Buying Vs Being A Lifelong Renter

[davejones]

I have the same concerns as the OP. I want to buy but am concerned at the current price of property. Historically boom bust in economies seems to come in 12-15 years cycles. Looking at the east west currency graphs we seem to be about due one. "The west is dead Asia is the future " rhetoric seems very similar to the "Asian tiger" words of the mid 1990's. But the game does seem to be different this time round. While demand seems to have dropped and most people I know think prices are high and are waiting, low interest rates are not forcing anyone to sell and the banks dont seem to care much about holding empty properties. Nobody seems to know how much money is coming in from China. In Singapore where there is more transparency on property transactions something like a third of all non landed properties are being bought by overseas Chinese buyers. I assume the same is true for Thailand. Nobody also seems to know the impact of Burma on all of this where either huge currency flows will come into Thailand because they now can , or go out of it as people from Burma no longer have to launder through Thailand .

I'm going to rent and wait for a year for a sign. My biggest fear is that every government is going to reach the same conclusion that the global economy is out of control and the only way to solve it is huge inflation to quietly write off the debts. In that case the poster that said buy property regardless of price is right and anyone like me with savings but no income or hard assets is going to be destroyed. My other concern is the disorientating feeling that maybe there will be no correction, the world has just changed and I don't get it. An old Chinese guy 10 years ago told me with a little anger that people like me are insane to pay S$5 for a cup of starbucks when he could buy a coffee for 30 cents. I saw a development on Wireless Road where they are selling 25 year lease 90 Sqm condos for 14 M Baht which means you have no house and no capital after 25 years. The girl told me they had two units left and foreigners were buying to have a place downtown. The million dollar basic condo has become the norm in Singapore, maybe Thailand is going the same way.

I currently feel the same sense of world insanity as that old Chinese guy.

I think that if you have a set amount of money and no income, then it's always best to buy a property when you need it, and not try to guess where prices are going. You could buy and then prices could drop 20%, but you will still have your property. And you will not have been paying rent in the meantime. I know people that have been renting for 10+ years while they wait for the perfect moment to buy a house. Even when prices fall they don't buy, because they are frightened they will go lower. If buying a home for the long-term, you need to stop worrying about what the price of the property will be in the future.

Regarding lower interest rates, I hope you're not talking about Thailand, because rates are quite high here.

Buying a 25 year lease for 14 million is the same as renting for under 50,000/month. I've no idea of the quality of the condos you're talking about, but that sounds like it could be a bargain price. If the lease was 999 years, then the condos may cost 50 million or more. So I don't think your comparison is very good.

The world has changed, as is continuing to change rapidly.

Singapore is small, so demand for property probably outstrips supply. In Thailand there is massive supply and little demand, so prices will never get to the levels of Singapore. But if China continues growing, then more will probably buy in nearby countries, so prices could rise.

Inflation is a real killer of you have cash, so be careful.

Buy wisely, and there's not need to worry about a property price crash. The people mostly affected are usually the ones that buy what are obviously grossly overpriced properties. These are always fairly easy to spot.

But I think there is already a bubble and that it will grow much bigger before it bursts. ASEAN is coming, and that is pushing up land and property prices in many areas.I think this rise will continue until at least 2015, and probably a few more years. Then, just like the EU, it will come crashing down. ASEAN isn't like the EU now, but if it gets anything like it, it will suck the life of the economy.

[LawrenceChee]

I agree ...most of the women I met and thought at a point of settling down had no bad financial habits and were prudent with money and yea they have their wish list a new phone now and again a new bag / pair of shoes

However thank god it's only that ...if I was back in Korea it's the weekly jaunt to Dior / Chanel stores ...makes me hate the French by default ! The item is so beautiful but so destructive on the wallet and cc hagahahahahah

For me renting now makes sense as I am always on the road but when I marry someone it makes sense then to buy

I only have 2 hand carry ons now ...marrying will create more than my $40 baht investment of 2 tea mugs

[isawasnake]

I honestly see a pattern here though: people who trust no one (for their various reasons, legit or not) are the renter. More "stable" people who tend to trust others more are the buyers. I guess you could only figure out what was "right" given your particular circumstances. All things being equal though, buying does seem to be the prudent, long term move.

