Should I Rent Or Should I Buy

[Alberthall]

I have read avidly a recent a thread on the merrits (or not) of the 30+30+30 lease in Thailand. There is a strong body of people here that feel that they are at best risky and at worst a scam. I can see both points of view. And as has allready been said it is often dependent on personal circumstances. Having also read about the risks associated in the land/property in the Thai wifes name and the expense of the company route, I am seriously thinking for myself renting is the answer. I base this on the following.

1. Many here advise only to risk in LOS what you can afford to walk away from. Whilst I find this a cynical view I am not stupid enough not to know it is based on a large number of real life experiences.

2. At 55 (and married to a Thai) lets say I have another 30 years. Say I rent a home for 35,000bht per month over 30 years = 12.6 million baht. The same home is for sale for 9.6million Bht at the moment. so if I rent I would be paying an additional 3 million bht.

3. The monthly rent for the 30 years would come from interest on capital invested.

4. The rent + house runnning costs + domestic help would representwould only represent 1/3 of my monthly interest.

5. For sure after 30years I would have no capital appreciation but I have done all the "climbing the house ladder stuff b4 and have how cashed my chips in. Allowing for a 2% p/a top up of my capital from the annual intrest I would be in the same position in 30 years. ......... living comfortably with little risk.

Have I missed the plot?. or for my particular set of circumstances should I rent or should I buy.

[BEENTHEREDONETHAT]

Keep in mind you have to consider the rent will increase from time to time.With the present inflation that will probably be sooner rather than later.

I think that a 30+30+30 can only be counted on to be a 30 year lease, the additional 30's are very much in doubt. At 55 you could run out of lease before you run out of time. Living into the 90's is more common all the time.

It seems to me the best solution is a condo which you can legally own and not have to worry about rent increases or the lease running out. But that really depends on the life style you want to live.

It is a tough call> Good luck on whatever you choose to do.

[chiangmaibruce]

There are several things that MIGHT happen that could push things strongly one way or the other, but I would say the risk of these things happening probably balance themselves out. So I would say the best bet would be to either buy a large condo (in your name) or rent a house.

If you can search and find a well-located, well-constructed and well-managed block you might get yourself a nice big 2nd hand condo at a good price and then renovate to your taste.

Rental increase is one of the things that might well take place, but it might be modest and it might take a while. Despite the inflation we are experiencing now I get the impression (just from reading the ads) that rents here in Chiang Mai have actually dropped in the past 6-12 months. Plus there are a lot of empty places around.

Some disclaimers:

You haven't said how long you have lived in Thailand already. Suggest you rent for a year just to make sure you like the country (and the place in Thailand you have chosen)

Buying the condo depends on firstly whether you are confident of your abilities to make a good choice and buy at the right price (maybe not a given as it is a different ball game here). Secondly of course, you have to be happy living in a condo - some people just aren;t.

Good luck with the big decision

[Khun Jean]

As long as there are houses and condos for rent every step you take the price would probably not rise too much.

Anything can change, especially if you consider a 30 year period.

Another thing to consider is, would you like to live in one place 30 years.

For me that would be impossible and hence the renting option is easier for me. If you are 55 you can look back and count in how many houses you lived. If it is 2 or 3 you are probably used to live a long time in one place. If it is more, would this 'trend' stop once you have something in Thailand?

In my experience a place in Thailand changes more rapidly than anywhere else i have been. Some change from a dump to a nice place, more change from a nice place to a dump. Something to consider.

[Alberthall]

Thanks for the advice, I appreciate your time in posting.

I guess I would be more content in a spralling single story style home rather than a condo living. I would value a garden of some kind and a pool. I like to potter around abit fiddling with my car and bike. I have been looking around CR but I must say the condo market looks expensive against a house. Possibily condo prices are strong as they are the only posible falang ownership option. I have been in Thailand for under a year and like the country but I also would like to travel around.

Whilst in a previous live I would have said long term renting is money down the drain. At my time in life when I have got to the financial level I am likely to atain in this life, I feel I should simple live for the day with the least risk and the most flexibility. As long as I live within my means and do my best to replace my capital I should be ok. Then all I have to worry amout is going out with the bank balance at Zero. I guess to achieve that I could always buy land.

