How many Expats plans are on hold due to the property slow down?

[Caine]

12 hours ago, Airalee said:

He didn’t lower his price enough.  

 

Try 20k baht.

 

The market has spoken.

More like 6k a month, I’m in a brand new one bedroom pool view cleaned and bed linen once a week perfect internet in room and by the pool, Sky TV for 9k. The market is speaking even louder. ????????????

[Caine]

12 hours ago, bert bloggs said:

We own a house here in Pattaya on a gated estate ,one just sold for 2.5 million more than we paid for ours , so good investment ,its our home ,i will die here then my wife will live here .when i am gone ,as will our son  and his wife and kids when he has them . that or sell up. 

Bloody rubbish, soon as you turn your toes up they will cash in and probably can’t wait. Wise up mug.

[Pravda]

1 hour ago, Sterling said:

Serious question, not trying be snarky. How would you discourage Airbnb in your building? The fingerprint reader sounds like a good start (until the owners start including a rubber fingerprint with the condo keys so the Airbnb'ers can get in).

 

C ekkamai. 

 

My ex owns a condo there. 

 

Signs everywhere short term rentals are illegal. 

 

Raided by immigration police several times. 

 

Fingerprint scanner - the works! 

 

Still dozens of Chinese tourists every day. Juristic office wastes half of their time setting up fingerprint scanners for Chinese. Come and visit.... Use the pool for free. No one will kick you out... You're probably just another short term guest. 

 

And for the record.... Prices in this building are dropping.... And it's Ekkamai, not Pattaya or Hua Hin. 

 

Food for thought. 

Edited November 24, 2019 by Pravda

[KSwr7UDHyn]

2 hours ago, Why Me said:

Equivalent condos in the neighborhood start at 6 mil. Now, 20k x 12 / 6 mil = 4%. So essentially I am borrowing 6 mil in the form of real estate at 4% per annum. I can and do make a lot more than that in the US stock market where I am fully invested. No, I am not some brilliant/lucky trader. The opposite in fact so I have everything in staid boring index funds. The market historically grows at an average of 7%/annum recessions included.

 

 

The market grows at a 7%/annul rate, but it does not grow in a straight line.  That 7% is a historical average over many years.  

 

It also assumes that all of your money remains invested. 

 

So, let's say that you decide to set aside 6 million baht ($200K USD) and invest that in the market and use the proceeds to pay your rent at a rate of 4% of your principle balance. 

 

If the market goes up 7% every year, that's wonderful.   You will surely come out ahead and have made an excellent financial decision. 

 

But what happens if the market tanks 20% the first year and instead of pulling out capital gains you have to pull it out of principle? 

 

Your 6 million declined in value by 1.2 million baht.  Plus you're paying 20,000 baht a month (x12 months) which is another 240,000 baht gone.  So, now you're down to $4.56 million. 

 

Basic retirement theory says you should drop your expenses to match the new value of your portfolio value.  So, unless you're willing to give up your lease and get a place for 15,200 baht a month, you're going to have a hard time catching up to that 7% per annum rate of return because every monthly payment is eating into your principle. 

 

Even if the market immediately bounces back 30% the next year, you're still short of 6 million (you would be at 5,928 million).  But, that's rarely how the market works.  You are far more likely to see 15% the next year, and maybe 15% the year after.  But, since you started from a deficit, you're not just taking the rent money out of your capital gains, at least for awhile, you're pulling the returns out of principle so you're going to fall behind even further. 

 

Look up "sequence of returns" for more information on how what the market does in the first few years impacts your overall returns. 

 

 

[Pravda]

It's always better to own than rent. Even if the prices tank the place is still yours and no one can kick you out. Plus you can get creative renting it out. 

 

However this is providing you have all the rights and privileges and being a farang mug you don't have any. 

 

Rent. 

[Airalee]

18 minutes ago, KSwr7UDHyn said:

 

The market grows at a 7%/annul rate, but it does not grow in a straight line.  That 7% is a historical average over many years.  

