Value Of Farm Land Near Buriram

[Thailaw]

I am considering purchasing 20 rai of land presently being used to grow rice about 40km from Buriram. It is not near any rivers or lakes (the closest one is 10 km away), and there are no substantial home in the immediate area. It would be purchased as a long term investment for my two young Thai/farang daughters. Any thoughts about how much it might be worth per rai? I was told that land of this kind and in this area was worth B30,000 per rai a year or two ago, but that the price has recently increased to around B50,000 per rai, I assume with the increase in the price of rice. Any useful/reliable information will be very much appreciated.

[Lickey]

Quote,

Any useful/reliable information will be very much appreciated

Or suggestions?

[happyaussie]

Judging by your description I'd say the price is high. No more than 12,000 to 15,000 or cheaper, depending on how desperate the current owners want to off load. If it's leased to farmers, don't expect much return. It's a lot of land and if it's long term investment plant teak trees. In 10/15 years that will be an excellent leg up for the kids.

I'm sure you know this, but be very careful with titles and deeds. Also make sure the land is unencumbered. This includes loan sharks.

If I were you I'd have a Thai I can trust to do negotiations and don't let anyone know a Farang is involved. Even if the deal is through a family member there's a 95% chance they'll be looking for a spotters fee.

I have a few small parcels of land and at first I'm sure I got stitched up. But now I'm a little better, I think.

[isanbirder]

This is a constant theme on the Isan forum! Price varies for all sorts of reasons. Is it on a tarmac road? Where's the nearest water/electricity supply? Most of all, is it unencumbered , and on chanote? Don't let anyone know a farang is even vaguely involved!

Land prices in Buriram are rising quite fast at the moment... so land can be a good buy, depending entirely on the location. The price of rice has very little to do with it.

[Thailaw]

This is a constant theme on the Isan forum! Price varies for all sorts of reasons. Is it on a tarmac road? Where's the nearest water/electricity supply? Most of all, is it unencumbered , and on chanote? Don't let anyone know a farang is even vaguely involved!

Land prices in Buriram are rising quite fast at the moment... so land can be a good buy, depending entirely on the location. The price of rice has very little to do with it.

The land has electricity supply available and there is a paved road to the property. The land is two adjoining parcels with two chanotes and is presently mortaged, but part of the sale proceeds would be used to clear the title. The issue of liens and encumbrances is more of procedural issue to ensure that the liens are removed with a payment of a portion of the proceeds to the lien holder at the time of sale. The land is presently owned by a relative, and the sale price is based more on debts needing to be cleared than any measure of "market price", which could be higher or lower. If the land is agricultural land, as it is,and likely has little industrial or residential value (at least for the foreseeable future), its value should be affected by the market price of the produce which it is capable of producing. Rising rice prices should certainy have an impact on the value of land on which rice can be productively grown, although the longer term strategy may be to change its use. The land is owned by relatives who want to clear their debts, so price negotiation is limited/nonexistent. I was told that a farang and his Thai wife recently purcahsed 30 rai in the area for B1.5 million (somewhat higher than the per rai price offered to me), but I immediately dismissed this as fluff or a "farang inflated" price. My motive is to help the family but at the same time it MUST provide a good long term investment for my daughters. My main concern is and will be the welfare of my children. It sounds like this may be an offer to pass on.

Edited November 19, 2011 by Thailaw

[Thailaw]

Judging by your description I'd say the price is high. No more than 12,000 to 15,000 or cheaper, depending on how desperate the current owners want to off load. If it's leased to farmers, don't expect much return. It's a lot of land and if it's long term investment plant teak trees. In 10/15 years that will be an excellent leg up for the kids.

I'm sure you know this, but be very careful with titles and deeds. Also make sure the land is unencumbered. This includes loan sharks.

If I were you I'd have a Thai I can trust to do negotiations and don't let anyone know a Farang is involved. Even if the deal is through a family member there's a 95% chance they'll be looking for a spotters fee.

I have a few small parcels of land and at first I'm sure I got stitched up. But now I'm a little better, I think.

A useful post. Thanks for your input.

[Thailaw]

Quote,

Any useful/reliable information will be very much appreciated

Or suggestions?

So long as the "suggestions" are based on reliable information in the possessions of the person giving the suggestions, they are of course welcome. I got one estimate of value from happyaussie at B12,000 to 15,000, which is about 1/3 of the price offered to me. Based on that information, the obvious suggestion is "do not buy". I am happy and will appreciate any information (coupled with (or not) suggestions of what to do) on the value of farm land 40 km of Buriram city. Thanks,

[cardholder]

Seems a fair price to me but wait for sinbin to come on because he is quite an authority on land prices.

