Buy To Let

[jay1980]

I have a small flat in South London I let out. I get £520 gross a month and after tax and agency fees about £450. It I easy to find a tenant. It is worth about £110,000 and if I sold after taxes and fee's I would get about £100,000 (4.8 M baht at current exchange rates)

In the next 1-2 years I would like to move to Thailand permanently. With rents from my properties giving me my main income of 68K baht per month at 48/£. (I have a nicer flat where I live now and would rent for £900 per month, I will not sell this one). I have a condo already in Jomtien (not yet finished) so I would not have to pay rent so I think it is enough for me.

If exchange rates were consistent it would be easy and simple to live off these rents, but with the very possible future weakness of sterling I have started wondering if I would be better to sell my cheaper flat and buy one or more condo's, or maybe another type of property in LOS. The advantage would be I would have part of my income in the local currency and also I would be locally available to attend to any issues. The disadvantage is that I have no problem to find tenants in the UK, and maybe not so easy in BKK or Pattaya. All my properties are owned outright.

Any thoughts of advantages or disadvantages for both options other board members could think of would be most welcome.

Thanks in advance.

[kennkate]

Don't forget If you sell and it is not your main Residence Capital Gains Tax is now 18% on all gains made

You only get a personal allowance of £9.600. I know I have just sold a commercial property.

Had it for 25 Years so the Gain was considerable. Taper Relief was scraped a couple of years ago.

Best to hang on to it and rent in Thailand. Rents in Thailand are much less. If you buy it could be difficult to sell it at a later date.

YOU MIGHT EVEN HAVE TO WALK AWAY FROM IT IF IT ALL GOES BELLY UP.

Think long and hard about that one. But at the end of the day it's up to you. Good Luck

[jay1980]

Thanks for the reply,

Not too worried about capital gains tax, I did not make a huge capital gain on this flat so less than £4,000 to pay. I could 'flip' it (live in this place for 6 months).

I have a small cheap condo in Jomtien anyway, mostly thinking of income.

Maybe I am just getting over worried about the exchange rates and bad news in the UK (not hard when based here) and ignoring the risks of investing in Thailand.

For sure I would not sell my nicer flat though so I would always have somewhere to go back to in UK if it came to it.

Did you re-invest in UK Europe when you sold your property or invest in Thailand/Asia?

cheers

[ding]

My situation is similar, but lesser now and I'm coming from the states . I wanted to get out of US real estate and USDollars. But the market softened, lending sucks ... etc. and don't want to sell now.

You may want to consider what I am planning, and have done these on residential (and a commercial property) previously;

Lease to own- enough down payment to transition to Thailand. Payments for rent + extra to be added to principal. Limitted time to find financing for full amount.

Owner Carry Contract- I've done this too, earns interest.

Both eliminates rental maintenance and problems, I will never do that again. My rental properties were spread out too far as it was, let alone from Thailand!

Downside; this doesn't get me out of the American market enough.

Upside; I don't have all my eggs in 1 basket too quickly.

I will not buy a condo in Thailand because rents are too low vs. cost and risk of ownership there. Not that I think prices will tank in Thailand, just too cheap to pass up the margin in low rental prices there. I may not even come to Thailand if they continue making us less welcome or the politicos ratchet things up. No specific political statement intended -

Long live the King.

[Musongman]

Famous last words I learnt from this forum...."never put more into Thailand than you are prepared to walk away from...".

I foolishly went against my own decision never to buy in Thailand while rents are so cheap, and helped a friend out by taking 50% ownership in a VT7 condo, so he would not lose his payments, as he did not have enough to close the deal when the building completed.

Now I see I have very little likelihood of ever getting my money back or realising the idea of permanent domicile.

I have become disenchanted with the whole "Thailand thing", and after my next visit later this year, I will move on to greener pastures.

There is no sense of security of tenure, property-wise or visa-wise, and the whole country could erupt in the near future, and a Thai soldier with a rifle and carte blanch to use it, is more than I want to contemplate.