[TommoPhysicist]

All things being equal though, buying does seem to be the prudent, long term move.

You've never been divorced?

Edited February 16, 2013 by TommoPhysicist

[davejones]

All things being equal though, buying does seem to be the prudent, long term move.

You've never been divorced?

I've never been divorced, but I know people who have, and they still buy properties with their new partners. If you bought together, split up and shared teh property, then that is fair, so not sure why it's relevant. Unless you paid for the property and then had to give half or more away. Can be a tricky situation I suppose. But in Thailand I think prenups are legal. I could be wrong, but I think I read that somewhere. I wouldn't get married without one. Not romantic, but good to agree where you both stand if you split up.

[rgs2001uk]

I have the same concerns as the OP. I want to buy but am concerned at the current price of property. Historically boom bust in economies seems to come in 12-15 years cycles. Looking at the east west currency graphs we seem to be about due one. "The west is dead Asia is the future " rhetoric seems very similar to the "Asian tiger" words of the mid 1990's. But the game does seem to be different this time round. While demand seems to have dropped and most people I know think prices are high and are waiting, low interest rates are not forcing anyone to sell and the banks dont seem to care much about holding empty properties. Nobody seems to know how much money is coming in from China. In Singapore where there is more transparency on property transactions something like a third of all non landed properties are being bought by overseas Chinese buyers. I assume the same is true for Thailand. Nobody also seems to know the impact of Burma on all of this where either huge currency flows will come into Thailand because they now can , or go out of it as people from Burma no longer have to launder through Thailand .

I'm going to rent and wait for a year for a sign. My biggest fear is that every government is going to reach the same conclusion that the global economy is out of control and the only way to solve it is huge inflation to quietly write off the debts. In that case the poster that said buy property regardless of price is right and anyone like me with savings but no income or hard assets is going to be destroyed. My other concern is the disorientating feeling that maybe there will be no correction, the world has just changed and I don't get it. An old Chinese guy 10 years ago told me with a little anger that people like me are insane to pay S$5 for a cup of starbucks when he could buy a coffee for 30 cents. I saw a development on Wireless Road where they are selling 25 year lease 90 Sqm condos for 14 M Baht which means you have no house and no capital after 25 years. The girl told me they had two units left and foreigners were buying to have a place downtown. The million dollar basic condo has become the norm in Singapore, maybe Thailand is going the same way.

I currently feel the same sense of world insanity as that old Chinese guy.

In that case the poster that said buy property regardless of price is right and anyone like me with savings but no income or hard assets is going to be destroyed.

You may well end up, property rich bank poor.

I honestly believe right now, cash is king.

Its horses for courses, I dont care if my portfolio is worth X or Y, I need Z every month to live on.

Nothing wrong with owning a propety here, I wouldnt be sinking my life savings into one though.

I have seen nothing that makes me think I am missing out by not buying here, and certainly nothing that has me wanting to sell my properties overseas to invest here.

I like certainty, I like to know I have X as an income every month, whether I spend it or not.

Make sure you are buying for the right reasons, fear of being left behind to me isnt good enough.

As part of a well balanced portfolio by all means buy, but I wouldnt be looking to flip as a way of trying to make a quick buck.

For me, I dont know where I will be in 5,10,15 or 20 years time. It may or may not (and probably wont) be Thailand, but I would hate to have assests tied up here that I couldnt shift to finance a move elsewhere.