 

It also assumes that all of your money remains invested. 

 

So, let's say that you decide to set aside 6 million baht ($200K USD) and invest that in the market and use the proceeds to pay your rent at a rate of 4% of your principle balance. 

 

If the market goes up 7% every year, that's wonderful.   You will surely come out ahead and have made an excellent financial decision. 

 

But what happens if the market tanks 20% the first year and instead of pulling out capital gains you have to pull it out of principle? 

 

Your 6 million declined in value by 1.2 million baht.  Plus you're paying 20,000 baht a month (x12 months) which is another 240,000 baht gone.  So, now you're down to $4.56 million. 

 

Basic retirement theory says you should drop your expenses to match the new value of your portfolio value.  So, unless you're willing to give up your lease and get a place for 15,200 baht a month, you're going to have a hard time catching up to that 7% per annum rate of return because every monthly payment is eating into your principle. 

 

Even if the market immediately bounces back 30% the next year, you're still short of 6 million (you would be at 5,928 million).  But, that's rarely how the market works.  You are far more likely to see 15% the next year, and maybe 15% the year after.  But, since you started from a deficit, you're not just taking the rent money out of your capital gains, at least for awhile, you're pulling the returns out of principle so you're going to fall behind even further. 

 

Look up "sequence of returns" for more information on how what the market does in the first few years impacts your overall returns. 

 

 

$200k (฿6,000,000) invested with a 5% dividend in a boring blue chip stock would bring in ฿300k (฿240k after taxes).  Plenty to pay rent without touching the capital.

 

As a renter, one doesn’t have to pay any monthly/quarterly/annual common fees.  No special assessments for ongoing maintenance which the low common fees never cover.  Don’t have to pay for the new fridge, tv, washer, furniture as it wears out.  No purchase or selling fees/commissions.  Freedom to move at any time.

[Destiny1990]

1 hour ago, KSwr7UDHyn said:

 

The market grows at a 7%/annul rate, but it does not grow in a straight line.  That 7% is a historical average over many years.  

 

It also assumes that all of your money remains invested. 

 

So, let's say that you decide to set aside 6 million baht ($200K USD) and invest that in the market and use the proceeds to pay your rent at a rate of 4% of your principle balance. 

 

If the market goes up 7% every year, that's wonderful.   You will surely come out ahead and have made an excellent financial decision. 

 

But what happens if the market tanks 20% the first year and instead of pulling out capital gains you have to pull it out of principle? 

 

Your 6 million declined in value by 1.2 million baht.  Plus you're paying 20,000 baht a month (x12 months) which is another 240,000 baht gone.  So, now you're down to $4.56 million. 

 

Basic retirement theory says you should drop your expenses to match the new value of your portfolio value.  So, unless you're willing to give up your lease and get a place for 15,200 baht a month, you're going to have a hard time catching up to that 7% per annum rate of return because every monthly payment is eating into your principle. 

 

Even if the market immediately bounces back 30% the next year, you're still short of 6 million (you would be at 5,928 million).  But, that's rarely how the market works.  You are far more likely to see 15% the next year, and maybe 15% the year after.  But, since you started from a deficit, you're not just taking the rent money out of your capital gains, at least for awhile, you're pulling the returns out of principle so you're going to fall behind even further. 

 

Look up "sequence of returns" for more information on how what the market does in the first few years impacts your overall returns. 

 

 

I don’t understand ur calculations Because  very seldom properties in Thailand go up in value after being sold to the first buyer in-fact they loose value similar to a used car. Only new properties at launch go up in asking prices. So Capital gains aren’t there for consumers. Market can grow but not for your existing property because its second hand . Developers only can increase asking prices of New real estate!!!

Fyi some clowns here will now post how much profit they made on their last wonderful property deals here  but as long as they dont proof that with documents then simply ignore their fairytales!!