I paid a lot more than that.

[Thailaw]

Land prices in Buriram are rising quite fast at the moment... so land can be a good buy, depending entirely on the location. The price of rice has very little to do with it.

[emphasis added]

Land can be a good buy depending on location AND price! The fact that land prices are rising is interesting, but not very helpful -- rising from what present point? If I buy land for B50,000 per rai that has a present market value of B15,000, assuming that land prices are rising at 10% per year, it will take 23.3 years (assuming for simplicity no compounding) to get to a point where the market price equals what I paid for the land -- a good buy? I think not, and I certainly hope that you agree, The real issue is what is the land worth at present. Have any thoughts on that? That would be helpful, unlike your earlier post.

[jamescollister]

Thailaw, don't know the area, but I live in the end of nowhere and land without any real title goes for over 30,000 Baht. If the loans on the land are with a bank, go ask them what they valued the land at.. If the loans are from the local money lender different story. Take the titles to a land lawyer, Things are often not what they seem here and every Thai will say the land has charnot even though all they have is a village title. Check to see who actually owns the land. Thais buy and sell to each other and never go to the land office to have the deeds changed and pay the transfer taxes, Step carefully, Jim

[Thailaw]

Thailaw, don't know the area, but I live in the end of nowhere and land without any real title goes for over 30,000 Baht. If the loans on the land are with a bank, go ask them what they valued the land at.. If the loans are from the local money lender different story. Take the titles to a land lawyer, Things are often not what they seem here and every Thai will say the land has charnot even though all they have is a village title. Check to see who actually owns the land. Thais buy and sell to each other and never go to the land office to have the deeds changed and pay the transfer taxes, Step carefully, Jim

Thanks much for the reply. I agree with everything you say. Any problem with title or clearing liens will be a deal stopper. I am at the stage of deciding whether to pursue this offer or not. If I decide no, then it all stops here. If I decide yes, then money will only pass hands when all of the i's are dotted and t's are crossed -- full stop. I am not worried about B10k or 20k for transfer taxes or getting the documents in order, it is the fundamental value of the property in relation to the asking price that I am exploring at the moment. Is B45,000 per rai in the "ball park" for agricultural land 40 km outside Buriram? I have never stepped foot in Buriram, so my first thought was to seek help and information from those living there that know the market. I appreciate the help and input from everyone, but I am not where I need to be on this issue yet. Please keep in mind that this is not an academic inquiry, and I am not looking for support or bashing of Issan generally -- just reliable information on the value of farm land in Buriram. All helpful information and ideas will be greatly appreciated. There is one lien/loan on the property from Bangkok Bank for about B350,000. This is all that the Bank would loan. I do not know if that limit is due to the ability of the borrowers to repay the loan or that it was all that the value of the land would support. I can ask for the Bank's appraisal, but I am not sure that it is recent enough to reflect present market value. I can have an appraisal done, which may be the only way to get reliable information on land values. Thanks.

Edited November 19, 2011 by Thailaw

[isanbirder]

We sold some rice land, without road access, or electricity, for about 50,000 per rai earlier this year. The land is about 20 kms from Buriram. And it did have chanote. And I wish we'd kept it. The land we have now, alongside a road, is worth considerably in excess of that.

James Collister gives good advice... step carefully.

[Gary A]

I can only tell you that the land in our area of Loei province has gone absolutely crazy. I have no idea if it is a bubble value or not. My wife wanted to buy 6 rai that happens to be next to the ten rai she already has. We paid 20,000 baht per rai for that ten rai six years ago.

The guy wanted 60,000 baht per rai. I refused to help her so she went to the bank for a loan. By the time she arranged the loan, the property had sold for 70,000 baht per rai. That land was on a paved road but has no water or electricity.

Recently she paid 170,000 baht per rai for two rai that has electricity and is on a good paved road. The guy backed out and returned her money.

I have no idea why the prices have gone crazy but nothing that involves land values surprises me now. I have come to the conclusion that land is worth whatever someone is willing to pay for it. I am quite conservative and with the crazy prices, I'd be quite careful buying for an investment.

[isanbirder]

Land prices in Buriram are rising quite fast at the moment... so land can be a good buy, depending entirely on the location. The price of rice has very little to do with it.

[emphasis added]

Land can be a good buy depending on location AND price! The fact that land prices are rising is interesting, but not very helpful -- rising from what present point? If I buy land for B50,000 per rai that has a present market value of B15,000, assuming that land prices are rising at 10% per year, it will take 23.3 years (assuming for simplicity no compounding) to get to a point where the market price equals what I paid for the land -- a good buy? I think not, and I certainly hope that you agree, The real issue is what is the land worth at present. Have any thoughts on that? That would be helpful, unlike your earlier post.

