Whether To Risk Buying 10 Rai Of Land With Sor Por Gor ?

[Martouf]

What does everyone think to this plan ?

My wife found out the local nurse and her police bodyguard husband want to sell 10 rai of land (8 rai of rubber, remaining two rai have two ponds and half built house). The trees are Rim 600 and they reckon are producing on average 260kg per month (therefore based on 75baht a kilo approximately 20k thb) - they want 1,400,000 thb - she has seen the land and has sent pictures

The land is near a village by a main road in Isaan, Nong Khai is about 70km, Phon Phisai 24km - if any locals are reading the place is called Nong Kwai/Nonsumlan

I quite liked the idea as there was a small income now (family can help with rubber) and I could sit and fish with my wife selling fish together with other food - we have a son (both uk and thai passport) and the plan was for the land to be in his name

initially I was told by my wife that the land had a chanote, no, and I am grateful for the son of the "sellers" for being honest in email - it is Sor Por Gor 4-01!!

I know full well that this title deed cannot be sold etc.... it is government land still at the end of the day, under any future land reforms the title right may change but there is no guarantee of this .

they want to arrange a power of attorney and sale contract and then we all go to the headman etc... they are named on papers despite the fact they purchased it from the original family 10 years ago, I thought this was odd. My view is a sale contract when they have no right to sell is not worth the paper is it written on.

my wife thinks most of the farm land around where we are have similar land titles - would you risk it ? have any TV members paid for such land in the villages and have had problems ?

if it was say 500,000 thb maybe it is worth the gamble but at 1.4 million when in theory they have no right to sell it is way overpriced.

my gut feeling is to walk away

what does everyone think

[jubby]

Most of the Land around us is the same.

Most of the land has changed hands Several times despite it being Illegal.

I suspect this is the case all over Thailand.

I suspect if a Government was to come along and rectify it in a negative way , that Government wouldn't last too long.

I think thats a lot of money to effectively Rent land from the Government , you have to do the Maths.

[slapout]

As you noted, there are potential problems with handing over your money for the land you described. We have chanote land as do many TV members. You question has been discussed several times here, and it seems those with chanote usually recommend buying chonate land , while others are more trusting of the system.

With the recent focus on illegal transfer of property, none compliance of land use, etc, throughout Thailand I would personally not get involved.

[Mosha]

A case of buyer beware, but as has been said, probably the vast majority of land in Thailand is like that. We have the house on Chanote, but we are one of the few round here.

[jamescollister]

As others have said, you are illegally buying the right to use Crown land. The title will remain with who ever received it in the first place, but that's the way it has been done since these titles came about. If you are happy to buy land that can be taken from you by the Government, at any time OK I have such land myself, with rubber. The land office knows that this is the way things are done and doesn't get involved if possible.

As for the rubber, don't believe what you are told is the output, by tree, tap or day ask for copies of last seasons sales dockets.

Personally I would not buy anything without seeing if first hand. Jim

[kwonitoy]

We have bought sor por gor 4 land around our area, about 60 kms south of Phon Phisai.

After buying it we paid for a surveyor and then registered the official survey with the land office and anywhere from 1-3 years later we have received the chanote.

As Jim says it is Crown land, but from our dealing with the local land office they are trying to move this land to chanote ownership to increase their tax base.

Don't take this as any investment advice, just our own personal experience.

As for 8 rai of rubber for 1.4 million. I wouldn't buy it, but I would sell some at that price

[jamescollister]

We have bought sor por gor 4 land around our area, about 60 kms south of Phon Phisai.

After buying it we paid for a surveyor and then registered the official survey with the land office and anywhere from 1-3 years later we have received the chanote.

As Jim says it is Crown land, but from our dealing with the local land office they are trying to move this land to chanote ownership to increase their tax base.

Don't take this as any investment advice, just our own personal experience.

As for 8 rai of rubber for 1.4 million. I wouldn't buy it, but I would sell some at that price

The value of rubber and land is in the eye of the buyer. I have changed my opinion on what they are worth over the years. When I started I had no real care as to price, good or bad. My only concern was will this land make me a return in the following years, so I can throw away my uniform and take up swinging in a hammock, drinking cold beer as a fultime occupation.

I note that farangs look at land values as more of a gift to the wife and a right off in money terms , rightly so for most as they can't own it. Thais look at it as, will this land support the family for their life. Chinese Thais take a much longer term view of it, as an investment in the future. [ generally] I am now looking at it as an investment in the future, for my 2 young children. When or if I have money I will be looking at what it will be worth in 20 years not what it cost today. Jim

[tingtong]

We have bought sor por gor 4 land around our area, about 60 kms south of Phon Phisai.

After buying it we paid for a surveyor and then registered the official survey with the land office and anywhere from 1-3 years later we have received the chanote.