So, OP, keep your money and properties in Blighty IMO.

[huawei]

i have done what you are thinking about. I have rental property in UK, no problem with tenants, steady cash flow for the last 15 years, will never sell. I also own my condo here in Bangkok. I have just purchased another condo by the beach as a rental property. Of course it is a risk, but i don't want total exposure to sterling and can also use the property for personal use. However you will not get the rental stream which is almost assured in the UK.

I have lived here ( alot of the time) since 1985 i have seen the pound at 38 go to 70 and back down again. I have for the most part of that period seen property prices in BKK on a par with those in the UK or higher! expect for the last 10 years they are now equalising out again.

I did not buy my first property until i had lived here 10 years. If you intend to live here permenantly i think it is a reasonable proposition, but do your home work.

I do not believe in this saying do not invest in Thailand what you are not prepared to walk away from. In your own name, no company, and not influenced by anyone else its a reasonable alternative. Buying a house for yourself and the wife ( as i have done) is not an investment!

frankly i see appreciation on beach front and well located properties.

Just don't rush.

[Naam]

The disadvantage is that I have no problem to find tenants in the UK, and maybe not so easy in BKK or Pattaya.

you answered your question. don't even think of selling your London flat!

[ExpatJ]

I sold my house in UK (luckily at the peak of the housing boom 3-4 years ago) and bought one apartment in Jakarta and am planning to buy in bangkok this year- the Jkt and Bkk condos are/will be buy to let.

Jakarta has some of the highest rental returns in the world - im getting about 10% return from my current tenants- but a bit risky as foreigners cannot legally own a condo (we made a legal agreement with the owner of the apartment complex and land).

As to bangkok- there is political instability- but medium to long term e.g. 5 years plus, Thailand (and the Asia region) is only going to get richer and more developed i.e. property investments in bangkok will will rise in value.

You might also consider investing some cash in the thai stock exchange- its booming right now- my stocks have increased from 6- 26% since January even with the red rallies in bkk over the last 2 weeks stocks are going up- Thai stocks also have some of the highest dividend payments in the world.

[jackdawson]

but a bit risky as foreigners cannot legally own a condo

ya' think ?

[ExpatJ]

but a bit risky as foreigners cannot legally own a condo

ya' think ?

Well lets see- in jakarta tenants always pay rent one year in advance- lump sum- i had a 2 year contract with them- so that meant i got 20% cash return on my investment just one week after buying the condo- i cannot think of any investment anywhere in the world with that sort of return. Is it worth the risk?- 'yes please, and thank you very much'- for me- but others are more risk averse of course. risk versus reward.

Edited March 30, 2010 by ExpatJ

[123ace]

I would hold the UK property vis a vis selling now and buying in Pattaya. As UK has bottomed out, and a flat is far far more renatable there than the majority in Pattaya in terms of a 12 month tenancy (very hard to do in Pattaya as demand is from long stay tourists for 3 - 6 months). Bangkok is a better buy to let market.

Pound vs Baht exchange is an oddity at present. I am expecting a slow shift as the UK may be expected to slowly recover and the THB may be expected to slowly decline. This is irrespective of the US or Euro, but a THB vs Pound comparison in isolation, and not short but medium term.

In summary - Hold the UK asset & rent in Pattaya; or sell the UK and buy to let Bangkok.

[jay1980]

Many thanks for all the input. I guess I will renew my London tenant for another 6 month and review again in 6 months

In the mean time I will save to invest in Thailand.

ExpatJ, any pointers about where to start research on Thai stock exchange investments, did you pick shares to buy yourself, or do they have managed funds to buy into like in UK?

For buying in BKK, I can save and buy an additional property here, maybe I am being paranoid but with most of BKK close to sea level, should that be a concern for me when it comes to picking a district?

cheers

[RAZZELL]

You might also consider investing some cash in the thai stock exchange- its booming right now- my stocks have increased from 6- 26% since January even with the red rallies in bkk over the last 2 weeks stocks are going up- Thai stocks also have some of the highest dividend payments in the world.

