What Are The Advantages Of Buying Property In Chiang Mai

[ludditeman]

The average 2 million baht home would rent out for between 10k -15k Baht a month.

To a foreigner, a Thai would only pay 6-8k, Thais will usually buy and get a mortgage if higher(see post #29).

The interesting thing about people who own houses, they always boast about how much it is worth, when time to sell it can often only be sold for half the 'boast' value. If it can be sold at all.

Edited March 6, 2012 by ludditeman

[Thailand]

We have been trying to sell to downsize for 2.5 years.

Good location, nice house (biased of course) very fair price. 2mill less than a similar property sold on the same estate 3 years ago.

Next to no interest apart from wannabe estate agents. We are in a mid to upper range price bracket which I think is one of the problems.

Would we buy again when we eventually sell? Yes,but at a much lesser level of investment than we have now,don't really want to rent.

[OriginalPoster]

We have been trying to sell to downsize for 2.5 years.

Good location, nice house (biased of course) very fair price. 2mill less than a similar property sold on the same estate 3 years ago.

Next to no interest apart from wannabe estate agents. We are in a mid to upper range price bracket which I think is one of the problems.

Would we buy again when we eventually sell? Yes,but at a much lesser level of investment than we have now,don't really want to rent.

Agents seem to be toxic to both buyers and sellers. I've looked at houses in some of those "mid to upper range price bracket" developments and if you call a number from a sign in front of any of the houses you almost always get an agent, and the agent interprets your interest in "mid to upper range price" houses to be an indication that you're so rich that they can quote you prices on houses as high as ones in Orange County.

Edited March 6, 2012 by OriginalPoster

[elektrified]

The average 2 million baht home would rent out for between 10k -15k Baht a month.

To a foreigner, a Thai would only pay 6-8k, Thais will usually buy and get a mortgage if higher(see post #29).

The interesting thing about people who own houses, they always boast about how much it is worth, when time to sell it can often only be sold for half the 'boast' value. If it can be sold at all.

We have been trying to sell to downsize for 2.5 years.

Good location, nice house (biased of course) very fair price. 2mill less than a similar property sold on the same estate 3 years ago.

Next to no interest apart from wannabe estate agents. We are in a mid to upper range price bracket which I think is one of the problems.

Would we buy again when we eventually sell? Yes,but at a much lesser level of investment than we have now,don't really want to rent.

I agree with them both. I too, have met people with beautiful, expensive homes that have been trying for years to sell them. Condominiums are even more difficult to sell.

[oldgent]

On a 1,500,000bht house with a 5% down deposit of 75,000thb:

Loan Amount = 1,425,000bht

Average Monthly Repayments = 9200bht (6% bank finance over 25 years)

Total Interest paid = 1,330,400

Total Cost 2,830,400 (not inclusive of maintenance and repairs)

Note the above does not include repairs, maintenance, homeowner expenses etc which perhaps would be an extra 10 to 15% of total costs (I may be very wrong on this) so add another THB425000 (over 25 years)

So at the end of the 25 years your house is owned outright at approximately 3,254,960.

At the end of the day I guess the questions needs to be asked what your 1.5thb home will be worth in 25 years?

very good example forgive me but ive just done some calculations on your example. based on a rental figure say of 9000bht/month over 25 years= 2700000 million bht not allowing for rental increase. not a lot of difference. but at the end of the day you dont own anything.

[drnkurmlkshk]

Maintenance costs are a considerable amount of money. These need to be factored in when adding up the cost of owning a house for X years. You also have to pay for insurance. I am not sure what the property taxes are (if anything) in Thailand as well.

There is also a large risk in owning a house here that cannot be ignored. Sometimes a bad thing happens and you have to leave the country or you lose your house. Yeah this probably doesn't happen all that often, but it does happen some % of the time.

Unless you find that owning improves your quality of life it is more sensible to rent.

