Rental propeties - Investment Income in Thailand

[fletchsmile]

Have you considered REITs as a way of investing in property?

They provide capital appreciation as well as regular income, and are completely hassle free (no tenants to worry about, no maintenance, etc.) and liquid. Easy to use as part of a complete portfolio which includes regular rebalancing, so easy to avoid at least some of the effects of a property bubble.

The only drawback is you normally don't buy REITs on leverage like you would have with a mortgage, but you're probably not looking at a mortgage in Thailand so that wouldn't be a factor.

And of course look for low fee REITs and don't forget about tax considerations.

Definitely something to look into.

I'd agree with Ludacris, for investment related to property in Thailand, my preferred way would be REITs. Tax efficient, 6-7% yield possible, and if you decide Thailand's not for you, or you want to sell, for whatever reason, they are much more liquid, as they are exchange listed. You just sell and can have the money in your bank a couple of days later. Actually I prefer Singapore REITS that yield 6%, but that's a different story.

My view on property in Thailand is it's for nesting rather than investing. We (or should I say Mrs. Smile) own one condo here, and live in it. Very happy with it, but initially it did have its teething problems, still does sometimes, and getting things fixed is less easy than back in the west. OK maintenance is cheaper here but the quality of work reflects that. I really wouldn't want to be dealing with tenants, vacant occupancies, maintenance and all the other hassles that come with property ownership and renting.

The higher yields tend to come from cheaper places (well less than 1mio) where you can rent to locals - double digits possible sometimes I believe from one or two long term people that seem OK with it - rather than more expensive quality places rented to expats, where you'd be lucky to get the same yield as a REIT. Personally I wouldn't want the hassle of dealing with Thai locals as tenants, where they're at a level economically they can't buy their own place. The yield will be higher but you need to keep more of an eye on things...

I also know quite a few people that have bought a decent property, then from time to time struggle to rent, so income drops to zero. That's why a small portfolio of more, lower value is better, and actually why I'd say REITs are better still. If you want say 25% of your cash back for something, you can't sell 25% of a condo either - all or nothing - again REITS mean you can sell any amount any time

Cheers

Fletch

Edited January 17, 2015 by fletchsmile

[TealLA]

It all really depends on how much of a deal you can get on the condo(s).If you can buy a condo worth 2mill or 2.5 for 1.2 and rent it for 10k + a month I think ok. From what I see there is now a 15 to 20 year return on your money once you figure in what you would get if you just invested your cash at say 3% interest. You have to buy below market price to make out here. Maybe prices will come down in another year ???

As an example, I am currently paying 15K on a place that sells for 2.8m. Do the math but figure in about what your money would bring if you have it sitting in the bank collecting interest, say 3%. You must also figure in the maintenance fees and times that the unit is empty. It is currently a renters market in most of Thailand. Many reasons not to buy right now.....

Thanks for your information. I was thinking three units each fetching about 8,000 baht per month. I will do more research for sure. At this point I'm just thinking out loud, so to speak.

[TealLA]

"if" you had bought about 7-8 years ago when the baht was weak it was "ok" now its really not so good at all, maybe you will get 3-4%, 8 years ago 10+% was what I got in BANGKOK which was the best place to do this.

My advice dont bother "now"

Save yourself a lot of hassle with poor quality construction ( especially water) leading to problems later and shove it in the highest interest account you can.

Units I bought way back 8 years ago cost me 1.1 million baht (5x 30m2 units) close to the BTS

I started renting them for 15k a month as at the time few new units available at my location, over the next 4-7 years rents fell as more stock came online, rent went down to 14-13.5-13-12-11-and last customer 10k a month.

I have since sold ALL the units and they sold for 1.45 million baht, no problems selling if in good condition and location, all were studios, no commission to any agents as..................Wife is an agent!!!

I did pretty well out of them.

I wouldnt buy in the current market

Thanks for all the great information!! How did you have the properties set-up legally? e.g.- wife's name, company, or just low-key off the books so to speak?

[TealLA]

As an investor myself I would first assess what happens if you buy 3 condos and cant find tenants for a long time. Is this going to make or break you. If you are really well off then take a risk as it wont affect your cash flow. If its the only money you have then I would suggest only buy one and sit on it for a few years until you know the market better.

Back home I learnt that the best investment property is in a town where there is a chronic shortage of rental properties.

If I were you I would spend many months looking at as many properties for sale and also look at many rental condos to give you an idea. By the way you make money in property when you buy ..... if you get it cheap...

good luck

Thank you Sir for the good advice!