As Jim says it is Crown land, but from our dealing with the local land office they are trying to move this land to chanote ownership to increase their tax base.

Don't take this as any investment advice, just our own personal experience.

As for 8 rai of rubber for 1.4 million. I wouldn't buy it, but I would sell some at that price

Just 2 things to point out:

1. has a half biult house, not plain land all...i dont know what kind a house, but if it suits him to finish it up, might change the maths considerable.

2. he said: they asking for 1.4 million. Now, being as i am, and we all should, take asking price and make our offer somewhat lower....usually like 30-50% lower, if they know farrang who they offer too. in this case it would probably come to about 1 million, and if they motivated sellers i am sure he could close not higher than 1.1 million...

( i was just late to an offer in our region, 8.5 rai sugarcane, ask 450k, sold 320k...bad to seller, as i would give up to 350k...it has full chanote, and as added advantage it is about 2 km only from us; btw, my wife thought they wouldnt sell bellow 400k, but as yyou see, motivationmight be big drive).

[tothemark]

We have bought sor por gor 4 land around our area, about 60 kms south of Phon Phisai.

After buying it we paid for a surveyor and then registered the official survey with the land office and anywhere from 1-3 years later we have received the chanote.

As Jim says it is Crown land, but from our dealing with the local land office they are trying to move this land to chanote ownership to increase their tax base.

Don't take this as any investment advice, just our own personal experience.

As for 8 rai of rubber for 1.4 million. I wouldn't buy it, but I would sell some at that price

Just 2 things to point out:

1. has a half biult house, not plain land all...i dont know what kind a house, but if it suits him to finish it up, might change the maths considerable.

2. he said: they asking for 1.4 million. Now, being as i am, and we all should, take asking price and make our offer somewhat lower....usually like 30-50% lower, if they know farrang who they offer too. in this case it would probably come to about 1 million, and if they motivated sellers i am sure he could close not higher than 1.1 million...

( i was just late to an offer in our region, 8.5 rai sugarcane, ask 450k, sold 320k...bad to seller, as i would give up to 350k...it has full chanote, and as added advantage it is about 2 km only from us; btw, my wife thought they wouldnt sell bellow 400k, but as yyou see, motivationmight be big drive).

Ting Tongs nearer the mark and thats from Tothemark

Its way overpriced, we are about 30kms from Phon Phisai and it would be fair to say that I have a good understanding of the prices in this area, albeit some factors will change the prices but you havent mentioned any strong ones.

I presume there are are about 600 trees on the site and they are either under performing and/or possibly 6/7 years old only?

IMHO the value on this land would be maximum 1m, possibly more like 900k.

There is no problem with sor Por Kor if you use a good land lawyer, i stress land lawyer not lawyer.

The issue with Sor Por Kor is that usually 15 rai was "given" by the state in the 80's under the land reform act to peasant/subsistance farmers allowing any one person a maximum of 50 rai. The original person gifted the land is the title holder and you have to be very careful when purchasing in the way that the new contract has to be worded. This is my understanding if i am incorrect I would be interested to hear others opinions.

We have seen a number of contracts where the title holder has "sold" the Sor Por Kor to the "new" owner and they clearly state that it allows them use of the land. Under this definition it is effectively a lease and by its definition of allowing use only, precludes the "new" owner from ever selling the land again, even though it does happen.

Dont be put off, we have bought Sor Por Kor, just get a good lawyer, I can pm you if you need one. But you will have difficulty if you ever want to borrow against it from a main street bank.

Earlier this year i looked at a site that was SPK (SorPorKor) and on its second owner, i didnt like the price or make up of the site, 28rai at 3.5m and walked away. We heard later it was sold to a Bkk "lady" but the original land holder blocked the deal on the basis i mentioned above.

Personally I would not rush into that deal, 8rai of rubber will be difficult to tap as it will not generate enough income for a third party tapper, so you may struggle to get anyone to work it, unless of course you want to do it ! As Jim has pointed out in the past dont rely on family unless they are already tapping in that area.

There are plenty of "agents" touting land around and I would advise spending a couple of weeks letting them take you or a family member around the area to see whats for sale, that will give you a very good understanding of just what you are getting into.

Edited September 2, 2011 by tothemark

[Mosha]

The price depends on how desperate the seller is. A mate was looking at 15 Rai Sor Por Kor with a house and producing rubber for 700K. He lost interest after his Thai family started playing up.

[jamescollister]

Having a house on SPK land is not legal, the title allows for a workers hut not a large family dwelling. I know that Thais and farangs build and in most cases have no trouble, but in reality you need planning permission just like in the west, and you won't get it. You only need one jealous neighbor with a bit of pull to complain, bye bye house. Don't think it doesn't happen. Even out in the boonies where I live things are changing fast.

