Easiest Way To Deal With Property?

[tjo o tjim]

I'm looking at an investment that is viable either as a land lease or as a purchase; it would generate positive cash flow in under 3-5 years with a fairly high MARR/cost of capital. My wife and I are both farang; my company is Amity treaty.

The simple questions are as follows:

How much transfer-ability of the lease is there? (independent of the market)

Would I assume options-style reduction in value over the lease duration, or is it "more complicated" than that?

If I don't trust the developer/current land owner, am I better off with a lease or ownership? (Legal leasehold vs. quasi-legal ownership)

If there is a change in Thai law that permits foreign land ownership, is it possible to have a legally-binding option to buy the property for 1 Baht?

I lean towards a lease arrangement, since I know it can be above-board, but it seems like this arrangement has gone out of favor over the last two years.

I appreciate any advice/input.

[donx]

As I understand Thai law, your Amity Treaty company is not a Thai company and therefore can't purchase land. If you want to purchase land using the company route, you will have to establish a Thai company. Looks like your best option is the lease route.

[tjo o tjim]

Thanks for the input, donx.

I agree that the Amity company can't own land, but would there be any advantages to lease or purchase (aside from appreciation of the land over time with purchase, and a depreciation of the lease value over time). I know I would have to set up another company, but so far I haven't really found any real incentives to doing it this way.

I find this odd, because it seems like the majority of "land purchases" by farang have gone the thai company route from what I understand in the forums and elsewhere.

[donx]

Thanks for the input, donx.

I agree that the Amity company can't own land, but would there be any advantages to lease or purchase (aside from appreciation of the land over time with purchase, and a depreciation of the lease value over time). I know I would have to set up another company, but so far I haven't really found any real incentives to doing it this way.

I find this odd, because it seems like the majority of "land purchases" by farang have gone the thai company route from what I understand in the forums and elsewhere.

The advantage of purchase over lease is appreciation of land over time and a depreciation of the lease value over time. After 20 years, a land purchase may be worth several times more than you paid for the land whereas the lease will most likely be worth much less than it was when you established it. What about 40 years from now? If the individual you made the lease with dies 2 years after the lease contract, then the new landlord may not want to lease you the land after 30 years. The company shares can be passed on to one's heirs well beyond the 30 year limit.

The advantage of the lease over purchase is that legally you are in a much more secure situation. I believe the majority of recent land purchases by farang are not going the thai company route. The majority used to go that route, but with recent changes in the enforcement of existing Thai laws, I hear very few cases where the thai company route is being allowed by the land departments.