Bye . Bye , Banks

[midas]

You know, one thing many westerners fail to take into consideration is, many many people buy realestate with no intention of selling it, ever. Take my wife for instance. The day after she moved into our house she put up a For Sale sign for about 80% more than she had just paid. 3 years later someone wanted to buy her house for that price and she was mortified and promptly took down the sign. It's back up now with a price adjustment higher and don't forsee anyone being to bothered anytime soon.

But Lana, given the laws about landownership for farangs, it's fair to guess most of these will be owned by Thai's ?

With the increasing prospects of a fair number of people heading back to live and work in Isaan,

this is contribute to a general slowdown in places like Pattaya and

it does make me wonder how many shop house owners will be able to afford to have the quite unique Thai

perspective of completely ignoring the principles of the time value of money?

[lannarebirth]

You know, one thing many westerners fail to take into consideration is, many many people buy realestate with no intention of selling it, ever. Take my wife for instance. The day after she moved into our house she put up a For Sale sign for about 80% more than she had just paid. 3 years later someone wanted to buy her house for that price and she was mortified and promptly took down the sign. It's back up now with a price adjustment higher and don't forsee anyone being to bothered anytime soon.

But Lana, given the laws about landownership for farangs, it's fair to guess most of these will be owned by Thai's ?

With the increasing prospects of a fair number of people heading back to live and work in Isaan,

this is contribute to a general slowdown in places like Pattaya and

it does make me wonder how many shop house owners will be able to afford to have the quite unique Thai

perspective of completely ignoring the principles of the time value of money?

I guess some people put their property "in the bank", but I don't know any. I have never observed a real estate transaction here that wasn't a cash sale. I know sales with attendent mortgages exist, but from my own observations that seems to be a smaller part of the market. I could be wrong due to my fairly narrow perspective however.

Personally, I would like to see a return, or a start of owner financing, both here and in the ststes. RE contracts used to be a nice source of income for me and I wouldn't be averse to doing it again, given proper LTV ratios.

Edited February 17, 2009 by lannarebirth

[12DrinkMore]

The above post was submitted by Gary A. to rebut the scaremongering regarding real estate slumping in Thailand. His point of course, was that shophouses were unaffected pricewise during the 97 crisis. But, in less than a decade, these Shophouses jumped up in price from 1.4 million to 4 million. The should scare the life out of anyone owning a shophouse going into the current crisis. If the data submitted is anywhere near accurate, we have some scary times ahead. If somebody considers this post as scaremongering, so be it but I will not be investing in a shophouse any time soon. In fact, most all property can be tracked logically using an example such as this one.

Yep, there has been a boom in the tourist areas of Pattaya, Phuket, Hua Hin and this has resulted in the property prices rising too much. As far as I can work out, almost all of these shophouses are rented out and not owned by the people running the business. The way I think the economics of it works as follows

- the owner of the land borrows money from the bank and builds say 10 shophouses.

- now these shophouses are very primitive in construction. They are all the same. You go into any one of them all over Thailand and you know EXACTLY where the toilet is, where the stairs are etc. They surely cannot cost more than around 4,000 Baht/square metre to construct, probably less, there is nothing QUALITY about these boxes, and any finishing is left to the renter. With a floor area of maybe 160 square metres, that is a maximum of 640,000 Baht construction cost per unit.

- Now they are rented out at between 7,000 and 30,000 Baht/month upwards depending on area. So lets take the lowest price, giving an income of 84,000 Baht/year. This will cover the mortgage costs of maybe 40,000 Baht and have some 40,000 Baht profit.

- Rent out 10 and it's happy days! 400,000 income per year for just collecting the rent. And this is at the low end of the scale.

- But when it comes to selling, well, maybe the owner is just happy with the current situation? But for 3,000,000 Baht we can talk about it? After all, it would pay off 50% of the outstanding mortgage and suddenly boost the income up considerably. BUT if you are already living comfortably with the car, house, garden, then why bother to sell? Oh ok, we'll put the price up to 5,000,000 Baht instead.

I think this is why the rents are so low in comparison to the asking prices of the properties. The owners are happy to earn a comfortable living, paying off their mortgages and still owning the assets. They are generally not property developers trying to earn 200% plus on building and selling, because they know that the average Thai cannot afford this and it would be long term not beneficial for them anyway, as it would allow others to hold assets!. Better to keep the assets in the (Chinese) family.