[TealLA]

^{Buy the smaller, lower priced units. Look for condos under 1 million. You can always rent them out and don't need farang customers. Your return should be around 10%.}

This was going to be my game plan. I recently stayed in Chiang Mai at a guest house, similar to a long stay hotel. They are getting around 8K baht/month for a tiny 1 bedroom, granted they are in a central location. It seems to me that I should be able to get that for a decent condo.

[TealLA]

Buy the condo's in Cebu, you will make a fortune

I have spent time in Cebu back in 2006. The PI has a lot of growth potential in my opinion. I never considered the PI before, I'll have to look into that.

[TealLA]

Hi Teal

It should not be difficult for you to answer your own question !

• Visit 20 Condominiums for rent with the local agents.
• Discuss the rental costs.
• Visit 20 Condominiums for sale with the local agents.
• Discus the sale price.
• Do the Math's and then you will understand the "gross" return you are likely to gain on your investment.
• You should then be able to figure out your "Net return".
• Take very much care !

Very much appreciated! Problem is I'm not in Thailand now and I never seriously considered it before when I was in Thailand. But that would be the best logic.

[TealLA]

done this years ago was getting 10% on my investments which was good, then with all the over building here and everyone I spoke to was doing the same as me it became harder to rent the properties and had to reduce the rents ending up with lots of work lots of problems and 3 or 4% not so good, so I sold all the properties.

hope this helps you.

Sure helps, thanks for your time. Seems to be there is quite an oversupply in some markets.

[TealLA]

Buy the condo's in Cebu, you will make a fortune

And that post is based on what...stopping the greed?

I assume the gentleman is being ironic; condos in the Philippines, and Cebu in particular, have notoriously poor build quality, are consistently overpriced both to buy and to rent vis-a-vis houses, and are hopelessly illiquid, even compared to Thailand.

If the OP is looking for investment income in Thailand without hassle and relatively low risk, I suggest he looks at SET corporate funds, some of which will pay a tax-free 6-7% dividend annually. The key with these however is to buy at the right moment to protect the capital investment.

You bring up a good point about investing in the SET and I've considered that. I was looking into that a few years back. How would one go about setting up an account to invest in the SET? I'm not very educated in that.

[TealLA]

i assume you know about Thailand so we will not get into that nightmare.

there is no off switch for the overbuilding.

believe me they will build just like they drive. until they crash at full speed.

I live in a sea of empty condos in Hua Hin.

dark monoliths with no lights on at night. maybe one or two units in a twenty story building.

Eleven thousand new units.

And more under construction.

and the collective denial of the owners. some I know who have been trying to sell for three years.

and empty and failing housing projects that dot the countryside every 100 meters. villa this and villa that.

i rent a three bedroom two bathroom house with a big yard, 3 minutes walk from the ocean, 5 kilometers from the Kings Summer Palace.

My rent is 10,000 baht or $306 USD.

good luck.

Thank you for your reply. I do know a little about Thailand and it's issues. Honestly I wasn't aware that it was such an issue with overbuilding and oversupply. I haven't spent any serious amount of time in Thailand since 2009/2010 and like I mentioned to another poster, I'm really just thinking out loud at this moment and exploring options. It's always good to get the general consensus on things like this and hopefully get good feedback from people who have actual experience.

[TealLA]

Have you considered REITs as a way of investing in property?

They provide capital appreciation as well as regular income, and are completely hassle free (no tenants to worry about, no maintenance, etc.) and liquid. Easy to use as part of a complete portfolio which includes regular rebalancing, so easy to avoid at least some of the effects of a property bubble.

The only drawback is you normally don't buy REITs on leverage like you would have with a mortgage, but you're probably not looking at a mortgage in Thailand so that wouldn't be a factor.

And of course look for low fee REITs and don't forget about tax considerations.

Definitely something to look into.

I'd agree with Ludacris, for investment related to property in Thailand, my preferred way would be REITs. Tax efficient, 6-7% yield possible, and if you decide Thailand's not for you, or you want to sell, for whatever reason, they are much more liquid, as they are exchange listed. You just sell and can have the money in your bank a couple of days later. Actually I prefer Singapore REITS that yield 6%, but that's a different story.

My view on property in Thailand is it's for nesting rather than investing. We (or should I say Mrs. Smile) own one condo here, and live in it. Very happy with it, but initially it did have its teething problems, still does sometimes, and getting things fixed is less easy than back in the west. OK maintenance is cheaper here but the quality of work reflects that. I really wouldn't want to be dealing with tenants, vacant occupancies, maintenance and all the other hassles that come with property ownership and renting.

