Build A Condo Instead Of A House.

[Khun Jean]

We (i mean my wife) have acquired some land and the plan was to build a house and some bungalows on it.

Instead we decided that for that location it would be better to use the little bit of land (1 rai) for a garden and swimming pool and build a small condominium, about 4 floor, 20 condos'.

While letting this sink in and considering options available i was thinking that this may be a way for foreigners to at least own something freehold.

You would start a company, build a condominium, sell the condos' leaving the best one (penthouse) to yourself as private property.

Then when everything is sold, this company has no more assets in the condo and land and would be free to take on another role or be dissolved.

Has anybody done this?

Can you spot an impossibility in this "plan"?

Edited January 10, 2013 by Khun Jean

[thaiwanderer]

other than the attitude / suspicions of local officials and usual pratfalls of a farang's involvement (real or imagined) nothing impossible here or greatly different from normal land / development issues

however coming back to due diligence thread, that is essential here not least to check whether condo allowed on plot and or practical likely hood of approval

[BlackPuddingBertha]

"We (i mean my wife) have acquired some land and the plan was to build a house and some bungalows on it.

Instead we decided that for that location it would be better to use the little bit of land (1 rai) for a garden and swimming pool and build a small condominium, about 4 floor, 20 condos'."

Great idea. But what makes you think that anyone would want to buy a condo on this site? Is it in a desirable area?

Every day when I leave my building I see a hundred different condo developments in various stages of (non-)construction (and of deterioration), and every day I wonder who could possibly be buying them and why?

[Khun Jean]

If the land was not on a good location we would not buy it. It has sea, lake and mountain views.

The land is in Ban Krut, some swedish fellow sold houses with no view at all for 5.9 million and they went pretty quick (at least the first eight of ten build). I always wonder though why a foreigner in their right minds would spend that kid of money for something you can not own. A condo on a nice location would be a much better buy. A house for a foreigner can only be a good rental.

I know that one is born every minute (i even think every second) but i still have my own principles and would not try to sell something that is not 100% legal or secure.

I am currently drawing some sketches of some initial ideas. If i look at condos that go the quickest i think around 60m2 1 bedroom, so most units will be of at least that size, maybe throw in a few 30m2 to satisfy the Thai and cheap charlie demand, and a few between 120m2 and 250m2 with 3/4 bedroom.

I am taking baby steps, soon a visit to establish what can and cannot be build and even if a condominium is possible.

The backup if the condo's not sell is to use it as appartments for short and long stays.

Selling some units would make it easier as i have cash for about 50%. A house and some bungalows coul dbe done with 100% cash but then there is still no freehold title which is essential.

[scotto]

interesting thought please keep us informed of your progress!

[rekkie]

If you build a condo don't you need first a condo license?

The legal side of ownership will be very difficult 49% and all that and maintining those proportions.

Sales...route to market Ban Krut is not the centre of the universe.

Do you want to live next to Mr Cheap Charlie and his 35sqm condo and 20 people you have never met. The calibre of condo buyers is variable

Insurance and liability/relationships of neighbours/suicides all possibilities

What happens after you have built and 2 years later sold none...ie second worst case..worst case being it fell down!

Is it worth the heartache or just build you own pad

Signed...devil's advocate!!

ps do not design a dream and expect it to be built well here keep it simple and functional

[Khun Jean]

Hi Rekkie,

I unfortunately know very well the different 'caliber' of foreigners. It is something to discourage.

Ban Krut is not the center for whore mongering and bars so it will be of little interest to people who like that.

Going upscale will not prevent idiots because there are a lot of rich a..holes too. I would rather have a decent 'cheap charlie', or normal decent folks.

I am going to target it to the older public and one of the demands is that the condos will be comfortable to live in even when walking is becoming more difficult even if extra care is needed. I have experience in elderly care and know how to design a house/condominium with accessibility and comfort in mind. This will mean enough room to move around with a wheelchair, use of kitchen/toilet/shower etc.

A condo license is of course essential, before spending money i need confirmation of this and also the limits what can be build.

If a condominium is possible the build will be difficult because i absolutely not accept shoddy work, it will just have to take longer if that is the case. The design will be made with unskilled work in mind, very modular and with materials most Thai builders are comfortable with.

The 49% is a real problem, for that i am planning a building A and B, it might be a solution to have one of the buildings be Thai company owned and rented out for long terms.