Tips please...I could do with making 26% in 3 months too

RAZZ

[ExpatJ]

Well, i bought Thai airline stocks in January (45% increase- you can check online at any stock website), also i bought KBANK a month ago- 21% increase; bought PTL 6 weeks ago- 18% increase.

I use the financial times websites 'stock screener' to identify good quality 'growth stocks'- i have a watch list of 20 or so- these are fundamentally sound companies that have a proven history of profits, low debts etc. Then i use charts (relative strength index, MACD, and rate of change) to identify buy and sell points among these 20.

In terms of dividends for example, i have AIS stock- they are due to bay 9% dividend next week. I also received 6% dividend return on my LANNA stock last month.

I cant believe that just 2 months ago, before i began investing in thai stocks, i was seriously considering putting my money into a 6 month bank saving scheme with a paltry 1.5% return!!!!!

Edited March 31, 2010 by ExpatJ

[ding]

The disadvantage is that I have no problem to find tenants in the UK, and maybe not so easy in BKK or Pattaya.

you answered your question. don't even think of selling your London flat!

Naam, this advice would be different if subtracting the 30% withholding on regular rent income from a US rental, correct?

(sorry to hijack jay1980)

Edited March 31, 2010 by ding

[jay1980]

No hijack ding, tax is a consideration for me also.

[Rinrada]

Not saying they are back on the UP but every little bit (as they do say)helps

House price rise 'fuelled by London' - 30/03/2010

A significant jump in London house prices has helped to keep the overall average cost of buying a home going up, according to Nationwide Building Society.

Producing its latest price figures, the mortgage lender noted that the first quarter of the year saw a 1.6 per cent rise across the UK, taking the annual rate of increase to 8.8 per cent.

Every region saw prices going up in the quarter, but London led the way at 2.5 per cent, making its increase over the past 12 months 15 per cent.

Nationwide chief economist Martin Gahbauer added that the north was tending to see prices rise by less, which continued the trend seen in 2009.

The figures came in contrast to the Land Registry data for February, which showed an overall price dip of 0.3 per cent in the month.

In addition to this, the regions with the two largest price rises during the month were the north west and the Yorkshire and Humber areas, while London prices declined by 0.5 per cent. I

f i ever actually get round to moving to LOS I will probably rent out my gaff as well....@ £1K a month after everything (its only a wee one)plus the old Pension and a couple of saved Sovs...

Fortunately everything we own (I/We of course) is all paid for ...apart from the new pool ...I said 4 lights ...thats enough and should be able to grow enough carrots and bannanas on our 32 Rai to keep us and our cows and half the village ..well fed...then its only really beer money.. init

[ding]

If i ever actually get round to moving to LOS I will probably rent out my gaff as well....@ £1K a month after everything (its only a wee one)plus the old Pension and a couple of saved Sovs...

Fortunately everything we own (I/We of course) is all paid for ...apart from the new pool ...I said 4 lights ...thats enough and should be able to grow enough carrots and bannanas on our 32 Rai to keep us and our cows and half the village ..well fed...then its only really beer money.. init

I always say that Thai living is 1/2 off for me... I don't drink, smoke, or gamble!

Sounds like you two can leave Old Blighty (?) and do just fine. You aren't leaving a country that wants to trap all currency for a possible 30% nick while hiding the M3 showing how much $ they're printing.

[ChiangMaiFun]

Hi – I am in a similar position – here’s what I did and why:

I spread my risk somewhat and have a property in UK giving me a rental income of around a grand a month – I call this my ‘safety net’ – however, and here’s the rub, I invested quite a bit in some condos here for rental for the following reasons:

· Normally I have 90% occupancies here

· I get 7/8% NET return

· I own the Chanod etc.

· I have income in ‘local’ currency – don’t forget this last point – very important – I don’t have to worry about ATM charges or rate fluctuations – for this portion of my income I don’t care if its 70 to the GBP or 30

· It gives me a bit of ‘interest’ and something to do

My advice would be to split your assets as far as you can 50/50. Try to get ‘local’ income and forget all those ATM and bank charges – and rates changes will be a thing of the past! Just choose your condo wisely – good block/goo management and location, location, location.