[Forkinhades]

If you are planning to rent for more than 10 years, then in my view buying is the best option, and the current market is a buyers market, if you look around you will get some great deals

[pkrv]

As long as there are houses and condos for rent every step you take the price would probably not rise too much.

Anything can change, especially if you consider a 30 year period.

Another thing to consider is, would you like to live in one place 30 years.

For me that would be impossible and hence the renting option is easier for me. If you are 55 you can look back and count in how many houses you lived. If it is 2 or 3 you are probably used to live a long time in one place. If it is more, would this 'trend' stop once you have something in Thailand?

In my experience a place in Thailand changes more rapidly than anywhere else i have been. Some change from a dump to a nice place, more change from a nice place to a dump. Something to consider.

That was a shit hot post - Yes, do you choose to live in the same place for 30 years? No - I choose my own direction - is that fair as an owner who can choose?

[Ubon9]

Your question is very simple to replay : if you got the money you buy,many people they are happy with renting becouse they dont have the money to buy.very simple

[Alberthall]

Your question is very simple to replay : if you got the money you buy,many people they are happy with renting becouse they dont have the money to buy.very simple

I apologise in advance in taking issue with your post. The question is not that simple. The driver behind my original post was based on the must discussed pitfalls and risks associated in buying in Thailand. Obviously if falangs were able to buy without any restrictions the most sensible thing is to buy. But in Thailand it is not, simple as that. Based on such a volitile environment my question was based on my financials "buy or rent?.

I think the concensus is rent.

With respect OP.

[Ubon9]

Your question is very simple to replay : if you got the money you buy,many people they are happy with renting becouse they dont have the money to buy.very simple

I apologise in advance in taking issue with your post. The question is not that simple. The driver behind my original post was based on the must discussed pitfalls and risks associated in buying in Thailand. Obviously if falangs were able to buy without any restrictions the most sensible thing is to buy. But in Thailand it is not, simple as that. Based on such a volitile environment my question was based on my financials "buy or rent?.

I think the concensus is rent.

With respect OP.

Not a problem

[wolf5370]

You say you are married to a Thai, then you could buy a house and land in the Mrs name and have her sign a USUFRUCT (register it) and you can now live there rent free for life - she can sell, but the USUFRUCT would go with it, so no one wants to buy unless you agree to give it up. If you add your kids/nieces/nephews whatever, then it stays intact until you all die (hopefully of old age ).

Just another option - legit one.

[Alberthall]

You say you are married to a Thai, then you could buy a house and land in the Mrs name and have her sign a USUFRUCT (register it) and you can now live there rent free for life - she can sell, but the USUFRUCT would go with it, so no one wants to buy unless you agree to give it up. If you add your kids/nieces/nephews whatever, then it stays intact until you all die (hopefully of old age ).

Just another option - legit one.

Ok am no legal expert on this one but I have been reading a thread exactly about the USUFRUCT. The opinion was that is is a good level of protection and sercrity if the land remains with your wife or initiail land owning company however if they sell the land after the 30year tern the new owner does not have to honour the rerms and extens for another 30. ergo y got 30 days to remover your house. This sound like the kind of thing that can really bite one in the arse.

[Khun Jean]

You say you are married to a Thai, then you could buy a house and land in the Mrs name and have her sign a USUFRUCT (register it) and you can now live there rent free for life - she can sell, but the USUFRUCT would go with it, so no one wants to buy unless you agree to give it up. If you add your kids/nieces/nephews whatever, then it stays intact until you all die (hopefully of old age ).

Just another option - legit one.

Absolutely incorrect!!!!!!!!!

Read the thread about usufructs!

It is good when you are NOT married, or get a usufruct from someone else (your wife would probably not agree with that!).

[donx]

You say you are married to a Thai, then you could buy a house and land in the Mrs name and have her sign a USUFRUCT (register it) and you can now live there rent free for life - she can sell, but the USUFRUCT would go with it, so no one wants to buy unless you agree to give it up. If you add your kids/nieces/nephews whatever, then it stays intact until you all die (hopefully of old age ).

Just another option - legit one.