Edited March 6, 2012 by drnkurmlkshk

[egdirb]

On a 1,500,000bht house with a 5% down deposit of 75,000thb:

Loan Amount = 1,425,000bht

Average Monthly Repayments = 9200bht (6% bank finance over 25 years)

Total Interest paid = 1,330,400

Total Cost 2,830,400 (not inclusive of maintenance and repairs)

Note the above does not include repairs, maintenance, homeowner expenses etc which perhaps would be an extra 10 to 15% of total costs (I may be very wrong on this) so add another THB425000 (over 25 years)

So at the end of the 25 years your house is owned outright at approximately 3,254,960.

At the end of the day I guess the questions needs to be asked what your 1.5thb home will be worth in 25 years?

very good example forgive me but ive just done some calculations on your example. based on a rental figure say of 9000bht/month over 25 years= 2700000 million bht not allowing for rental increase. not a lot of difference. but at the end of the day you dont own anything.

Personally I think buying a property in Chiang Mai is a very bad investment.

However, if your intention is to purchase a property with the intention of holding long term (eg: 20/25 years), it may be cost effective (not to be confused with a good investment) as opposed to renting. I don't think however it is possible to make any money short term from property in Chiang Mai.

Just to give an example, the house I am currently renting for 18,000thb per month is on the market for 4,500,000. I had a word with the agent today who informed me that the owner purchased it six years ago (new) for 4,000,000thb and has since spent in excess of 500.000thb on improvements. The house in under 95% of original purchase price under mortgage, so the monthly repayments far exceed the rent I pay, plus there has been zero growth in the property market. In fact I would say negative growth as new houses in my moo baan are available for 3.9mil.

[PoodMaiDai]

I currently rent in Thailand and have no plans of buying for investment, but there is something to be said about owning a home and making it your own. It's yours and you can do with it as you wish.

You rent a house. You own a home.

[egdirb]

I currently rent in Thailand and have no plans of buying for investment, but there is something to be said about owning a home and making it your own. It's yours and you can do with it as you wish.

You rent a house. You own a home.

indeed there is something to be said about owning a home, but if owning a home costs you more than renting it, then what is to be said, is "don't do it". Like I stated in my previous post, the house I am in, I pay 18,000thb per month rent. The owner bought it seven years ago for 4,000,000, and has spent an extra 500,000thb on it in lovely improvements.The owners mortgage repayments would be about 28K per month. It is on the market for 4,500,000 with no interest whatsoever. Basically I live here subsidized by the owner who cant sell. Has the owner made a good investment? HELL NO.

[funcat]

It also depends on how big is an interest rate...the government rates can be as low as 1.5%...anyway,as somebody said it before it's a big difference between owning a home and renting a house.

Situation in CM is not easy for the sellers right now...but I've bought "my" house 8 years ago,payed cash and it is a great feeling that I don't have to come up with the rent money every month now.

As for the investment...yes,great investment for my kids !! In 25 years who knows what is gonna happened,but the prices will not be lower...IMO..of course there are much better ways to make money thou...

[tolstoy]

"prices will not be lower.."

That is a falacy.

Property doesn't always increase.

In my community they are building new houses that are cheaper now for the same size land and house than people paid 4 years ago. Earthquakes, floods and everything else might destroy your house too. 25 years from now, do you really think that your house will be in the same condition? Leaving your children a financial burden what a great gift. Not to mention that property taxes will exist someday here.

[uptheos]

Are those looking at a house as investment and concluded that renting is best, single or married?

[funcat]

"prices will not be lower.."

That is a falacy.

Property doesn't always increase.

In my community they are building new houses that are cheaper now for the same size land and house than people paid 4 years ago. Earthquakes, floods and everything else might destroy your house too. 25 years from now, do you really think that your house will be in the same condition? Leaving your children a financial burden what a great gift. Not to mention that property taxes will exist someday here.

Just 1 question...do you know what were the prices in CM 25 years ago ??!!

[egdirb]

"prices will not be lower.."

That is a falacy.

Property doesn't always increase.