Much to consider, and this will take some time to accomplish no doubt.

[BlackPuddingBertha]

The land is in Ban Krut, some swedish fellow sold houses with no view at all for 5.9 million and they went pretty quick (at least the first eight of ten build). I always wonder though why a foreigner in their right minds would spend that kid of money for something you can not own.

You and me both.

[davejones]

The land is in Ban Krut, some swedish fellow sold houses with no view at all for 5.9 million and they went pretty quick (at least the first eight of ten build). I always wonder though why a foreigner in their right minds would spend that kid of money for something you can not own.

You and me both.

For some farang it just doesn't matter if they own the land or not. If it gets taken away from them for some reason, well it's only money that's lost. And many farang have enough money to not have to worry about such things. What's losing 5 million if you have 100 million+? Nothing really. Be careful, but don't spend so much tome focusing on money or you'' end up missing out on life. Money's there to be spent, and life to be lived. No point being to scared to live the life you want because you constantly fear something will be taken away from you. Most farangs die not owning their houses in the same way that they would in USA. So it didn't make any difference to them.

[BlackPuddingBertha]

For some farang it just doesn't matter if they own the land or not. If it gets taken away from them for some reason, well it's only money that's lost. And many farang have enough money to not have to worry about such things. What's losing 5 million if you have 100 million+? Nothing really. Be careful, but don't spend so much tome focusing on money or you'' end up missing out on life. Money's there to be spent, and life to be lived.

Indeed, but I think there are better ways of spending it than on expensive millstones that you cant even legally own.

I know some people here who have 100M+ and none of them would ever think of buying land or houses here. They just rent rather nice places.

[dave111223]

So you went from wanting your own private house, with a separate group of investment bungalows...

To wanting to have a unit in a 4 floor block with 19 other people? Seems like an odd transition in thinking to me.

Edited January 11, 2013 by dave111223

[CWMcMurray]

Know someone doing something similar ...

Although they will only have 3 units, all upscale.

They had the plans done by architect from overseas and has just found a Thai builder that he is happy with. He has gone through all the hoops (opening a company,environmental impact study, building permits, etc...)

The one recommendation I would make to the OP is not to go to big...

Your original plan was to ensure you ha enough funds for the entire build.

Even though you are doing condos instead of bungalows, you should still do the same.

If you can afford to do 10 condo units in the building instead of 20 then only build 10

If not you could be taking a big risk... As if you build 20 and do not sell enough of the condos on pre-sale to finance the build, you will be stuck and could end up loosing it all

As it will be next to impossible to get a loan from a Bank to finance the build for a brand new company with zero history and no revenue

Why risk it an why cause you self sleepless nights hoping you can sell enough units to finish your building?

[falang07]

I suggest building an extremely upscale condo with only a few units that no one would be willing/could afford to buy and you would be left with all the building just for yourself

Edited January 11, 2013 by falang07

[trogers]

You are basically saying you want to be a developer instead of being just an owner of a piece of land with a house.

You need then to study the role, risk and responsibilities of being a developer. Why do some developments fail while others succeed? Yes, developments do fail. Start your study from this point.

[taninthai]

im no expert it sounds like you could make a bit of money but it also sounds like a whole lot of head aches coming your way involving condo management ,upset tenants etc

[Khun Jean]

You are basically saying you want to be a developer instead of being just an owner of a piece of land with a house.

You need then to study the role, risk and responsibilities of being a developer. Why do some developments fail while others succeed? Yes, developments do fail. Start your study from this point.

This is correct. I think there is a opportunity in the market that i can provide.

Of course this has to be researched, because it is only a 'feeling' at the moment. I do however know that what i want to build is not available, the question is why. Could be that nobody thought of it or they were all unsuccessful, or successful and i don't know about it.

I think i will go ahead with all the research needed, design it and then try to market it. The money spend until that moment is the risk. If there are pre-sales possible it would make it easier, if there is no interest not much is lost and will change the design of the penthouse to a normal house.

[Khun Jean]

im no expert it sounds like you could make a bit of money but it also sounds like a whole lot of head aches coming your way involving condo management ,upset tenants etc

As with most things, "no pain, no gain".

Never been afraid of that.