Anybody any thoughts, or is that a load of rubbish?

[Chaimai]

- the owner of the land borrows money from the bank and builds say 10 shophouses.

- now these shophouses are very primitive in construction. They are all the same. You go into any one of them all over Thailand and you know EXACTLY where the toilet is, where the stairs are etc. They surely cannot cost more than around 4,000 Baht/square metre to construct, probably less, there is nothing QUALITY about these boxes, and any finishing is left to the renter. With a floor area of maybe 160 square metres, that is a maximum of 640,000 Baht construction cost per unit.

- Now they are rented out at between 7,000 and 30,000 Baht/month upwards depending on area. So lets take the lowest price, giving an income of 84,000 Baht/year. This will cover the mortgage costs of maybe 40,000 Baht and have some 40,000 Baht profit.

- Rent out 10 and it's happy days! 400,000 income per year for just collecting the rent. And this is at the low end of the scale.

Anybody any thoughts, or is that a load of rubbish?

Agree entirely with the logic and there is, of course, a lot of old (Chinese) money involved.

Can I just clarify the maths - I thought that the shophouses were typically 4m x 12m = 48 sqm x 2 storey = 96 sqm. I guess a 3 storey would get near to the 160 sqm quoted. I am happy to be corrected on these numbers.

10 shophouses @ 7k p.m. = 840k p.a. overall or a 13% return on capital - not bad for a low-end rental return.

[12DrinkMore]

Agree entirely with the logic and there is, of course, a lot of old (Chinese) money involved.

Can I just clarify the maths - I thought that the shophouses were typically 4m x 12m = 48 sqm x 2 storey = 96 sqm. I guess a 3 storey would get near to the 160 sqm quoted. I am happy to be corrected on these numbers.

10 shophouses @ 7k p.m. = 840k p.a. overall or a 13% return on capital - not bad for a low-end rental return.

And I can give an example that I personally know from the opposite end of the scale.

Landowner chucks up six 4*10 metre single storey rabbit hutches, thin walls, no front and the cheapest roof available. Maximum cost for the lot maybe 600,000 Baht. There was NOTHING in these, no tiling, no windows not even paint on the walls. They have been rented out for 35,000 Baht/month, and the incoming business had to completely fit them out. So the owner now runs around in his Benz and collects 2.5 million Baht/year. And get this one, if you, as Farang business owner, want a receipt for the rent to set off against business income tax, the landowner will give you a receipt for 60,000 Baht/year!!!

The Thai businesses don't seem to care about tax receipts etc etc as they don't need work permits and all the rest....

And any complaint will see your lease not renewed...........

[Chaimai]

Landowner chucks up six 4*10 metre single storey rabbit hutches, thin walls, no front and the cheapest roof available. Maximum cost for the lot maybe 600,000 Baht. There was NOTHING in these, no tiling, no windows not even paint on the walls. They have been rented out for 35,000 Baht/month, and the incoming business had to completely fit them out. So the owner now runs around in his Benz and collects 2.5 million Baht/year. And get this one, if you, as Farang business owner, want a receipt for the rent to set off against business income tax, the landowner will give you a receipt for 60,000 Baht/year!!!

I know one Thai who build 10 resort/short-time rooms for 2m Baht i.e. 200k each (He owned the land already) Reasonable standard and that included the furniture - double bed, fridge, dressing table, wardrobe, small table and 2 chairs. Walk in tiled shower and toilet.

Charges 500 Baht a night. Needs 400 nights (in simplistic gross terms) to cover this cost. At 25% occupancy that is less than 4.5 years add another 50% to cover operating costs and he still gets pay-back in less than 7 years.

[bartender100]

BROKER NEWS Lloyds Banking downgraded to sell from reduce by NCB, target price cut to 45p

Price at the moment is 51p sell, sell, sell. LOL

[Chaimai]

BROKER NEWS Lloyds Banking downgraded to sell from reduce by NCB, target price cut to 45p

Price at the moment is 51p sell, sell, sell. LOL

Yes, follow the herd !

Ooops ! Price up to 57p

[Jumber]

Nothing in life is 100% safe, even life itself. The airplane you fly in with may crash too. It does happen.

Can not agree more. You knew from the beginning what risks you faced.

