Thinking To The Future –Liquidating My Asset.

[trogers]

The OP seems to be still of good health. Another option he can seek is to size down his home, meaning selling his present place and buying a smaller and cheaper place to stay.

[Delight]

The OP seems to be still of good health. Another option he can seek is to size down his home, meaning selling his present place and buying a smaller and cheaper place to stay.

In my case -not an option. I like where I live too much. Its a very a very good condo in a very good location.

The way I see it any prospective investor may wish that I have a long life. That we he has regular income for an extended period,

My thoughts are that my ideal investor would be a wealthy Thai. He has the regular income plus he can bequeath the condo to his family. Maybe wishful thinking on my part..

[davejones]

The French viager system seems on the way out, I see fewer and fewer of them in the listings. Perhaps people were scared off by the Mme. Calment episode. I agree it was a way of releasing equity in a time when there were far fewer financial instruments to buy houses. As said, the real reason was to allow people to continue living in their home with some income beyond inadequate state pensions.

In my Canadian friend's case he was broke other than his one asset, the house. His motivation was he had lived in it from age 4 and was very sick from cancer, emphyzema etc. He knew he had limited time left and the idea of packing and moving was simply not on for him so the reverse mortgage was his only option. He took a lump sum then drew it down as needed. On sale of the house the lender was first in line.

Here in Canada there are lots of tv commercials selling the reverse mortage idea. They air mainly in the daytime, clearly pitched at retired folks who may need cash. It all sounds very attractive but as said, and as my friend found out, the miracle of compound interest can be a nasty bite to the estate down the road.

I don't think the compound interest matters, because you would have your cash and a place to live, and that is the important part. That there is anything left after you die might be irrelevant to most people. But there is no easy solution for people in these situations. They need cash and if you borrow money you have to pay interest. And if you don't pay it back then it obviously compounds. For some people they could move to a smaller house/condo, as someone mentioned above, but if you're already in a small condo, then you options are very limited.

[davejones]

davejones- But it's the father's money and not the children's inheritance.

Me -This point touches my true motive. My family has no interest in having the condo bequeathed to them –too much hassle .This way I can give them the money ahead of any Will.

Can you please adopt me?

[davejones]

The OP seems to be still of good health. Another option he can seek is to size down his home, meaning selling his present place and buying a smaller and cheaper place to stay.

In my case -not an option. I like where I live too much. Its a very a very good condo in a very good location.

The way I see it any prospective investor may wish that I have a long life. That we he has regular income for an extended period,

My thoughts are that my ideal investor would be a wealthy Thai. He has the regular income plus he can bequeath the condo to his family. Maybe wishful thinking on my part..

A foreigner would also be interested, as they could leave the condo to their Thai children (if they have any). This arrangement would suit plenty of people. It will work for the buyer because he'd be guaranteed of long-term rent, with no void periods, estate agent fees, etc. You sound like an ideal tenant.

I think most people would also be happy to leave to family outside Thailand. It's not much of a hassle selling property abroad. Millions of Brits own property abroad these days.

How old are you? No need for exact age, just decade.

Edited September 12, 2012 by davejones

[johnnyk]

The French viager system seems on the way out, I see fewer and fewer of them in the listings. Perhaps people were scared off by the Mme. Calment episode. I agree it was a way of releasing equity in a time when there were far fewer financial instruments to buy houses. As said, the real reason was to allow people to continue living in their home with some income beyond inadequate state pensions.

In my Canadian friend's case he was broke other than his one asset, the house. His motivation was he had lived in it from age 4 and was very sick from cancer, emphyzema etc. He knew he had limited time left and the idea of packing and moving was simply not on for him so the reverse mortgage was his only option. He took a lump sum then drew it down as needed. On sale of the house the lender was first in line.

Here in Canada there are lots of tv commercials selling the reverse mortage idea. They air mainly in the daytime, clearly pitched at retired folks who may need cash. It all sounds very attractive but as said, and as my friend found out, the miracle of compound interest can be a nasty bite to the estate down the road.

I don't think the compound interest matters, because you would have your cash and a place to live, and that is the important part. That there is anything left after you die might be irrelevant to most people. But there is no easy solution for people in these situations. They need cash and if you borrow money you have to pay interest. And if you don't pay it back then it obviously compounds. For some people they could move to a smaller house/condo, as someone mentioned above, but if you're already in a small condo, then you options are very limited.

People don't always do the math and it's pitched in a way that sugar-coats it. Many use it to get ready cash to buy a car or pay credit cards down, whatever. But when its 3-4% above a standard mortgage rate it adds up very quickly. In my friend's case it didn't matter very much as he had no siblings or children, he knew he had only about 2-3 years to live and was totally skint.

[hyperdimension]

For some people they could move to a smaller house/condo, as someone mentioned above, but if you're already in a small condo, then you options are very limited.

Sell and then rent monthly is a simple solution. I think the arrangements being discussed here are only for those who have a strong desire to stay where they are.