[Khun Jean]

I suggest building an extremely upscale condo with only a few units that no one would be willing/could afford to buy and you would be left with all the building just for yourself

This is unfortunately not possible. As anyone knows land can not be owned by a foreigner so in that case i would just be a tenant that paid for the whole thing. I willl never ever spend that much money on something that will not be owned freehold.

I could own 49% of the condos freehold, i settle for that.

[USNret]

Selling some units would make it easier as i have cash for about 50%. A house and some bungalows could be done with 100% cash but then there is still no freehold title which is essential.

Sounds like your mind is made up & you already have all the answers, so I'm not sure what advise you're looking for here.

In regards to your comment above, I thought the law changed a few years ago to prevent condo developers from using deposits from buyers to finance construction. This outdated practice was a major reason why condo projects failed in the midst of construction. Now, builders have to obtain 100% financing through bank loans, and hold buyers deposits in escrow, allowing them to be refunded in case of failure of the project.

Edited January 11, 2013 by USNret

[LaoPo]

Selling some units would make it easier as i have cash for about 50%. A house and some bungalows could be done with 100% cash but then there is still no freehold title which is essential.

Sounds like your mind is made up & you already have all the answers, so I'm not sure what advise you're looking for here.

In regards to your comment above, I thought the law changed a few years ago to prevent condo developers from using deposits from buyers to finance construction. This outdated practice was a major reason why condo projects failed in the midst of construction. Now, builders have to obtain 100% financing through bank loans, and hold buyers deposits in escrow, allowing them to be refunded in case of failure of the project.

Is that true? I didn't know that.

Anybody?

[Khun Jean]

Selling some units would make it easier as i have cash for about 50%. A house and some bungalows could be done with 100% cash but then there is still no freehold title which is essential.

Sounds like your mind is made up & you already have all the answers, so I'm not sure what advise you're looking for here.

In regards to your comment above, I thought the law changed a few years ago to prevent condo developers from using deposits from buyers to finance construction. This outdated practice was a major reason why condo projects failed in the midst of construction. Now, builders have to obtain 100% financing through bank loans, and hold buyers deposits in escrow, allowing them to be refunded in case of failure of the project.

"Instead we decided that for that location...." as said in the op states that the decision is made, the search is now for advise.

You don't use down payments except a small one at the moment contract is signed. This should be never more then 50.000 baht.

Deposits in Escrow works both ways, it is good for the buyer and for the developer, so i see only advantages in that.

Normally money is released on cetain milestones, like foundation ready, concrete structure ready, water and wind proof etc.

For a developer it is great that funds are released at such moments and don't have to go hunt after buyers.

I only talked with one bank and they said that a 50% loan would not be a problem, and that also is released in stages.

When you have pre sales, even 100% is possible.

This is all just talk and info from only a few sources so everything has to be confirmed.

I am not going into this as a complete newbie, lots of experience buying, letting, renting some building experience, the condo part however is new to me.

And i wish i had all the answers, i am looking for experience and warnings for common pitfalls.

Or other info like what people like and dislike about having a condo, all info is valuable and can only add to my own information got by experiences.

Edited January 11, 2013 by Khun Jean

[mccw]

I had this idea also but was put off a bit by the potential head aches of tenants / owners / neighbour issues; imagine they know you live upstairs and can come to knock your door complain every little thing; try to involve you in the "politics" of noise or nuisance etc. I rent HMOs in UK right now and the politics of people in the same building is a real pain in the arse; but at least tenants can be removed if needs be + i can keep phone on silent. What happens if you get a "problem" owner? Are there legal evictions if owner/ in breach of condo rules? Send some one round to make it clear they need to sell up and move, but then they know you just live upstairs. If your only option/ forced to go down that path then at least need to be located off site and low profile.

Another problem is if your ideas for maintance and upkeep , renovations etc differ to the committees. Ie you will / could be out voted in "your" own building.

To get round this and the Thai 49% ownership potential problem I would have kept the Thai share in my wife's name and give for rent + at least 5% on my name, so we maintain control of the building and the sink fund to make sure everything is kept to standard and nice etc. But I would still live offsite for sure.

As a biz model / target I was thinking along the lines of a "luxury boutique residence" of only 10-16 units of 1-4bedrooms. premium features like branded western kitchens, interiors properly designed in a modern Thai fusion style, and jacuzzi or small pool on the wide spacious balconies. I don't see anything on the market like this. Could be because of the costs involved to get provide this high standard; could be only highest for the sale units and nice but not so extravagant on the rentals.