Ken interesting what you are saying about the Government up grading titles, hasn't started here yet, but a win win if you already have the land. The BIL who works for the local Government was saying last year, that if we have any money we should be buying possession land, no title at all, just land that people have been farming. Didn't get it at the time, but if they are converting farm land to charnote, there may be something to what he is saying. Jim

[Gary A]

That would appear to be near the price for land with a chanote. My Thai wife has turned down Sor Por Gor 4 land that was priced much cheaper than this. With the government tearing down resorts and confiscating foreign controlled rubber farms on this type of land, I would definitely walk away.

[somo]

My wife and I bought 32 rai of sor por gor land a few years ago and had to slowly clear about 7 rai of it.

Once all cleared I measured it at about 26 rai. Got the official from chayapoum to come out and check the markers and sure enough some of them had been moved by neighbouring land owners but now have our 32 rai after a lot of argument.

The official also helped us to hook the original land documents out of the office. Although they are not in our name it is important to have them as otherwise the named owner can use them to borrow money against. I know of one case in our village where this has happened and the lending bank took possesion of the land although they let the new owners farm it who knows when the bank will kick them off the land or start charging rent.

Having said that if the price was right I would buy more but I am talking about 20-30K/rai which is all farming land is worth to me. Anything more and it would take too long to get my money back growing casssava.

[tothemark]

Having a house on SPK land is not legal, the title allows for a workers hut not a large family dwelling. I know that Thais and farangs build and in most cases have no trouble, but in reality you need planning permission just like in the west, and you won't get it. You only need one jealous neighbor with a bit of pull to complain, bye bye house. Don't think it doesn't happen. Even out in the boonies where I live things are changing fast.

Ken interesting what you are saying about the Government up grading titles, hasn't started here yet, but a win win if you already have the land. The BIL who works for the local Government was saying last year, that if we have any money we should be buying possession land, no title at all, just land that people have been farming. Didn't get it at the time, but if they are converting farm land to charnote, there may be something to what he is saying. Jim

We have been told similar Jim, make sure that you pay your land tax on Sor POr Kor every year in the same name that the "new" owner is now registered, i.e. your wife. Maybe, and its just a maybe it will put one in a strong position IF Sor Por Kor does get a regraded land title.

Gary A, wheres that come from ? Do you have a link ?

Somo, thats a good point about the documents. The other one to remember is if you are buying the SPK from someone who has bought it from the original owner, i.e further down the chain, you must get a contract where the original owner also agrees to have "sold" it to you, not just the person you are buying it from. As I said get a good land lawyer and best to buy SPK with the view that you farm it to keep in the family for good.

[jamescollister]

Hi all , a bit bored this morning and have a few hours to kill before I head out, so thought I would throw this in and see what people thought.

How much is a plantation really worth.

Now anyone who has read my posts will know I have a distaste for averages, but for this I will use them, plus will talk in US dollars, rather than Baht.

One rai land, say 70 producing trees. Making ribbed smoked sheet. Price $5 US a kilo [Know that's not today's price, but it was earlier and will be again, end of this year or next.] Average output allegedly 5 kilos per tree per year.

70 X 5 350 kilos per year. 350 kilos X $5 $1750 of rubber per year.

Now forgetting you are a farang, which has no relevance to prices. You are a man who can tap his own trees.

Man pays $3300 [ about 100,000 Baht] for that rai. Minus his costs, say $250 a year. He will have paid off his initial investment in under 3 years and own the trees and land.

Now I am no business man, but think you would be hard pushed to do the same in the west, whether in farming, buying a shop or gas station etc. Jim

[tothemark]

Hi all , a bit bored this morning and have a few hours to kill before I head out, so thought I would throw this in and see what people thought.

How much is a plantation really worth.

Now anyone who has read my posts will know I have a distaste for averages, but for this I will use them, plus will talk in US dollars, rather than Baht.

One rai land, say 70 producing trees. Making ribbed smoked sheet. Price $5 US a kilo [Know that's not today's price, but it was earlier and will be again, end of this year or next.] Average output allegedly 5 kilos per tree per year.

70 X 5 350 kilos per year. 350 kilos X $5 $1750 of rubber per year.

Now forgetting you are a farang, which has no relevance to prices. You are a man who can tap his own trees.

Man pays $3300 [ about 100,000 Baht] for that rai. Minus his costs, say $250 a year. He will have paid off his initial investment in under 3 years and own the trees and land.

Now I am no business man, but think you would be hard pushed to do the same in the west, whether in farming, buying a shop or gas station etc. Jim

My sentiments entirely Jim.

Anyone contemplating rubber should seriously consider purchasing a working plantation rather than starting from scratch with virgin land (unless of course they already own it and wish to keep it). Bearing in mind that semi forest rai is fetching up to 40,000 a rai at the moment, if you can buy established rubber currently producing at circa 100,000 a rai then its a no brainer, especially if the lumber is worth 40,000 (in time to come).