Edited February 16, 2013 by rgs2001uk

[davejones]

I have the same concerns as the OP. I want to buy but am concerned at the current price of property. Historically boom bust in economies seems to come in 12-15 years cycles. Looking at the east west currency graphs we seem to be about due one. "The west is dead Asia is the future " rhetoric seems very similar to the "Asian tiger" words of the mid 1990's. But the game does seem to be different this time round. While demand seems to have dropped and most people I know think prices are high and are waiting, low interest rates are not forcing anyone to sell and the banks dont seem to care much about holding empty properties. Nobody seems to know how much money is coming in from China. In Singapore where there is more transparency on property transactions something like a third of all non landed properties are being bought by overseas Chinese buyers. I assume the same is true for Thailand. Nobody also seems to know the impact of Burma on all of this where either huge currency flows will come into Thailand because they now can , or go out of it as people from Burma no longer have to launder through Thailand .

I'm going to rent and wait for a year for a sign. My biggest fear is that every government is going to reach the same conclusion that the global economy is out of control and the only way to solve it is huge inflation to quietly write off the debts. In that case the poster that said buy property regardless of price is right and anyone like me with savings but no income or hard assets is going to be destroyed. My other concern is the disorientating feeling that maybe there will be no correction, the world has just changed and I don't get it. An old Chinese guy 10 years ago told me with a little anger that people like me are insane to pay S$5 for a cup of starbucks when he could buy a coffee for 30 cents. I saw a development on Wireless Road where they are selling 25 year lease 90 Sqm condos for 14 M Baht which means you have no house and no capital after 25 years. The girl told me they had two units left and foreigners were buying to have a place downtown. The million dollar basic condo has become the norm in Singapore, maybe Thailand is going the same way.

I currently feel the same sense of world insanity as that old Chinese guy.

In that case the poster that said buy property regardless of price is right and anyone like me with savings but no income or hard assets is going to be destroyed.

You may well end up, property rich bank poor.

I honestly believe right now, cash is king.

Its horses for courses, I dont care if my portfolio is worth X or Y, I need Z every month to live on.

Nothing wrong with owning a propety here, I wouldnt be sinking my life savings into one though.

I have seen nothing that makes me think I am missing out by not buying here, and certainly nothing that has me wanting to sell my properties overseas to invest here.

I like certainty, I like to know I have X as an income every month, whether I spend it or not.

Make sure you are buying for the right reasons, fear of being left behind to me isnt good enough.

As part of a well balanced portfolio by all means buy, but I wouldnt be looking to flip as a way of trying to make a quick buck.

For me, I dont know where I will be in 5,10,15 or 20 years time. It may or may not (and probably wont) be Thailand, but I would hate to have assests tied up here that I couldnt shift to finance a move elsewhere.

Very sensible advice, and what I think as well. I certainly wouldn't buy for investment here at the moment, as i think there are better opportunities elsewhere. UK has great opportunities at the moment, especially as more cheap mortgages are coming on the market every week. You can now get 10-year fixed rates at under 4%, and 5-year fixed rates under 3%. Buy-to-let is starting to take off again. Property prices are bound to follow. I'd only buy here as a long-term home, or as a base in Thailand. I would consider a cheaper property for investment here though. There are some bargains if you know the right people. Buying from distressed buyers seems like a good way to make money, and I know someone who'd done a few successful deals in the last few years. I might buy a similar one and see how it goes. But definitely not a shiny new, overpriced condo.

[rgs2001uk]

Dave^^^^^, in the next 3 or 4 months I will be returning to the UK with the aim of buying another property.

You are correct about BTL, what is killing a lot of people is the cost to first time buyers, my first house cost the equivalent of 3 times an annual salary, the same house now costs 7 times the annual salary in the area.

My properties are for long term growth and regular income,the income that isnt spent is reinvested.

I have properties that if they dropped in value by 50% I would still be in profit, and that doesnt include the rental income.

Horses for courses, if the American tax system wasnt so draconian and investor unfriendly I would consider properties there.