In my community they are building new houses that are cheaper now for the same size land and house than people paid 4 years ago. Earthquakes, floods and everything else might destroy your house too. 25 years from now, do you really think that your house will be in the same condition? Leaving your children a financial burden what a great gift. Not to mention that property taxes will exist someday here.

Just 1 question...do you know what were the prices in CM 25 years ago ??!!

Good question, do you? And I don't mean that to be smart, but I would be very interested what house prices were 20/25 years ago. However, I don't think they had moo bans back then, but I would be very interested to know what property prices were...Anyone?

[funcat]

"prices will not be lower.."

That is a falacy.

Property doesn't always increase.

In my community they are building new houses that are cheaper now for the same size land and house than people paid 4 years ago. Earthquakes, floods and everything else might destroy your house too. 25 years from now, do you really think that your house will be in the same condition? Leaving your children a financial burden what a great gift. Not to mention that property taxes will exist someday here.

Just 1 question...do you know what were the prices in CM 25 years ago ??!!

Good question, do you? And I don't mean that to be smart, but I would be very interested what house prices were 20/25 years ago. However, I don't think they had moo bans back then, but I would be very interested to know what property prices were...Anyone?

I would have to ask my wife...but I'm guessing she is to young to remember

...well,I've asked...she wouldn't know 25 years ago,but her older sister has bought a house 16 years ago in a mooban,2 story,3 bedroom,3 bathroom,75 sq wah land...1.1 mil Baht

Edited March 6, 2012 by funcat

[tango]

As the more astute folks have mentioned, only buy if family will inherit; as an investment forget it. One or two years to sell a house in the Chiangmai market will in all likelihood never happen; one or two decades is more the norm.

We check realty almost daily and have done so for twenty years: there are houses that are offered as a first sale that were first offered 10 to 15 years ago. On your way golfing, before the quaint golf course out near Sankampang in the hills, check the bird of paridiso 'resort' style build nestled just back of a natural lake (village pond and nitely make-out spot), made of sun-dried brick over 15 years ago. Advertised even today and for years: we watched the construction on occasion.

As for the suggestion that one can ship teak lumber out of Thailand - not in this lifetime.

Mind you getting it to your build site was a minor miracle of sorts, even within province. Twelve or so years ago the Forestry folks would just occasionally open a narrow window of opportunity of a week or two a year to move teak timber: no such opportunities within the last decade plus. Even old rice barn teak had to have each plank registered and stamped with costly permits before trucking - even then, problematic was the byword.

[HaleySabai]

At the end of the day I guess the questions needs to be asked what your 1.5thb home will be worth in 25 years?

Nothing. Remember, you don't buy a house, you buy LAND. That is your investment, not in a depreciating lump of concrete.

Live in it,love in it because the only real value of the structure itself is in the purpose you give it.

[bobl]

Situation in CM is not easy for the sellers right now...

Bingo, there it is.

It's not easy for the sellers - ergo it's easy for the buyers.

And there you have it. Right now it's a buyer's market. If you buy in a buyer's market and sell in a seller's market, OF COURSE it's a good investment. Do it the other way round and you're toast.

That said - rent is so cheap here AND you have the flexibility to move as and when the urge takes you - I wouldn't buy a property as an investment. To leave to the family, maybe...

[funcat]

...but if it is so bad,why "bangkok people" like it so much to invest here ??!...and yes,they are still buying...

[OriginalPoster]

Situation in CM is not easy for the sellers right now...

Bingo, there it is.

It's not easy for the sellers - ergo it's easy for the buyers.

And there you have it. Right now it's a buyer's market. If you buy in a buyer's market and sell in a seller's market, OF COURSE it's a good investment. Do it the other way round and you're toast.

That said - rent is so cheap here AND you have the flexibility to move as and when the urge takes you - I wouldn't buy a property as an investment. To leave to the family, maybe...

Maybe in theory, but when I look at houses I am always quoted outrageous prices that preclude any possibility of me buying. Doesn't matter how long a house has been sitting empty, it seems like few sellers are willing to budge on price.

