Requirements for foreigner mortgage or owner financing of a condo?

[DrHoneydew]

Just curious... not sure buying a condo here would be the smartest thing to do, but curious...

 

If a foreigner wants to buy a condo with as little personal money in the game as possible, how can that happen?

Is a foreigner able to get a mortgage here, if so, how?

Is owner financing a thing here?

Is the foreigner legally allowed to rent it out? If so, how does that work?

 

 

Cheers

[nigelforbes]

Your chances of getting a mortgage here, unless you put up substantial collateral, are almost zero.

 

If by owner financing you mean using rental income as a guarantee on a loan, no, that won't work for you either, see the above.

 

Yes you are allowed to lease out your condo, short term rentals under 30 days are not allowed. You will need to file a Thai tax return to declare the income, this is easily done and the Thai tax authorities are very easy to deal with. Generous deductions are available. For example, the first 150k of income is zero rated, plus a personal allowance of 30k per person is available for the filer and their spouse, health and life insurance is deductible, as are mortgage payments, within limits :((. Income from 150k to 300k is taxed at 5%.

Edited December 24, 2022 by nigelforbes
add tax info

[Mike Teavee]

Friend of mine who has a high paying job in Bangkok went into Bangkok Bank to ask about a mortgage & was told that it would have to be in his partners name with him as a guarantor… (NB I’m not sure if he asked about a mortgage in general or one to buy a house/land which could not be in his name).

I did see a YT video where Magna Carta (well known legal firm) we’re offering mortgages to Foreigners in Thailand, IIRC these were for 1 year (can renegotiate to extend) & needed a 50% deposit.

 

[nigelforbes]

I also know of a foreigner working in a very senior role in banking who was able to obtain a mortgage via his client (the bank he worked for in Bangkok) by using securities held in a pension plan and  with the mortgage being in his wifes name. I think strongly that any lending option outside of the mainstream banks is going to come with high risk and should be avoided at all costs.

[Etaoin Shrdlu]

Foreigners with permanent residence status here may obtain conventional mortgages from Thai banks provided they have sufficient Thailand-based income from a job or other legitimate source and otherwise meet lending criteria. Often, the mortgage term can't extend past the borrower's 60th birthday, so if you're 55 years old, your mortgage would be for a maximum of four years and some months. So, yes, it is possible for a foreigner to obtain a mortgage, but relatively few foreigners meet these requirements.

 

Foreigners without PR need to show that funds were brought into Thailand for the purpose of purchasing a condo. It may be possible to arrange a loan from an offshore bank or other lender and then bring the funds into Thailand, but such loans usually carry high interest rates. In the past, I think Bangkok Bank had a scheme in which their Singapore branch would grant a loan for this purpose. I'm not sure if this scheme is still available or what the lending criteria may be or other details.

 

Given the requirement to bring funds into Thailand, seller or owner financing would not work here.

 

Foreigners may rent out their condos as Nigel has stated above.

 

[DrHoneydew]

Ah, to clarify I guess I meant 'seller' financing. ie: You give the seller a small or no down payment and they then finance the balance personally. This may sound crazy to some, but not that unusual in America, so wondering what sort of creative financing options could be done in Thailand. Looking to make investments, not for personal use. Putting your personal money into investments is not ideal for how I wish to go about it.

[Salerno]

26 minutes ago, DrHoneydew said:

Ah, to clarify I guess I meant 'seller' financing.

That pops up quite regularly in FB, not in huge numbers but often enough, so the possibility is there.

[DrHoneydew]

8 hours ago, Salerno said:

That pops up quite regularly in FB, not in huge numbers but often enough, so the possibility is there.

Any recommended groups?

[Salerno]

5 minutes ago, DrHoneydew said:

Any recommended groups?

I've seen them in https://www.facebook.com/groups/PattayaCondosForSaleOrRent. 

 

Possibly worth posting in there saying you are looking for properties with "owner finance" (seems to be what they call it in Thailand) and maybe get in touch with some of the bigger agents, although they'd obviously want a cut.

 

Here's one from a couple of days ago for example (light on details as always) and another one from Christmas Eve (light on detail where the finance is from).

[nigelforbes]

14 hours ago, DrHoneydew said:

Ah, to clarify I guess I meant 'seller' financing. ie: You give the seller a small or no down payment and they then finance the balance personally. This may sound crazy to some, but not that unusual in America, so wondering what sort of creative financing options could be done in Thailand. Looking to make investments, not for personal use. Putting your personal money into investments is not ideal for how I wish to go about it.

The big difference of course is that in the US, owner financing is regulated and an accepted part of real estate lending which is heavily regulated and policed. Here, a person would be taking the lenders word for things and there would be no security whatsoever.

[Etaoin Shrdlu]

If you haven't already done so, you might want to look into the viability of condo units as investments. Rents here tend to be low and one can't count on a condo significantly appreciating in value, at least not in Thai baht terms, although I'm sure there are exceptions.

