Buying Vs Renting

[Will27]

Greetings gang.

I know this has been done to death but over

the last 12 months or so, the financial climate

has changed a fair bit.

Eighteen months ago I could get 10% interest

and now lucky to get 5% so this has got me

thinking.

Been in Chiang Mai for nearly a year now.

Rent is 20 000 Baht per month in a reasonably

new building. Condo is a bit small (only 2 of us)

at 65 SQM. Same as everywhere, can move out

a bit and get something bigger and cheaper although

the buildings are pretty run down.

A couple of condo's have become available now at

what I consider to be good prices at approx 3.4 million

Baht.

I wouldn't be buying for capital gain. I just would like

to be able to call something my own.

Like I said, with the falling of interest rates, and the

increase of the aussie dollar, now seems pretty

good time to buy.

How about some advice/opinions?

Regards

Will

[12DrinkMore]

Well, this is a topic which I have been grappling with ever since I came to Thailand, over eleven years ago now. And even more because CM was the last place where I went through this process.

As in the past, in spite of the sometimes overwhelming "it would be sooo nice to own my own place" feeling I decided not to buy. The reasons are

for me the most important

- it is not a liquid market and property is very difficult to sell, so a lot of flexibility is lost.

and then a host of minor issues that come with ownership, parking (there always seem to vehicles that don't belong to condo owners), noises, unpaid maintenance fees, foreign ownership etc.

Add in the possibility that the nice view will be obscured by the next condo building.

World interest rates are at a unusual low and this cannot continue for too long and in twelve months or so they will have to increase.

CM has a lot of condos on the market and new condos are being erected constantly. It seems to me there is an oversupply, so maybe if you do decide to go ahead, I suggest you through in a few very low balls and not be in a hurry to spend the hard earned cash.

But for me I want to be able to move around, but once the condo has been bought, this flexibility has gone.

Edited July 29, 2009 by 12DrinkMore

[phetaroi]

I have recently moved here on a retirement visa. I could certainly afford to buy a condo, but I am preferring to rent. Two reasons foremost in my mind. First, we are still guests here. While it seems unlikely we would be told to leave, who can say for sure. And if that ever happened, how would we sell?

Second, I've never been overly impressed with what I'll refer to as "structural integrity and maintenance" in Thai buildings. It seems the Thai idea is more to tear it down and rebuild. If that happens, then what?

[PeaceBlondie]

I used to pay 6500/month for 65 or 85 sq meters in Chiang Mai, and 8000 for a beach bungalow. I knew somebody paying 14K for a big house along the canal. We know a couple in Hillside 4 that have been trying to unload their big condo for many years. Rent is still cheap; I don't know if condo prices have gone down 30% here like they have in the USA.

[backsoon]

Greetings gang.

I know this has been done to death but over

the last 12 months or so, the financial climate

has changed a fair bit.

Eighteen months ago I could get 10% interest

and now lucky to get 5% so this has got me

thinking.

Been in Chiang Mai for nearly a year now.

Rent is 20 000 Baht per month in a reasonably

new building. Condo is a bit small (only 2 of us)

at 65 SQM. Same as everywhere, can move out

a bit and get something bigger and cheaper although

the buildings are pretty run down.

A couple of condo's have become available now at

what I consider to be good prices at approx 3.4 million

Baht.

I wouldn't be buying for capital gain. I just would like

to be able to call something my own.

Like I said, with the falling of interest rates, and the

increase of the aussie dollar, now seems pretty

good time to buy.

How about some advice/opinions?

Regards

Will

Will, have a look at my posting today. As a fellow Ozzy, let me tell you this.

3,400,000 in your pocket can pay your current rent for 9-12 months a year. And you keep your money and freedom. Buying will reduce your freedom, add many expences and reduce your capital. In LOS there is no such thing as appreciation, only depreciation, and a quick one, due to climate and lack of maintenance. Cheers.

[eljeque]

If you were to buy the condo, expect to HAVE TO WAIT a year or two or longer, to sell it, and expect to have to discount the price as well.

RENTING IS THE SMARTEST THING TO DO.

[BEENTHEREDONETHAT]

If you are reasonable sure that CM is the place you want to be and if you can find a condo with good management and a reasonable amount of it owned by farangs (they push to keep maintenance up).

With the economy of the world being in such a mess I prefer to have my $ sitting in property rather than in the bank. Since I don't know what is going to happen inflation wise I know I will always have a place to live. You also have the advantage of being able to decorate and make the place your own.

I don't look at my condo as a investment but a lifestyle that I like and I know it is legally mine and would be difficult to duplicate anywhere else at a price even close. But as I said I don't much worry about the prices going up or down as I don't intend to sell anyhow.