[barefoot1988]

OT but im looking for 1/2 a rai in chiangmai, preferably within 60km from cm airport. budget is about 200k, of course the lower is better, you guys think its possible?

i heard people saying to actually drive around and look for potential boards rather than online which prices will be significantly higher, true i guess? any area to recommend guys?

[heybruce]

Until I can own land in Thailand-- not my wife (assuming I marry), not my "business partner", and not some shell company set up by a lawyer--I'm not interested in owning property in Thailand.

Yeah, I know I can buy a condo. That's not the same as owning land, and I have serious doubts about the long term value of condos. However I'm quite happy with the price and quality of properties I can rent.

Edited March 6, 2012 by heybruce

[chiang mai]

OT but im looking for 1/2 a rai in chiangmai, preferably within 60km from cm airport. budget is about 200k, of course the lower is better, you guys think its possible?

i heard people saying to actually drive around and look for potential boards rather than online which prices will be significantly higher, true i guess? any area to recommend guys?

That should be dooable for rice paddy land.

[tolstoy]

I have seen 1 rai with chanote for 50K but usually you have to buy more than just 1 rai. I have seen some as low as 10k a rai but that is about 80-100km outside passed Sanpatong.

[BigJohnnyBKK]

very good example forgive me but ive just done some calculations on your example. based on a rental figure say of 9000bht/month over 25 years= 2700000 million bht not allowing for rental increase. not a lot of difference. but at the end of the day you dont own anything.

Have to factor in risk of capital loss as well, opportunity costs etc. Particularly when at the end of the day **you** - as an actual farang human being - can't actually be the owner anyway.

Plus when life circumstances change you can up and move without any hassle, that's worth a **lot** to me personally.

If the amount you're looking to invest in Thailand is small enough relative to your earning power and/or accumulated net worth, so that losing it all wouldn't be more than an annoyance, fine then it's worth have the emotional satisfaction of being an owner.

Otherwise I'd advise rent every time.

[aliasinmontana]

The peculiarities of buying real estate in Thailand aside, it is not surprising to see people evaluate buying a house the same way they would evaluate an investment and find buying a house is a bad idea.

Thing is, a primary residence ISN'T an investment, it's an expense. Buying a house allows you to recoup monies that would otherwise be lost. There are additional expenses and risks involved, so it is not for everybody, but viewing buying a home purely as an investment is an error.

[Greenside]

There's been little or no mention about location so far in this discussion.

The virtual absence of any planning or zoning policies (and the likelihood that even if they were brought in the major developers are sufficiently well connected to ride roughshod over them) mean that buying into edge of town or out of town locations ensures an almost endless supply of competitively priced new properties nearby. Sure, the land price keeps increasing due to demand but it's partially offset by smaller plots and hidden cost cutting in both building and development planning, for example smaller common areas.

You can't assume that your home will be a declining investment without regard to what and where it is - ten years ago no-one wanted to know about Nimmenhamen and now you are looking at upwards of 100,000 a talang wah by all accounts. Wish I'd had the opportunity to invest in a little house around there when I first arrived.

While you wouldn't want to decide where to live solely on the merits of the property's investment potential, it seems pretty clear that areas close to the centre of town, with limited scope for additional development and good access to schools are likely to hold or improve their value if you can acquire one for a fair price.

Edited March 12, 2012 by Greenside

[BigJohnnyBKK]

I pay THB18,000 per month to live here.

I'll bet with a minimal effort you can find as nice or nicer for significantly less per month.

Now *that* would yield a tremendous ROI.

[chiang mai]

I pay THB18,000 per month to live here.

I'll bet with a minimal effort you can find as nice or nicer for significantly less per month.

Now *that* would yield a tremendous ROI.

ROCE not ROI, (return on cash employed)

[BigJohnnyBKK]

ROCE not ROI, (return on cash employed)

Oh exquisite pedantry 8-)

Actually right back at you - I was referring to an investment of his time only, which will returns cash savings, comparing future to current outlay, every month thereafter.

Not to mention the infinite ROI when compared to the likely losses of his purchasing over rental (IMO of course).