Should I Rent Or Should I Buy

[beginner]

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

Not necessarily. It depends on the rate of inflation and the rate of interest you receive.

You can buy Index Linked Certificates from UK National Savings up to 15k per issue. Two issues are available at present which means that 30k can be saved with a guarantee of increasing in line with the old RPI not new CPI. After one complete year a rate of interest is also applied meaning that you beat inflation as measured by RPI.

Several issues are normally released each year and you can buy 15k in each one. Totally tax free. You are not required to mention your holdings on your UK tax return.

You can also get 6.25% tax free in offshore accounts such as Nationwide International. This exceeds the current rate of inflation in the UK.

Higher rates can be obtained by taking more risk.

The biggest risk to your wealth if you are an expat with income from abroad is probably exchange rate fluctuations which can make a huge difference and which are very difficult to predict and hedge against effectively.

On the rent versus buy conundrum. Some people simply feel more secure owning a condo and the financial considerations take second place. Good luck to them.

Others claim that many condos and houses can be rented for possibly 3% of the capital value. Properties in really desirable locations such as beachfront may achieve more but rarely more than the rate of interest on perfectly safe and risk free offshore bank savings accounts. So they argue, why tie up capital in an illiquid 'investment' in a very uncertain political climate?

Renters also have freedom to relocate at short notice and with minimum stress and cost. This can be quite an advantage in Thailand where the neighbours from hel_l or a noisy building site/karaoke bar can pop up nearby without warning.

[Khun Jean]

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.

One major problem with a usufruct..... you can't sell it. So it is worthless in that respect.

If it is fulfilling your wishes until the end, that would be great. But you are not free to make a choice anymore, it is locked up in a usufruct and no way to get it available again. Not a problem when you have enough money but if it is your life savings it better be a very very good location and worth every penny until the day you die.

[Khun Jean]

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.

The condo is the only secure way, no doubts there. Selling it is a big questionmark as the market is not predictable at all. Just don't tie up to much in it and it would leave you with some choices.

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).

I know irenes strategy and it is a good one. Only condos in highly wanted areas. Can't really go wrong. Except i think doing the same in London would be more of a safer environment to do that. If you buy to rent other places can give equal and better roi's. Having it in Thailand makes you less perceptible to exchange rates. I feel a mix would be best. Exchange rates can be bad and good. Even them out by owning property in different countries. I would think the US would be a good place to start investing in property. Dollar is low AND prices are low. Can not get any better than that for someone that can buy (preferably cash).

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).

I agree with that 100% and is what i am saying as long as i remember. Don't buy when you still wearing very rose tinted glasses. Reality should sink in before making live decisions.

My estimate is that you would need at least 6 months even better a year to find a place to live.

[BEENTHEREDONETHAT]

I agree that you should rent for 6 months or a year and use that time to insure where exactly you would like to live. You can also use that time to shop around and find the best place for you. Location can be one of the major issues when buying, the more desireable the location the higher the price. But I think you will find the better locations, like beach front will hold up better and I think have a better chance of being maintained. They will also increase most in value as they are not making any more beachfront.

It seems hard to believe that anyone truly thinks the cost of housing and the cost of rent will not go up for the next 30 years. With construction cost going up 15 to 20% a year how can prices stay the same?

Some say you should rent and then you can leave at any time, keep in mind the owner can decide not to continue renting to you also and you will have to leave whether you want to or not. Unless you have your lease registered and in excess of 3 years long.

Buying a condo in a good location with good management and association rules and in the 49% is the way to go. Unless you have a Thai spouse and don't mind having everything in their name. In that case you can do most anything you want and can afford.

Good luck whichever way you go.

[beginner]

It seems hard to believe that anyone truly thinks the cost of housing and the cost of rent will not go up for the next 30 years. With construction cost going up 15 to 20% a year how can prices stay the same?

Maintenance costs of condos are also subject to inflation.

The current rate in Raimon's Pattaya properties is 40 baht sqm. A 100 sm unit is 4000 per month, 250 sm is 10,000.

In certain Jomtien properties, trying to get long overdue maintenance done has run into the reluctance of some owners to pay maintenance fees and they also resist all attempts to increase the fee in line with actual costs.