[bartender100]

BROKER NEWS Lloyds Banking downgraded to sell from reduce by NCB, target price cut to 45p

Price at the moment is 51p sell, sell, sell. LOL

Yes, follow the herd !

Ooops ! Price up to 57p

Well were from now?looks like the broker was right

[ray23]

Well since the question was about banking do what you feel comfortable with I have been doing the 65K a month for six years never had a problem. I see very little advantage to putting 800K in an account that you don't even get interest on.

Bank have failed since and before this crisis in the states FDIC insured up to 100K dollars. Unless I have missed somthing 29 since the criss started and there will be more. A freidn worked at one of them and lost his job a a result of it. But the bank didn't stop operating, it was operated by the feds.

Its' your money do what is going to give you peace of mind

[Chaimai]

BROKER NEWS Lloyds Banking downgraded to sell from reduce by NCB, target price cut to 45p

Price at the moment is 51p sell, sell, sell. LOL

Yes, follow the herd !

Ooops ! Price up to 57p

Well were from now?looks like the broker was right

Good effort bartender. Where from now could be anywhere, but remember - since 17th Feb the FTSE dipped circa 15%. I bet the broker didn't forecast that figure.

What we have learned is that markets go up.... and they go down, they go up..... they go down. Astrionics, it is not.

Edited March 7, 2009 by Chaimai

[hhgz]

McDonald's has added one more item to its $1 menu: a share of Citibank stock.

[quadisking]

That's one of the reasons I use the 65,000 THB per month income option. The money comes in, the money gets spent... no questions about the security of savings, unless you figure that every country is more or less in the same boat :-(

It's 40,000 baht per month, NOT 65,000.

[Merangue]

That's one of the reasons I use the 65,000 THB per month income option. The money comes in, the money gets spent... no questions about the security of savings, unless you figure that every country is more or less in the same boat :-(

It's 40,000 baht per month, NOT 65,000.

I thought the 40k was only for a married couple set up and the 65k was for a single retiree

[Lasic1]

Hello friend: You're assuming the Thai government will have the monetary reserves to guarantee all the bank deposits in Thailand? Also to what amount will they guarantee? I wouldn't recommend keeping much money in any Thai bank no matter what the government says. Especially with a volatile currency which could be on the brink of devaluing. As I see it their main source of revenue is tourism and maybe rice. Declines in either source plus defaulting loans from construction projects and commercial ventures could easily deplete their reserves to emergency limits. Keep your money in pounds or dollars and use a debit card to cover your expenses in country.

best options .

with the requirement to have 800,000 tb .

tucked away in a thai bank ,

for the purpose of obtaining a retirement visa .

worse case senario.

what if thai banks follow ,

the trendy ,yuppy , western banks ,

and declare themselves , BUST .

could we expect the thai goverment ,

to bail out the thai banks ??.

as the righteous , british goverment has { out of our pension funds }

our can we kiss our 800.000 tb . bye bye ..

and replace it , from our own finances ..

as per visa , requirements ,of 800.000 bt

any legal eagles , on board ??

sweet dreams .

What a load of cr4p. More unnecessary panic-mongering. Check your facts first - 2 clicks got me to this:-

BANGKOK - THAILAND'S cabinet on Tuesday agreed to extend a guarantee on bank deposits by two years until 2011, to build confidence in the sector amid the global financial credit crisis, Finance Minister Suchart Thanda-Thamrongvech said.

The global credit crunch has left countries worldwide with a shortage of funds and created fear among investors that their money will not be safe in banks. 'The cabinet has approved the finance ministry's proposal to extend the 100 per cent guarantee on deposits to Aug 10th, 2011,' Mr Suchart said.

Now get back to your dreams/nightmare.

[longtom]

Hello friend: You're assuming the Thai government will have the monetary reserves to guarantee all the bank deposits in Thailand? Also to what amount will they guarantee? I wouldn't recommend keeping much money in any Thai bank no matter what the government says. Especially with a volatile currency which could be on the brink of devaluing. As I see it their main source of revenue is tourism and maybe rice. Declines in either source plus defaulting loans from construction projects and commercial ventures could easily deplete their reserves to emergency limits. Keep your money in pounds or dollars and use a debit card to cover your expenses in country.

You might want to learn a bit about the Thai economy before giving advice to others:

BOT International Trade Figurs

Tourism and rice