The higher yields tend to come from cheaper places (well less than 1mio) where you can rent to locals - double digits possible sometimes I believe from one or two long term people that seem OK with it - rather than more expensive quality places rented to expats, where you'd be lucky to get the same yield as a REIT. Personally I wouldn't want the hassle of dealing with Thai locals as tenants, where they're at a level economically they can't buy their own place. The yield will be higher but you need to keep more of an eye on things...

I also know quite a few people that have bought a decent property, then from time to time struggle to rent, so income drops to zero. That's why a small portfolio of more, lower value is better, and actually why I'd say REITs are better still. If you want say 25% of your cash back for something, you can't sell 25% of a condo either - all or nothing - again REITS mean you can sell any amount any time

Cheers

Fletch

Thanks Fletch, very informative!!

I was thinking less than 1 million baht for sure and thinking a few units that way if I would have a vacancy I could hopefully have the other units providing income. Also, I think I would want to focus on Thais instead of Westerners and perhaps even focus on places off the beaten path and not so much dependent on tourism.

[kannot]

"if" you had bought about 7-8 years ago when the baht was weak it was "ok" now its really not so good at all, maybe you will get 3-4%, 8 years ago 10+% was what I got in BANGKOK which was the best place to do this.

My advice dont bother "now"

Save yourself a lot of hassle with poor quality construction ( especially water) leading to problems later and shove it in the highest interest account you can.

Units I bought way back 8 years ago cost me 1.1 million baht (5x 30m2 units) close to the BTS

I started renting them for 15k a month as at the time few new units available at my location, over the next 4-7 years rents fell as more stock came online, rent went down to 14-13.5-13-12-11-and last customer 10k a month.

I have since sold ALL the units and they sold for 1.45 million baht, no problems selling if in good condition and location, all were studios, no commission to any agents as..................Wife is an agent!!!

I did pretty well out of them.

I wouldnt buy in the current market

Thanks for all the great information!! How did you have the properties set-up legally? e.g.- wife's name, company, or just low-key off the books so to speak?

Virtually ALL Thai landlords do it off the books,2 were owned in my name 3 in the Wifes, Ill let you speculate on if I paid any taxes??????????

We got a mix of folk half Foreigners half Thai, most were fairly decent never had anyone trash the place, I did all the maintenance myself, youll save a lot of hassle and bodge jobs if you can do this.

We also cleaned them ourselves, it took 2 FULL days to clean a 30m2 studio when anyone left, 3 days if I painted the walls only.

I did pretty well out of these units, with the Wife being in the trade we can sometimes get a desperate seller, we just got a 2 bed for 3 million close to the bts 68m2 which usually sell for 4.1 upwards and the rent on thats about 20-22k its only 3 years old

[NCC1701A]

"if" you had bought about 7-8 years ago when the baht was weak it was "ok" now its really not so good at all, maybe you will get 3-4%, 8 years ago 10+% was what I got in BANGKOK which was the best place to do this.

My advice dont bother "now"

Save yourself a lot of hassle with poor quality construction ( especially water) leading to problems later and shove it in the highest interest account you can.

Units I bought way back 8 years ago cost me 1.1 million baht (5x 30m2 units) close to the BTS

I started renting them for 15k a month as at the time few new units available at my location, over the next 4-7 years rents fell as more stock came online, rent went down to 14-13.5-13-12-11-and last customer 10k a month.

I have since sold ALL the units and they sold for 1.45 million baht, no problems selling if in good condition and location, all were studios, no commission to any agents as..................Wife is an agent!!!

I did pretty well out of them.

I wouldnt buy in the current market

Thanks for all the great information!! How did you have the properties set-up legally? e.g.- wife's name, company, or just low-key off the books so to speak?

Virtually ALL Thai landlords do it off the books,2 were owned in my name 3 in the Wifes, Ill let you speculate on if I paid any taxes??????????

We got a mix of folk half Foreigners half Thai, most were fairly decent never had anyone trash the place, I did all the maintenance myself, youll save a lot of hassle and bodge jobs if you can do this.

We also cleaned them ourselves, it took 2 FULL days to clean a 30m2 studio when anyone left, 3 days if I painted the walls only.

