Buying Land - Which Way To Go?

[skipdivils]

I am interested in buying land in Samui as an investment. I have many questions after my last visit there. Out of the following options:

1. Buy in a gated villa community with an established company and get the '12%' annual return.

2. Buy an individual plot of land (0.5 - 1 rai) that has road access, water and electricity already and build a villa and then sell it for profit.

3. Buy a bigger plot of land, put the road and electric/water service in, clear it, divide it up and sell it for profit. (or build a few villas on it).

4. Just buy a bigger piece of land (6 rai?), wait a year or two, divide it up into smaller plots and sell.

Out of these, which is the best way to start as someone who wants to invest in Samui and make some cash. My goal is not to get rich quick, but rather start a company (with my Thai partners) that will make money off of one deal, and then move on to the next and so on and hopefully over the course of time (5 years???) I will be able to live there full time and enjoy a pretty reasonable life, making decent money.

Or is it just better to go and invest somewhere smaller and less developed, for future potential?

Any thoughts here would be greatly appreciated. Thanks.

[Tornado]

Depending on your finances, I would go with option 2,3 or 4. Option 4 is a lot easier and a lot less stressfull, but you obviously have to have the money to support yourself, while waiting for your investment to "mature".

Good luck to you!

[LivinLOS]

2 or 3 are both good.. I dont have faith in the continual rise of property at current rates.. Personally I am gloomy on global economic outlook for the 2 -5 year timeframe so would avoid sitting on anything too long if your risk adverse..

[Erwin1011]

Stay away from any land investment now! wait about six months to a year. we are currently living in a very similar bubble as in 1997.

[skipdivils]

Thanks for the help so far.

So what kind of bubble was there in 1997, what happened then?

Sounds like the best way to go is to buy some land, do something with it (i.e. build and sell homes/villas, or clean it, divide it and sell it). Is this a pretty safe way to make money?

How long would it take, in your opinions to turn around the money. I was thinking that within two years of buying the land, I could have a villa built and sold and make a nice profit. What do you think?

Also, if I were to spend, for example, 3 million baht on a rai of land, and then 4 million baht more to builed two villas on that rai, how much do you think I could sell those villas for? Just an example.

Thanks again for the help, I hope the replies keep coming. cheers.

[Khun Jean]

The advice is go for number 5.

5. Buy some appartments or houses in my home country and rent them, and spend that money in Thailand.

If you have some money why not invest it in your own country where the rules of ownership are much more clear and in your favor.

I have a few appartments in managed buildings in the Netherlands. Mine still have a large mortgage but i still make a profit on it. Without the mortgage i can have a very very luxery lifestyle here in Samui.

In about 20 years they are fully paid (by my tenants) which will gibve me a good pension.

In my humble opinion that is the best way to invest your money. If things not work out here in Thailand you still have something to fall back on.

[skipdivils]

Good advice.

I already have one rental property in my hometown of Toronto, Canada. I was going to go that route all the way. My plan was to have four rental properties here in Canada, then do exactly what you said. That is, use the profit to retire in Thailand and live off the monthly rental income from back home.

But my thoughts have recently changed. It seems that the international markets, while more risky, provide far more potential for return. And they are growing much quicker. The bottom line is, I don't really wanna wait for 20 years for my properties to be paid off to retire in Thailand. I would rather do it in 10 years, or 5. I would definately still keep the rental property I have now in Toronto, but instead of purchasing my next one here, I would do it somewhere where the market is more vibrant.

Don't you think that this makes sense? I am interested to know your opinion on this, as you seem to know what you are doing.

Still looking for more comments from anyone too. Thanks.

[fisherd3]

It is against the law of Thailand for an alien to own land in Thailand, whichever way you dress it up this basic fact would stop me from investing in land in Thailand big time.

Forget Thai partners as my TGF says 'me Thai you farang'.

Edited January 22, 2005 by fisherd3

[Khun Jean]

Fisherd3 i totally agree.