[hyperdimension]

Buying older condo units in good location, refurbish them and rent them out gives you better rental yields

What is the range as a percentage of your purchase price (or in baht amount) that you would spend on refurbishment?

[trogers]

Buying older condo units in good location, refurbish them and rent them out gives you better rental yields

What is the range as a percentage of your purchase price (or in baht amount) that you would spend on refurbishment?

Amount spent on refurbishing is not fixed nor vary with purchase price. It will depend more on 2 factors: the age and state of the old condo unit, and the class of tenants its location will attract and their likely budget for rent.

Two of my condo units in Sukhumvit Soi 24 of over 30 years old. Purchased at Bt47-50k/sqm. Unit sizes 121 and 163 sqm. Refurbishing cost (excluding loose furniture and household electrical items) about Bt10k/sqm. Now being rented to Japanese tenants.

Three others are smaller units, two 1-bed (45 and 62 sqm) and a 2-bed (72 sqm) at Prakhanong. Project is 16 years old and purchased at Bt30-35k/sqm. Better conditions, spent Bt2-5k/sqm on refurbishing. 2-bed is rented to Japanese, one to NZ and the other to Austrian.

[12DrinkMore]

But it's the father's money and not the children's inheritance. Their inheritance is whatever he leaves them in his will, if anything at all. Too many people think that they have a right to other people's money.

Yep, and there are a lot of kids aged 25 to 40 on an extended holiday in Thailand expecting that the inheritance will come their way....

No small number also get the odd cash injection when the liquidity level drops.

[davejones]

Buying older condo units in good location, refurbish them and rent them out gives you better rental yields

What is the range as a percentage of your purchase price (or in baht amount) that you would spend on refurbishment?

Amount spent on refurbishing is not fixed nor vary with purchase price. It will depend more on 2 factors: the age and state of the old condo unit, and the class of tenants its location will attract and their likely budget for rent.

Two of my condo units in Sukhumvit Soi 24 of over 30 years old. Purchased at Bt47-50k/sqm. Unit sizes 121 and 163 sqm. Refurbishing cost (excluding loose furniture and household electrical items) about Bt10k/sqm. Now being rented to Japanese tenants.

Three others are smaller units, two 1-bed (45 and 62 sqm) and a 2-bed (72 sqm) at Prakhanong. Project is 16 years old and purchased at Bt30-35k/sqm. Better conditions, spent Bt2-5k/sqm on refurbishing. 2-bed is rented to Japanese, one to NZ and the other to Austrian.

What rental income do you get as a percentage of purchase cost + refurb cost? I spotted a few very large condos in Sukhumvit area that needed refurbishing. Prices were similar to what you paid. I've been looking into this for a while, but am a little concerned about how easy they would be to rent out.

[trogers]

The smaller units are getting gross rental yield of 8-10%, but are based on prices 2007-8 when I acquired and refurbished them.

The two larger units are only getting gross rental yield of 7-7.5%. I acquired them because my rights to the 2 rai of land is 1/80 for each unit.

[trogers]

I spotted a few very large condos in Sukhumvit area that needed refurbishing. Prices were similar to what you paid. I've been looking into this for a while, but am a little concerned about how easy they would be to rent out.

Large condo units (meaning >200sqm) tends to have lower yields. My 163sqm unit was a 2-bed unit but I converted it into a 3-bed to gain higher rent, but still only getting 7% due to higher purchase and refurbishing price.

Also, the street the units are located makes much difference. Soi 24 is favoured over Soi 22, 26 and 39 among Japanese tenants.

[davejones]

I spotted a few very large condos in Sukhumvit area that needed refurbishing. Prices were similar to what you paid. I've been looking into this for a while, but am a little concerned about how easy they would be to rent out.

Large condo units (meaning >200sqm) tends to have lower yields. My 163sqm unit was a 2-bed unit but I converted it into a 3-bed to gain higher rent, but still only getting 7% due to higher purchase and refurbishing price.

Also, the street the units are located makes much difference. Soi 24 is favoured over Soi 22, 26 and 39 among Japanese tenants.

By large I meant 100-150 sqm. Do you know what the rental yield would be if you bought today? Have prices gone up and rents stayed the same? Also, do you know some good, old condo buildings on Suk 24. I'll go take a look and see what's available. Still not totally decided whether to go ahead or not yet though. I still think property here is very overvalued and could easily crash.

[trogers]

I spotted a few very large condos in Sukhumvit area that needed refurbishing. Prices were similar to what you paid. I've been looking into this for a while, but am a little concerned about how easy they would be to rent out.

Large condo units (meaning >200sqm) tends to have lower yields. My 163sqm unit was a 2-bed unit but I converted it into a 3-bed to gain higher rent, but still only getting 7% due to higher purchase and refurbishing price.

Also, the street the units are located makes much difference. Soi 24 is favoured over Soi 22, 26 and 39 among Japanese tenants.