Jims calculations marry mine in that as Jim says, if you are the owner and tapper your return (based upon the higher price of rubber) is 33% p.a. If you employ a team on a split basis (50/50, 60/40) then your return is 15% p.a. These are the figures that I work to when buying established rubber. Stress testing the investment and allowing for rubber to fall by 50% to 40bht a kilo drops the return to 7.5%, still acceptable in my view.

Your investment is producing an income in baht and not from your country of origin (COO)and therefore you dont have the added loss of exchange rate variances in getting your money to Thailand. Additionally, you dont have to pay the punitive country of origin taxes (as its not in my name) you would be subjected to on the same rates of investment income if you invested in your COO.

But remember thats in a perfect world and running a plantation as a business is open to many, many variances that can affect that rate of return.

Jim you said you were rubbish at figures, what happened ?

Edited September 4, 2011 by tothemark

[SantiSuk]

Our house and some farmland is Sor Por Gor. Other options arise too infrequently in this part of Si Saket province.

I took a calculated risk, but I would not have done so if I could not afford to replace the house and land when and if confiscated.

[elgato]

caveat emptor

[Gary A]

Having a house on SPK land is not legal, the title allows for a workers hut not a large family dwelling. I know that Thais and farangs build and in most cases have no trouble, but in reality you need planning permission just like in the west, and you won't get it. You only need one jealous neighbor with a bit of pull to complain, bye bye house. Don't think it doesn't happen. Even out in the boonies where I live things are changing fast.

Ken interesting what you are saying about the Government up grading titles, hasn't started here yet, but a win win if you already have the land. The BIL who works for the local Government was saying last year, that if we have any money we should be buying possession land, no title at all, just land that people have been farming. Didn't get it at the time, but if they are converting farm land to charnote, there may be something to what he is saying. Jim

We have been told similar Jim, make sure that you pay your land tax on Sor POr Kor every year in the same name that the "new" owner is now registered, i.e. your wife. Maybe, and its just a maybe it will put one in a strong position IF Sor Por Kor does get a regraded land title.

Gary A, wheres that come from ? Do you have a link ?

Somo, thats a good point about the documents. The other one to remember is if you are buying the SPK from someone who has bought it from the original owner, i.e further down the chain, you must get a contract where the original owner also agrees to have "sold" it to you, not just the person you are buying it from. As I said get a good land lawyer and best to buy SPK with the view that you farm it to keep in the family for good.

There was some good information from a source that CANNOT be used here. Here is a link from Thai Visa;

[jamescollister]

hi Gary, read the article, think there is a big difference between a farangs wife owning some crown farm land and growing rubber. Than illegally logging national park , then claiming the land for rubber plantations.

Round here, near national park land, they are red hot on illegal logging. Border solders, forestry and police are locking up a lot of Thais. At a guess the Thai Government is being put under pressure by green Peace, Save the Planet and other groups. This green house warming and or climate change is making it hard for those who thought they were far enough away to do as they liked. Jim

[Gary A]

hi Gary, read the article, think there is a big difference between a farangs wife owning some crown farm land and growing rubber. Than illegally logging national park , then claiming the land for rubber plantations.

Round here, near national park land, they are red hot on illegal logging. Border solders, forestry and police are locking up a lot of Thais. At a guess the Thai Government is being put under pressure by green Peace, Save the Planet and other groups. This green house warming and or climate change is making it hard for those who thought they were far enough away to do as they liked. Jim

Maybe not as much difference as you think. We live in a scenic area with water falls and beautiful rock formations on land that fits the same description as in the article. I found a property that was absolutely beautiful and priced right. It had sugar cane growing in the 11 rai valley located between sheer rock faces that formed a natural wall around three sides.

The old lady who wanted to sell it said that her grandfather had settled there many years ago and that the land could be sold legally because she was paying taxes on it. My Thai wife did some checking and told me that land could NOT be sold and the old lady only had rights to farm the government owned land.

Another similar piece of land in the same area was supposedly owned by an old man who claimed he owned the land and had owned it for many years. The forestry department came in and built an office and quarters for their workers. The local people were very upset because many of them are in that same situation. In the end the government gave that old man compensation. He got a whopping 10,000 baht.

I had convinced myself that the piece of land I badly wanted was worth taking a chance on. I was probably fortunate that my wife was finally able to talk me out of it.

ADDED - Just yesterday I was up the mountain having a few beers with some friends. We were at a new restaurant that is the nicest in the area. The "owner" has also built four hotel room sized bungalows for tourists with plans to build more. He has been warned by the government NOT to build anything else on the property. What will happen next is anyone's guess.

Edited September 17, 2011 by Gary A