What's you preliminary guesstimate build budget? Not including land.

I've ruled it out personally because after thinking through all the costs, risks to returns I think I'd rather not put so many eggs in one basket.

Chock dee

[mccw]

I reached same conclusion from the same or similar reasons why not to bother building with the target on the other side of the market also ie Thai Dorm / apartment building.

[mccw]

Just reading your post again about "refusing to invest in anything you can not own / only a tenant; no disrespect but, if like this, it sounds like you don't trust your wife enough to be building a condo together either.

The other thing to consider the language a legals. If your wife is the main Thai speaker and can't be trusted or if she doesn't have the excellent business brain and ability to grasp the technicalities of what's going on, be able to negotiate and put a quality thai face to the company then your quite likely to fail and / or get ripped off.

[Khun Jean]

mccw,

Many thanks for your posts.

Just to make clear it is not the case that i not trust my wife, otherwise i would no marry her and stay married with her.

I just think nobody should pay for something 100% and own nothing unless it is a gift.

I am willing to share everything with my wife and as a result also our kids.

We have tens of small condos in a few buildings targeted to the Thai working people in Bangkok owned by our company. None of those were build by us.

As this is a company that is functioning normal, make profit, pays taxes, have employees there is nothing wrong with it.

The land that was bought several years ago is on my wifes name, this will be transferred to the company first, it is worth to pay taxes on it for that.

Initially 100% will be owned by this company, and selling units up to 49% is certainly an option to seriously consider. It would make controlling and maintaining the building and the land it sits on much more easy and up to our standard. Selling more on a later date is always an option. Thanks for pointing that out as it is indeed the part that can be very troublesome. I am not sure if keeping majority of the building will allow us to out vote everyone or if it is prevented by condo rules on how much voting right can be accumulated by one or two persons. Something would have to be in the rules to ensure buyers that upkeep will be done to a certain standard. Any ideas on that?

It will not be a big building, about 4 floors depending on the building restrictions. Shophouse are build to this height so it is one of the ways to keep the build easy. Columns would need to be on a 6x4m grid to have good sized condo's without pillars in open areas..

The number of units will be around 15-20 with probably a penthouse on the top floor. Total square meters will be around 1500-2000 each floor being around 500m2.

"refusing to invest in anything you can not own" is i think not only my feeling. I imagine if a house and a condo are both for sale in the same area and for around the same price 95 out of a 100 will choose the condominium. First and foremost because it can be owned freehold, the extra security a condo has, no maintenance worries, plus access to swimming pool, fitness, garden etc. As i will target the retirement age group or ones that are close to it (40-60) offering something that will be build so that people can live in it for a long time, meaning wide access doors, smooth floors without obstacles, easy wheelchair access to everything from getting out of the car, the common area and private condo, strong ceilings to support lift equipment, live in care/maid room, choice of different floor plans or even 'design your own', fittings that can be very luxury or plain or without fittings , etc.

All this is not available on the market, and that is why i think it will be possible.

Contracts i sign are first translated, i think in all the time i only signed one contract that was in Thai for a small shop around 5k per month. In that case it was too little money to worry about it. Being ripped off happened in the first few months in Thailand, the variety of scams is amazing. Now i prevent them by knowing what i am going to do and don't need advice on the spot. Being prepared is a necessity in Thailand otherwise the only thing you have left is luck. And there is no such thing as luck Obi-wan once said.

[thaiwanderer]

Initially 100% will be owned by this company, and selling units up to 49% is certainly an option to seriously consider. It would make controlling and maintaining the building and the land it sits on much more easy and up to our standard. Selling more on a later date is always an option. Thanks for pointing that out as it is indeed the part that can be very troublesome. I am not sure if keeping majority of the building will allow us to out vote everyone or if it is prevented by condo rules on how much voting right can be accumulated by one or two persons. Something would have to be in the rules to ensure buyers that upkeep will be done to a certain standard. Any ideas on that?

You and your wife can hold any % up to 100 by shrouding in a combination of legal personalities - her name, thai companies, your name & off shore companies.

As to attraction of condos even some not suffering from cognitive dissonance on the legalities prefer house over condo because of the physical structure. There is some potential for looking into townhouses or detached houses in an estate as a condo but its a bit shaky tbh.