Good luck whichever way you go.

[trogers]

Well, this is a topic which I have been grappling with ever since I came to Thailand, over eleven years ago now. And even more because CM was the last place where I went through this process.

As in the past, in spite of the sometimes overwhelming "it would be sooo nice to own my own place" feeling I decided not to buy. The reasons are

for me the most important

- it is not a liquid market and property is very difficult to sell, so a lot of flexibility is lost.

and then a host of minor issues that come with ownership, parking (there always seem to vehicles that don't belong to condo owners), noises, unpaid maintenance fees, foreign ownership etc.

Add in the possibility that the nice view will be obscured by the next condo building.

World interest rates are at a unusual low and this cannot continue for too long and in twelve months or so they will have to increase.

CM has a lot of condos on the market and new condos are being erected constantly. It seems to me there is an oversupply, so maybe if you do decide to go ahead, I suggest you through in a few very low balls and not be in a hurry to spend the hard earned cash.

But for me I want to be able to move around, but once the condo has been bought, this flexibility has gone.

Landlords like us needs more people like you...

[dale8]

Hello, renting does lend itself to flexibility as you will never see any of the rent money again. You will not lose as much money if you buy a place, but be sure it is where you want to live for years to come. Good luck to you as this is a question most people in the world would love to consider. Cheers.

[Will27]

Thanks fella's.

Good advice all around and I guess

flexibility is a big one.

Presently (if needed), I could pack

a bag and just go. Sure, lose bond

but that would be a small price to

pay if I really needed to go ASAP.

Regards to all who responded.

Will

[mamborobert]

I think a few people have tossed this dilema around and are interested in comments.

Assuming a person is in a stable relationship with a Thai ( ) would anyone have a wildly different opinion if it meant buying a house here. Potential relationship dramas to the side, having an intent to stay here for a number of years, and being fully aware of the land ownership/lease arrangements, would this be a more viable option than a condo.

Suspect building practices can happen anywhere, though more suspect here.....but at least with a house the upkeep,fittings,layout,use, decoration is largely yours to control, surely physical security is not that much of an issue given that there are lots of expats in houses here already.

To me the condo argument is still valid on 3.4 million baht verses a 20 thousand baht a month rent on a good house. This equates with ownership against 14 years of rent, and there are houses a lot cheaper to buy than 3.4 million. You still have the flexibility to bail out at any time. Its just the house option for me personally seems much better than the Condo option all things being equal on the stable relationship side of things.

Would it depend on your age then, if you plan to stay here and live longer than say 14 years (under this example). I suppose really this comes down to commitment verses flexibility and perhaps we all would have different opinions based on age, finances, realtionships, and other considerations.

Edited July 31, 2009 by mamborobert

[neverdie]

Will, Where on earth were you getting 10% interest (cash deposit?) 18 months ago?? Maybe you meant close to 10%?

Yes, now a cash deposit in the medium term will get you around the 5% mark but thats what happens with these things, they go up and then they go down & then up again. The trick is locking away when they are relatively high and not locking away when low. This is the game I play, its one of the investments I use to survive.

Australia has seen the last of its interest rate cuts and when inflation takes hold the reserve bank has absolutely no option but to up interest rates and when they do they will move quickly, just like they did when they were coming down. I have a little bit of cash floating at the moment at a low rate, I will roll it over on the short term because it wont be that long before the rates improve again.

With the way thai property goes, capital gain or lack there of and the quality of construction etc, RENTING is the way to go. Anyway thats my opinion and thats what you were asking for, others will say differently.

[eljeque]

I have some neighbors who are happy with the development which they are in, but not the dogs next door. They are renters.

They would be very unhappy if they would have bought here.

Now, buying would have included a more thorough investigation of the neighbors than renting, but even if the dogs were not there, and then new people moved in with dogs, they would be stuck.

The prefer keeping their money elsewhere than property in Pattaya, or elsewhere in Thailand.

best of luck

[Heng]

I wouldn't and don't buy unless I can pay cash, so that often means years and years between each purchase. As for selling, I don't buy anything that I plan to sell before my grandchildren are born.

[Jingthing]

Some thoughts:

-- don't expect much if any capital appreciation

-- get a sense of the management and maintenance situation of the condo building. if it is going south, you may be buying an asset worth very little in the future

-- if you think it is very probable you will live in the condo for 10 to 20 years, the free rent is a good return on investment, the longer the better

-- if you think it is probable you will live there less than 5 years, it is very risky and I would say RENT

-- the current market is not liquid and no reason to expect excellent liquidity in the future

-- a lot of it is luck and timing. In my case I bought a condo 5 years ago. Consider exchange rates and expected sale price (IF I could sell it) I might enjoy a 15 percent profit. However, compared to the same performance in most USA real estate or most major stock markets, this is not bad performance during this particular time period. Buying now is another matter. If you think you are smart enough to predict the future, you have no money concerns anyway ...