I did pretty well out of these units, with the Wife being in the trade we can sometimes get a desperate seller, we just got a 2 bed for 3 million close to the bts 68m2 which usually sell for 4.1 upwards and the rent on thats about 20-22k its only 3 years old

This is a good post. It includes real examples of what you need.

Someone who speaks Thai.

Someone in Thailand you can trust.

Someone with a inside track to bargains.

Someone to do the work and oversee any work the Thais do.

And a illustration of the falling rental rates.

[Lukecan]

i assume you know about Thailand so we will not get into that nightmare.

there is no off switch for the overbuilding.

believe me they will build just like they drive. until they crash at full speed.

I live in a sea of empty condos in Hua Hin.

dark monoliths with no lights on at night. maybe one or two units in a twenty story building.

Eleven thousand new units.

And more under construction.

and the collective denial of the owners. some I know who have been trying to sell for three years.

and empty and failing housing projects that dot the countryside every 100 meters. villa this and villa that.

i rent a three bedroom two bathroom house with a big yard, 3 minutes walk from the ocean, 5 kilometers from the Kings Summer Palace.

My rent is 10,000 baht or $306 USD.

good luck.

Generalising the Thai Real Estate market by giving some no name city where only broke pensioners live as an example. If you buy in a desirable area in Bangkok you will have no problems selling it or renting it out.Real estate is all about lcation location location.

For me buying real esate is not worth it in Thailand unless you buy it from a good area in Bangkok(Thong Lor,Ratchatewi,Silom etc) In these areas you will have no problems finding a tenant or a buyer, you easily find thai buyers who want to spend some of their black money on a property.

[DividendGuy]

I read your statement and basically you say you are looking to earn enough income to be able to live here in Asia/Thailand on a permanent basis. I believe real estate rentals will give you a lot of problems and maybe not deliver enough income for you to live here full-time. Ninety-thousand dollars, is not enough of an investment amount to allow you to live here. You will eventually have problems with inflation that eats away at your income so in the end you will not have enough to live on. You need an investment that keeps up with inflation and that comes down to equities.

If you buy dividend paying stocks, utilities, property funds, REITS, and other non-cyclical stocks then you might be able to earn enough to live here, but then again you now don't have enough to survive long-term. If you are working abroad, save your money and continue to invest in the Thai SET market until you have enough income to have a decent return and enough to live on, then you can start to think about living here permanently. So many people come here unprepared and in the end are forced to leave because they weren't financially strong enough...do it the smart way and you can have a nice life here.

[TealLA]

"if" you had bought about 7-8 years ago when the baht was weak it was "ok" now its really not so good at all, maybe you will get 3-4%, 8 years ago 10+% was what I got in BANGKOK which was the best place to do this.

My advice dont bother "now"

Save yourself a lot of hassle with poor quality construction ( especially water) leading to problems later and shove it in the highest interest account you can.

Units I bought way back 8 years ago cost me 1.1 million baht (5x 30m2 units) close to the BTS

I started renting them for 15k a month as at the time few new units available at my location, over the next 4-7 years rents fell as more stock came online, rent went down to 14-13.5-13-12-11-and last customer 10k a month.

I have since sold ALL the units and they sold for 1.45 million baht, no problems selling if in good condition and location, all were studios, no commission to any agents as..................Wife is an agent!!!

I did pretty well out of them.

I wouldnt buy in the current market

Thanks for all the great information!! How did you have the properties set-up legally? e.g.- wife's name, company, or just low-key off the books so to speak?

Virtually ALL Thai landlords do it off the books,2 were owned in my name 3 in the Wifes, Ill let you speculate on if I paid any taxes??????????

We got a mix of folk half Foreigners half Thai, most were fairly decent never had anyone trash the place, I did all the maintenance myself, youll save a lot of hassle and bodge jobs if you can do this.

We also cleaned them ourselves, it took 2 FULL days to clean a 30m2 studio when anyone left, 3 days if I painted the walls only.

I did pretty well out of these units, with the Wife being in the trade we can sometimes get a desperate seller, we just got a 2 bed for 3 million close to the bts 68m2 which usually sell for 4.1 upwards and the rent on thats about 20-22k its only 3 years old

Thank you so much!! This is exactly the type of information I am hungry for.

Good job on the newer unit you recently purchased.

[NCC1701A]

i assume you know about Thailand so we will not get into that nightmare.

there is no off switch for the overbuilding.

believe me they will build just like they drive. until they crash at full speed.

I live in a sea of empty condos in Hua Hin.

dark monoliths with no lights on at night. maybe one or two units in a twenty story building.

