Housing Decisions

[stament]

We've recently rented a house in Nong Hoi near plaza 89 which is fine for a one year rental. However next year we are thinking of buying and I would like to hear more experienced forum members views. We are considering at this stage Saraphi, Nong Hoi, and possibly Hang Dong or San Sai. Reasons for this is that we want to be on the Lamphun side of CM. A few questions:-

1. Not knowing these areas very well what are the pros and cons currently and potentially in the future?

2. Prices is one area more expensive relative to another currently?

3. Most of the houses in the 4-6m range seem to come with very small gardens. Is it better to build yourself or buy ready made and avoid the problems around that but likely accepting a smaller garden perhaps, especially if a new build.

4. Buy new or second-hand? Seems to me that Thais don't like to live in a property others gave lived in before. Does this mean that generally new houses that haven't been lived in command a premium on a like for like basis?

5. Future sale and best option. It's likely that the house will be a short term investment for around 6 to 10 years. Based on that is there any preference for type of property or area that will make the house easier to sell in the future as well as a higher return for a particular area?

Sorry for such a detailed post but rather than post five different threads I thought I'd combine it.

Looking forward to seeing members views as they've been extremely helpful in the past in enabling me to make good balanced decisions on schools, housing and under choice if restaurants and holidays!

[worgeordie]

Buying a property which you only intend to live in for 6-10 years,

is not a good idea,depending where you buy,you might find it

could take years to find a buyer,unless you sell at a fire sale price,

so you would not be looking at much if any capital gains.

Thais only wanting to buy new is a myth,in the last year,several

properties in our Moo Bhan have been sold and bought by Thais,

which are 20 years old,because the location is good,probably better

built, than new houses,and generally more space,inside and out.

More importantly,how do you propose to purchase a property?

If you are not committed to staying long term in Chiang Mai,like

20-30 years, I think you best option would be just to keep on

renting.

regards Worgeordie

[inzman]

I always advocate buying. But be sure to buy in an area that will add to resale. Location location location. Why pay rent to someone, and you can alter the house if you own it.

[fang37]

I assume that you are farang. You have a wife? Thai or farang?

There are restrictions on land ownership in Thailand.

Having satisfied the above, in a foreign country, property ownership for 5 years should generate a profit.

Here -

building contractor is everything

materials - if the contractor buys, he will add about 15% markup. If he buys, you lose quality control over materials.

Here, I would look more at 10 year ownership.

When the time comes to sell, expect to wait 1 year to draw up a contract.

Lastly, the obvious. Look at many existing homes in order to get ideas.

[stament]

Thanks all for the replies so far and just to clarify a couple of things. Six years is probably on the very low side, we'd probably more likely be in the house 10 years plus. I would have thought over this period of time it would make more sense financially to buy rather than rent and if a sake couldn't be achieved in the future renting it out is always a consideration. In this respect location is key as rightly pointed out.

Fang37 you assume correctly I'm a farang married to a thai and know about land ownership. That isn't a concern whatsoever for me. However, a good point as depending how I finance the purchase, there could be some complications. Ideally I would be looking to pay a big deposit of say 50% plus. The loan would presumably need to be in my name as my wife doesn't work, and to further complicate matters I currently work abroad, outside of Thailand. I'm guessing all these hurdles can be overcome though.

The advantage of building our own house is we get the exact spec and also we'd plump for a larger garden.

If there are any recommended areas then I'd be happy to hear about them.

[fang37]

I lived in CNX for 13 years. Housing estates - no thanks - very small lots.

Others - very limited. Occasional lots around. Other - if you are an avid golfer, you might look at golf courses.

Flooding - do all the research.

Bank finance - I suggest that you check it out. I doubt that you can borrow. Wife - is she working?

BTW, communication with the contractor. Some people supervise every day. We used FIL. Others use an engineer.

Quality of mats - buy the better grades. Far less disappointment. Insulation - pay special attention re mats.

Have a written contract stipulating price, who pays fro what, timing of payments, & withholding amount for quality control. Stick to the contract. If he says that he has a liquidity problem & needs payment in advance, reconsider the deal.