 

Then there are the running costs such as annual fees for the communal property upkeep, insurance, maintenance and repair, etc. combined with the difficulty and hassle of having a reliable tenant occupying the unit at all times. Also, don't forget Uncle Sam's hand in your pocket when it comes tax time, especially the recapture of depreciation when you sell. 

 

My apologies if you've already considered all of this or are a savvy real-estate investor. If not, you may wish to solicit others' opinion on this as well. My experience as owner of a rental property here was decidedly mixed. I would have done better with the money in a balanced stock portfolio in the US during the time I owned the unit.

 

[DrHoneydew]

On 12/25/2022 at 7:56 PM, Etaoin Shrdlu said:

If you haven't already done so, you might want to look into the viability of condo units as investments. Rents here tend to be low and one can't count on a condo significantly appreciating in value, at least not in Thai baht terms, although I'm sure there are exceptions.

 

Then there are the running costs such as annual fees for the communal property upkeep, insurance, maintenance and repair, etc. combined with the difficulty and hassle of having a reliable tenant occupying the unit at all times. Also, don't forget Uncle Sam's hand in your pocket when it comes tax time, especially the recapture of depreciation when you sell. 

 

My apologies if you've already considered all of this or are a savvy real-estate investor. If not, you may wish to solicit others' opinion on this as well. My experience as owner of a rental property here was decidedly mixed. I would have done better with the money in a balanced stock portfolio in the US during the time I owned the unit.

 

Agreed & aware. I'm lightly curious if its even a possibility or if I should just forget the idea completely. I have had more than a couple Thai folks tell me about their new condo they just bought and are renting on AirBnB etc, talking about what a great deal it will be once they sell. The latest, after asking for some intel on a condo I just rented for a couple weeks, is the owner expects to rent it out for 15K/m during high season and maybe 12K in low. She's paying teh bank 20K/m in mortgage and all the other costs that go along with condos on top. It's a negative cash flow gamble that she'll be able to sell one day. I asked her about those expectations and she was excited to tell me the building was 80% sold after just 4 years!! (oof). My view is that it should have been sold out well before now if she ever expects to sell for a profit. Why buy hers for a premium when they can pick up a new unit for the regular price, or perhaps even discounted because of all the unsold inventory. Unless ALL the pool view sell out and the only units left are parking lot view & low level. I shake my head at just about every deal I hear about. My thoughts were it may be something to consider if someday I stumble across a cash flow positive unit in an area that I could expect it to regularly rent. Probably a unicorn, but I'm not particularly spending time looking either. Would pick one up if the situation was right. 

[nigelforbes]

You should look at the supply and demand profiles of the area that interests you, prior to covid there was a massive oversupply of condo's in Thailand. That may have eased somewhat in the past couple of years as a result of lockdowns but not entirely. It's hard to imagine why any condo would see capital appreciation when there is an over supply, or unless it is located strategically in an area undergoing rapid change. I bought a unit in 2004 that I sold for the same price in 2008. Similar units today are selling for only 12% more than what I paid years ago and rents have increased by only a similar amount. The purchase was however a useful store of THB which appreciated substantially during the period and this was where most of my profit came from.

[Delight]

On 12/25/2022 at 2:51 PM, DrHoneydew said:

Ah, to clarify I guess I meant 'seller' financing. ie: You give the seller a small or no down payment and they then finance the balance personally. This may sound crazy to some, but not that unusual in America, so wondering what sort of creative financing options could be done in Thailand. Looking to make investments, not for personal use. Putting your personal money into investments is not ideal for how I wish to go about it.

When the monies are all paid-you will be reliant on the seller helping you with the title deed transfer.

Nothing to stop the seller from refusing .

Suspect a legal contract will not help.

Not in this country!

[steve sharp]

There are a number of requirements that a foreigner may need to meet in order to obtain a mortgage or owner financing for a condominium unit in Thailand. Some of the main requirements include:

• Proof of income: Most lenders will require you to provide evidence of your income, such as pay stubs, tax returns, or bank statements. This is to ensure that you have the financial ability to make the required mortgage payments.

• Credit history: Lenders will also typically review your credit history to assess your creditworthiness. This may include looking at your credit score and credit report, as well as any outstanding debts or financial obligations.

• Down payment: Most lenders will require a down payment as part of a mortgage or financing arrangement. The size of the down payment will depend on the lender and the specific terms of the loan, but it is generally expected to be at least 20% of the purchase price.

• Legal documentation: You will need to provide legal documentation, such as a valid passport and proof of residence, to obtain a mortgage or financing in Thailand. You may also need to provide documentation related to the property, such as a title deed or lease agreement.

• Language: It is a good idea to have your mortgage or financing documents translated into English, or at least have an English-language summary of the documents, to ensure that you fully understand the terms and conditions of the loan.

Overall, the requirements for obtaining a mortgage or owner financing for a condominium unit in Thailand may vary depending on the lender and the specific terms of the loan. It is a good idea to carefully research and understand the requirements before applying for a mortgage or financing.