Long Term Leases Null & Void

[Gary 4,119]

For most two week millionaires, it may be better to follow the three "F's" The three F's are if it floats, fucks or flies, it's cheaper to rent.

[torrenova 644]

A long time ago I advised that people wanting to live in a house but protect themselves from rising prices could go some way to achieving this by buying condos in their own name and renting them out, using those funds to rent the house they wanted or if able or in partnership with a Thai, to buy a house on finance, treating the mortgage repayments akin to rents.

 

I do not doubt that the technically illegal company nominee ownership will outlive me as the only true alternative is foreign ownership (which is / was allowed up to 1 rai and if you put up Bt40m) and that is never going to come for the masses as it would be a free for all on a scale hitherto unimaginable.

[ZARIS 20]

A long time ago I advised that people wanting to live in a house but protect themselves from rising prices could go some way to achieving this by buying condos in their own name and renting them out, using those funds to rent the house they wanted or if able or in partnership with a Thai, to buy a house on finance, treating the mortgage repayments akin to rents.

 

I do not doubt that the technically illegal company nominee ownership will outlive me as the only true alternative is foreign ownership (which is / was allowed up to 1 rai and if you put up Bt40m) and that is never going to come for the masses as it would be a free for all on a scale hitherto unimaginable.

 

Dear Torri,

 

Would you advice have worked out? How are rents now compared to say 5 years ago?.Is there capital growth?

 

I like your idea of buying and renting to finance where you really want to live.

 

As a comparison here in Australia if you bought today in Sydney your rent would yield circa 3% with capital gains in the last 12 months in a lot of areas 20%. However longer term capital gains more like high single digits.To buy a house you will need around 1 million AUD.

 

If you bought in Brisbane yield would be 4-5% with capital gains around 5%.To buy a house you will need around 450-500k. How do those numbers compare.?

[nkped 1,208]

Then again, I bought a condo in Washington state in early 2007 to live in but with the thought that I would turn a nice profit when I moved on. It bottomed out at about 45% of the purchase price. Fortunately, I didn't have to sell when I retired. I may be above water in a year or so; forget the equity.

[MeGoDanceNow 4,281]

 

Dear Torri,

 

Would you advice have worked out? How are rents now compared to say 5 years ago?.Is there capital growth?

 

I like your idea of buying and renting to finance where you really want to live.

 

As a comparison here in Australia if you bought today in Sydney your rent would yield circa 3% with capital gains in the last 12 months in a lot of areas 20%. However longer term capital gains more like high single digits.To buy a house you will need around 1 million AUD.

 

If you bought in Brisbane yield would be 4-5% with capital gains around 5%.To buy a house you will need around 450-500k. How do those numbers compare.?

 

 

If you bought a house in Sydney now I wouldn't fancy your chances of capital gains mate.

[torrenova 644]

Dear Torri,

 

Would you advice have worked out? How are rents now compared to say 5 years ago?.Is there capital growth?

 

I like your idea of buying and renting to finance where you really want to live.

 

As a comparison here in Australia if you bought today in Sydney your rent would yield circa 3% with capital gains in the last 12 months in a lot of areas 20%. However longer term capital gains more like high single digits.To buy a house you will need around 1 million AUD.

 

If you bought in Brisbane yield would be 4-5% with capital gains around 5%.To buy a house you will need around 450-500k. How do those numbers compare.?

 

Asking prices versus actual sales prices have probably never been wider and with the internet, every Ivan, Vladimir or Olga thinks they are real estate agents and they continually post utter shite all over the net and Facebook.

 

Today, you could put together a small portfolio of around Bt20m, split into single units of about Bt1m to Bt1.5m value and return over 15% gross and hope to get around 12% to 13% return with some upward shift in capital appreciation and little downside risk. Move into higher priced units and you have more potential for capital growth but you will get hit on returns, which will fall below 10%. Move into the luxury end at Bt10m plus and you might get lucky but the downside is huge and you are virtually illiquid with high competition for whatever rental you can get.

 

Later in this video http://bcove.me/vmvgzwr8 a scheme where Scandinavian folk bought their own land and set up their community in a way which suited them. Drop down a level and you see EU governments considering exporting the older generation to warm climates as a cost saving measure. In the UK market, people come for short holidays but in the EU, going for a month is not uncommon, which is where the sweet spot is in rentals, neither too short to have lots of void days and not too long to have to give up too much of a long term discount.

 

However, buying and renting properties in LOS is not for the weak of mind or heart, nor for the poor, who would be reliant upon the income for all their needs. It does however, give some people another option as it is cash positive at the lower end and not wholly reliant upon capital growth.