Edited November 24, 2019 by Destiny1990

[amykat]

13 hours ago, oslooskar said:

I bought a very nice house here in Thailand last year and put it in my son's name because he has Thai citizenship. I then shipped all my worldly possessions here and no longer have to pay $220.00 U.S. a month in storage fees. However, although I was originally planning on buying another place here as well, I have since decided against it because of the continually changing immigration requirements.

Soon you can apply that storage money to your near worthless insurance or your Elite visa, or whatever....new thing is needed.

[tlandtday]

7 hours ago, DaRoadrunner said:

Take a look at Q House Sukhumvit near Nana station. Cheapest condo unit is 30m Baht.... up to 130m Baht! Thai greed has gone too far. This is an area with severe pollution, the street is filthy, there are beggars and hookers and ladyboys around..... Naturally it appears to be empty.

 

Convert that into Pounds or US$ and imagine what you could buy for that money back home.

 

Yeah they are asking huge amounts but can't bring themselves to hire a farang to provide the correct content including spelling for their english website. Baffling.

Edited November 24, 2019 by tlandtday

[sunnyboy2018]

15 hours ago, 4MyEgo said:

Can't see a bubble, perhaps an excess of property coming onto the market for many a reason.

 

As for foreigners buying property, I would think not especially when some currencies have dropped a minimum of 20%, suffice to say if your looking at purchasing a property for 5m, it becomes 6m.

 

Coming from a property background of 25 years, I would NEVER purchase property in Thailand, especially when you do not get any permanent residency status and can only buy into villa's, condo's and the like which are 51% owned by Thai's, that's just my take, add to that there is no control over how much development can be done within a particular area within a particular year, oversupply does help in bringing prices down as new becomes hard to sell in a down turning market, and then they have competition with the 2nd hand market to worry about on top of exchange rates.

 

As for Hua Hin, I would have thought if one purchases at the right time, i.e. in mid 20 with the new airport being built or built, that might help property prices in the future as the baht comes back to earth, change of government and farangs starting to return, but who can see into that crystal ball, just my speculation of course, and still dicey when you cannot obtain permanent residency unless you meet a certain criteria, i.e. having worked and paid taxes, plus, plus, plus and the only allow so many per year, Vs retirement/marriage extensions.

 

I believe rent would be a better option, unless your prepared to off-set the rent per annum from the purchase price, year in year our given the above.

The new train service from Bangkok to Pattaya might improve things in Pattaya but the whole of Thailand has a serious  problem: the wealth gap. This is not a matter of social justice but economic efficiency. For economies to grow there must be a burgeoning middle class with sufficient wealth to buy things. Thailand does not have a growing middle class either big enough or growing fast enough to help fuel the economy. Without a native population able to buy condos the market will decline. Where I live in Pratumnak there are two or three 90% empty condos but three new ones have been built in the last year.

[sunnyboy2018]

15 hours ago, BritManToo said:

I can buy a rundown farm in France for 10,000-15,000 Euros.

They can't give em away.

Yes but the local village will have no shops. These places are dead zones. But if you like a solitary life....

[sunnyboy2018]

15 hours ago, BritManToo said:

I'm buying a 3 bed, 3 shower house (from new) in Chiang Mai for 10k/month (90% mortgage).

Pointless to risk your own money up front in Thailand.

 

But as a foreigner you cant own a house  or rather cant own the land. So is it and the mortgage in your wifes name?

[scubascuba3]

7 hours ago, luckyluke said:

"Nice" is a relative concept. 

 

When in Pattaya I rent at MaxxCity;

 

"nice", at 15900 Thb, if 3 months rent. 

 

What "nice" place can you get in Pattaya for 10000 Thb? 

Lots on Facebook. I saw one the other day 7k a month for a 45m condo in Pratamak, photos looked good. Good move by the owner, better have someone in there than stay empty

[BritManToo]

2 hours ago, sunnyboy2018 said:

Yes but the local village will have no shops. These places are dead zones. But if you like a solitary life....

Same as the UK villages and smaller towns, the only shops left are the out of town superstores, not even any banks.

Just charity shops and estate agents.