[WinnieTheKhwai]

All good points, and yes any financing hurdles can be overcome especially if you have a chunk of cash for a deposit to ensure that a bank won't lose money either way. It helps further if your wife or her family has some land somewhere, and it's just healthy to begin with if she/her family is also invested in it.

> 1. Not knowing these areas very well what are the pros and cons currently and potentially in the future?

> 2. Prices is one area more expensive relative to another currently?

Well, for Nong Hoi and possibly Saraphi, flooding can be a concern. Actually localized flooding is an attention point anywhere, but Nong Hoi especially floods pretty much first if the river goes over again at some point in the future. Of course when building yourself you'd raise the land and also the house significantly, though it's still a drag if all roads around you flood. Still, this doesn't happen very often and with the work done to the river and river banks it may be as infrequent as once a decade. And Nong Hoi / Sarapee is a very attractive area as it's an older, more established area with lots of villages that have been there pretty much forever. As opposed to San Sai where you get a lot of developments in what used to be very cheap agricultural land. So for that reason I too would favor Nong Hoi, Sarapee and parts of Hang Dong district. And closer to town would be even better if you're looking at selling it again in the future; close to town (or in town) is more desirable and prices rise faster. The down side is relatively higher price of land of any reasonable size.

> 3. Most of the houses in the 4-6m range seem to come with very small gardens. Is it better to build yourself or buy ready made and avoid the problems around that but likely accepting a smaller garden perhaps, especially if a new build.

Building yourself I think is vastly preferable over purchasing a cookie cutter home in a dreary development. It IS a lot of work though, but you said your wife doesn't work so that'll give her a full time job for a year or so. She should move to (or very close to) the plot in some temporary shack if at all possible and watch over things like a hawk.

> 4. Buy new or second-hand? Seems to me that Thais don't like to live in a property others gave lived in before. Does this mean that generally new houses that haven't been lived in command a premium on a like for like basis?

I also think that's a myth, especially in a desirable area. Prices for an existing house can be relatively low though. So I wouldn't rule it out if you find a place that has potential after (likely major) renovation.

> 5. Future sale and best option. It's likely that the house will be a short term investment for around 6 to 10 years. Based on that is there any preference for type of property or area that will make the house easier to sell in the future as well as a higher return for a particular area?

If that's the case then buy in town, or VERY near it. Especially a place that might have potential as a future shop/restaurant/coffee shop or whatever. I even see some commercial developments go up in town again now, especially just East of river. (Near Sanpakhoi market, and up Bumrungrat Road for example). Those are likely high priced, but should at least keep their value and/or be an easier sale.

[JLT]

Fantastic summary by Winnie the Kwai.

I would definitely endorse his remarks about building your own house. The likelihood of you getting a loan from a bank varies between remote and impossible BUT you might get a loan from the developer (which they will finance via a bank. But if you do that then watch out for the interest rate!)

I bought a house on a small moo baan development (40+ houses) in Saraphi and after three years there are still a number of "new" houses still not sold. Chiang Mai and its environs has a glut of new properties some of which (like those mentioned above) have been standing empty for over two years. The problem with these houses is that the fabric of the house deteriorates fairly quikly if there's no-one carrying out routine maintenance.

But all of that notwithstanding, I wish you and your wife the best of luck. Chiang Mai is a wonderful place to live.

[fang37]

I can confirm - CNX property market - DEAD!

Therefore, if you have the $$$, this is an opportune time to buy a 2nd hand house. Must be far cheaper than building yourself.

Land prices over the past 3 years have skyrocketed.

Building - I have owned 30+ properties over the years - mostly in my native country.

We recently built a new home - 2 storey - Fang. Problems - small. Would I do it again? NO!

The other forum (TD) has an extensive forum on house construction - good read. You do not need to join just to read.