 

Of course, many eventually want their own pool and their own house. Some prefer to rent and you can find options but may rentals are simply sales that have no buyer and some day in the future, you will be out on your ear.

Edited March 5, 2015 by torrenova

[jacko 8,823]

 

 

Of course, many eventually want their own pool and their own house. Some prefer to rent and you can find options but may rentals are simply sales that have no buyer and some day in the future, you will be out on your ear.

A neighbour recently took this action, a well known Estate agent in town said selling was unlikely and he managed to secure a rental to someone working here from a nearby country. A darned good rent too I might add.

[torrenova 644]

A neighbour recently took this action, a well known Estate agent in town said selling was unlikely and he managed to secure a rental to someone working here from a nearby country. A darned good rent too I might add.

 

A mate of mine has someone in his villa paying Bt160k a month but it was empty for quite a while beforehand and likely empty for a while when they leave. Beautiful place but he can't get out of it if he wanted anywhere near his inward Bt17m and once valued at Bt25m to Bt30m. On the other hand, you can shift decent condos all day long to tourists.

[MeGoDanceNow 4,281]

 

rentals are simply sales that have no buyer and some day in the future, you will be out on your ear.

 

 

True this. The house I was renting a couple of years ago was one the owner desperately wanted to shift, so I kept hearing that it was about to be sold. Of course being a Thai man he wasn't "desperate" enough to ask a realistic market price, so the threat never materialized. (It now sits empty.)

Edited March 7, 2015 by MeGoDanceNow

[Gary 4,119]

Renting out your condo to pay the rent for a house is a sound idea. A 2 million baht condo will rent for about the same price as a 5 million baht house. As for the HIGH end properties, that is a different situation, but unless the owner is really lucky, the house/condo is likely to remain empty.

[cbrib 354]

One way i was told about by a lawyer was to have your Thai wife form a company with out you. When it comes time to buy you come in as one of the lenders along with a bank. Although your name is nowhere involved with the company, which may scare some, that it what makes it legal.

 

Because you are a legal lender the chanote can't be transferred in a sale until you are paid off by the Thai company, which of course isn't going to happen because that is your safety net

[Parkwahn 61]

Renting out your condo to pay the rent for a house is a sound idea. A 2 million baht condo will rent for about the same price as a 5 million baht house. As for the HIGH end properties, that is a different situation, but unless the owner is really lucky, the house/condo is likely to remain empty.

Not a chance, I agree you can get a 2 million condo for 13500 a months thats 8% .. no chance you can get a 5 million house for the same thats 3% return, they all run from 7% to 12%

[Idefix 2,275]

Because you are a legal lender the chanote can't be transferred in a sale until you are paid off by the Thai company,

Right, your wife can't sell the house, but she can decide to sell the company (!) if things turn bad with you. You could finish as a lender of a company you have no relation with, company who owns a house you couldn't use anymore... :sad:

Be careful...

[Gonzo 419]

Not a chance, I agree you can get a 2 million condo for 13500 a months thats 8% .. no chance you can get a 5 million house for the same thats 3% return, they all run from 7% to 12%

At the moment it seems very difficult to get THB 13500 rent for a 2 million baht condo. Have a look at some of the agents websites and you will find hundreds of empty condos advertised for rent or sale all over Pattaya, Jomtien and Naklua. A friend of mine has been trying to rent a very well presented 60sqm. condo for the last three months with several agents. Two years ago he used to get 15000 baht rent for it on yearly contracts. Now he has come down to asking for a measly THB 10000 and their are still no people interested.

[Fondles 94]

Not a chance, I agree you can get a 2 million condo for 13500 a months thats 8% .. no chance you can get a 5 million house for the same thats 3% return, they all run from 7% to 12%

 

 

Iam renting a 4.5 million house (well that is what the owner has it advertised for) for 15000 , thats 4%.

[nkped 1,208]

Right, your wife can't sell the house, but she can decide to sell the company (!) if things turn bad with you. You could finish as a lender of a company you have no relation with, company who owns a house you couldn't use anymore... :sad:Be careful...

And how can you foreclose if you can't own the property?

[cbrib 354]

Right, your wife can't sell the house, but she can decide to sell the company (!) if things turn bad with you. You could finish as a lender of a company you have no relation with, company who owns a house you couldn't use anymore... :sad:

Be careful...

 

Good point!. The only advantage there would be you will have to be paid back what it says you lent the company before the new owners of the company can legally sell the house. At least you get something back out of the deal

[Fondles 94]

Right, your wife can't sell the house, but she can decide to sell the company (!) if things turn bad with you. You could finish as a lender of a company you have no relation with, company who owns a house you couldn't use anymore... :sad:

Be careful...