[BritManToo]

13 hours ago, Kurtf said:

I've been trying to sell our house in Mae Taeng for a couple of years and have reduced the price to very low levels and have very few people interested. Or those that are interested are Thai people with no funds.

How much?

I might be interested.

[BritManToo]

4 hours ago, Pravda said:

Even if the prices tank the place is still yours and no one can kick you out.

Have you forgotten immigration?

[Topdoc]

15 hours ago, Gecko123 said:

Quantitative easing has heightened financial uncertainty everywhere.

This is the closest comment so far explaining the situation but QE itself is not exactly the reason why we see this developing trend around the world.

 

This is the reason why but it took me about 30 years of reflection to understand:

J.M.Keynes: "For a little reflection will show what enormous social changes would result from a gradual disappearance of a rate of return on accumulated wealth."

 

 

 

[luckyluke]

1 hour ago, scubascuba3 said:

Lots on Facebook. I saw one the other day 7k a month for a 45m condo in Pratamak, photos looked good. Good move by the owner, better have someone in there than stay empty

Pratumnak is of course Pattaya.

But for me MaxxCity is already far away from central Pattaya.

Just stay there because the price is fair (for me) for the "nice" given. 

 

[1FinickyOne]

22 hours ago, GeorgeCross said:

 

LOL - do you know how long it actually takes to find then buy a piece of land, then clear it, find an architect, get planning permission, prep it (flatten/drainage), then actually build it, put the gardens in, design the interior, deal with all the BS at EVERY STEP, etc, etc..

 

thats where the two times price comes in! - 2 years of work!!!!

 

i've sold 2 properties this year, both at a tidy profit i might add, and while i agree houses depreciate over time, the trick to selling them is to bring them back to new.

 

do that and they sell.. for new prices

 

its a buyer's market so have to have a superior product to the lazy gits who can't even be bothered to jet wash their driveways before putting their houses on the market and wonder why no-one comes to view!

 

 

took us 3 months... but you are the expert..  had a good builder. he did everything needed. lol indeed. 

[KSwr7UDHyn]

5 hours ago, Airalee said:

$200k (฿6,000,000) invested with a 5% dividend in a boring blue chip stock would bring in ฿300k (฿240k after taxes).  Plenty to pay rent without touching the capital.

 

As a renter, one doesn’t have to pay any monthly/quarterly/annual common fees.  No special assessments for ongoing maintenance which the low common fees never cover.  Don’t have to pay for the new fridge, tv, washer, furniture as it wears out.  No purchase or selling fees/commissions.  Freedom to move at any time.

 

And many of those dividend paying stocks could cut their dividend during a recession or other economic hard times.  Which would both drive down the price of the stock and lower your income. 

 

I'm not saying that you should buy real estate rather than own equities, I'm just pointing out that due to the sequence of returns issue, you can't just make some projection of earning 7% like it's interest on your savings account. 

 

It fluctuates and there will be up years and down years and some years you could be dipping into your principle which is going to kill your chances of hitting 7%. 

 

BTW, the other thing here is that the original proposal here was rent was 4% of the 6 million (i.e. 240,000 baht) which is EXACTLY your after tax amount on your blue chips paying a 5% dividend.  Even if you avoid rent hikes for 20 years, eventually you're going to pay more than you pay today and then the 240,000 and now you're dipping into principle again. 

[KSwr7UDHyn]

5 hours ago, Destiny1990 said:

I don’t understand ur calculations Because  very seldom properties in Thailand go up in value after being sold to the first buyer in-fact they loose value similar to a used car. Only new properties at launch go up in asking prices. So Capital gains aren’t there for consumers. Market can grow but not for your existing property because its second hand . Developers only can increase asking prices of New real estate!!!

Fyi some clowns here will now post how much profit they made on their last wonderful property deals here  but as long as they dont proof that with documents then simply ignore their fairytales!!

 

I'm really not sure what you're trying to say either because I didn't talk about the price of the property increasing. 

