places I want to visit in Asia isn't enough reason to want to move? So I took women right out of the equation. And after all, even if they cleaned this place up, there would still be all those beautiful ladies working in shops, hotels, etc. while American women had gotten to be so fat that hardly a one of them was worth having.

 

So for me moving to Pattaya while never looking back made perfectlly good sense. Now....should I rent or buy? When I bought the exchange rate was about 38.5 baht to one American dollars. Over the long term I felt this exchange rate was more likely to get worse than better. I also reasoned that there was only so much beach front property in the world and that although I was not buying a condo that was directly on the ocean that I was getting the next best thing since it was just 200 meters away. Moreover, the condo I'd get, was smack right next door to the Long Beach Hotel as well as other high dollar condominiums. My gut feeling was that in a few very short years the cost for a place that had so much going for it would be out of reach.

 

So I've done it. And I now have that special custom teak desk I've always wanted and a waterfall in my condo's entry way. I've hung a ceiling fan out above my deck so it now feels like sitting in a breezy beer bar sitting out there. And the kitchen is just the right size to fit my needs with the exact countertops and cabinets I like. I couldn't do all of this if I was a renter and I'd always be worried once I got too attached to a place that the owner wouldn't at some point in time decide to move in himself which would force me to go elsewhere.

[MrMango 665]

Here's my thinking that led to my buying this condo here at Wongamat Beach. First, I loved the area as it is quiet and very colorful with many flowers on my walking/jogging routes meaning that the area's atmosphere is vastly different from the noisiness and boisterness of Central Pattaya. So if I want to immerge myself in what Central Pattaya has to offer, I can go there within minutes, but if I want more tranquil surroundings--well....that's where I will live. So I can have the best of both worlds. Moreover, Pattaya should be an excellent base out of which I can travel throughout Asia at much cheaper airfares than I can get out of the U.S. So I should never be bored through the years. Ok....so it makes sense to retire in this area where I can have the best of two worlds.

 

Now if I would have remained in the U.S. facing rapidly increasing gasoline and health care costs, I would probably have remained in that stunning apartment I was renting in the St. Louis area. But within one year my rent would have edged up to $150 more per month than my debt service and maintainance fees are for the condo I've bought. But each year the monthly rent increases by $25.00 per month. So in 10 years I would be paying $400 more per month to live in this apartment over the condo I ultimately bought. Moreover, I am now living 200 yards from the ocean and have 200 more square feet than I had in my apartment. However, the particular apartment I had was a one of a kind unit. There was no other like it in the entire complex (eg. it was the only unit with its own heated garage) while the entire complex was of much better quality than anything else in the entire area at the kind of price levels we were paying in rent. Within two years there would be a new shopping center within one mile of the complex so it was likely that this would driven rents up even higher than they had been going up so I felt there was a good chance that my ten year rent increase projections would actually be met in five years.

 

At 59 years of age, for me the cost of health care in the U.S. is going through the roof. Each year health insurance climbs 25 %. I had been paying $300 U.S. per month or $3600 per year and that's with a $5000 deductible. So if I required even the smallest surgery procedure, say another hernia operation, my annual medical costs for that year would be $8600. Keeping in mind that I'm currently 59, there is likely to be more and more things going wrong with me with each passing year. So by remaining in the U.S., I'm setting myself up for a grand fleecing.

 

When I left the U.S. the price of gasoline was skyrocketing. And the cost of a replacement car for when my vehicle needed replacing was getting just a little too high.

 

So I did a little analysis. Sure, I love the women here in Pattaya and yes, I have a keen appreciation for getting cheap access to them. But let's suppose the THais cleaned out all the go-go and beer bars and all the dancers and beer bar girls left town. Would I still prefer living in Pattaya to living in the U.S.? What? Saving all that health care money, not having to buy a car or all of that expensive gasoliine, while living just off the beach and not being very far to all those other places I want to visit in Asia isn't enough reason to want to move? So I took women right out of the equation. And after all, even if they cleaned this place up, there would still be all those beautiful ladies working in shops, hotels, etc. while American women had gotten to be so fat that hardly a one of them was worth having.

