To Buy Or Not To Buy A Condo

[TommythePO 0]

 

Hello. In case anyone's wondering, I'M the idiot. I know not much about financial matters. I've been a laborer and truck driver for most of my life. I plan to move to Pattaya for good in a couple of years. I want to live high in the sky (30+ stories up) in a 2 bedroom facing the beach. I want to make love to some Thai sweetheart during sunset. I want a room with a view, an ocean view.

 

1. Is it feasible for me to buy now, and rent out the unit?

2. What is the best site online to look at available condos?

3. Because of the 49% Farang / 50% Thai ownership law, do many "insiders" get the jump on new developments?

4. What are your thoughts on Thai owned versus Foreign owned/developed properties?

5. Do you have any other considerations I should be thinking about?

 

Thank you in advance.

 

Your faithful idiot.

 

[FatherMojo 2]

Q1...

 

How much do you want to pay?

 

 

 

FatherMojo

[laffnliv 78]

You need to get over here and look around. Don't just research over the internet. Also, don't rule out re-sale units. Due to economic reasons some are for sale as the owner needs to go back home and go back to work. Some good buys if you look around. Be VERY wary of pre-construction sales of new condos. Some have gone bust already. If you can't see it and walk around in it, don't buy. Pay cash so you get a title. Don't get a Thai mortgage. You want to have the title in your hand. If you have to borrow money, try to get it in your home country.

 

And...don't pay/invest more than you can afford to lose. I realize that some can afford to lose more than others. Keep your assets otherwise in your home country. In Thailand you never know what may happen.

 

Little Roy

[som nam na 0]

You need to get over here and look around. Don't just research over the internet. Also, don't rule out re-sale units. Due to economic reasons some are for sale as the owner needs to go back home and go back to work. Some good buys if you look around. Be VERY wary of pre-construction sales of new condos. Some have gone bust already. If you can't see it and walk around in it, don't buy. Pay cash so you get a title. Don't get a Thai mortgage. You want to have the title in your hand. If you have to borrow money, try to get it in your home country.

 

And...don't pay/invest more than you can afford to lose. I realize that some can afford to lose more than others. Keep your assets otherwise in your home country. In Thailand you never know what may happen.

 

Little Roy

 

Some good advice but do not borrow to fund property in Thailand ... the golden rules are "do not bring into Thailand more than you can expect to lose" and "rent before you buy". Some will say always rent and don't buy. There is a lot of sense in that but it doesn't suit everyone. When you make the move to Thailand rent first so you will get a better idea of what you like / what is available and you will also will be able to keep an ear to the ground for bargains.

Edited October 10, 2009 by som nam na

[Gary 4,118]

I would NEVER buy pre-construction. Many complexes are never finished. There are still some not completed from the '97 crash.

 

I bought mine when I got 41 baht to a dollar and I have been offered about 60 percent more than I paid for it. That doesn't include the currency premium. That said, I would NOT buy a condo today for an investment. I bought my condo to live in and/or for a safe haven in case my wife ever kicks me out.

 

If you do decide to buy, look for bargains. There are some farang owned units that are priced right. Make SURE you buy a unit in your own name and don't get mixed up in Thai companies. The Thai company scams are illegal and may or may not come crashing down. It's not worth taking a chance.

 

Finally, don't buy a shoe box. Anything smaller than 40 square meters is too small for full time living. I have NEVER seen a condo worth more than 50,000 baht per square meter. Most new units available are insanely priced at 90,000 or higher per square meter.

[torrenova 644]

Some good advice from Gary there. To be honest, you need somewhere you are comfortable with, rather than looking at your home as an investment. Much better to protect your downside.

 

Rent for 6 months minimum and find out where you want to live. I lived in town and View Talay for years and swore blind that I didn't want to live out in the sticks past Sukhumvit but having a kid and moving out there to a detached house really opened my eyes. I am not sure I could go back to a condo lifestyle and if I did, I'd probably stick with View Talay 2 and get another place for a reasonable price per sqm.

 

My viewpoint has changed I admit and whilst I'd never put large sums into a house, I could perhaps be persuaded to part with a few million for a 3 bed 2 bath house through a company. Condos tend to be nearer the beach but the lifestyle round some developments of houses is really nice and much cheaper.

[Gary 4,118]

Some good advice from Gary there. To be honest, you need somewhere you are comfortable with, rather than looking at your home as an investment. Much better to protect your downside.

 

Rent for 6 months minimum and find out where you want to live. I lived in town and View Talay for years and swore blind that I didn't want to live out in the sticks past Sukhumvit but having a kid and moving out there to a detached house really opened my eyes. I am not sure I could go back to a condo lifestyle and if I did, I'd probably stick with View Talay 2 and get another place for a reasonable price per sqm.

 

My viewpoint has changed I admit and whilst I'd never put large sums into a house, I could perhaps be persuaded to part with a few million for a 3 bed 2 bath house through a company. Condos tend to be nearer the beach but the lifestyle round some developments of houses is really nice and much cheaper.