 

What I said is that if you do the math and figure out that rent is 4% of the purchase price and thinking that because the market returns 7%, you're automatically golden, you misunderstand how investing works because your stock portfolio is not going to go up 7% every year.  It will go up 7% ON AVERAGE given a long enough time frame but one year it could be up 30% and the next year down 40%.  In what order those up and down years happen can make it difficult (or impossible) to get that 7% return. 

Just saying the math is not as simple as saying, "Oh, the market returns 7% a year, on average, so if I invest this money and use the proceeds to pay rent, I come out way ahead."  There are other variables that can dramatically lower your chances of earning a 7% return. 

Edited November 25, 2019 by KSwr7UDHyn

[newnative]

22 hours ago, GeorgeCross said:

 

LOL - do you know how long it actually takes to find then buy a piece of land, then clear it, find an architect, get planning permission, prep it (flatten/drainage), then actually build it, put the gardens in, design the interior, deal with all the BS at EVERY STEP, etc, etc..

 

thats where the two times price comes in! - 2 years of work!!!!

 

i've sold 2 properties this year, both at a tidy profit i might add, and while i agree houses depreciate over time, the trick to selling them is to bring them back to new.

 

do that and they sell.. for new prices

 

its a buyer's market so have to have a superior product to the lazy gits who can't even be bothered to jet wash their driveways before putting their houses on the market and wonder why no-one comes to view!

 

 

    Agree.  I've sold 2 condos this year--also at a profit.  They sold because, as you said, they were a superior product.  Didn't hurt that both were in excellent locations, always kept in tiptop shape with no clutter, and were priced realistically and listed with all the realtors.  

[Destiny1990]

8 minutes ago, KSwr7UDHyn said:

 

I'm really not sure what you're trying to say either because I didn't talk about the price of the property increasing. 

 

What I said is that if you do the math and figure out that rent is 4% of the purchase price and thinking that because the market returns 7%, you're automatically golden, you misunderstand how investing works because your stock portfolio is not going to go up 7% every year.  It will go up 7% ON AVERAGE given a long enough time frame but one year it could be up 30% and the next year down 40%.  In what order those up and down years happen can make it difficult (or impossible) to get that 7% return. 

Just saying the math is not as simple as saying, "Oh, the market returns 7% a year, on average, so if I invest this money and use the proceeds to pay rent, I come out way ahead."  There are other variables that can dramatically lower your chances of earning a 7% return. 

Oh okey i get it now you was refer to the stocks and bonds market returns.

Yeah its a valid point those can create big losses for long periods not the slightest guarantee for 7% fixed. 

[RichardColeman]

Should - or if - they ever ask for insurance on non-o's the dribble will become an uncontrollable tide and those renting will not be giving one iota !

[Tayaout]

26 minutes ago, KSwr7UDHyn said:

 

I'm really not sure what you're trying to say either because I didn't talk about the price of the property increasing. 

 

What I said is that if you do the math and figure out that rent is 4% of the purchase price and thinking that because the market returns 7%, you're automatically golden, you misunderstand how investing works because your stock portfolio is not going to go up 7% every year.  It will go up 7% ON AVERAGE given a long enough time frame but one year it could be up 30% and the next year down 40%.  In what order those up and down years happen can make it difficult (or impossible) to get that 7% return. 

Just saying the math is not as simple as saying, "Oh, the market returns 7% a year, on average, so if I invest this money and use the proceeds to pay rent, I come out way ahead."  There are other variables that can dramatically lower your chances of earning a 7% return. 

You are right if you are retiree that need to cashout every month/years. If you are younger or have other source of revenues then you don't need to wait much to compensate for losing years. The probability is higher to start on a gain. When I will buy land and a house it won't be under my name so I will have to count it has a gift unfortunately. 

 

 

[pookondee]

22 hours ago, GeorgeCross said:

got to say there is a huge amount of inventory coming on to the market right now in Hua Hin i've never seen anything quite like it. a month ago we was considering buying a holiday let in the 5M baht range and could only find 2 houses off of the private villages (i don't like service charges) - 2 days ago i was browsing about and i swear is saw 10 of them and the prices are crashing fast. did some checking in the sub-5M, 5-10 and 10+ ranges and same thing there.