When i see what kind of prices you have to pay for a piece of land on Samui, i get the feeling it is already overpriced. But i can be totally wrong too. It all depends on tourism, and ownership rules. If you buy land here in Samui your potential customers probably are not Thai. Peope who want a holiday residence or a place to retire are the ones you are going to sell to. They have to go through a lot to get control of the land and property, many will go for a property somewhere else where ownership is not against the law.. If the government decides to make it even more difficult like not allowing companies to be set up just for the purpose of "owning" the land prices will fall. This means you are very dependent on the decisions this or next governments are going to make. At this moment the goverment and the voters are very nationalistic (sp), the change of things changing in favor of foreigners are very small.

You will also have to go through the whole proces to be sure that what you buy with your money is really yours. And that not somebody in a few years claims the land is his and you loose it all.

The big profits on Samui have already been made, will it go on, or collapse. Nobody knows.

I suggest when you really want to do it, do a trial with a small piece of land and get a feeling how everything works (or not works) here. I promise you you will have some suprises you never thought of.

The saying here is:

If you want to make a small fortune, bring a big fortune.

Now you are warned, use these warnings and gather information as much as you can before you even spend 1 cent on buying land.

[sbk]

The bubble of 1997 was a result of overextension by banks on their loans, the baht devalued from 25 baht to the US dollar to 55 baht at one point. I don't know about Samui but here on Phangan the value of land didn't go down at all. The problem with your "buy one rai for 3 million" idea is that there really aren't that many one rai plots for sale. If you are really keen on buying land then your best bet would be to buy a bigger piece of land and subdividing it in the future.

[Khun Jean]

Sbk, you are right and it might be a way of making a profit.

Most people are not looking for 20-30 rai of land. Plots of 1/4 rai to 1 rai are much more easy to sell. BTW 1 rai is 1600 sqm.

What i also see is that many large plots are not kor ror sam kor or chanote. In my opinion the only two landtitle deeds a foreigner can consider. There are ways of upgrading a landtitle but that should be done before the deal is made final and probably easier said then done.

[fisherd3]

Fisherd3 i totally agree.

The saying here is:

If you want to make a small fortune, bring a big fortune.

Now you are warned, use these warnings and gather information as much as you can before you even spend 1 cent on buying land.

<{POST_SNAPBACK}>

[/quote

The other saying is:

Dont invest in Thailand that which you are not prepared to lose"

[sendbaht]

I think it would be better if you HAD some land to sell it now.

Want until 2009 2010, that should be the next bottom in land prices.

Cash is King until then!

[naomisri]

I have been told recently that prices on Samui have gone up about 8% since the Tsunami on the other side of Thailand. I'm not sure whether I believe this or not.

I come from London where prices are sky high - they are just starting to slow in growth now, but I couldn't afford to buy in London 3 years ago - the average 1 bed apartment in central London is about 600,000 dollars even now so I effectively "missed the boat" while I was in the UK. It's hard for me to see Samui prices - where I have lived full time for 2.5 years, but where my husband has lived for 17 years - rising to such ridiculous prices as in London.

We're just buying now, three rental properties 75m from a beautiful beach, but it's going to be a big drain on our resources for the next 5 yrs.

It's risky buying anywhere, but if you have the capital available I think the idea of buying a larger plot of land and dividing it into sub-plots is a better way to go for two reasons -

i) local people (farang who have settled here) or will be staying on a regular basis are looking to buy outside the real estate agents i.e. at realistic prices where they can still get a bargain.

ii) as has already been mentioned people are looking for enough space to build a larger house and still have room for a garden.

If you can make the process simple for them by dealing with the land registry and sorting out the water/elec/access then you will be more likely to sell in my opinion. I can't see betty and bob from Blackpool trying to deal with putting in electricity pylons.

I know somone who recently bought one of these sub-plots on a larger plot of land. His plot was less than a rai, about 40 dw but he's built his house to every corner of his land. There are no other buyers as yet, but you've got to wonder who is going to buy the plot next to his, but also how he's going to get out of his house when there's no access road.

If you can get around these kind of problems without turning yourself into a high maintenance agent with all the associated costs you may have a chance of making some money. You would have a responsibility to check out all of the pitfalls on behalf of your potential customer.