 

So for me moving to Pattaya while never looking back made perfectlly good sense. Now....should I rent or buy? When I bought the exchange rate was about 38.5 baht to one American dollars. Over the long term I felt this exchange rate was more likely to get worse than better. I also reasoned that there was only so much beach front property in the world and that although I was not buying a condo that was directly on the ocean that I was getting the next best thing since it was just 200 meters away. Moreover, the condo I'd get, was smack right next door to the Long Beach Hotel as well as other high dollar condominiums. My gut feeling was that in a few very short years the cost for a place that had so much going for it would be out of reach.

 

So I've done it. And I now have that special custom teak desk I've always wanted and a waterfall in my condo's entry way. I've hung a ceiling fan out above my deck so it now feels like sitting in a breezy beer bar sitting out there. And the kitchen is just the right size to fit my needs with the exact countertops and cabinets I like. I couldn't do all of this if I was a renter and I'd always be worried once I got too attached to a place that the owner wouldn't at some point in time decide to move in himself which would force me to go elsewhere.

Can I ask how big your place is and what you paid for it?

 

Excellent report.

[Owen` 2]

Yeah, thanks for that report. Real, solid, legit data of what someone actually did and why is valuable.

 

Keep an eye on Medicare back home. After 6 great years in Thailand, maybe the US will let Medicare money come to you outside the boundaries.

 

But whatever happens, you executed a rational plan and that puts you ahead of maybe 75% of people who just let things happen.

 

Keep us apprised of your experiences settling in.

[Emil 0]

Unless you have a crystal ball its impossible to forecast which is better. One of our boardmembers was renting his condo for a few months when the landloard offered him the place at a price which equaled 6 years 3 month of renting. If he would have continued renting after 75 months all he would have is rent stubs. I think the eky is if your going to buy,don't over pay. Expecting rent to remain stable is wishful thinking. I moved into a new place in Dec 04, after being open about 8 months they increased the rent 8%.

 

Although you plan to stay for 30 years or more who to say that 15 years from now you decide to move to another location in LOS or elsewhere in the world. If that were to happen you would probably wish that you had an assest that had appreciated in value or had maintained its value.

[wacmedia 277]

I couldn't do all of this if I was a renter and I'd always be worried once I got too attached to a place that the owner wouldn't at some point in time decide to move in himself which would force me to go elsewhere.

 

Hi,

 

jackcorbett makes a very strong case for buying and I think a condo is a purchase you can make without losing any sleep. It's one I would make if I could afford to move to LOS.

[Emil 0]

After 6 great years in Thailand, maybe the US will let Medicare money come to you outside the boundaries.

Not likely to happen as Medicare is in deep financial trouble and its doubtful that Congress would do anything that would increase expenditures of a program that the last I heard could be bankrupt in 10 years. Then again Congress is talking about giving illegal immigrants socail security credit so anything could happen.

[bangkapiboy 5]

I see the topic is making the case for NOT buying a condo... But...

 

Since being here in Thailand for close to 8 years (on and off), I think I have adapted to a more Asian way of thinking. One where family wealth is important, not just for yourself, but even for your future blood generations. Where I see many farrangs planning their dollars to last until they pass, I will take great pride in passing on any real estate to my kids when I pass away. If I was just a renter all my life, then there might be little to pass on.

 

I'm a born and raised New Yorker. My single mother is still renting in NYC, because when she first came there 30 years ago rent was cheap. So she continued renting, thanks to rent control laws. However those laws are changing, thanks to Bush and mayor Bloomberg. Now things are so far out of range there is no way she (or I) can buy anything there in a somewhat decent area or size. One of her artist friends, just down the street there, bought her Tribeca loft for $16,000 about 25-30 years ago as an empty shell for living. Now it is worth $2 - 4 million, with rents minimum of $7500/m. Obviously, I cannot compare the 2 markets at all, because Pattaya is so far off from being New York City, but I have already seen the pitfalls of renting, and the gains of owning.