I did assume readers would use their common sense and realise that "at a reasonable price" was a given.

The problem with buying and selling land in Isan is that there is no ballpark figure. Residents in one area cannot give useful advice to people intending to buy in a different area. You simply have to glean what information you can about prices for chanote land in your area, and work from that. But, so long as you don't pay over-the-top prices, land does seem to be a rising market (and not a bubble!).

[cardholder]

. I can have an appraisal done, which may be the only way to get reliable information on land values. Thanks.

You could try exploring forums local to Buriram to see if you can extract any more local opinion from expats.

Any appraisal can only be based on comparibles - someone localy may have some.

At the end of the day it is what YOU think is reasonable that matters.

[Thailaw]

. I can have an appraisal done, which may be the only way to get reliable information on land values. Thanks.

You could try exploring forums local to Buriram to see if you can extract any more local opinion from expats.

Any appraisal can only be based on comparibles - someone localy may have some.

At the end of the day it is what YOU think is reasonable that matters.

If this was residential property and I was going to live there, I would tend to agree with you, at least in part. But this is a long term investment, nothing more. What I think it is worth matters not. What matters is what I (or my daughters) will be able to sell it for in the future in relation to what I pay for it now. I have no idea what it is worth -- what a buyer would pay for this land in an arm's length transaction. nor do I own a crystal ball that will tell land values in the future. I do tend to believe that land will provide a reasonable return over time, and that will be true in Asia/Thailand in particular. Given the very varied estimates of land values near Buriram, it soulds like B35,000 to B40,000 per rai is a good "ball park" estimate of the value of the land in question.

Thanks to all who have provided input and information on land sales prices. They have been helpful. In chacking further, I have found that the paved road and electricity are about 400 meters to the land parcel. Electricity can be brought to the parcel easily and relatively cheaply. The road is probably a much more costly proposition. One can certainly expect that economic development in the area will bring the road and electricity to the parcel in due course within the next 10 years -- a plus for expected land value increase. If anyone has any additional information, I would be pleased to hear it.

[rgs2001uk]

In my experience of travelling through the region ex pat landowners usually fall into the following categories,

a. Live here full time, independantly wealthy, have bought a hobby for themselves and or wife and family.

b. Live here full time, trying to run at a profit, but have a pension to fall back on when they realise the ROI wasnt what they were promised or planned for.

c. Live and work overseas, have bought property as a retirement plan, have no idea of the return of outlay in terms of yield/profit per rai per year, continue to subsidise purchase by regular payments. In most cases one step away from next category.

d. Live here full time, bought land a few years ago and try to make a go of it, now realise a return of 10k per rai per year doesnt support the lifestyle they hoped to live. 50 rai giving an income of 500k per year doesnt support a farang mansion, matching his n hers Fotrunas in the driveway, holidays or pay for a decent education for children, savings constantly being eroded by inflation and unplanned for emergencies. They dont know how long they can last, in most cases one step away from next category.

e. Walked away from it all after being slowly drained, in some cases are lucky can return to work overseas and recover, in other cases, too old, now living elsewhere in Thailand, usually propping up some farang bar and bad mouthing Thailand and all things Thai.

There are always exceptions of course, the problem is trying to sort out the wheat from the chaff.

If you want my honest opinion, this land will be as worthless in real terms in 10 years time as it is now.

The best you can do for your children is to provide them with a decent education.

In your shoes I would be looking at purchasing some mutual funds such as ING or Aberdeen capital growth funds.

That way you still have control over your investment, no need to worry about loan sharks becoming involved.

[Thailaw]

In my experience of travelling through the region ex pat landowners usually fall into the following categories,

a. Live here full time, independantly wealthy, have bought a hobby for themselves and or wife and family.

b. Live here full time, trying to run at a profit, but have a pension to fall back on when they realise the ROI wasnt what they were promised or planned for.

c. Live and work overseas, have bought property as a retirement plan, have no idea of the return of outlay in terms of yield/profit per rai per year, continue to subsidise purchase by regular payments. In most cases one step away from next category.

d. Live here full time, bought land a few years ago and try to make a go of it, now realise a return of 10k per rai per year doesnt support the lifestyle they hoped to live. 50 rai giving an income of 500k per year doesnt support a farang mansion, matching his n hers Fotrunas in the driveway, holidays or pay for a decent education for children, savings constantly being eroded by inflation and unplanned for emergencies. They dont know how long they can last, in most cases one step away from next category.

e. Walked away from it all after being slowly drained, in some cases are lucky can return to work overseas and recover, in other cases, too old, now living elsewhere in Thailand, usually propping up some farang bar and bad mouthing Thailand and all things Thai.