 

so is this panic selling over immigration changes or a bursting bubble?

 

one things for sure across all price ranges there is panic in the air, seen it before, samui 2009.

 

thai market is holding up though no problems there seems to be foreign real-estate correction

 

so is this panic selling over immigration changes or a bursting bubble?

 

And who can blame them?

What sane person would buy in a place where your security to stay is often no longer than 90 days?

OR wonder when the next new IMM law will force you out of your yearly extensions?

 

I would call it common sense, not panicking.

 

But even before the IMMs changes,  people on these boards were advising RENT,

and of course all the hotshots were BSing about all the money they made.

lol

 

Thais will sit on a property for years without needing to drop the price.

This is why they keep getting the inflated prices, even when the market is hugely over-saturated.

 

Johnny farang comes along, buys at the inflated price, then when he has to leave for whatever reason..its firesale time.

 

A Thai scoops it up at 50% discount and the cycle starts again.

[Chazar]

20 hours ago, BritManToo said:

Financed by whom?

I wonder?

The  first 3  I  paid  for way back in 2006 the remaining 4  she paid  for from selling other  rooms and renting other  rooms  over an 5  year period, at  times she was  earning a  huge  amount each  month....hundreds of thousands , she re invested it.

We  sold the original 3 about 5 years  ago and bought  some  bigger ones  closer to the BTS My initial investment was just 3.6  million for  all three when rents for those were 15k a  month which continued for about 4  years until we  sold.

Then  she  bought other rooms form a friend of hers who wanted out and owned 50+ rooms and she got  them all at well below market  value.

So the answer is I bought the first 3 she bought the rest most are 1  bed with one 2  bed all on the BTS the cheapest is about 1.5  million the most expensive about 5 million.

All  bought at the right  time at the right  price, ie  initial  outlay by me when pound was 72 baht and the others were  irrelevant as bought with thai  baht she earnt.

I struggle  with immigration when they say  "supporting a Thai wife" as I literally dont anymore.

[RobbyXNorway]

23 hours ago, NCC1701A said:

...for what he thought it was worth.

 

there I fixed that sentence for you.

 

and it is hard to compete with 10,000 baht a month, three bed room, two bathroom house rentals in Hua Hin. 

That unit I believe is priced at about 1,8 million baht. Its a 36 sqm small apartment. I looked at the photos and was not impressed. Add to that its in the building closest to the road which has quite a bit of nightly noise. The condo is also a bit out from the center of Hua Hin, with no shuttle bus or nearby taxis.

 

Seems there are quite a few people coming here thinking they can play the market also. Had a farang/thai couple here a couple of weeks ago who bought an appartment here. 2 days later same appartment was listed on Facebook groups at 2,85 million baht. From what I could tell they bought it to sell it for a higher price. Complete joke IMO since its a simple 1 bedroom 40 sqm apartment.

 

The property market is pretty dead in the water. And its not a great time to buy property here unless you already have the money in THB and dont need to bring in money from your home country.

[BritManToo]

1 hour ago, kenk24 said:

took us 3 months... but you are the expert..  had a good builder. he did everything needed. lol indeed. 

Mine took 5 months from viewing the plot to moving in.

Would have been 4 months, but I didn't want to move in before the road was finished.

[kingdong]

23 hours ago, Chazar said:

Wife has 7 rooms  for rent all full in BKK....is  it  getting harder to find a  customer.........yes, can it be done....yes...does it require  more  work ...yes.....outside of Bangkok probably much worse

Rooms  still sell at the "right price"..unfortunately many owners havent a  clue about what the right price is and are up to their ears in the bank  loan they stupidly  took  out. All Wifes  rooms are paid for  no  loans and this is where she has an advantage.

Yeah they,'ll sell at " the right price " that's what someone will rent-pay for it.