Some owners simply do not have the cash. They used up their resources buying and are now trapped in units that could only be sold with great difficulty and probably at an overall loss.

Prime units in prime locations are less risky but in Thailand it is a great deal easier to buy than to sell.

[mikethevigoman]

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.

This is probably the best,most honest post i have ever read from a house owner in thailand,.well said,.great advice,.

[dave111223]

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.

8.5%?? What online banks are these?

[beginner]

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.

8.5%?? What online banks are these?

ASB New Zealand. try asb.co.nz look at savings rates.

Fastsaver FastSaver

Balance Rate All Credit Balances 8.00 % p.a.

You can operate the account on the internet. The biggest risk factor is the exchange rate but it has recently been quite stable against the baht.

Edited June 1, 2008 by beginner

[DragonQuest]

RENT

[GuestHouse]

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.

Cynicism has nothing to do with it, good sense does.

Ask yourself, can you afford to walk away from the Bht9.6 million that the house would cost to buy?

If not Rent.

[dave111223]

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.

8.5%?? What online banks are these?

ASB New Zealand. try asb.co.nz look at savings rates.

Fastsaver FastSaver

Balance Rate All Credit Balances 8.00 % p.a.

You can operate the account on the internet. The biggest risk factor is the exchange rate but it has recently been quite stable against the baht.

Looks interesting, do you know if non-new zealand residents can apply?

[dave111223]

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.

Cynicism has nothing to do with it, good sense does.

Ask yourself, can you afford to walk away from the Bht9.6 million that the house would cost to buy?

If not Rent.

I can't afford to walk away from anything, that's why i kept my money in a sardin can under the bed.

[hanibal7]

pkrv.

good point with your post.cost of living in certain parts of thailand has and will continue to rise for a while.the influence is the strenght of the baht against other currencies,based on expats retiring here with savings/pensions.people that work here are not as bad off if the baht strenghtens.

i have been ehre for 5 years and i reckon i am spending about 2,000 baht a week more.i am not affected with the low exchange against the pound because i am still living on money in thai bank which was 70 baht to the pound.whgen i have to get money from the uk and exchange then i could have only 63 baht.every bodies different in looking at this situation.i have made about 800,000 baht profit on my house purchase so if i sold the profit would give me about 5 years rent if i got into trouble,so you are right to say you can downgrade if you have too.so my suggestion is to buy but look for a bargain,like i did.

[BEENTHEREDONETHAT]

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.

8.5%?? What online banks are these?

ASB New Zealand. try asb.co.nz look at savings rates.

Fastsaver FastSaver

Balance Rate All Credit Balances 8.00 % p.a.

You can operate the account on the internet. The biggest risk factor is the exchange rate but it has recently been quite stable against the baht.

Looks interesting, do you know if non-new zealand residents can apply?

Dave111223

Non New Zealanders can hold accounts, although it is necessay to go to New Zealand to open the account. Have been dealing with them for several years and find them very pleasant to deal with and the best interest rate around. Typically when we call to have money wired it is here in two hours. That is if you call early in the morning here, afternoon there.

Google New Zealand interest rates and it will give you rates for everything. Be aware the exchange rate can cost you if it goes against you. Right now it is about 25Baht to NZD.

[Naam]

Non New Zealanders can hold accounts, although it is necessay to go to New Zealand to open the account. Have been dealing with them for several years and find them very pleasant to deal with and the best interest rate around. Typically when we call to have money wired it is here in two hours. That is if you call early in the morning here, afternoon there.

why would anybody travel to NZ for an account? i keep NZD in Singapore on an overnight rate of (latest) 8.345%. for a weekly fixed deposit my bank pays 8.495%, 2 months 8.63%, 6 months 8.915% and 12 months 9.00%.

[appleman]

Instead of putting down 9.6 million baht on a house this money could be invested. At a reasonable 4.5% return you would make (albiet before taxes) enough to pay the 35,000 baht rent on your house. And you would have the principle always available. Things happen, relationships change, governments change, neighborhoods change, you change. If you have 9.6 million baht locked up in real estate you may or may not be able to take the money and run if you needed to. Saying that, I own a house here. But I have been married for 40 years to the same Thai woman and my grown children, who would inherit the house, have both Thai and US citizenship. And I have enough so that I could walk away from the house if I had to. There is no one answer to whether one should rent or buy. Each person's situation is different. In your case, I don't feel you have been here long enough to know what your situation is. In that case I would rent until I knew more.