Eleven thousand new units.

And more under construction.

and the collective denial of the owners. some I know who have been trying to sell for three years.

and empty and failing housing projects that dot the countryside every 100 meters. villa this and villa that.

i rent a three bedroom two bathroom house with a big yard, 3 minutes walk from the ocean, 5 kilometers from the Kings Summer Palace.

My rent is 10,000 baht or $306 USD.

good luck.

Generalising the Thai Real Estate market by giving some no name city where only broke pensioners live as an example. If you buy in a desirable area in Bangkok you will have no problems selling it or renting it out.Real estate is all about lcation location location.

For me buying real esate is not worth it in Thailand unless you buy it from a good area in Bangkok(Thong Lor,Ratchatewi,Silom etc) In these areas you will have no problems finding a tenant or a buyer, you easily find thai buyers who want to spend some of their black money on a property.

Broke pensioners? Hua Hin is a no name city? LOL. It is expensive as hell to live here. The police check points outside town make sure you are driving a Mercedes Benz before they let you in.

[Lukecan]

i assume you know about Thailand so we will not get into that nightmare.

there is no off switch for the overbuilding.

believe me they will build just like they drive. until they crash at full speed.

I live in a sea of empty condos in Hua Hin.

dark monoliths with no lights on at night. maybe one or two units in a twenty story building.

Eleven thousand new units.

And more under construction.

and the collective denial of the owners. some I know who have been trying to sell for three years.

and empty and failing housing projects that dot the countryside every 100 meters. villa this and villa that.

i rent a three bedroom two bathroom house with a big yard, 3 minutes walk from the ocean, 5 kilometers from the Kings Summer Palace.

My rent is 10,000 baht or $306 USD.

good luck.

Generalising the Thai Real Estate market by giving some no name city where only broke pensioners live as an example. If you buy in a desirable area in Bangkok you will have no problems selling it or renting it out.Real estate is all about lcation location location.

For me buying real esate is not worth it in Thailand unless you buy it from a good area in Bangkok(Thong Lor,Ratchatewi,Silom etc) In these areas you will have no problems finding a tenant or a buyer, you easily find thai buyers who want to spend some of their black money on a property.

Broke pensioners? Hua Hin is a no name city? LOL. It is expensive as hell to live here. The police check points outside town make sure you are driving a Mercedes Benz before they let you in.

Ok bro its the new beverly hills where you can rent a 3bdr beach view property for 300 bucks

[DividendGuy]

You would do well if you paid attention to what NCC1701A and fletchsmile say. If you lived here in Thailand and you bought rental units then you would be in a situation to look after them because there will be so many details you need to look after when you rent out. You aren't looking at the whole picture as there will be so many hassles in rentals and you will need to be here to fix the problems when they arise. I am not saying that you shouldn't own rentals, just that you need to own them in the correct order in your investment portfolio . Fletch is right when he mentions "REITS" as a better, less hassled, and a good income return on your investment. You need to look at the whole overall picture on portfolio investing in order to protect yourself and your family.

There is no magic involved in investing for retirement (that's what you are talking about) so you can live here in Thailand long-term without all the financial stress of not having enough income to live year after year. It just takes some study time at the library. Learn about investing for the long-term, it is not that hard to learn, then no one can BS you. It will require you to go to the SET library here in Bangkok (next to Queen Sirikit Center) and study books on investing. It doesn't take that much time to learn the basics on investing, you will be better off for it and maybe you will start to like doing your own investing.

[Lukecan]

You would do well if you paid attention to what NCC1701A and fletchsmile say. If you lived here in Thailand and you bought rental units then you would be in a situation to look after them because there will be so many details you need to look after when you rent out. You aren't looking at the whole picture as there will be so many hassles in rentals and you will need to be here to fix the problems when they arise. I am not saying that you shouldn't own rentals, just that you need to own them in the correct order in your investment portfolio . Fletch is right when he mentions "REITS" as a better, less hassled, and a good income return on your investment. You need to look at the whole overall picture on portfolio investing in order to protect yourself and your family.

There is no magic involved in investing for retirement (that's what you are talking about) so you can live here in Thailand long-term without all the financial stress of not having enough income to live year after year. It just takes some study time at the library. Learn about investing for the long-term, it is not that hard to learn, then no one can BS you. It will require you to go to the SET library here in Bangkok (next to Queen Sirikit Center) and study books on investing. It doesn't take that much time to learn the basics on investing, you will be better off for it and maybe you will start to like doing your own investing.