[davejones]

For some farang it just doesn't matter if they own the land or not. If it gets taken away from them for some reason, well it's only money that's lost. And many farang have enough money to not have to worry about such things. What's losing 5 million if you have 100 million+? Nothing really. Be careful, but don't spend so much tome focusing on money or you'' end up missing out on life. Money's there to be spent, and life to be lived.

Indeed, but I think there are better ways of spending it than on expensive millstones that you cant even legally own.

I know some people here who have 100M+ and none of them would ever think of buying land or houses here. They just rent rather nice places.

I've never found a condo or house here that's to my exact tastes, so eventually I will buy one and renovate it so it's exactly like I want it. Whether I own it or not is immaterial, as being able to live somewhere that's perfect for me is what I want. I doubt very much that anything will go wrong, as I know numerous farangs that have 'owned' houses here for decades without any problems. In any case, if there's a risk involved I'm willing to take it. Everything in life is a risk. Don't see the pint of having 100M+ like the guy you mentioned and being too scared to spend any of it. Money is there to be spent. What's the point of dying with 100M+ all safely tucked away. That's complete nonsense to me. I earn money so that I can send it and enjoy myself.

[mccw]

Kunn Jean

Since you've got 10s of condos / stable income biz already then I say go for it and good luck to you! Sounds like your experienced and will do your due dilligence.

The ideas about target older people and long term thinking is good. Do think a specific "retirement condominium" could work? Ie over 40s only? Or no point to excluded people? But I thought maybe no kids running around, splashing in the pool, babies screening middle night etc could be a popular point. Also could try to provide a visiting doctor and perscription delivery service. Maybe rather than live in maids quarters in room how about a service contract including maid / cleaning, + an on call carer or two for emergencies with an alarm / beeper system; so if some one has a fall or gets stuck, short of breath etc they just press a button and someone's on hand to help strait away? This kind of service was another idea I had to make basically a serviced care residence where you have these facilities for a rent reflective of the service. Could sell leases on the Thai half? Or rent and have some sold freehold but with a monthly service fee for the extra provisions. Obviously you'd need a critical mass of uptake to make it economic but by my calculations it should be possible to provide the services and make a good profit over the staff costs.

Things like shuttle bus to shops and other on site services like mini mart, pharmacy, laundry collection and drop off, room service restaurant of decent quality. If like this then medium sized units of 60 to 150sqmeters be fine I think.

Also like this the residents would expected that the company will manage everything due to the service levels provided rather than people in a condo scenario wanting to stick thier noses in to how the building is run.

[Khun Jean]

I've never found a condo or house here that's to my exact tastes, so eventually I will buy one and renovate it so it's exactly like I want it....

This is exactly one of the 'problems' that buyers face i want to prevent. Many condos i have seen have strange floorplans, or windows facing the wrong way, kitchen too small, too big etc. I have seen i think more then a hundred codos of which maybe one or two would fit my wishes.

I will have plans sketched with alternate floorplans or allow for a design it yourself floorplan, also plan to leave it complete empty so people can choose the fittings they like or choose from a catalogue. When presales are possible even water, drains etc can be moved.,

As such it will be one of a kind, i only don't know for sure if there is a market for that strategy, so remaining flexible is a must.

mccw, the picture you paint is what it will try to accomplish. Good pointers again. I guess the age bracket it will also be influenced by what kind of respose i get. If most of them are 50+ it might be better to focus on that age.

Making condos big enough that family can visit would also be a big plus i think. It will help agains tbeing isolated from family and friends. And as it is a nice location many would want to stay over.

Not allowing kids will be detrimental for old age people, it is one of the joys for most elderly if it stays within bounds. But crying babies, save to say nobody likes those.

Thanks a lot!

Edited January 12, 2013 by Khun Jean

[mccw]

They already have this resident care service in Chiang Mai but on a bungalow / resort kind of lay out. I think it would work just as well in a condo with gardens and noce shared facility format just as well.

http://www.careresortchiangmai.com/

They cater for all the way through to quite advanced medical conditions. Something to think about is how far your provided services can go. Personal I think a middle ground of "assisted independent living" would be easier to deal with, and more profitable at the scale we're talking about, than a full blown "care home" type service through to dementia and serious such conditions requiring practically constant supervision.

Legally and morally clear definitions of what is covered and when extra help should be sort.