I made the 'jump' 2 years ago - and never looked back - I use my UK income for travel (Philippines/Cambodia etc.) and 'local' income (about same amount as you) for living expenses and fun here.

If I can help further PM me… good luck

[jay1980]

changmaifun, what you did is exactly my thinking, and why I was considering selling the smaller of my 2 London flats.

7/8 % net return is excellent, great to hear what I was thinking of can work out for others.

Are your places in Chang Mai?

Cheers

[ChiangMaiFun]

changmaifun, what you did is exactly my thinking, and why I was considering selling the smaller of my 2 London flats.

7/8 % net return is excellent, great to hear what I was thinking of can work out for others.

Are your places in Chang Mai?

Cheers

Good morning - yes I have a few but only in Chiang Mai so cannot advise about other areas. I have bought some renovated already and renovated a couple myself. I have found the larger ones have rented easily and only the studios have rented more slowly - I only have one empty now. The 7/8% is after:

common area fees

agent fees

renovation costs

Gross is 10% ish and the actualy return is better than 7/8% net because I pay no ATM/Transfer charges as my daily income is all in 'local' currency. I rent out my place in UK and have that money sit there for my frequent travels - it works for me.

The downside is you have to put in time to find agents and tenants and there is a risk you cannot rent out everything -I found that with one studio - I cannot find a tenant - so I have just sold it at a 'loss'. It was one mistake but only one amongst my successes - you just have to learn from experience - I will now concentrate on a few larger condos which bring in larger rents.

My advice is sell one London place and start slowly (I actually dived in too quickly) - buy a couple of condos and get them done up and rented out then sell second London place.

I used to live in London and sold - but I bought a house in the South West for renting out and the condos here in Chiang Mai - if everythings ok in 10 years I may sell that house too.

[jay1980]

My next longer trip to Thailand will be October/November time.

Thinking I will go and get to know Chang Mai for a few weeks, always wanted to explore North more anyway and now have an extra reason for going.

(only been that far north once for a few days only to visit Golden Triangle and the King's Mum's Swiss/Thai villa).

cheers

[dmax]

im no expert but pattaya is full of empty condo,s at min

[ChiangMaiFun]

im no expert but pattaya is full of empty condo,s at min

Same BKK - this is not the 'best' time and Chiang Mai quiter than usual but many people are re-locating here - slowly, slowly catchy monkey - if you are in Chiang Mai I can help (for free!) as I know everyone

[trogers]

I think you should also consider the potential of increases in property prices in the UK and Thailand. I would not mind paying capital gain tax of 18% if the property can be sold for 150k five years later.

Cost of fund transfers can be minimized by saving a revolving sum and doing transfers 2-3 times a year, instead of monthly or withdrawing like an ATM machine. This would also force you to manage your expenditure.

In addition, it may be more cost effective for your agent to manage 2 properties in the same city than one in each country.

[zorro1]

The disadvantage is that I have no problem to find tenants in the UK, and maybe not so easy in BKK or Pattaya.

you answered your question. don't even think of selling your London flat!

Property prices plumett in London, selling his flat is wishfull thinking

[jay1980]

Changmaifun - thanks for you offer, if you have time later this year when I am out looking I will be in touch. Chang mai is an area I have not looked at before but it sounds intresting.

trogers - ease of management is a good point, I the small flat I am thinking of selling is fairly close to my bigger one that I will keep forever regardless, so I can use the same agent which helps. I want to end up semi-retired and living in Thailand though and what scares me more than capital gains tax, is if there is longer term de-valuation of the pound wiping out increases in the properties value. This is why I would like to build some more investments in Thailand.

zorro1 - Your information about property prices is about a year out of date. (for London/SE anyway not sure about trends in other areas). I have a big flat where I live now in a good suburb in London close to a mainline station I bought in 1997 for £48K and could sell all day long for £220K easly. I will always keep this place though as it is a nice place to live and would want a level of security in my own country.