By large I meant 100-150 sqm. Do you know what the rental yield would be if you bought today? Have prices gone up and rents stayed the same? Also, do you know some good, old condo buildings on Suk 24. I'll go take a look and see what's available. Still not totally decided whether to go ahead or not yet though. I still think property here is very overvalued and could easily crash.

I bought into the oldest condo in Soi 24, Premier Condo. Prices for the unrefurbished units gain only modestly in the last 5 years. A couple of the lower units (3rd or 4th floor) were selling for just Bt 50k/sqm early this year. My units are in 7th and 9th floor of 11 floors. I do not expect prices to crash for such an old condo. In my calculation, my share of the land has a higher value than the prices I paid for the condo units.

The 163 sqm unit was acquired in an auction held by the Legal Execution Department.

Also, we just got the 2 elevators replaced and the building exterior will be repainted end of this year.

Edited September 15, 2012 by trogers

[davejones]

I spotted a few very large condos in Sukhumvit area that needed refurbishing. Prices were similar to what you paid. I've been looking into this for a while, but am a little concerned about how easy they would be to rent out.

Large condo units (meaning >200sqm) tends to have lower yields. My 163sqm unit was a 2-bed unit but I converted it into a 3-bed to gain higher rent, but still only getting 7% due to higher purchase and refurbishing price.

Also, the street the units are located makes much difference. Soi 24 is favoured over Soi 22, 26 and 39 among Japanese tenants.

By large I meant 100-150 sqm. Do you know what the rental yield would be if you bought today? Have prices gone up and rents stayed the same? Also, do you know some good, old condo buildings on Suk 24. I'll go take a look and see what's available. Still not totally decided whether to go ahead or not yet though. I still think property here is very overvalued and could easily crash.

I bought into the oldest condo in Soi 24, Premier Condo. Prices for the unrefurbished units gain only modestly in the last 5 years. A couple of the lower units (3rd or 4th floor) were selling for just Bt 50k/sqm early this year. My units are in 7th and 9th floor of 11 floors. I do not expect prices to crash for such an old condo. In my calculation, my share of the land has a higher value than the prices I paid for the condo units.

The 163 sqm unit was acquired in an auction held by the Legal Execution Department.

Also, we just got the 2 elevators replaced and the building exterior will be repainted end of this year.

Have the rents increased or stayed the same? Do you have many void periods?

[trogers]

Have the rents increased or stayed the same? Do you have many void periods?

Rent went down about 8% after the red shirts burnt Bangkok and there was an exodus of tenants for almost half a year. My present Japanese tenants have stayed for 1.5 years and I have informed them rent will be adjusted back up 8% starting when the leases are renewed next year. They have indicated they will stay on.

The Japanese look at renting differently from Western tenants. They are given a rental budget and they will look for a place that maximize the given budget. They do not get to keep any savings. Western tenants are usually given a lump sum amount in cash and will try to get a cheaper rent, and keeping the balance to spend.

Edited September 15, 2012 by trogers

[davejones]

Have the rents increased or stayed the same? Do you have many void periods?

Rent went down about 8% after the red shirts burnt Bangkok and there was an exodus of tenants for almost half a year. My present Japanese tenants have stayed for 1.5 years and I have informed them rent will be adjusted back up 8% starting when the leases are renewed next year. They have indicated they will stay on.

The Japanese look at renting differently from Western tenants. They are given a rental budget and they will look for a place that maximize the given budget. They do not get to keep any savings. Western tenants are usually given a lump sum amount in cash and will try to get a cheaper rent, and keeping the balance to spend.

I'd better start learning some Japanese.

[how241]

Please tell me as an investor, whats in this for me?

Sounds as if you want to have your cake and eat it.

Maybe it has dawned on you you are stuck with an asset you cant shift and which may well have no capital appreciation.

I as the potential owner should have the lease to suit my needs, whats to stop you just walking away?

What protection would I have, end up with another overpriced condo I cant rent?

Lets assume your condo costs me 4 million, what would you consider to be a fair rental price.

It may well take me years to return my capital outlay, why should I purchase your problem?

If the market price is 4Million Baht and I sell it for 2 million baht -and then give a 5% return to the investor -then maybe it is attractive.

Market forces will control the deal.

My question was about the legal framework

I have done something similar in the past in the UK. It worked out great for all concerned, except for the children of the guy I bought the house from, who saw their father spending their inheritence

The legal framework albeit drawn up by solicitors, was not complicated at all and although I don't know if it's common in Thailand or not, I can't see it being a problem. For the investor, your age and health is a major factor. However, if the investor is looking at renting out the condo and getting 5% back from you, that wouldn't be too bad a return.

Send me a pm when you are ready to go to the next stage.

But it's the father's money and not the children's inheritance. Their inheritance is whatever he leaves them in his will, if anything at all. Too many people think that they have a right to other people's money.

Correct. I'm spending mine now.