There are always exceptions of course, the problem is trying to sort out the wheat from the chaff.

If you want my honest opinion, this land will be as worthless in real terms in 10 years time as it is now.

The best you can do for your children is to provide them with a decent education.

In your shoes I would be looking at purchasing some mutual funds such as ING or Aberdeen capital growth funds.

That way you still have control over your investment, no need to worry about loan sharks becoming involved.

RGS, thanks. Your views and advice are sound, and no doubt reasonably describe the farang land owners in Issan. If I buy the land I will not use it. It will remain with the relatives who now own it for at least 7 to 10 years, and we will agree some sharing of proceeds from the sale of rice -- 70 (them)/30(me) has been proposed, which translates into B30K per year I am told (about 4% return, ignoring any appreciation in value). Nobody is going to get rich on that amount of money. But we are not talking about a large sum to purchase the land either, less than $30,000. With todays interest rates, that amount of money won't provide much over the next 10 years in terms of return in bonds or a mutual fund. I have already established a trust fund for my daughters' educations that will take care of private schools and university and maintain them in a reasonable standard if I were to die tomorow. So that is not an issue. This would be a relatively small "side" investment that,if the Thai economy continues to grow, might pay them a better return than putting the money in the bank or buying another bond (paying 2.75%, taxable). There are certainly problems dealing with relatives and getting them to perform as promised and what to do if they do not -- probably can't kick them off the land, and if I were gone the girls might be pressured to transfer the land back to the relatives when they are old enough to do so. But the pressure to help and support the "family" will always be there, and I worry about that in relation to their well being and future security a lot. But I am still grappling with the fundamantal question that I need to answer before I deal with any of the rest -- is the land worth (would a distinterested Thai person pay) what is being asked for the land, about B44,000 per rai for 20 rai. No decision yet, still thinking. Thanks for your input -- it does put the issues in a better perspective. Cheers,

Edited November 20, 2011 by Thailaw

[cardholder]

I would share the view that the main considerations are non-financial.

You have said that the monetary side is not that important and, as an investment, it does not stack up.

You can do better things with the money for your daughters and not take on potential risk factors with the family.

Walk away from it as an investment opportunity.

[Thailaw]

I would share the view that the main considerations are non-financial.

You have said that the monetary side is not that important and, as an investment, it does not stack up.

You can do better things with the money for your daughters and not take on potential risk factors with the family.

Walk away from it as an investment opportunity.

Thanks. Sound advice, I think. I am leaning in the direction you suggest for several reasons, not the least of which is that I really cannot get a good feel or much comfort on the value of the land, and without that buying as an investment doesn;t make much sense.

[rgs2001uk]

I would share the view that the main considerations are non-financial.

You have said that the monetary side is not that important and, as an investment, it does not stack up.

You can do better things with the money for your daughters and not take on potential risk factors with the family.

Walk away from it as an investment opportunity.

Thanks. Sound advice, I think. I am leaning in the direction you suggest for several reasons, not the least of which is that I really cannot get a good feel or much comfort on the value of the land, and without that buying as an investment doesn;t make much sense.

My 2 satangs worth.

From a common sense point of view, this purchase doesnt pass the logic test, too many variables, is this a proper chanot?, what about access, frontage road? I have seen too many times the scenario of what the farang thinks will happen and what is promised bears no resemblance to what actually happens.

The OP would do well to google Thailand property deeds and acquaint himself with the various type of deeds.

From a financial point of view, it doesnt add up, there are better things the OP can do with his money.

From an investment point of view, I wouldnt touch it with a barge pole.

Sorry to be so negative, but I can see nothing that makes this venture worthy of further consideration, more like a potential nightmare.

[fatfather]

I can only tell you that the land in our area of Loei province has gone absolutely crazy. I have no idea if it is a bubble value or not. My wife wanted to buy 6 rai that happens to be next to the ten rai she already has. We paid 20,000 baht per rai for that ten rai six years ago.

The guy wanted 60,000 baht per rai. I refused to help her so she went to the bank for a loan. By the time she arranged the loan, the property had sold for 70,000 baht per rai. That land was on a paved road but has no water or electricity.

Recently she paid 170,000 baht per rai for two rai that has electricity and is on a good paved road. The guy backed out and returned her money.