[insideleft]

An additional issue that concerns me is health care and reselling potential.

I'm in my early fifties. I wonder if as I get older, should I develop illnesses that Medical Insurance companies in Thailand may refuse to sell me policies to cover treatment and care, whether I could fairly easily sell a property if I decided to leave Thailand. My country of origin has universal health cover.

This health issue is perhaps the greater concern for me when I consider the longer term.

I'm wondering that going to Thailand may well involve either running back to my home country for treatment and burning up the family's wealth, or allowing myself to die much earlier. While I am playing with projections, dying earlier and leaving the family better off instead of keeping a sick or disabled body alive seems more preferable.

I am much less well-off than this thread's father, and as I understand it, second hand property can be difficult to sell in Thailand. Please remember, my affordability is between 3 & 4 million baht.

I don't have the wealth to walk away from these amounts, but the idea of renting when I can buy is an uncomfortable one. Being unable to buy is the cause of not owning anything yet. Affordability is one of the main reasons I plan on moving to Thailand.

E r R

Non New Zealanders can hold accounts, although it is necessay to go to New Zealand to open the account. Have been dealing with them for several years and find them very pleasant to deal with and the best interest rate around. Typically when we call to have money wired it is here in two hours. That is if you call early in the morning here, afternoon there.

why would anybody travel to NZ for an account? i keep NZD in Singapore on an overnight rate of (latest) 8.345%. for a weekly fixed deposit my bank pays 8.495%, 2 months 8.63%, 6 months 8.915% and 12 months 9.00%.

[ade100]

2.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.

Why not invest the 9.6M in a property that you can own (say in another country) then use the rent generated from that property to pay your rent in Thailand.

[swain]

If married.... I would say buy.... I built my wifes credit over three years... and we bought a house on a thirty year mortgage which is much cheaper than if we rented the same style house next door.. if we wanted to move... we would rent out the house for more than the mortgage payment... seems to me to be the best of both worlds.

[roadking95]

2.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.

Why not invest the 9.6M in a property that you can own (say in another country) then use the rent generated from that property to pay your rent in Thailand.

You may be liable for non residents tax if you do that, in Australia for example if you receive rental income that is profit from a property as a non resident you pay 30% tax on it.

[gmac]

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.

You can only downsize if you can find a buyer for your property. With all the new building constantly going up your old monolith may not be so easy to shift!

[bingobongo]

whats the rush? no matter what som chai the builder says

lets see, Hong Kong, Australia, Singapore and Vietnam.......and soon LOS will be added to the list

Home Buyers in Asia Play the Waiting Game

With prices expected to continue falling in Asia, it's no surprise that potential buyers are happy to play the waiting game.

http://www.cnbc.com/id/24886079

Edited June 1, 2008 by bingobongo

[thaigene2]

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.

Don't be so sure. I am paying the same amount of rent now (for a big house) that I paid eight years ago. Maybe I'm lucky - but other people I've talked to (and many others on this board) say renting is cheaper - there is also a mathmatical table somewhere here on TV that shows you why/how.

I do agree with your main point though, that it is good to know what your pension income will be and if you can pay cash now to assure your shelter, then that gives you more control over your life. I'd agree more so if that was in one's home country - sadly Thailand is not "our" home country - and they can and do change the rules about "living/retiring" here quite regularly as you are aware.

If you have some big 300-400 K per month pension income it will 'probably' never affect a retiree here - short of a xenophobic 'get the white guys' thing happening..

But for everyone else there is lots of uncertainty - and that ain't good considering that it ain't cheap to buy a condo here.

[Flapman]

The increasing cost of oil is driving up the cost of building materials. Surely, sooner or later, property prices will reflect the current (and increasing) replacement cost. If that happens, then that makes some houses look well priced right now. OK, oil may be in a price bubble right now (some say it isn't!), but the long term sees more expensive diesel, cement, iron. Cost per rai is rising much less steeply than the build cost. Anyone currently involved in a build project got any hard figures for recent increases in cost of materials here in LoS?