I saw the UK go through the same 20+ years ago, look at property values over the last 20 years and tell me it was a bad move to invest in UK property.

[davejones]

Dave^^^^^, in the next 3 or 4 months I will be returning to the UK with the aim of buying another property.

You are correct about BTL, what is killing a lot of people is the cost to first time buyers, my first house cost the equivalent of 3 times an annual salary, the same house now costs 7 times the annual salary in the area.

My properties are for long term growth and regular income,the income that isnt spent is reinvested.

I have properties that if they dropped in value by 50% I would still be in profit, and that doesnt include the rental income.

Horses for courses, if the American tax system wasnt so draconian and investor unfriendly I would consider properties there.

I saw the UK go through the same 20+ years ago, look at property values over the last 20 years and tell me it was a bad move to invest in UK property.

I bought at the absolute bottom of the property market in 1995. But by luck. I needed somewhere to live, so bought. Now quadrupled in value. I could never afford to buy it now.

I used to live in Nottingham, and there seem to be lots of reasonably priced properties there at the moment. Not sure what the market's like there. but maybe a little oversupplied. A nice town though, and I enjoyed living there. You can get a 1-bed for £50k.

[BlackPuddingBertha]

The million dollar basic condo has become the norm in Singapore, maybe Thailand is going the same way.

Maybe indeed. But if it happens will anyone still choose to live in Thailand? I certainly wouldn't choose to live in Singapore.

[davejones]

The million dollar basic condo has become the norm in Singapore, maybe Thailand is going the same way.

Maybe indeed. But if it happens will anyone still choose to live in Thailand? I certainly wouldn't choose to live in Singapore.

If people are willing to pay a million dollars for a condo, then people obviously want to live there. In undesirable places, prices would never reach those levels.

[teatree]

You could buy a house in wife's name. You can also own a house and one rai of land if you invest a certain amount of money in Thailand. I know if you buy in wife's name, it's not yours personally, but it's still the family's house, and can still save money over renting. If some aren't comfortable with that, then they can rent. But many are happy to buy in wife's name, so it saves them money in the long run. Buy house for wife or give landlord rent for 30-50 years so that he can own a house? Most would rather give the money to their wife than to a landlord. Or if you're really paranoid, get wife to get a mortgage and pay if for her instead of paying rent. You're still paying the same money out each month, and if she leaves you can just walk away, so nothing to lose. Many ways around the problem.

You could buy a house in wife's name. Nominee ownership is prohibited by Thai law, it's also not actually buying you a house.

You can also own a house and one rai of land if you invest a certain amount of money in Thailand. That scheme finished a while back, all investors lost their 10MBht investments.

PS

Rent (approx 5% property value) is currently about half the cost of mortgage repayments (6.5% + capital repayment) in most areas.

What you missed out of this is that rents tend to rise in value over time. So for example, if you pay 250,000 annual rent on a 5 million baht property today, you may be paying 500,000 per annum in 10 years time. Renting is almost always cheaper in the very early years, but rarely better in the later years. You also don't take account of property appreciation.

Anyway, last on this thread, as it's all getting a bit pointless. Some prefer to rent, so they should rent. Nothing else to say.

Exactly.

This is something that often does not occur to people. If you get a fixed rate mortgage you can lock down your monthly payment. The length of the payback period may change according to interest rates but the amount will be fixed.

Rents don't go down. You won't be paying less rent for your house/condo in 10 years from now.

But if you are paying back a fixed mortgage you may find yourself paying well below the market rate of a rental on the same property with the gap widening each year.

[LennyW]

The million dollar basic condo has become the norm in Singapore, maybe Thailand is going the same way.

Maybe indeed. But if it happens will anyone still choose to live in Thailand? I certainly wouldn't choose to live in Singapore.

If people are willing to pay a million dollars for a condo, then people obviously want to live there. In undesirable places, prices would never reach those levels.