I have no idea why the prices have gone crazy but nothing that involves land values surprises me now. I have come to the conclusion that land is worth whatever someone is willing to pay for it. I am quite conservative and with the crazy prices, I'd be quite careful buying for an investment.

Since the flood in Bkk, many rich Bangkokians trew their eyes into Isaan, because there is no flooding and the infrastructure is not too bad to get connection to the capital. Many land is bought at moment from such investors. That makes the landprices spinning up. At this time land at a sealed road, water, electricity available, chanote...... up to 100,000 THB/rai is ok if it is suitable farmland.

fatfather

[Thailaw]

My 2 satangs worth.

From a common sense point of view, this purchase doesnt pass the logic test, too many variables, is this a proper chanot?, what about access, frontage road? I have seen too many times the scenario of what the farang thinks will happen and what is promised bears no resemblance to what actually happens.

The OP would do well to google Thailand property deeds and acquaint himself with the various type of deeds.

From a financial point of view, it doesnt add up, there are better things the OP can do with his money.

From an investment point of view, I wouldnt touch it with a barge pole.

Sorry to be so negative, but I can see nothing that makes this venture worthy of further consideration, more like a potential nightmare.

More variables does not make an investment "illogical". It simply means that careful due diligence is required. The important variables need to be identified and they need to be satisfactorily addressed in the transaction, or it doesn't happen. A chanote is required, and I have been told that the land has two chanotes. If the seller cannot deliver chanotes, no sale. Where is the risk, apart from going through the motions? Access (paved road) and electricity have been described as being within 400 meters of the parcel, with a dirt road to the land parcel. This can be checked from land records, and again if it is materially wrong, the deal dies. I am reasonably familiar with the various land titles, and would only acquire this property if it has a chanote land title.

The transaction needs, I think, to be kept in perspective. We are talking about B880,000 (the asking price) for 20 rai. I spent more on my family's10-day vacation last month than that -- a "nightmare", I doubt it. Do I want to blindly toss away B880,000, no. But if I can come up with a reasonable price for the land, I am very capable of structuring a transaction that will take care of most of the "risks" that exist in the transaction. As an aside, I am also looking at beach front land (about 3 rai) in southern Thailand as an investment for my daughters. This would be in addition to that, and them having a portfolio of income generating investment assets when they reach their early 20's is the objective. (They are both under 4 yo now).

As a first step, I have decided to offer the seller B35,000 per rai reduced by the rent (B30,000 per year, discounted at 2.50% per year) for the first 5 years following the transfer, about B560,000 total for 20 rai. The lease will have a term of five years and they can then occupy the land for 5 years rent free. The seller/lessee will have the option to renew the lease for five more years at an annual rent of B30,000. The Lease will provide that if the rent is not paid after the 5th year, the lease will terminate and the land will be sold. My risk exposure is B30,000 (1 year's unpaid (and lost) rent) plus lost income during the time required to sell the land at a reasonable price. Will they accept these terms? I have no idea, it is up to them. But the price and sale structure satisfies my concerns, I think. Ownership is an issue -- me or my daughters. My first thought was for my daughers (Thai/Americans) to own the land. But if minors are the owners, a court order approving the sale is required. So, I will now investigate whether one of my two existing Thai companies, which both own parcels of land in Chonburi, can acquire the land. Any thoughts on that? If I need to create a new company, I can do that, but there are costs to that that I would like to avoid -- it would eat up almost half the annual rent. And I do not know how the company ownership structure is viewed by the Land Department in Buriram.

This is where I am at the moment.

Edited November 22, 2011 by Thailaw

[Gary A]

My 2 satangs worth.

From a common sense point of view, this purchase doesnt pass the logic test, too many variables, is this a proper chanot?, what about access, frontage road? I have seen too many times the scenario of what the farang thinks will happen and what is promised bears no resemblance to what actually happens.

The OP would do well to google Thailand property deeds and acquaint himself with the various type of deeds.

From a financial point of view, it doesnt add up, there are better things the OP can do with his money.

From an investment point of view, I wouldnt touch it with a barge pole.

Sorry to be so negative, but I can see nothing that makes this venture worthy of further consideration, more like a potential nightmare.

More variables does not make an investment "illogical". It simply means that careful due diligence is required. The important variables need to be identified and they need to be satisfactorily addressed in the transaction, or it doesn't happen. A chanote is required, and I have been told that the land has two chanotes. If the seller cannot deliver chanotes, no sale. Where is the risk, apart from going through the motions? Access (paved road) and electricity have been described as being within 400 meters of the parcel, with a dirt road to the land parcel. This can be checked from land records, and again if it is materially wrong, the deal dies. I am reasonably familiar with the various land titles, and would only acquire this property if it has a chanote land title.