Ok am no legal expert on this one but I have been reading a thread exactly about the USUFRUCT. The opinion was that is is a good level of protection and sercrity if the land remains with your wife or initiail land owning company however if they sell the land after the 30year tern the new owner does not have to honour the rerms and extens for another 30. ergo y got 30 days to remover your house. This sound like the kind of thing that can really bite one in the arse.

Alberthall, I think you have this wrong. Khun Jean is correct. A usufruct can be for life not just 30 years as is the limit for a lease. But because any agreement between spouses (as far as I'm concerned this includes leases and usufructs) can be terminated at any time, it is my understanding that a usufruct with someone other than your spouse is actually a safer choice. If the land is sold while either a usufruct or lease is registered on the chanote, then the buyer is obligated (assuming such terms are included in the registration) to honor the usufruct or lease. Since a usufruct can be made for your lifetime, if you live to the age of 95, then you have effectively protected yourself for 40 years. Even if the land isn't sold, the owner of the land with a 30 year lease registered on it still doesn't have to honor the additional 30 year lease. Don't expect to get more than 30 years from a lease no matter who owns the land.

[Khun Jean]

I think the best option (when you want to own a house) is to let your child(ren) have a usufruct from the owner. And when that is ready the wife can buy the land with the usufruct in place. Only disadvantage is that you have to trust your child(ren) and hope that they live longer than you. If not than the 'fallback' is that your wife owns the land.

Still i feel renting is so much easier, you still have all the money in the bank. Just make sure it not sits idle but is invested in something with a good return and in with you are comfortable. More risk higher profits... etc.

[brizzle]

I think the best option (when you want to own a house) is to let your child(ren) have a usufruct from the owner. And when that is ready the wife can buy the land with the usufruct in place. Only disadvantage is that you have to trust your child(ren) and hope that they live longer than you. If not than the 'fallback' is that your wife owns the land.

Still i feel renting is so much easier, you still have all the money in the bank. Just make sure it not sits idle but is invested in something with a good return and in with you are comfortable. More risk higher profits... etc.

Khun Jean- Thank you for contributing valuable information to this interesting thread.

With regard to the usufruct can this be in both your name and your child(ren)?

From what has been said I appreciate that if you are married this would only be in name with your child(ren) since it seems that it is quite easy to overturn such an agreement in Thai law but was interested none the less.

However if you are able to do this would you say that if you have a child and are not married the best option is to stay single and get the usufruct in both you and your childs name thus bypassing any possible eventuality in regard to life expectancy?

Many thanks.

Edited May 29, 2008 by brizzle

[donx]

I thought that only one person could have a usufruct. If I'm wrong then I'd like to know if more than one person is listed then who's lifetime is the usufruct based upon? The first person that dies? The last person that dies? Perhaps usufructs that expire based upon someone's lifetime are not allowed when more than one person is listed and are based instead upon a maximum of 30 years.

I have 3 dual citizen children. I don't think there is a benefit for listing them with me on a usufruct. My wife owns the land which will be inherited by our children. I could get a usufruct if I wanted to protect myself from my children, but I don't see this as necessary - at least not at this time in my life.

[dsfbrit]

I have a House in Pattaya, lived here for 5 years.

If I had my time again I would rent a house here for at least a year to see how I felt about it after a year. It would also give me a chance to fully understand all the implications of ownership and the subtleties of Thai law.

I am happy here, but I don't know how much better it is than renting as I did not try that first.

Until you are absolutely certain, you should NOT buy anything in Thailand at ALL.

Good Luck - I love it here in Thailand - hope you do to.

[backflip]

"I think the concensus is rent."

John Kenneth Galbraith first mentioned "conventional wisdom", and he used it as an insult. Deciding what you should do based on the opinions of disenfranchised and marginalized farangs is not very smart. You're getting a bucketload of opinions based on ignorance, rather than knowledge, and you accept it all without any critical analysis. Many TVers are just a few baht away from scavanging food and plastic bottles, and aren't able to provide the insight you require for a proper decision.

[kangeroo]

I think renting is the way to go ,as long as you invest the money you would have paid for the house .eg. on line banks returning 8.5 % . But there are so many reasons to buy as well . perhaps the partner has land you can build on with a lease . or a very good loan through a company bank.