I just came back from Singapore yesterday, i saw parents dropping off their kids at school in Ferrari's, Bently's, Porche's, Aston Martin's, Merc's, Range Rovers and even a Maybach, incredible amount of wealth around there, all very nice but very expensive to live there, very expensive!!

[LawrenceChee]

6th costliest city in the world I sold my apartment recently for 4 times what I paid for it to an investor

That is one location to plonk your money on condos for investment buck ....the govt wana to raise the population to 6.9 million from 5.5 and everyone need a house in a small land mass

I am plonking more money there for a real estate return

[davejones]

6th costliest city in the world I sold my apartment recently for 4 times what I paid for it to an investor

That is one location to plonk your money on condos for investment buck ....the govt wana to raise the population to 6.9 million from 5.5 and everyone need a house in a small land mass

I am plonking more money there for a real estate return

I just read about that. Sure to push prices up further.

[TommoPhysicist]

Rents don't go down. You won't be paying less rent for your house/condo in 10 years from now.

But my wife won't be taking the rented property from me in the divorce settlement.

I agree, it's great to buy a house but only if you can be sure of hanging on to it.

(Also I don't like condos and can't own a house in Thailand anyway)

Edited February 17, 2013 by TommoPhysicist

[davejones]

Rents don't go down. You won't be paying less rent for your house/condo in 10 years from now.

But my wife won't be taking the rented property from me in the divorce settlement.

I agree, it's great to buy a house but only if you can be sure of hanging on to it.

(Also I don't like condos and can't own a house in Thailand anyway)

Sorry to hear of your impending divorce.

[TommoPhysicist]

Rents don't go down. You won't be paying less rent for your house/condo in 10 years from now.

But my wife won't be taking the rented property from me in the divorce settlement.

I agree, it's great to buy a house but only if you can be sure of hanging on to it.

(Also I don't like condos and can't own a house in Thailand anyway)

Sorry to hear of your impending divorce.

A comment you can make to every married person, and be right at least 50% of the time.

[diddums]

To get back on track, perhaps someone could enlighten me as to how I can leverage in Thailand?

Suppose I bought a condo for 3 million, our real esate experts tell me its now worth 6 million, to me thats 3 million of "dead money", why cant I leverage the appreciation to buy a new 3 million baht condo, thus freeing up my capital?

Where are these real estate experts ??

So I take it you've met his wife and know all this. The Thai people I know are all good with money. I've never met a Thai that has a gambling problem. My gf, for example, doesn't even buy lottery tickets. There is no way she'd gamble away the money she has after working so hard for it. Sounds like you hang out with very lo-so people. Trying getting out and about a bit more and meet some real Thais.

Go look inside any of the illegal gambling dens or the casinos just across the border....many not so loso in them.

[turgid]

6th costliest city in the world I sold my apartment recently for 4 times what I paid for it to an investor

I saw that 6th costliest city number.

The top six cities are Japan's Tokyo, Osaka, Australia's Sydney, Norway's Oslo and Australia's Melbourne, then Singapore.

4 of of the other cities are in two countries and in all the other countries you have the option to commute. That makes Singapore the 4th most expensive country by numbers but in reality probably the most expensive country because you cant live outside the city. Again by all the metrics I can imagine a correction has to be due. But maybe it really is a new paradigm.

[davejones]

6th costliest city in the world I sold my apartment recently for 4 times what I paid for it to an investor

I saw that 6th costliest city number.

The top six cities are Japan's Tokyo, Osaka, Australia's Sydney, Norway's Oslo and Australia's Melbourne, then Singapore.

4 of of the other cities are in two countries and in all the other countries you have the option to commute. That makes Singapore the 4th most expensive country by numbers but in reality probably the most expensive country because you cant live outside the city. Again by all the metrics I can imagine a correction has to be due. But maybe it really is a new paradigm.

Which metrics? Can you be more specific?

Edited February 18, 2013 by davejones

[Khun Jean]

QE X will make houses (and everything else) everywhere on the planet more expensive.