The transaction needs, I think, to be kept in perspective. We are talking about B880,000 (the asking price) for 20 rai. I spent more on my family's10-day vacation last month than that -- a "nightmare", I doubt it. Do I want to blindly toss away B880,000, no. But if I can come up with a reasonable price for the land, I am very capable of structuring a transaction that will take care of most of the "risks" that exist in the transaction. As an aside, I am also looking at beach front land (about 3 rai) in southern Thailand as an investment for my daughters. This would be in addition to that, and them having a portfolio of income generating investment assets when they reach their early 20's is the objective. (They are both under 4 yo now).

As a first step, I have decided to offer the seller B35,000 per rai reduced by the rent (B30,000 per year, discounted at 2.50% per year) for the first 5 years following the transfer, about B560,000 total for 20 rai. The lease will have a term of five years and they can then occupy the land for 5 years rent free. The seller/lessee will have the option to renew the lease for five more years at an annual rent of B30,000. The Lease will provide that if the rent is not paid after the 5th year, the lease will terminate and the land will be sold. My risk exposure is B30,000 (1 year's unpaid (and lost) rent) plus lost income during the time required to sell the land at a reasonable price. Will they accept these terms? I have no idea, it is up to them. But the price and sale structure satisfies my concerns, I think. Ownership is an issue -- me or my daughters. My first thought was for my daughers (Thai/Americans) to own the land. But if minors are the owners, a court order approving the sale is required. So, I will now investigate whether one of my two existing Thai companies, which both own parcels of land in Chonburi, can acquire the land. Any thoughts on that? If I need to create a new company, I can do that, but there are costs to that that I would like to avoid -- it would eat up almost half the annual rent. And I do not know how the company ownership structure is viewed by the Land Department in Buriram.

This is where I am at the moment.

I would advise you to totally avoid any type of company regardless of what anyone tells you. If you have nominee partners, you still won't have total control besides it being illegal. That's not even considering the yearly taxes and accountant expenses.

If your daughters are Thai citizens, that would be the way to go. If there is an age problem with the government, a contract giving them the land when they do come of age surely could be arranged.

[rgs2001uk]

My 2 satangs worth.

From a common sense point of view, this purchase doesnt pass the logic test, too many variables, is this a proper chanot?, what about access, frontage road? I have seen too many times the scenario of what the farang thinks will happen and what is promised bears no resemblance to what actually happens.

The OP would do well to google Thailand property deeds and acquaint himself with the various type of deeds.

From a financial point of view, it doesnt add up, there are better things the OP can do with his money.

From an investment point of view, I wouldnt touch it with a barge pole.

Sorry to be so negative, but I can see nothing that makes this venture worthy of further consideration, more like a potential nightmare.

More variables does not make an investment "illogical". It simply means that careful due diligence is required. The important variables need to be identified and they need to be satisfactorily addressed in the transaction, or it doesn't happen. A chanote is required, and I have been told that the land has two chanotes. If the seller cannot deliver chanotes, no sale. Where is the risk, apart from going through the motions? Access (paved road) and electricity have been described as being within 400 meters of the parcel, with a dirt road to the land parcel. This can be checked from land records, and again if it is materially wrong, the deal dies. I am reasonably familiar with the various land titles, and would only acquire this property if it has a chanote land title.

The transaction needs, I think, to be kept in perspective. We are talking about B880,000 (the asking price) for 20 rai. I spent more on my family's10-day vacation last month than that -- a "nightmare", I doubt it. Do I want to blindly toss away B880,000, no. But if I can come up with a reasonable price for the land, I am very capable of structuring a transaction that will take care of most of the "risks" that exist in the transaction. As an aside, I am also looking at beach front land (about 3 rai) in southern Thailand as an investment for my daughters. This would be in addition to that, and them having a portfolio of income generating investment assets when they reach their early 20's is the objective. (They are both under 4 yo now).

As a first step, I have decided to offer the seller B35,000 per rai reduced by the rent (B30,000 per year, discounted at 2.50% per year) for the first 5 years following the transfer, about B560,000 total for 20 rai. The lease will have a term of five years and they can then occupy the land for 5 years rent free. The seller/lessee will have the option to renew the lease for five more years at an annual rent of B30,000. The Lease will provide that if the rent is not paid after the 5th year, the lease will terminate and the land will be sold. My risk exposure is B30,000 (1 year's unpaid (and lost) rent) plus lost income during the time required to sell the land at a reasonable price. Will they accept these terms? I have no idea, it is up to them. But the price and sale structure satisfies my concerns, I think. Ownership is an issue -- me or my daughters. My first thought was for my daughers (Thai/Americans) to own the land. But if minors are the owners, a court order approving the sale is required. So, I will now investigate whether one of my two existing Thai companies, which both own parcels of land in Chonburi, can acquire the land. Any thoughts on that? If I need to create a new company, I can do that, but there are costs to that that I would like to avoid -- it would eat up almost half the annual rent. And I do not know how the company ownership structure is viewed by the Land Department in Buriram.