[Scott123]

.....i have made about 800,000 baht profit on my house purchase so if i sold the profit would give me about 5 years rent if i got into trouble,so you are right to say you can downgrade if you have too.so my suggestion is to buy but look for a bargain,like i did.

1. you haven't make any profit until your property is sold.

2. if are in a hurry to downgrade, you will have to sell your property at a "bargain price" too. Why you think you can hunt for a bargain property, while selling your old property at a premium price?

[Naam]

the decision owning or renting is based on the lifestyle of an individual. it makes no sense to discuss the question "what is better?"

[CaptHaddock]

the decision owning or renting is based on the lifestyle of an individual. it makes no sense to discuss the question "what is better?"

Not true at all. Not counting speculators, there are two classes of buyers: those rich enough to be able to consider housing costs purely as an expense and those who must also take into account the long-term effects on their net worth. If you are fortunate enough to count yourself among the happy few, then my hat is off to you. However, most of us find ourselves in the latter camp. For us, buying or renting can not only be "better," it can make the difference between being solvent or not. Examples of bankruptcy and foreclosures due to bad housing decisions abound in the US newspapers these days.

At a first approximation, buying is better if it is cheaper than renting. But to do a proper analysis you have to consider carefully all the variables. For example, people routinely overlook the opportunity cost of a down payment, which can be considerable over the long haul. The best online buy vs rent calculator I have found comes from the New York Times. While it expects dollars, you can use baht just as well. It accounts for all the variables.

http://www.nytimes.com/2007/04/10/business...NT_GRAPHIC.html?

In addition to the purely financial analysis, which, I repeat, is crucial to those of us for whom housing may represent the largest chunk of our net worth, there are the special risks to consider for Thailand: lack of transparency in the real estate market, uncertain privilege of residence for many expats, generally undeveloped resale market in Thailand, limited availability of financing for expat purchases, restrictions on expat ownership rights, poor culture of building maintenance, political instability, and so on. While I don't currently live in Thailand, from afar, renting there looks like an overwhelming bargain to me: it's cheaper and less risky. Indeed, the attractiveness of renting in BKK is one of the main reasons I am considering retiring there in a few years.

Edited June 7, 2008 by CaptHaddock

[Naam]

the decision owning or renting is based on the lifestyle of an individual. it makes no sense to discuss the question "what is better?"

Not true at all. Not counting speculators, there are two classes of buyers: those rich enough to be able to consider housing costs purely as an expense and those who must also take into account the long-term effects on their net worth. If you are fortunate enough to count yourself among the happy few, then my hat is off to you. However, most of us find ourselves in the latter camp.

we are not in disagreement. i repeat that it depends on the individual lifestyle and of course the financial means which may vary.

[ray08]

The increasing cost of oil is driving up the cost of building materials. Surely, sooner or later, property prices will reflect the current (and increasing) replacement cost. If that happens, then that makes some houses look well priced right now. OK, oil may be in a price bubble right now (some say it isn't!), but the long term sees more expensive diesel, cement, iron. Cost per rai is rising much less steeply than the build cost. Anyone currently involved in a build project got any hard figures for recent increases in cost of materials here in LoS?

Oil is up, but property prices down in USA, Australia ,UK , the negative effect of oil prices is the increase in the cost of goods , leaving less money in consumers pockects,

[boogie]

Should I rent or should I buy ?

Here's an interesting perspective

Paul McCartney-Heather Mills divorce.

After 5 years of marriage, he paid her $49 million On the other hand, Elliot Spitzer's call girl Kristen charges $4,000 an hour. Crazy, right?

But...

Had Paul McCartney employed Kristen for 5 years, he would've paid $7.3 million for an hour of sex every night for 5 years (a savings of $41+million).

Value-added benefits are: a 22 year old hot babe, no begging, no coaxing, never a headache, wide open menu, ability to put BOTH legs around you, no bitching and complaining or 'to do' lists. Best of all, she leaves when you're done, and comes back the next day, ready for another round. All at 1/7th the cost, with no legal fees.

Is it just me, or is it better to rent?