[palm]

Say I rent a home for 35,000bht per month over 30 years = 12.6 million baht. The same home is for sale for 9.6million Bht at the moment. so if I rent I would be paying an additional 3 million bht.

That's assuming the rent stays at 35,000 baht a month for 30 years.

[autonomous_unit]

On the other hand, do you know for sure how long you will be in one place? Much of the market is cyclic and buying makes sense if you will stay put for a full cycle or you can get lucky and enter on a down point in the market. Some people would say we're already at such a low, while others expect it to decline further before it starts recovering...

We bought a house a few years ago in the Bangkok area. Prior to that, we were renting a modest 2 BR condo and feeling that it was "expensive" at 20k/month. Part of our motive for moving to the house was to have more space and a garden.

Now, due to the economy and market changes, I could easily imagine we would lose 2M THB or more if we had to sell the house now. This equates to about 55k/month for the last three years that we could have spent on renting a nicer condo or house in a more convenient location than where we purchased, still allowing us to buy our house today for the same overall cash budget. Maybe it is a wash, since we do like our house. But maybe if we were untethered today, we would be considering different options based on the past few years of moving around and sampling more areas.

At our age (mid thirties), we aren't sure what the future will hold or when we might find it is time to move, whether in Thailand or internationally. Had I known the market situation, I probably would have waited and kept renting, to keep our options open. But if we would have gotten into the market ten years earlier, it would be a different story as we would be looking at gains rather than losses on the property, and therefore a comparable rent budget of zero for the intervening years.

[Naam]

Say I rent a home for 35,000bht per month over 30 years = 12.6 million baht. The same home is for sale for 9.6million Bht at the moment. so if I rent I would be paying an additional 3 million bht.

That's assuming the rent stays at 35,000 baht a month for 30 years.

Thailand is well known to be a country where inflation does not exist

[pkrv]

Rents go up, retirment income goes down - this is the most basic fact of life (unless you run a business untill you drop dead). When the two cross into negative territory you are stuffed. If you have personal assets (e.g. a freehold condominium) you can downsize without being adversely (or positvely) affected by exchange rates. If house prices have gone up or down it does not matter - prices will be reflected in the downsized property and you will have cash again.

[Khun Jean]

^ Western logic. Does not work like that in Thailand.

Unlearn what you have learnt and start all over again from an asian perspective.

[pkrv]

^ Western logic. Does not work like that in Thailand.

Unlearn what you have learnt and start all over again from an asian perspective.

Interesting comment. If I expand out can you point to the errors please?

Pensions are generated in the home country (we are mostly Foreigners on this forum after all) - Pensions rarely if ever keep up with inflation and if you are UK based state pension is frozen at whatever rate it was when you shift to Thailand - These are western rules, this is how it works. I see no errors here.

A lump sum invested will be drawn on eventually (operations, care you name it). Not everyone can run a business nor manage investments (just look at Bingobongo ). Whist there are always exceptions to the rule this source of money will deplete over time. We live in a capitalist society, this is how it works. I see no errors here.

Are you seriously saying rents will not be (much) greater in 30 years time - I see no errors here they will over the long term keep up with inflation.

If you buy for say 10m and properties drop by half in say 20 years (doubtful) you could still buy for 2.5m and have 2.5m, agreed it would be a very mixed up economy by that time, and capitalism would have failed, so anything would go. If it doubles to 20m you can buy for 10m (after shifting the cash out and back in again) and still have 10m. You cannot seriously be saying there is no secondary market at all in Thailand. Agreed all property is relatively illiquid and perhaps slightly more so in Thailand but there are quite a number of estate agents in Thailand who would not be in business if there were not a market. I have just used example figures here - but still see no errors.

If you have investments in a country you are not open to exposure (positive or negative) on exchange rate, i.e. you limit your risk. Ok rates can go in your favour but like many retiring to Spain found out to their cost it can go against you too. A whole load of people retired to Cyprus many years ago and rented. Later they were found living in caves (true story! much to the embarrassment of the UK) - again I see no errors with my logic.

Pensions will be subject to exchange rate fluctuations there will be bad times, during which reserves will diminish. – Again I see no errors in logic here.