 

That is the reason why I feel good owning my condo. I don't want to be left in 30 years with just rental stubs. I should point out that I am 30 years old, so I am probably biased toward owning, since I expect I'll be around quite a while more.

 

I must say that a big plus to owning a condo in Thailand, compared to US, is that the monthly maintenence fee is so low here.

[roderick17 0]

Please, please tell me where I can get a solid 7% return on my money!!!!!

[bangkapiboy 5]

Give it to me. I'll return 7% of it to you.

[Gary 4,100]

Please, please tell me where I can get a solid 7% return on my money!!!!!

Below are ETF closed end funds. Below is link where you can look at the details. A simple explanation is that they are sold like stocks and since they are closed end they can't sell any more shares. You have to buy them directly from the market from someone who is selling. They are required by law to pay out all the money they earn so they can never grow. I own these five and the average dividend is over 9 percent a year. The dividend is paid monthly. Don't plan for the share price to go up or down much. They have a very low volitility. (Beta). About 40 percent is in foreign funds in case the dollars falls even lower.

 

http://www.etfconnect.com/select/rank/default.asp

 

 

PHT

PTY

PFN

IGD

EBI

 

I sold out of the stock market in February and am happy to get a 9 percent return on the proceeds from my sell out.

[Emil 0]

I must say that a big plus to owning a condo in Thailand, compared to US, is that the monthly maintenence fee is so low here.

Also, I haven't heard of anyone paying any property taxes.

[bangkapiboy 5]

Also, I haven't heard of anyone paying any property taxes.

Exactly! There are no property taxes to pay on your condo, whether you are Thai or Farrang.

[wannabeexpat 0]

Obviously, I cannot compare the 2 markets at all, because Pattaya is so far off from being New York City, but I have already seen the pitfalls of renting, and the gains of owning.

No you cant compare them.

I was going to go to Pattaya or Bangkok and buy a few condos and rent them out like I do in the UK. But when I researched it, it looked like a bad idea.There are thousands of empty units, that the owners cant sell or rent out. And they are still building them.I dont think theres much prospect of them appreciating in value. Then the ownership or visa laws could change or they could stop the p4p scene. The flexability of renting seems to be the best idea according to most expats.

I know of someone who got left a property in Millport in Scotland. It ended up costing him money because he couldnt sell it on. He had to insure it, maintain it,visit it to check on it,etc. Property can cost you money as well as make it.

[bangkapiboy 5]

Condos have appreciated in value -- but not all. In Bangkok, anything near the new MRT and BTS routes have shot up in value. So, I would say a lot depends on the location. I have very good farrang friends in Bangkok buying up condos and renting them out and they are actually doing very well. It takes a lot of experience in knowing the market.

[pattayachip 0]

Please, please tell me where I can get a solid 7% return on my money!!!!!

banks in massachusetts are offering 6 to 36 month cd's at 5.5% ,most likely 5.75% after the fed meeting on june 28th,all fdic insured

[BigDUSA 71]

Condos have appreciated in value -- but not all. In Bangkok, anything near the new MRT and BTS routes have shot up in value. So, I would say a lot depends on the location. I have very good farrang friends in Bangkok buying up condos and renting them out and they are actually doing very well. It takes a lot of experience in knowing the market.

Location, location and last but not least location is way more then 75% of making money in the real estate rental business.

[laffnliv 78]

I bought my condo almost 4 years ago. Only bought it then as a wonderful Thai lady had entered my life. Changed my thinking a lot! Before I had convinced myself not to buy as it would take nearly ten years of owning before I would have broken even by not renting. BAD thinking! Don't know how much the condo has gone up in value,....and don't much care. I know for a fact I am not losing money. AND, when I sell it....it will be as if I have been living here for free! Will get all my money back...plus! I didn't buy as an investment. I bought to please myself. Location was the biggest factor. I don't need a car or motorbike. I have baht buses at either end of my soi, and I can walk to the Big C for food for the fridge, or to eat out.