 

 

One important thing I forgot to mention is the maintenance fund. Some complexes have crooked managers who have stolen the funds blind. Those complexes are poorly maintained and the monthly fees are quite high. My complex charges 10 baht per square meter per month and the fund has a very healthy surplus. I have noticed crazy monthly fees like 50 baht per square meter per month. Another thing is to make sure the electric company bills each unit direct rather than the managers getting a cut. The regular cost per KWH is about 3.6 baht. Some condos and apartments more than double the cost. I rented an apartment and was charged 8.0 baht per KWH.

[gerry53 1]

Some really good knowledgable advise so far. I wouldn't buy yet, I haven't seen too many ocean view condo deals for farangs. The Thai baht has remained strong against some currencies and you may even have a crash as happened in the 90s. The wild card is the King's longevity, health rumors caused the Thai stock market to plummet 6-8% in one day last week. It is always wiser and safer to make a major purchase after things have corrected here (ie buy that 3 million baht condo for 2 million), less money to lose or recoup.

[Tel 0]

I suppose I am not the right person to reply. I have a family and we have a house the other side of Sirkhumvit.

 

I was advised to rent rather than buy a condo. Reason - the value will depend on how the whole development is maintained. If not done the value will crash. If you rent you can just move elsewhere. If there a re a lot of empty cocnods then it will not be maintained. Also Thais do not like paying maintenanace.

 

I like a house - less noisy neighbour problems.

 

I agree that you should rent first while you look round. We rented a house and found a great bargain when we bought.

 

With the state of the pound (and to a lesser extent the dollar) I would only rent now. Bring in that money when they are stronger. Yes you can get bargains now but you still lose out on currency conversion. There are some great bargains on rental.

[midlifecrisis 4,048]

Rent,

 

Do not tie up investment money in Thailand.

 

What happens if you die?

 

Think it through. Rent is cheap.

[Bazle 1,483]

With the state of the pound (and to a lesser extent the dollar) I would only rent now. Bring in that money when they are stronger. Yes you can get bargains now but you still lose out on currency conversion.

I wish I had your confidence that the GBP is going to strengthen against the Baht.

[Emil 0]

What happens if you die?

 

The same thing that happens to any of your assets in your home country, they are dispersed according to your will. If you invest your money in the market you may or may not make money, ask those that stood in line and needed a reference to invest with Bernie Madoff if they would have rather bought a condo in LOS. You could keep your money in a safe bank in America and enjoy a whopping 1%-2% return before you have to give the state and the feds their share which would reduce your effective yield.

 

With the out of control spending that is going on now and appears to only get worse in the future I wouldn't expect a favorable exchange rate on the USD soon. If one rents they could see rent increases in the future, by buying you have locked in your housing cost and for that portion of your expenses you don't have to worry about the decline in the USD. At the end of 10 years a renter only has a handful of rent receipts, a dollar that could be worth less than today and you've also paid the taxman on any income generated by your invested funds unless you were in a tax free investment.

[midlifecrisis 4,048]

The same thing that happens to any of your assets in your home country, they are dispersed according to your will. If you invest your money in the market you may or may not make money, ask those that stood in line and needed a reference to invest with Bernie Madoff if they would have rather bought a condo in LOS. You could keep your money in a safe bank in America and enjoy a whopping 1%-2% return before you have to give the state and the feds their share which would reduce your effective yield.

 

With the out of control spending that is going on now and appears to only get worse in the future I wouldn't expect a favorable exchange rate on the USD soon. If one rents they could see rent increases in the future, by buying you have locked in your housing cost and for that portion of your expenses you don't have to worry about the decline in the USD. At the end of 10 years a renter only has a handful of rent receipts, a dollar that could be worth less than today and you've also paid the taxman on any income generated by your invested funds unless you were in a tax free investment.

You can make money and protect your principle. You should talk to my guy at Wells Fargo.

 

My rollover IRA is doing quite well.

[Emil 0]

You can make money and protect your principle. You should talk to my guy at Wells Fargo.

 

My rollover IRA is doing quite well.

 

I didn't say that you couldn't, but right now one will not get that much of a return. I just stopped by my credit union and from their current rate sheet an IRA over 100K tied up for 5 years will get you 2.72%. Don't forget that when you start making withdrawals it will be included on you tax form and the state and feds will want their share unless your IRA is a Roth. How well do you think that IRA performed if the exchange rate drops to pre 97 and your only getting 25 to 1 in 5 years? Not a problem for those living in the states, but if your planning to live in LOS its a major factor.

[midlifecrisis 4,048]

I didn't say that you couldn't, but right now one will not get that much of a return. I just stopped by my credit union and from their current rate sheet an IRA over 100K tied up for 5 years will get you 2.72%. Don't forget that when you start making withdrawals it will be included on you tax form and the state and feds will want their share unless your IRA is a Roth. How well do you think that IRA performed if the exchange rate drops to pre 97 and your only getting 25 to 1 in 5 years? Not a problem for those living in the states, but if your planning to live in LOS its a major factor.

lol,

 

talk to my guy.

 

 

You have not read my other posts about my concerns but only two things concern me as a retiree - inflation on a fixed income no matter where I live and the exchange rate.