I agree dividend investing is one of the best ways to supplement income. But dont you think that investing in SET is kinda risky right now as its at its all time peak? Sure if you have 90k you can invest 30k of it, but investing all your money in the stock market of an emerging country, thats a huge risk!

And theres no way one can retire here with a portfolio of 90k, 400-500k portfolio should be the bare minimum, 1m + would be a more comfy retirement.

[DividendGuy]

Lukecan

If the dividend ratios are at the correct level for that particular stock then you are going in the right direction. If the yield is in the 5%, 6% or 7% return then it is not overpriced. It all comes down to one stock at a time. There is a whole criteria of rules on buying a stock and in my case I use at least a 20 rule format and then discuss it with my MO at the security company I have my account with just to make sure I am making the correct choice. Remember that dividend investing is all about holding a good non-cyclical stock for the long-term as long as you get the correct return on a stock going into the deal, then it will usually grow in price over the years and your dividend will increase too. If you pick a crappy wrong stock, with the ratios and a low dividend yield all wrong then you are going to have problems. And it is a must that you never overpay for any stock...if you do you will not be happy with that stock because the returns will not be up to the level of returns you need. I could go on and on, but this is not my thread.

You need to think of the whole investment scenario. You just don't buy any stocks, you invest in:

• Government and corporate bonds, usually at a 50:50 ratio.
• Utilities
• Energy
• Non-cyclical stock
• Property funds and REITS

This will help you to get where you are trying to go, but it is not all, as there are many more points to be taken into consideration. You are right about needing more than ninety-thousand dollars, half a million dollars is closer to the bare minimum amount needed to be invested so you are able to live off your investment returns.Regarding Thailand as an investment country. It is one of my favorite place to invest in, because I live here and like getting everything paid in Thai Baht...it does make things easier not having to go outside of this currency so there are pros and cons regarding this. For me, there is not too much risk exposure in my portfolio so I am happy investing here. If or when there is a meltdown in the SET then I have other means to continue to get a livable income that pays all my living expenses and I have intentionally done this so as not to put myself at financial risk.

[Lukecan]

Lukecan

If the dividend ratios are at the correct level for that particular stock then you are going in the right direction. If the yield is in the 5%, 6% or 7% return then it is not overpriced. It all comes down to one stock at a time. There is a whole criteria of rules on buying a stock and in my case I use at least a 20 rule format and then discuss it with my MO at the security company I have my account with just to make sure I am making the correct choice. Remember that dividend investing is all about holding a good non-cyclical stock for the long-term as long as you get the correct return on a stock going into the deal, then it will usually grow in price over the years and your dividend will increase too. If you pick a crappy wrong stock, with the ratios and a low dividend yield all wrong then you are going to have problems. And it is a must that you never overpay for any stock...if you do you will not be happy with that stock because the returns will not be up to the level of returns you need. I could go on and on, but this is not my thread.

You need to think of the whole investment scenario. You just don't buy any stocks, you invest in:

• Government and corporate bonds, usually at a 50:50 ratio.
• Utilities
• Energy
• Non-cyclical stock
• Property funds and REITS

This will help you to get where you are trying to go, but it is not all, as there are many more points to be taken into consideration. You are right about needing more than ninety-thousand dollars, half a million dollars is closer to the bare minimum amount needed to be invested so you are able to live off your investment returns.Regarding Thailand as an investment country. It is one of my favorite place to invest in, because I live here and like getting everything paid in Thai Baht...it does make things easier not having to go outside of this currency so there are pros and cons regarding this. For me, there is not too much risk exposure in my portfolio so I am happy investing here. If or when there is a meltdown in the SET then I have other means to continue to get a livable income that pays all my living expenses and I have intentionally done this so as not to put myself at financial risk.

You sound like a very experienced investor, I'm a person that wants to live the remainder of my life in Thailand too.

You are 100% right about investing in dividend stocks, but investing it all in the SET you'll be exposed to significant FX risk. Its best to have some usd lying around so if the SET takes a hit you can take advantage of it by accumulating more. Lets say you had a 500k usd worth SET portfolio in 1997, and 500k bond in usd. The set took a hit and your portfolios value dropped to 150k. But you had some usd bonds lying around so you sold it and bought more stocks, the market recovered a few years later and your portfolio became worth even more. I think keeping some cash/bonds in usd on the sideline is a must IMHO. Thailand baht has been performing very well in the last decade, but will it perform in a similar fashion in the next decade? Its better to be safe than sorry.