QE X+1 even more.

This is a point in time that is impossible to compare with the past, well maybe when the Roman Empire was devaluing their coins might be comparable. We all know happened next

But now, 99% of the poeple have no idea what is happening. No time to look at the news or read a news paper when there is so much sport (for the guys) and reality show (for the gals) to see.

Unreal, but the totla lack of knowledge of people is what is preventing a collapse at this moment.

There is for the western world no escape from interest rates close to zero and money printing.

Look at Spain, a lot more debt while having austerity measurements, i think they will start to understand, and then the ball gets rolling.

Most of the QE is done in dollars inflation is pushed to the whole world, Thailand is not immune.

Remember what you paid for a good meal at a street stall 5 years ago? Minimum wage rise?Inflation is everywhere.

What has that to do with renting or buying?

In my opinion if you can transfer cash into something that keeps value and follows inflation, and especially when you can live in it, i would buy. (Conveniently disregarding Thai laws for the moment).

Edited February 18, 2013 by Khun Jean

[utalkin2me]

Rents don't go down. You won't be paying less rent for your house/condo in 10 years from now.

But my wife won't be taking the rented property from me in the divorce settlement.

I agree, it's great to buy a house but only if you can be sure of hanging on to it.

(Also I don't like condos and can't own a house in Thailand anyway)

I guess this really gets to the meat of it. Even the pro renters are conceding that buying is better, but they just simply don't have the proper circumstances to set themselves up ideally. It's unfortunate (at least in my eyes).

Edited February 19, 2013 by utalkin2me

[davejones]

Rents don't go down. You won't be paying less rent for your house/condo in 10 years from now.

But my wife won't be taking the rented property from me in the divorce settlement.

I agree, it's great to buy a house but only if you can be sure of hanging on to it.

(Also I don't like condos and can't own a house in Thailand anyway)

Your wife won't take it away from you, because you've already given it to your landlord. You are paying rent so that he can own a house. When you move out, you won't own it. So your argument is flawed.

Rent = landlord gets house.

Buy = you or your wife gets the house.

So you definitely lose by renting, but have a chance of not losing by buying.

Why are you so happy to give everything to the landlord?

[Khun Jean]

As a landlord myself i like most peoples thinking. Win-win.

[TommoPhysicist]

Your wife won't take it away from you, because you've already given it to your landlord. You are paying rent so that he can own a house. When you move out, you won't own it. So your argument is flawed.

Rent = landlord gets house.

Buy = you or your wife gets the house.

So you definitely lose by renting, but have a chance of not losing by buying.

Why are you so happy to give everything to the landlord?

Wife can get it the day/week/month after I pay for it.

Landlord gets it after I live there for 20 years.

Can you see the difference?

[davejones]

Your wife won't take it away from you, because you've already given it to your landlord. You are paying rent so that he can own a house. When you move out, you won't own it. So your argument is flawed.

Rent = landlord gets house.

Buy = you or your wife gets the house.

So you definitely lose by renting, but have a chance of not losing by buying.

Why are you so happy to give everything to the landlord?

Wife can get it the day/week/month after I pay for it.

Landlord gets it after I live there for 20 years.

Can you see the difference?

Then put it in her name and get her to get a mortgage. You then pay the mortgage. If she leaves, you stop paying. Simple.

[diddums]

Landlord gets it when he decides to kick you out.

[TommoPhysicist]

Then put it in her name and get her to get a mortgage. You then pay the mortgage. If she leaves, you stop paying. Simple.

Brilliant idea!

Just tell me which bank will lend an unemployed farm girl 2M baht and I'm she's ready to buy.

Edited February 19, 2013 by TommoPhysicist

[TommoPhysicist]

Landlord gets it when he decides to kick you out.

Most people don't pay their landlord 20 years rent up front, but I suppose TiT.

Edited February 19, 2013 by TommoPhysicist