This is where I am at the moment.

The only thing I can add, is your approach to the venture.

You appear to have a rational view, viewing this from a business point of view, dotting the i's and crossing the t's, the due dilligence approach is to be commended.

Others often enter these type of deals from an emotional perspective, family pressure etc etc.

If you proceed I would view this as nothing more than part of a balanced portfolio which may well come under the category, underperforming asset.

As you have already identified, the true value of the land cant be gauged.

I agree the only thing you have to lose at the moment is the time you invest in research, and sorting out the wheat from the chaff, my primary concern would be access to the land, there have been a couple of threads about the exact same problem recently.

I have been offered land all over Thailand, and in most cases it becomes apparent there are underlying issues involved, almost all involve money problems, others access problems, in other cases disputes with neighbours, hence my somewhat cynical attitude.

I have gone past the point of investing anymore of my time, the wife now asks for a copy of chanot and exact google maps location to be sent before we even leave the house.

You have mentioned its not a money issue, more an ownership issue, I am sorry i can offer no advice on that part, its something only you can decide after seeking proper legal advice.

I still stand by my view this isnt worthy of further consideration, but thats a moot point, the only thing that matters is how you view this transaction.

Good luck, you at least are approaching this with your eyes open, which is more than can be said for many who have gone before.

None of my business and I understand your concerns, why not just put this in your wifes name?

If thats not an option, then childrens name.

[Thailaw]

I would advise you to totally avoid any type of company regardless of what anyone tells you. If you have nominee partners, you still won't have total control besides it being illegal. That's not even considering the yearly taxes and accountant expenses.

If your daughters are Thai citizens, that would be the way to go. If there is an age problem with the government, a contract giving them the land when they do come of age surely could be arranged.

The girls are Thai. I saw them as the owners initially. But if they own the property, selling it is difficult, it requires approval of a court to sell property owned by minor children. That is where a Thai company comes in. I have two Thai companies already. I am the sole director of each company, so I have total control. These companies alreay own my home and the laond on which it sits. If I use one of the existing companies, the taxes and accountant's fees won't change. This structure is "normal" in Pattaya, but less so in Phuket. I am not sure if it is used successfully in Buriram or Issan more generally. I expect that owning property in the Thai wife's name is the norm. I can probably put the property in the girls' names, and take a lease from them, and then assign my lease rights to the sellers. If they don't pay, I can evict them, but I won't be able to sell the property easily. And finding a replacement lessee may be rather difficult. I think that it doesn't work unless I can own the land via a Thai company, preferably one that alreasy exists.

[Thailaw]

The only thing I can add, is your approach to the venture.

You appear to have a rational view, viewing this from a business point of view, dotting the i's and crossing the t's, the due dilligence approach is to be commended.

Others often enter these type of deals from an emotional perspective, family pressure etc etc.

If you proceed I would view this as nothing more than part of a balanced portfolio which may well come under the category, underperforming asset.

As you have already identified, the true value of the land cant be gauged.

I agree the only thing you have to lose at the moment is the time you invest in research, and sorting out the wheat from the chaff, my primary concern would be access to the land, there have been a couple of threads about the exact same problem recently.

I have been offered land all over Thailand, and in most cases it becomes apparent there are underlying issues involved, almost all involve money problems, others access problems, in other cases disputes with neighbours, hence my somewhat cynical attitude.

I have gone past the point of investing anymore of my time, the wife now asks for a copy of chanot and exact google maps location to be sent before we even leave the house.

You have mentioned its not a money issue, more an ownership issue, I am sorry i can offer no advice on that part, its something only you can decide after seeking proper legal advice.

I still stand by my view this isnt worthy of further consideration, but thats a moot point, the only thing that matters is how you view this transaction.

Good luck, you at least are approaching this with your eyes open, which is more than can be said for many who have gone before.

None of my business and I understand your concerns, why not just put this in your wifes name?

If thats not an option, then childrens name.