[DividendGuy]

Lukecan

Thank you for your words about me being an experienced investor. Regarding retirement investing, I believe I know more than most other investors because I have been doing this for myself for a while and I continue to study it. I am not trying to sound smug. As you can see by my avatar, I don't usually get involved with giving out advice because there are many who really don't want advice, but are more happy to insult.

I have retired to Thailand and plan to stay here for the remainder of my life so we share a similar view. Regarding you last post on bonds and keeping cash on hand; you are correct on several points, but on some there needs to be some clarification.

Bonds: Once you buy bonds you should think about keeping them forever and when they mature you should roll them over into new bonds. Bonds are for using the interest rates to offset your living or in a worse case scenario use them to live on while waiting for the markets to recover. The best scenario for keeping bonds is to have several mature at different times periods preferably at 5, 6, and 7 years maturity dates. This allows you to protect yourself if the Thai market corrects downward and then you can use them whenever they reach their maturity dates. Broadly speaking, Bonds usually don't stay much ahead of inflation, but I say again; what they do is to keep you safe if or when there is a meltdown in the stock market and you can use that money to continue to live your life here in Thailand until the markets recover. If ever the market does correct there is a "Golden Rule" and it says to NEVER sell you stocks during times of severe correction, but to ride it out because all markets will recover in time and if you were forced into selling then you would lose a large value of your portfolio. And Thailand being a developing country it is governed by sharp ups and downs, that is the way the markets work here so, if you understand that and can live with it then it is not a problem because you have made adjustments for it. I honestly don't like having to hold bonds, but it is one of those safety valves that needs to be taken care of so you will not be foolish, have your portfolio in the wrong investments and not have enough money to see you through the bad times. Living in Thailand is totally different from living in Western countries... you just don't have the safety net you do there and if you fail here when you are retired then you are are in deep trouble with almost no way out unless you have prepared yourself for it.

I will write more on the cash holdings later because it is an important part of investing and it is time for my dinner.

[DividendGuy]

Lukecam

Regarding cash: I usually have at least two years of cash on hand (enough to meet the bare minimum of paying my living expenses) and I have this cash in a different bank account than the other investment funds because this is a reserve fund and is to be used only as a backup for emergencies. I also use this as a medical emergency fund so this is why it doesn't get used unless it is some sort of an emergency. I also have one high growth stock to fund my medical expenses for the future so I am covered if I have a major health problem. Also you mentioned keeping cash on the sidelines in case there is a downward correction. A mature investor always keeps a certain amount of money in case there is an oppertunity when the stocks are down. When you start to invest here in Thailand, you need to have a complete idea or plan as to what your investments will be so you can continuously fund them on a quarterly, bi-annually, or yearly basis. I recommend quarterly. I am not trying to hijack this thread so I have intentionally kept this e-mail short.

And one last point about bonds. You should only have enough bonds to fund half of your minimum yearly living expenses and only for three years running because your other funds will cover or overlap your needed income in hard times. With a wide variety of different investments you can protect yourself for life, but the drawback is that it is a long-term process and commitment, for me there is no better way than to do it for myself and by myself. This way you protect yourself from the sharks out there. It is a learning curve, but a very important lesson each man needs to learn so he can discard all the BS that is floating out there.

[TealLA]

I read your statement and basically you say you are looking to earn enough income to be able to live here in Asia/Thailand on a permanent basis. I believe real estate rentals will give you a lot of problems and maybe not deliver enough income for you to live here full-time. Ninety-thousand dollars, is not enough of an investment amount to allow you to live here. You will eventually have problems with inflation that eats away at your income so in the end you will not have enough to live on. You need an investment that keeps up with inflation and that comes down to equities.

If you buy dividend paying stocks, utilities, property funds, REITS, and other non-cyclical stocks then you might be able to earn enough to live here, but then again you now don't have enough to survive long-term. If you are working abroad, save your money and continue to invest in the Thai SET market until you have enough income to have a decent return and enough to live on, then you can start to think about living here permanently. So many people come here unprepared and in the end are forced to leave because they weren't financially strong enough...do it the smart way and you can have a nice life here.

Thanks for your insight.

You mention that $90,000 is not enough of an investment amount to live there and also that eventually inflation will eat away at my income. I would argue that if you live in an inflationary environment doesn't the cost of all services and goods go up as well.