 

Exactly.

 

The only way to thwart that is to have the full house value always encumbered against the company.

 

you got a company that owns a 10 million baht house but there is only 1 million encumbered...... she can sell the company for what is encumbered..... someone gets a bargain and you get thrown out of your 10 million baht house onto the street by the new owner cause he just bought your shit for a million !!

[MM 6,562]

 

Exactly.

 

The only way to thwart that is to have the full house value always encumbered against the company.

 

you got a company that owns a 10 million baht house but there is only 1 million encumbered...... she can sell the company for what is encumbered..... someone gets a bargain and you get thrown out of your 10 million baht house onto the street by the new owner cause he just bought your shit for a million !!

Assuming the house goes up in value (a big assumption these days), would you then have to keep upping the encumbered amount to match the market value?

[Gary 4,119]

Shady lawyers come up with all sorts of schemes to protect a property in the event of a relationship going bad. As far as I know none of the schemes are worth the paper they are written on. I have never hired a lawyer to protect property that I have purchased for my wife. Everything I have given my wife is exactly that, HERS. Trying to use some scheme will just cost you more money for the slimy lawyer. Make sure you are able financially to walk away and then you know exactly where you are at. Going to a bank to try to get a sizable long term loan will be wasting your time. It WON'T happen.

[wacmedia 277]

Shady lawyers come up with all sorts of schemes to protect a property in the event of a relationship going bad. As far as I know none of the schemes are worth the paper they are written on

 

Hi,

 

Agree, and the thought of having the house bought in your wifes company name(cbrib's suggestion) doesn't appeal either. I trust no one that much ! Am I sad ?

[Fondles 94]

Assuming the house goes up in value (a big assumption these days), would you then have to keep upping the encumbered amount to match the market value?

 

 

I was talking initial costs.... houses here do go up in value on paper but go down in value when they need to be sold.

[MeGoDanceNow 4,281]

Shady lawyers come up with all sorts of schemes to protect a property in the event of a relationship going bad. As far as I know none of the schemes are worth the paper they are written on. I have never hired a lawyer to protect property that I have purchased for my wife. Everything I have given my wife is exactly that, HERS. Trying to use some scheme will just cost you more money for the slimy lawyer. Make sure you are able financially to walk away and then you know exactly where you are at. Going to a bank to try to get a sizable long term loan will be wasting your time. It WON'T happen.

 

Yes. If you love a woman enough to buy her a house, you should trust her that much too.

 

Or if you're not sure you can trust her, you need to decide that you're going to trust her anyway. Otherwise why bother?

[torrenova 644]

Shady lawyers come up with all sorts of schemes to protect a property in the event of a relationship going bad. As far as I know none of the schemes are worth the paper they are written on. I have never hired a lawyer to protect property that I have purchased for my wife. Everything I have given my wife is exactly that, HERS. Trying to use some scheme will just cost you more money for the slimy lawyer. Make sure you are able financially to walk away and then you know exactly where you are at. Going to a bank to try to get a sizable long term loan will be wasting your time. It WON'T happen.

 

Very true Gary as they are shitting themselves about in Phuket what with the spill over from the recent legal cases.

 

However, two tectonic plates keep the equilibrium somewhat:

 

• Thais are never going to allow Mr Westerner to come buy any piece of land he chooses, legally, in his name, else it will be a bun fight ending with a few billionaires, thousands of dead people and millions of permanently poor.

 

• There are simply too many houses set up in dodgy companies with even dodgier nominee directors worth tens of billions of dollars to let it all collapse like the fraudulent house of cards it really is.

 

So what does the future bring ? possibly some form of legalised lease up to 30 years but anything that does not really reach out to around 100 years is going to make selling on with say 15 years left almost impossible. Hence, though it may be a bad situation, the current situation may persist for some time to come.

 

What is definitely on the cards though is a push to tax the income from rentals, especially to foreigners. We hear rumblings on this from multiple sources and it does make you think carefully about exposure and returns, as dropping say 30% to the tax man would crucify many.

[Gary 4,119]

Some of the expats have quite successful rental businesses. They may own a half a dozen condos and enjoy a good monthly income. Most of those guys like to rent to farangs. I think it's just a matter of time before the government comes knocking on their door for taxes and back taxes. With immigration cracking down, the renters need a document stating where they live from the owner of the house or condo. It's just a matter of the government putting 2 and 2 together and finding out who the owners are. I'm surprised that hasn't happened already. The tax law already exists.