Most of my portfolio is "underperforming" at the present. I thank Bernanke & Co. for that. Indeed, it is the miserable rates of interest in the US and risks in the stock market that have encouraged me to think about land in Thailand as an alternative. I have 5 year CDs (in Dollars) earning 2% taxable. Not a difficult bar to reach or pass. If the girls can get B30,000 per year on a B700,000 investment, that is 4.25%. And if the land appreciates it is icing on the cake. Certainly not guaranteed like bank interest, but for a relatively small amount, perhaps worth a shot. What I really need is a crystal ball.....

The land is presently owned by her parents. It has a lien on it, which they have not paid. Foreclosure is not imminent, but it appears to be on the horizon, in which case they will lose their capacity to earn an income. I could never expect her to enforce (or even press for) payment, so that become a problem. Indeed, I would expect that, at some point, she would transfer the land back to them if that would help them financially, as it certainly would -- then they could sell it or borrow against it again. As I said in an earlier post, I will only do this if it is beneficial for my daughters. Having it circle back to its present owners lien free (until they borrow against it again) won't help my daughters in the least. Putting the land in my daughters' names is an option, but it comes with some difficulties. So long as it cannot be sold or mortgaged by anyone (other than my daughters), that may not be too bad. My taking a 30 year lease may be a good linch pin. I will give that more thought. It may well not be worth the effort to make it work. Thanks,

Edited November 22, 2011 by Thailaw

[jamescollister]

I would advise you to totally avoid any type of company regardless of what anyone tells you. If you have nominee partners, you still won't have total control besides it being illegal. That's not even considering the yearly taxes and accountant expenses.

If your daughters are Thai citizens, that would be the way to go. If there is an age problem with the government, a contract giving them the land when they do come of age surely could be arranged.

The girls are Thai. I saw them as the owners initially. But if they own the property, selling it is difficult, it requires approval of a court to sell property owned by minor children. That is where a Thai company comes in. I have two Thai companies already. I am the sole director of each company, so I have total control. These companies alreay own my home and the laond on which it sits. If I use one of the existing companies, the taxes and accountant's fees won't change. This structure is "normal" in Pattaya, but less so in Phuket. I am not sure if it is used successfully in Buriram or Issan more generally. I expect that owning property in the Thai wife's name is the norm. I can probably put the property in the girls' names, and take a lease from them, and then assign my lease rights to the sellers. If they don't pay, I can evict them, but I won't be able to sell the property easily. And finding a replacement lessee may be rather difficult. I think that it doesn't work unless I can own the land via a Thai company, preferably one that alreasy exists.

Looks like you are making a simple thing very complex, this company route is not legal. People have been getting away with for years, but the times are changing.The tax man is getting computerized. The Thai constitution allows only Thais to own land and a dodgy company will get noticed in coming years as all the records are transferred on to computer. Jim

[Thailaw]

Looks like you are making a simple thing very complex, this company route is not legal. People have been getting away with for years, but the times are changing.The tax man is getting computerized. The Thai constitution allows only Thais to own land and a dodgy company will get noticed in coming years as all the records are transferred on to computer. Jim

I don't disagree with you (at least on the part about times changing. The Constitution part doesn't apply, at least not directly, a Thai company is a Thai "person" and can own land, no problem there). If that happens, I can easily transfer the property to my daughters within 5 minutes. And indeed, that is all that the law requires -- that it be transfered to a Thai if a nominee arrangement is determined to exist. But it may very well be beneficial for control and management purposes to keep the property in a Thai company for 5+ years. Eventually, everything I own in Thailand will be transfered to and owned by Thai citizens. It is only a matter of time (and the quality of health care in Thailand).

[jamescollister]

Looks like you are making a simple thing very complex, this company route is not legal. People have been getting away with for years, but the times are changing.The tax man is getting computerized. The Thai constitution allows only Thais to own land and a dodgy company will get noticed in coming years as all the records are transferred on to computer. Jim

I don't disagree with you (at least on the part about times changing. The Constitution part doesn't apply, at least not directly, a Thai company is a Thai "person" and can own land, no problem there). If that happens, I can easily transfer the property to my daughters within 5 minutes. And indeed, that is all that the law requires -- that it be transfered to a Thai if a nominee arrangement is determined to exist. But it may very well be beneficial for control and management purposes to keep the property in a Thai company for 5+ years. Eventually, everything I own in Thailand will be transfered to and owned by Thai citizens. It is only a matter of time (and the quality of health care in Thailand).

Time will tell, I have a Thai limited partners and we were called in to the Tax Office this year. The Tax man anywhere in the world is a bad. From what I understand it's not the company's they are looking at, but the nominees who are not paying tax that are under the microscope. Jim