[TealLA]

You would do well if you paid attention to what NCC1701A and fletchsmile say. If you lived here in Thailand and you bought rental units then you would be in a situation to look after them because there will be so many details you need to look after when you rent out. You aren't looking at the whole picture as there will be so many hassles in rentals and you will need to be here to fix the problems when they arise. I am not saying that you shouldn't own rentals, just that you need to own them in the correct order in your investment portfolio . Fletch is right when he mentions "REITS" as a better, less hassled, and a good income return on your investment. You need to look at the whole overall picture on portfolio investing in order to protect yourself and your family.

There is no magic involved in investing for retirement (that's what you are talking about) so you can live here in Thailand long-term without all the financial stress of not having enough income to live year after year. It just takes some study time at the library. Learn about investing for the long-term, it is not that hard to learn, then no one can BS you. It will require you to go to the SET library here in Bangkok (next to Queen Sirikit Center) and study books on investing. It doesn't take that much time to learn the basics on investing, you will be better off for it and maybe you will start to like doing your own investing.

I agree dividend investing is one of the best ways to supplement income. But dont you think that investing in SET is kinda risky right now as its at its all time peak? Sure if you have 90k you can invest 30k of it, but investing all your money in the stock market of an emerging country, thats a huge risk!

And theres no way one can retire here with a portfolio of 90k, 400-500k portfolio should be the bare minimum, 1m + would be a more comfy retirement.

I appreciate all of your insight and experience. I'm in my 30's and I'm not actually looking to retire. I'm looking for supplemental income and would likely get involved with some other business as well down the road.

[DividendGuy]

TealLA

I now understand that some of my comments were not really geared for you as you are basically looking for real estate and have no real interest in long-term stock investing...sorry about that as I was not trying to hijack your thread . I could go into a long oration about real estate pros and cons here in Thailand as I have owned several units and have faced the problems that comes with the ownership of real estate rentals in Thailand. I believe you have already made up your mind and I wish you all the success in your endeavor.

[Lukecan]

TealLA

I now understand that some of my comments were not really geared for you as you are basically looking for real estate and have no real interest in long-term stock investing...sorry about that as I was not trying to hijack your thread . I could go into a long oration about real estate pros and cons here in Thailand as I have owned several units and have faced the problems that comes with the ownership of real estate rentals in Thailand. I believe you have already made up your mind and I wish you all the success in your endeavor.

I would like to talk to you more about investing! I'm only 25 and managed to convince my parents to buy some dividend stocks some time ago, the stocks have done quite well, but some plunged The investing philosopy of my parents is very old fashioned, with every chance they get they buy a new condo, I've told them over and over again that dividend investing is the best way to go. We have like bunch of tenants, and dealing with them is a pain in the arse, some pay, some dont pay, some pay late, they keep calling when the house has problems etc. I'm trying to convince them to sell some of the condos they have and buy reits instead so they dont have to deal with tenant related problems. So far I've managed to get them to sell one of the condos, we put it in a REIT and the value has appreciated by 25% already, and the dividend yield is about 5%, and its been only 5 months

REITS are definitely the best way to go, its sold 1 second after you give the order, no hassles with tenants, just wait for your dividend and thats it, love it!

[chiang mai]

"I would like to talk to you more about investing! I'm only 25 and managed to convince my parents to buy some dividend stocks some time ago, the stocks have done quite well, but some plunged" - hmm, I smell financial markets rogue/IFA/con man, cannon fodder, (cut to sound of wolves howling and baying).

[DividendGuy]

chiang mai

I was a bit surprised and disappointed in your post. If you go back through my posts on this thread then you can see for yourself that all I was trying to do is be helpful and give out some information regarding retirement investing with no other motives. I have no hidden agenda, nor am I trying to make any money from anyone and never will. I understand there are those type of people who do this, but I am not one of them. I have a right to give my opinion just as you do. My hobby is studying retirement investing, I have been doing it for over twelve years and will continue to do it here in Thailand . I usually don't get involved in these forums because they almost always end up in an argument and nothing gets done except a lot of sniveling and insults flying around. I only give my opinion on open forums, never privately, and have a right to try and help other people who don't know about retirement investing. My aim is to help, (I'll even help you if you have a real question about investing and post it on a public forum) not hurt or make a profit from anyone, because there is a lot of bad advice being posted on these forums by people who are not really knowledgeable regarding retirement investing. I say again: I know about retirement investing and don't mind sharing this information without any hidden motives or agendas. There are so many foreigners here in Thailand who don't have a clue as to how to do retirement investing for themselves.