Could you assist please and point out where I have gone wrong - I will be in this boat one day and genuinely would like to be best prepared.

<edit - perhaps I should add that if the decison to downsize is taken just as the last penny is spent, you would be a true graduate of bingobongo's school of economics. Some forethought would be required (maybe 2 years? I'm not in that position today so couldn't say) /end edit>

Edited May 30, 2008 by pkrv

[Khun Jean]

^ Western logic. Does not work like that in Thailand.

Unlearn what you have learnt and start all over again from an asian perspective.

Interesting comment. If I expand out can you point to the errors please?

Pensions are generated in the home country (we are mostly Foreigners on this forum after all) - Pensions rarely if ever keep up with inflation and if you are UK based state pension is frozen at whatever rate it was when you shift to Thailand - These are western rules, this is how it works. I see no errors here.

Specific UK rule. Other Europe countries don't freeze pensions but index them with inflation. Some deduct a litlle if you live abroad.

A lump sum invested will be drawn on eventually (operations, care you name it). Not everyone can run a business nor manage investments (just look at Bingobongo ). Whist there are always exceptions to the rule this source of money will deplete over time. We live in a capitalist society, this is how it works. I see no errors here.

That is very individual. Many people are very good at managing their money. Compounding interest is not that difficult if you just use a savings account. Just stay ahead of inflation.

Are you seriously saying rents will not be (much) greater in 30 years time - I see no errors here they will over the long term keep up with inflation.

Pension, income, whatever will also keep up with inflation. In ratio rents will stay the same. (Buying however will get cheaper every year, but that is if you can own it outright otherwise it is just risky business with a change to loose it all)

If you buy for say 10m and properties drop by half in say 20 years (doubtful) you could still buy for 2.5m and have 2.5m, agreed it would be a very mixed up economy by that time, and capitalism would have failed, so anything would go. If it doubles to 20m you can buy for 10m (after shifting the cash out and back in again) and still have 10m. You cannot seriously be saying there is no secondary market at all in Thailand. Agreed all property is relatively illiquid and perhaps slightly more so in Thailand but there are quite a number of estate agents in Thailand who would not be in business if there were not a market. I have just used example figures here - but still see no errors.

Every calculation will not work because future exchange rates are unknown. The real estate market is very illiquid. And as only condos are available for freehold you have no control about for instance the maintenance.

Market is full with 'flippers'. It is not as clear as in most western countries. Even bank foreclosures don't go down in price!

If you have investments in a country you are not open to exposure (positive or negative) on exchange rate, i.e. you limit your risk. Ok rates can go in your favour but like many retiring to Spain found out to their cost it can go against you too. A whole load of people retired to Cyprus many years ago and rented. Later they were found living in caves (true story! much to the embarrassment of the UK) - again I see no errors with my logic.

What about the many people who bought a property and then later lost it because it was not really their own property or build without a proper license. They lost it all!! And that was in a EUROPEAN (Spain) country where everything sshould have been in order. Thailand is a few orders of a magnitude more 'dangerous' for owning anything else than a condo.

Pensions will be subject to exchange rate fluctuations there will be bad times, during which reserves will diminish. – Again I see no errors in logic here.

In the long run they even out and are less important.

If the exchange rate is good, save some local currency, if it is a bad rate live more moderately.

Could you assist please and point out where I have gone wrong - I will be in this boat one day and genuinely would like to be best prepared.

Errors and being wrong are 'wrong' words. It are just opinions and individual experiences and circumstances after all. They can not be projected to other people and places.

With the 'western thinking' comment i meant that the real estate market and people are very very different than in the west. For instance if a place is for sale for 5 million and it won't sell it just stays for sale for that price or even increase in price. No logic at all.

Same with rental places, some are empty for years because they don't except 1000 baht per month less.

It is more comparable to a lotery. They buy something smack on a very high price and wait until they sell (win the lotery).

It makes it very dificult to judge a price. I have seen land next to eachoter that had a difference in price of 5000%. More often a price difference of 50-100% is common.

With condos it is the 49% that will be the first concern. If you are within that quota you are lucky. But still areas fluctuate wildly and maintenance is between good and non existend. It is a big factor in resale price and a very big unknown.