 

And, I will be on SSI and augmenting with 5 to 10 K a year. Oh I feel so much tax pain! Oh I can't take much more!

 

So you think I am getting only 2.72 percent? roflmao

 

I have enough money to live off that interest alone with my SSI plan and never touch the principle. And I am doing much better than that.

 

If you live in the San Francisco Bay Area you should talk to my guy.

 

No offense, but I take financial advice on message boards with a grain of salt - like a lot of other things. People often think they know more than they actually do. I do not profess to be an expert but I know one when I find one and I use them. I have one of the best!

[Emil 0]

lol,

 

talk to my guy.

 

 

You have not read my other posts about my concerns but only two things concern me as a retiree - inflation on a fixed income no matter where I live and the exchange rate.

 

And, I will be on SSI and augmenting with 5 to 10 K a year. Oh I feel so much tax pain! Oh I can't take much more!

 

So you think I am getting only 2.72 percent? roflmao

 

I have enough money to live off that interest alone with my SSI plan and never touch the principle. And I am doing much better than that.

 

If you live in the San Francisco Bay Area you should talk to my guy.

 

No offense, but I take financial advice on message boards with a grain of salt - like a lot of other things. People often think they know more than they actually do. I do not profess to be an expert but I know one when I find one and I use them. I have one of the best!

 

You need to read my post a little closer. I never stated that you were only getting 2.72% nor do I care. I said that's what one would get today if they put their money in an IRA without any risk to principle and that would be an investment over 100k for 5 years, anything less or for a shorter duration would be lower.

 

You stated that one of your concerns is the exchange rate and that is what I was addressing. Purchasing a condo would eliminate any concerns for a drop in the exchange rate for your lodging costs. If you think that having the exchange rate drop from the current 33 to 1 to 25 to 1 in 5 years is not realistic keep in mind that when I first visited Pattaya in 2001 I was getting 45 to 1. Eight years latter its down to 33 to 1.

 

I'm not trying to give you financial advise, only trying to make you aware of some of the negatives of renting and other options. I wouldn't take advice from someone on a message board and I would also be very leery of taking advice from someone who would make a commission from me for giving me advice.

 

I'm sure that your heirs are very happy that you can live off your SSI and interest without touching your principle.

[jacko 8,813]

I wish I had your confidence that the GBP is going to strengthen against the Baht.

Me too, the 65/baht days of last year look like a dream gone by for the rest of this decade.

[Owen` 2]

I'm not going to get into the argument of who gets good advice where.

 

I am curious about an aspect of Thai real estate (condos). Namely, insurance. Anyone ever have a place burn down and make a successful claim? What are the Thai insurer ratings and regulatory processes that ensure the insurer isn't collecting premiums with no intent ever to cover claims?

[Emil 0]

I'm not going to get into the argument of who gets good advice where.

 

I am curious about an aspect of Thai real estate (condos). Namely, insurance. Anyone ever have a place burn down and make a successful claim? What are the Thai insurer ratings and regulatory processes that ensure the insurer isn't collecting premiums with no intent ever to cover claims?

 

Owen,

 

I'll be looking into that aspect next month when hopefully I'll be in my new place. In California the condo association purchases the fire insurance out of the association dues it collects for the condo, as an owner only owns what's inside the interior walls of his unit and would only have insurace for its contents, again I'll find out how its works in LOS. A place burning down is highly unlikely for the majority of the condos. The ones that I've seen are constructed as follows: Concrete, brick and rebar for the structure with tile roofs and floors. If someone were to fall asleep smoking in bed it should remain confined to the bedroom with mostly smoke damage. The unit that I purchased has no common wall with any other unit. For flooding look for a condo away from water and on high ground, also many of them have only parking on the ground floor along with an office.

[m_right 0]

Using the rent vs own calculator at Yahoo http://realestate.yahoo.com/calculators/

 

And playing with different input numbers can be a very enlightening exercise.

 

You can use it in reverse by putting in realistic numbers to see how much rent you would need to break even by renting it out.

 

You can't put in exchange rate changes. haha

[laffnliv 78]

"Breaking even" is not a consideration for me. I bought mine to live in. Should I live long enough to sell it I will make a profit even with the current downturn in value. The net result is that I will have lived in Pattaya for free. I have had my condo for 8 years now.

 

Little Roy

[BigDUSA 71]

When you buy a condo your stuck with your neighbors. What happens if you get a idiot next to you whose up all night playing rap music so loud it makes you ears bleed? Not everyone is as reasonable as you are. If you rent and you don't like whatever in a couple of months your gone.

[laffnliv 78]

If I had a neighbor like that we would have a "friendly" discussion. Problem would be solved.

 

Little Roy

[Gary 4,118]

When you buy a condo your stuck with your neighbors. What happens if you get a idiot next to you whose up all night playing rap music so loud it makes you ears bleed? Not everyone is as reasonable as you are. If you rent and you don't like whatever in a couple of months your gone.

 

Noise is one reason to find a complex that has good security. A call to security will bring a response and it will be straightened out.