Lastly I would have serious qualms setting up a business with anyone that couldn't trust my life with. Your Thai partners will always have more rights than you. Be careful! I too have heard many horror stories.

[skipdivils]

Thanks for all the comments so far. This is a huge help getting all these opinions together in one place.

Keep 'em coming. Anyone here actually made any money in the Samui property market recently? Is anyone else going to invest, and if so, what is your strategy?

[taxexile]

you are best off making your money back home from rents and coming to samui to live off your income .

you could lose a lot of money trying to make a little money in the housing game here.

there is an atmosphere of pure, total and unadulterated greed about this island from those (foreign and thai) involved in property here.

promises and contracts and agreed prices mean very little. good land agents and good builders who act professionally are hard to find.

prices for land and building costs are very high now, they may keep on rising but who knows.

buy a piece of land close to a main road and build a few small bungalows to rent on it. make it attractive with good landscaping and look after your (long stay ) tenants and you will have full occupancy and build up a good reputation.

sell it as a business. might be easier than selling a house that you lost a years sleep over whilst you fought with the builders getting it done. the bungalows cost little and are built by three or four men in a 3 or 4 months.

or buy some land , sit on it and sell it in three or four years time.

lots of high end and not so high end projects taking shape now , soon there will be an oversupply , only the properly built houses on properly managed projects in good locations will sell. every day new roads are being bulldozed up the green hills here to open up new future luxury estates. buyers will have a lot of choice.

too many new houses sitting empty on overgrown lots surrounded by other overgrown lots accessed down rubble strewn mud tracks or potholed roads.

every trick in the book may be used to part you from your money.

be very careful.

other than that.... there are some absolutely wonderful restaurants here , most of them no more than roadside shacks serving up authentic southern thai food ...... and if it wasnt for those places you probably wouldnt even know you were in thailand anymore. what have they done to this island ????

the sooner they stop foriegners owning land in this country the better. they are selling themselves to the highest bidder and in the process the country is going down the toilet ! greed..... its a killer.

[Khun Jean]

Buying land, wait 3-4 years and sell it sounds good, but you also have to consider currency exchange rates.

If you invest in land you most likely bring in money against the current rate.

If the landprices rise 40% but the baht falls 40% you have 0 profit.

This happened to people who bought land wih euro's 3 or more years ago.

At that moment the baht was aorund 30 for 1 euro. Now it is 50 for 1 euro.

A piece of land bought for 1 million baht has to be sold for 1.6 million baht to get your same number of euro's back.

That is a 60% profit in Baht but 0% in euro!

And there is also inflation you have to calculate and the loss on interest if you had put the money on a savings account.

[skipdivils]

True about the exchange thing, if I wanted to take the money out of Thailand. What if I wanted to spend it in Thailand, then it would not be an issue. The 60% profit would still be 60%.

The day I want to 'take the money and run' so to speak my marging would depend heavily on what has happened with the currency. but hey, the whole goal here is to get myself living in Thailand as quickly as possible.

[fisherd3]

  but hey, the whole goal here is to get myself living in Thailand as quickly as possible.

<{POST_SNAPBACK}>

'Less haste more speed'.

[naomisri]

I agree with Taxexile, it's a risky game. Us buying depends on four things -

i)not wanting to miss the boat, get our feet on the first rung of the ladder and we know the owner of the places we are buying

ii)knowing the owners and trusting them, they were in the same kind of situation we are now when they bought

iii)the GBP being so strong now which I personally don't believe is going to last

iv)we don't have any rush to make money, my husband has a good job and "takes care" of me and I need something to occupy my time!

If my husband wasn't Thai and hadn't worked for the Land Registry in Samui previously I wouldn't even be considering it. But for what it's worth I think there is a market for long term rentals particularly for a decent monthly rent for 2 bed houses. Can't count the number of people who have asked me about 2 bed houses. Are there any??!

[Tornado]

I have read all the replies and I dont agree with most.

Bubble about to burst? why?

You will make far better short term profits investing in land in Thailand Islands than you will ever in your own country.