Look at the thread about rental prices in Bangkok and see my entry. You will notice a big difference with the rest.

That is the best thing about patience and constantly looking around for good deals.

Edited May 30, 2008 by Khun Jean

[yorkieb]

By my rough calculations the OP has a monthly income of approx 300,000 Bht. Seems to me he can rent a great place for 35,000 per month, live an extremly good life in Thailand and afford to replenish his capital monthly above the rate of inflation. In addition if he keeps his nose clean for 12 months a substantial buffer would be built up giving a slush fund for emergencies or indulgense through the preceeding year. On that basis who in their right mind would buy anything in Thailand. The esense of the OP question IS based on his faiancial stiuation should he invest in such a volitile and unpredictable envirionment or simple risk very little and live with the chips he has cashed in. I think he has already answered his own question.

[wolf5370]

I thought that only one person could have a usufruct. If I'm wrong then I'd like to know if more than one person is listed then who's lifetime is the usufruct based upon? The first person that dies? The last person that dies? Perhaps usufructs that expire based upon someone's lifetime are not allowed when more than one person is listed and are based instead upon a maximum of 30 years.

No, a USUFRUCT can be for any amount of people of businesses. It is an ancient Roan law that has been adopted by Thailand (and many other countries). It was adopted in Thailand to protect aggricultural buinesses (farms) initially that build a business on land they do not own - if you rent/lease then officially its a grey are as to who owns any produce on the land - i.e. fruit, rice, grain etc. This was usually protected by contract separate from the loases which meant length legal battles etc if it all goes ape. However, USUFRUCTs give the USUFRUCTee the full control of the lot including ownership of all produce etc. You just still don't own it.

The USUFRUCT lasts until the last person (or business) dies (closes) or it is set aside by all those concerned. As it is registered it is already prescribed in law so the terms are easier to enforce (in theory). There was some concern that some courts could consider that a USUFRUCT between spouses (husband and wife) can be considered part of the estate and can be split or annulled. From research I have done on this, it is actually incorrect, but hard to argue with a judge. However, if anyone else not part of the spousal relationship (even a child of the couple) is addd, then it can NOT be considered part of the married esate and has to be held outside of the divorce proceedings.

I have done research on this with Thai property lawyers specialising in USUFRUCTs as I will be using this for land I currently 'own' and land that I am about to buy (a new house - I'm moving).

There is nothing stopping you having both protections - both the USUFRUCT and a lease agreement. A company owning the land can also give you a USUFRUCT that would also allow some other options.

[pkrv]

Thanks for taking the time to respond Khun Jean, it is deeply appreciated.

I should have stated up front I am a 49% foreign ownership quota in Bangkok and am UK based. Unfortunately in the UK pension funds have been collapsing left right and center, being paid anything at all could now be perceived to be a bonus, they are almost all terribly underfunded and that includes the ones that did not take pension holidays! I can however only speak from a UK perspective.

Compound interest means your money just stays still in real terms; every withdrawal diminishes your wealth.

If your pension income (if it actually materialises) keeps up with inflation, great you can pay rent based on this. But I have seen people who have rented a property hoping to buy it later on being left further and further behind - subjective but true statement.

I think you missed my point on this one - You have no future exchange rate issues if you have assets in the local currency (for me 49% freehold in a condominium)

I sort of don't wish to become embroiled in the House/Land ownership issues again. I fought heavily to separate out the 49% condominium issue on this forum and earned some bitter enemies in doing so. I simply own a ferang 49% quota unit, that’s it.

On the whole I can see my reserves diminishing over time (and my assets are pretty good). I agree with you that the market in Thailand does not mirror the market in the west, but neither do I believe that nothing ever sells, your views conflict with people like irene who buys and rents as investment (quite successfully).

In a way I sort of agree with yorkieb but for different reasons. If the guy is as unsure as he is RENT for a few years and then make up your own mind. After all he may not settle in who knows. But messages of doom/being ripped off whilst not uncommon anywhere on the face of the planet are not exactly the whole truth either. There are good deals to be had here too. The best advice anyone can give is to 'test the market' and see for themselves. There has been recent evidence that it is actually quite difficult to buy property here in well run, and in demand condominiums (49% quota).