More intresting is the small place that I bought March 2009 for £70K, cash purchase as a shell, smashed in windows, mould on the walls etc. Spent about £3K on a cheap refurb and let it out. Now after 9 months my 1st tenant is moving out and I had it valued. Had a couple of valuations averaging £110K. Sure there maybe a wobble in UK property prices if intrest rates rise sharply. I did my homework however and in 2012 there is a new transport link due to finish allowing very quick links to main business districts in London, and I feel this will cancel out any wobbles by making the area more desirable.

dmax - I guess I will find out how bad things are in Pattaya when my condo in Park Lane Jomtien is finished later this year/early next. I think anything will rent out at the right price but I don't really mind if I cannot rent it out locally as I have loads of friends who go out there regularly, and family members who have already said they would take it for short periods for holidays. Also I bought it with a view to using it myself, as I like Jointem, not as an investment. (btw hope problems with your misses from another thread better now)

[RAZZELL]

l want to end up semi-retired and living in Thailand though and what scares me more than capital gains tax, is if there is longer term de-valuation of the pound wiping out increases in the properties value. This is why I would like to build some more investments in Thailand.

If I was lucky enough to be in your position...I'd wait another 6 months at least.

I can't really see the £ getting any lower in the short term, and it could well bounce after the election.

If it goes up 10% to you'll be making another £15k or so on the exchange rate alone.

What about a remortgage? Or selling, using some of the money as a deposit on another place or two in the UK and renting them out and using the remainder of the cash in Thailand.

That way you have the best of both worlds?

RAZZ

Edited April 5, 2010 by RAZZELL

[zorro1]

Changmaifun - thanks for you offer, if you have time later this year when I am out looking I will be in touch. Chang mai is an area I have not looked at before but it sounds intresting.

trogers - ease of management is a good point, I the small flat I am thinking of selling is fairly close to my bigger one that I will keep forever regardless, so I can use the same agent which helps. I want to end up semi-retired and living in Thailand though and what scares me more than capital gains tax, is if there is longer term de-valuation of the pound wiping out increases in the properties value. This is why I would like to build some more investments in Thailand.

zorro1 - Your information about property prices is about a year out of date. (for London/SE anyway not sure about trends in other areas). I have a big flat where I live now in a good suburb in London close to a mainline station I bought in 1997 for £48K and could sell all day long for £220K easly. I will always keep this place though as it is a nice place to live and would want a level of security in my own country.

More intresting is the small place that I bought March 2009 for £70K, cash purchase as a shell, smashed in windows, mould on the walls etc. Spent about £3K on a cheap refurb and let it out. Now after 9 months my 1st tenant is moving out and I had it valued. Had a couple of valuations averaging £110K. Sure there maybe a wobble in UK property prices if intrest rates rise sharply. I did my homework however and in 2012 there is a new transport link due to finish allowing very quick links to main business districts in London, and I feel this will cancel out any wobbles by making the area more desirable.

dmax - I guess I will find out how bad things are in Pattaya when my condo in Park Lane Jomtien is finished later this year/early next. I think anything will rent out at the right price but I don't really mind if I cannot rent it out locally as I have loads of friends who go out there regularly, and family members who have already said they would take it for short periods for holidays. Also I bought it with a view to using it myself, as I like Jointem, not as an investment. (btw hope problems with your misses from another thread better now)

Jay you really need advice from us?

[jay1980]

Razzell – I agree and have decided to renew my tenant and review after 6 months +, hopefully at least by then the political situation in the UK, and with it the longer term future for the Pound will be clearer. Your suggestion to re-mortgage is not a bad one, however my personal preference is to avoid any debt.

Zorro1 – I have found the advise here very useful, made me think about other options for income within Thailand which I think is important. I hope in the next year or 2 I will be living there most of the time comfortably and will be able to start giving advice. For now I am very thankful for any advice I can get to achieve this

Thanks to all