AND given the current flap over land ownership by foreigners, I have my condo in my name alone and have no worries.

Life is goooood!

 

Little Roy

[neil324 0]

I got to thinking about this and decided to put pen to paper and crunch the numbers. What I learned is that there seems to be a good case for not buying a Condo in Pattaya. I'd be interested in getting a few comments.

 

Assumptions:

 

My numbers are based on an exchange of 40 baht to the US dollar. Partly because that's been the average for the past several years even though it's somewhat lower at the moment. And it makes for easier math.

 

A decent double unit will sell for about 3.6 million baht.

 

The rent on a comparable property would be about 20K baht per month.

 

The money that would be spent to buy the Condo could be invested with a 7% average annual return.

 

And the tax rate on the invested money would be 15% (again, used this amount just to have a rate to work with).

 

I didn't include inflation because as best I could tell there hasn't been a lot of inflation in the rental prices and becaused it's assumed that in a higher inflation period interest rates would rise to offset the higher prices and there would be more earnings on the invested dollars.

 

Now I know that we can argue that these assumptions have weaknesses but I have to start somewhere and from what I can tell these assumptions are as good as any to work out the options.

 

 

So we start with $90,000 (3.6 mill baht), invested it with a 7% return , pay the 15% tax, and start taking out $500 (20K baht) per month.

 

Using one of my favorite web sites: http://www.fincalc.com/ and putting the numbers into the "How long will my money last" program, I learned that after 30 years I'd still have $36,500 of my orginal $90,000 left. Or in other words, I couldn't outlive the investment...

 

So that leaves me with two options, pay the $90K for the property or invest it and rent a place for the rest of my life...

 

Personally, I think that I would rather pay the rent. If I own the condo then I'm pretty much stuck in one place. Selling the property to move to another part of the city (or country) would mean having to put myself at the risk of the real estate market. While renting means that I could pack up and move on at a whim.

 

Am I missing something here?

 

.

fuck me you get 7% on your savings and 15% tax rate

In the UK your lucky to get 5% with a 20% tax rate

[torrenova 644]

Offshore, pay fuck all tax.

[bob2005 0]

If you buy a condo for $90,000 you're losing out on the $6,300 a year you'd get in interest. If you use the $6,300 for rent the $90,000 is still yours. Buying is speculation that (1) the condo is going to be worth more than $90,000 at the time you want to sell it - if it's worth the same you might as well have rented it (2) the building is going to be maintained properly and without serious increases in maintenance charges.

[neil324 0]

Offshore, pay fuck all tax.

Dont mind paying the tax im self-employed so pay less tax than would normally, its that 2% difference in rates that hurts

Anybody like to give an opinion on where in the Uk interest rates will be in 5yrs time, the rates have been low for the last 10 yrs

[Shilo 371]

neil324,

 

Actually, what I said was that one of my "assumptions" was to be able to invest my cash with a 7% average annual return but I wasn't suggesting that I knew of any risk free "interest bearing" options that would currently get me the 7%.

 

Here in the states our interest rates are just a bit higher then the rates in the UK. The Fed rate is sitting at 5% and no one (including the Fed) seems to have a clear idea of where they will go from here... It seems that the Fed is concerned about inflation here in the states because of oil and other commodities and the low unemployment rate (currently at 4.6%) and many think that the Fed would like to increase the short term rate once or twice more before stopping. But the bond market is making it hard on them with the 10 year note at or just below 5%. There is a real concern that we could end up with an inverted yield curve (long rates below the short rates) that would spook the markets. In the past, an inverted yield curve has been an indicator of a recession...

 

My assumption was simply that I feel that over the long term I could average 7% on my capital.

 

And the 15% tax rate is something I could work towards while in retirement. Right now I pay a much higher rate on my income. But once retired there will be ways to use different pools of monies to keep the rate at or below 15%.

 

 

 

 

.