I have been to Samui many times over the years and have helped clients purchase land there - the place has had a steady increase in 8 years, unlike Phuket that has doubled nearly every year - I was told back then the bubble was about to burst as well

Go with your gut feeling, playing everything safe in life is boring and so are the "sure" people that are doing so.

Buying a large plot for a cheaper price than per Rai (1 Rai) is a great option, you dont even have to wait a couple of years, cut it and sell it from day one. Thats what Ive done In Phuket for the last 8 years and have done extremely well.

Thai Island land is going up in price everyday, even after the Tsunami it has still stayed the same or gone up. Your market is not the local farang or the Thais, it is the guys out of Hong Kong and Singapore looking for a slice of heaven with loads of cash to enjoy, compared to the prices in those countries theyve come from.

It is easy, very very easy and dont let the negatives tell you it isnt.

good luck.

[skipdivils]

Thanks Tornado, for the words of encouragement. And thanks everyone else. Well it looks my decision is made, and I am gonna go balls deep investing my future in Samui. Hopefully I don't end up being just another 'horror story' of a dumb Farang. But the way I see it, life's too short to not take risks. ######, it'll keep me interested for a while, and I really do think that I am gonna do all right on this deal, and with any luck, it will bring me closer to my dream of living in Thailand.

Any other comments on this topic would still be greatly appreciated. It is now Feb. 22 and any updates on the 'land in Samui' situation would help. Does it look like prices will continue to rise in '05?

[LaoPo]

I have read all the replies and I dont agree with most.

Bubble about to burst? why?

You will make far better short term profits investing in land in Thailand Islands than you will ever in your own country.

I have been to Samui many times over the years and have helped clients purchase land there - the place has had a steady increase in 8 years, unlike Phuket that has doubled nearly every year - I was told back then the bubble was about to burst as well 

Go with your gut feeling, playing everything safe in life is boring and so are the "sure" people that are doing so.

Buying a large plot for a cheaper price than per Rai (1 Rai) is a great option, you dont even have to wait a couple of years, cut it and sell it from day one. Thats what Ive done In Phuket for the last 8 years and have done extremely well.

Thai Island land is going up in price everyday, even after the Tsunami it has still stayed the same or gone up. Your market is not the local farang or the Thais, it is the guys out of Hong Kong and Singapore looking for a slice of heaven with loads of cash to enjoy, compared to the prices in those countries theyve come from.

It is easy, very very easy and dont let the negatives tell you it isnt.

good luck.

<{POST_SNAPBACK}>

Tornado....I agree!

Some 25 years ago, when Patong beach/Phuket was an almost deserted place, some friends, including myself had the opportunity to buy an absolute prime beach-location which was more than 5 rai...for peanuts.

Like always, most of the friends were negative since they didn't believe in mass-tourism. Wrong they were and stupid I was.

Also I fully agree with your comment that the 'Farang' is not your market. Indeed it will be the expats +local Chinese (rich!!!) from S'pore, HK and................the Chinese from the mainland.

BKK Airways is opening soon a direct flight HK-Samui and also a few cities in China...

The land and houses (villas) are still cheap seen from their eyes !

LaoPo

[LaoPo]

Any other comments on this topic would still be greatly appreciated.  It is now Feb. 22 and any updates on the 'land in Samui' situation would help.  Does it look like prices will continue to rise in '05?

<{POST_SNAPBACK}>

They certainly won't fall this year.

Be very careful though with investing; better sleep a few more weeks (or months) about investing, before you decide.

I'll send you a PM.

LaoPo

[skipdivils]

Any other comments on this topic would still be greatly appreciated.  It is now Feb. 22 and any updates on the 'land in Samui' situation would help.  Does it look like prices will continue to rise in '05?

<{POST_SNAPBACK}>

They certainly won't fall this year.

Be very careful though with investing; better sleep a few more weeks (or months) about investing, before you decide.

I'll send you a PM.

LaoPo

<{POST_SNAPBACK}>

Haven't got the PM yet, but you definately have caught my attention...Lemme know what's us...Thanks

[skipdivils]

Got your PM, sent you one back. Thanks...