Edited July 31, 2009 by Jingthing

[maxjay]

don't expect much if any capital appreciation

the current market is not liquid and no reason to expect excellent liquidity in the future

a lot of it is luck and timing. In my case I bought a condo 5 years ago.

I consider myself very lucky. I bought a Jomtien Condo in '99 at '99 prices. I sold it in April of '06 (only one month on the market). I got my original investment back, plus a profit equal to my original investment, plus I lived in the condo for six years.

I don't think one could do that in today's real estate climate.

I recommend renting for awhile longer.

[Jingthing]

I consider myself very lucky.

Yes lucky timing. For all we know NOW may be an ideal time to buy. Or not ...

[trogers]

I consider myself very lucky.

Yes lucky timing. For all we know NOW may be an ideal time to buy. Or not ...

We usually see the bottom of a downturn on hindsight!

[samran]

Not worth buying for me...and I'm a Thai citizen.

I can rent a 250sqm place in a well run building for 50K per month, centre of BKK. The mortgage on that same place is about 90K - 110K per month, if I purchased it. Doesn't make sense. I pocket that 40K - 60K and invest it elsewhere, in something much more liquid.

As others have said, liquidity here is a massive issue. Nice to have paper profits, but there are at least 6 apartments in my condo which have been for sale for the past year, and none of them have moved. I don't like the thought of holding something I couldn't sell.

Having said that, I may change my mind shortly. As Heng said, if i plan to use it for the next two generations, it might be worth it!

[neverdie]

Some thoughts:

-- don't expect much if any capital appreciation

-- get a sense of the management and maintenance situation of the condo building. if it is going south, you may be buying an asset worth very little in the future

-- if you think it is very probable you will live in the condo for 10 to 20 years, the free rent is a good return on investment, the longer the better

-- if you think it is probable you will live there less than 5 years, it is very risky and I would say RENT

-- the current market is not liquid and no reason to expect excellent liquidity in the future

-- a lot of it is luck and timing. In my case I bought a condo 5 years ago. Consider exchange rates and expected sale price (IF I could sell it) I might enjoy a 15 percent profit. However, compared to the same performance in most USA real estate or most major stock markets, this is not bad performance during this particular time period. Buying now is another matter. If you think you are smart enough to predict the future, you have no money concerns anyway ...

JT, You are spot on with everything but I certainly would be very upset if I got a 15% return on my money over 5 years.....OR WAS THAT 15% Per year for 5 years?

Whilst real estate might of taken the turn for worse in the USA, theres plenty of other places in the world where GREAT profits can be returned from real estate & probably no more better place in the world than from the OP's home country.

Will, have a read of a few guides about making money from property investment & they will all talk about what both I and JT mentioned....CAPITAL GAIN, thats what the whole game is about....then theres reducing ur tax liability & the list goes on. Sorry, I don't mean to be abrupt but theres probably much better things to do with your money. Good luck.

[Will27]

Thanks again gang.

Plenty of good advice to ponder.

Ideally I would prefer a townhouse,

something with a bit of land. As I

don't fancy leasing, it's out of the

question.

The wife wasn't real happy when I

told her that I wouldn't even consider

buying a house in her name. Told her

I wouldn't do the same in Australia so I

sure as hel_l wouldn't do it here. I'll probably

get slaughtered by people who have, but hey

I'm a realist.

Regards

Will

[neverdie]

Will, I said exactly the same thing to my GF. She asked why, so I sat with her and explained some of my basic beliefs regarding investment. I went into great detail & since that time she has become very interested in investment & I've even overheard her going into great detail about why we don't buy property here in Thailand.

I never even went down the road about why would I buy land in a country where I CANNOT legally own it, I didnt need to.

If you have an endless supply of the folding stuff and you don't really care about 3 or 4 million baht, go right ahead.

[Gary A]

I rented a decent apartment when I retired. Other than a pretty wild color scheme, it was fine. I wanted to hang a clock in my kitchen and the landlord wouldn't allow it. That is one major reason I bought a condo in MY name. I don't have to ask anyone if I can put a nail in my wall. I did NOT buy the condo to resell or for an investment.

[neverdie]

And Gary, good for you. I hope you got that nail in and a few others for the pleasure of spending those millions of baht.

Theres nothing wrong with owning property, but if your like the OP and seeking investment theres plenty of other places to park your dollars.

I'm all for property, thats how I made my money which has allowed me to survive my forced retirement.

[likite]

Before moving to Thailand I always owned my own home and I understand the feeling of wanting to own your place. But to contemplate buying in foriegn country where the property would not be in your own name is really a no brainer for me.

The list against buying any property here is long one, here are few.

1. What will the state of the condo be like in 3, 5 10 years time? Still saleable? Look at some of the older condos would you like to buy there and/or live there?

2. Future visa restrictions may come into force, you can't take the property with you if you want or need to move on.

3. Trying to sell can take years.

4. Neighbours from hel_l can arrive at anytime and make your life a misery. Where do you go? If you rent you move within days.

5. Cash is king and allows flexibility for any change in circumstances in the future.

6. Buying a house in someone else's name is asking for trouble not one to even consider.

7. What ever the return you would have had on the cash will be lost.

The list for buying..........I can't think of any.

Just my thoughts on the matter.

[neverdie]

Before moving to Thailand I always owned my own home and I understand the feeling of wanting to own your place. But to contemplate buying in foriegn country where the property would not be in your own name is really a no brainer for me.

The list against buying any property here is long one, here are few.

1. What will the state of the condo be like in 3, 5 10 years time? Still saleable? Look at some of the older condos would you like to buy there and/or live there?

2. Future visa restrictions may come into force, you can't take the property with you if you want or need to move on.

3. Trying to sell can take years.

4. Neighbours from hel_l can arrive at anytime and make your life a misery. Where do you go? If you rent you move within days.

5. Cash is king and allows flexibility for any change in circumstances in the future.

6. Buying a house in someone else's name is asking for trouble not one to even consider.

7. What ever the return you would have had on the cash will be lost.

The list for buying..........I can't think of any.

Just my thoughts on the matter.

Never a truer set of words spoken on Thai Visa. 18 months ago I gave advice to a friend about investment, they didnt follow my advice. Recently we chatted for a while about the way things have gone for each of us and my friend is kicking herself now. Anyway, I said this to her, "Don't look backwards, keep looking forwards". You can do alot worse than getting 5% return in the next 12 months.

Cash is king OP, alternatively there are some places in your home country where property will continue to do really well, have a look at that if you must own investment property.

Edited July 31, 2009 by neverdie

[bojo]

There is one upside to buying of course and that's living for free and if one moves out, one can also receive a rental income, should selling prove impossible.

One poster noted that a period of 14 years would be the threshold for stake money returned. So if someone aged 40 bought a property and lived until 80 for example he save alot compared to renting.

The property after 14 years would hopefully have a value far greater than it's original purchase price, capiatl and gain may not be the same as investing in a high offshore account but with interest rates as they are today, maybe not such a bad idea.

Real estate prices in tourist areas are still far lower than in 2006 and investors have a while before things start to move again.

Important key factors are, the development, location and management (for condos). Floral in Chiang Mai is a prime example of a decent condominium complex.

Not forgetting real estate can also be handed down.

I'm not advocating that buying is the way to go, especiality as most posters have expressed ' flexibility' as top of their priorities, but there are some significant benefits.

Regards Bojo

[trogers]

I would think most foreigners buying properties in Thailand have the intention, or are already building their nests here. Some may even be cutting off bridges to own countries.

Those who are on transit will prefer to hold cash or some other liquid assets.

But woe to the one who does not have a firm roof over his head, be it in Thailand or own country - like a wandering gypsy.

[Will27]

Nice work crew.

Also good to see a balanced discussion without

smart arse and puerile answers being thrown in.

I must admit in a brief moment of insanity that I

considered a place on the river I fell in love with

in Chiang Rai whilst doing a visa run.

We all have different circumstances, financial, emotional

etc so I guess there is no real right or wrong answer.

The condo I was looking at wasn't for investment, just

for living. I do have a place back home I'm renting while

hopefully propety prices increase over the next few years.

Anway, thanks again for the input.

I'll be sticking to renting (for a while anyway).

Regards

Will

[trogers]

Nice work crew.

Also good to see a balanced discussion without

smart arse and puerile answers being thrown in.

I must admit in a brief moment of insanity that I

considered a place on the river I fell in love with

in Chiang Rai whilst doing a visa run.

We all have different circumstances, financial, emotional

etc so I guess there is no real right or wrong answer.

The condo I was looking at wasn't for investment, just

for living. I do have a place back home I'm renting while

hopefully propety prices increase over the next few years.

Anway, thanks again for the input.

I'll be sticking to renting (for a while anyway).

Regards

Will

Two of my tenants, a French and an Aussie, are landlords in their own countries. They have a firm roof over their heads back home, and are here making a living.