[bangmai]

I would do one of two routes. 1) buy somebody else's dream house that they can't get rid of, and are leaving the country, at a fire sale price, then you will be able to possibly make money in the future, or at least break even. 2) Buy a TH in the old city, in one of the under-developed areas, paint it, and enjoy. The big check will likely come with the bulldozer, but either way, there is a finite supply of those homes, the land is very valuable, it has commercial potential, and they actually sell in a reasonable amount of time. I would say very tough for you to get a loan, even with 50% down. I've inquired with the terms, and it's flat out "no". Possible exception would be special builder financing...but it wouldn't be on any good investment property. I see the West side of inside the moat, as a prime investment area. Unfortunately, the wife will likely want a new house, so she can pick the shade of cream colored paint...the only way you can beat the traffic by living in the exurbs is if you very rarely come into town. Otherwise, I think it is better to live in the middle of the traffic jam, which will be gone at night and in the middle of the day. Other times, walking can be the quickest way. If I could get into Ban Wangtan for the 24K USD I paid in 2006, again; I would consider, but I don't think that is going to happen.

Edited August 4, 2015 by bangmai

[fang37]

Something to examine NOW.

The wife owns the land - you can own the house. A document - usustruct/ufustruct?? - needs to be signed. Insurance if it hits the fan?

I do not have one - I would just walk. But, I know several farangs who have taken this option.

[worgeordie]

I would recommend you only buy a plot or house,that is already built up

around it,this been Thailand,anything could be built in the empty plot

next door or in front of you.example the house next door rented some

land in front of our house,built a stable and have a horse there.right

in front of our gate,it could be worse,might have been karaoke,so

beware.

regards worgeordie

[MaeJoMTB]

Thanks all for the replies so far and just to clarify a couple of things. Six years is probably on the very low side, we'd probably more likely be in the house 10 years plus. I would have thought over this period of time it would make more sense financially to buy rather than rent and if a sake couldn't be achieved in the future renting it out is always a consideration. In this respect location is key as rightly pointed out.

Fang37 you assume correctly I'm a farang married to a thai and know about land ownership. That isn't a concern whatsoever for me. However, a good point as depending how I finance the purchase, there could be some complications. Ideally I would be looking to pay a big deposit of say 50% plus. The loan would presumably need to be in my name as my wife doesn't work, and to further complicate matters I currently work abroad, outside of Thailand. I'm guessing all these hurdles can be overcome though.

The advantage of building our own house is we get the exact spec and also we'd plump for a larger garden.

If there are any recommended areas then I'd be happy to hear about them.

Rental price is usually around 5% of the purchase price per year.

Not worth buying, for less than 10 years, probably not worth buying for 20 (at today's price and exchange rate).

Building your own home, you need to be onsite every day, else you will be ripped off and/or the builder will cut corners.

You won't get anywhere near your 'exact spec'.

But in the end she wants it, and will pressure you into buying it.

Home loan, without you or her working in Thailand, almost impossible.

PS

Plenty of s/h houses for sale in those areas for 1-2M baht, why pay so much for a white elephant in an unstable 3rd world country?

Edited August 4, 2015 by MaeJoMTB

[stament]

All thanks for all the comments, some food for thought. I think I should be ok for a loan as I work for a well known global bank so should be able to secure any financing through them. Having said that I could buy in cash for upto 4m ish THB.

No issues on my part with house not being in my name. I'm buying it for my family and my wife bad boys would need a house even if my wife and I decided to end our relationship, which I doubt very much would happen, but hey anything is possible and I'm not too naive to think it couldn't happen. More than happy to pay for it and continuing to support them.

Open to all suggestions and very open minded on type of property. There does seem to be a glut of developments popping up everywhere and I do wonder if supply far exceeds demand. I often see town houses with shop fronts going up and are empty even in places way out of town, Lamphun and beyond.

Is there any capital gains tax on sale of home in Thailand? Currently paying 20k per month wonder what the break even number of years for buying is? Difficult to say if you don't know how much rents and property prices will change in the future.

Land is very expensive and I do wonder perhaps better to buy an older property and refurb but then I'm not sure of the build quality in Thailand. My UK house is nearly 120 years old good red Victorian brick - they don't build them like that anymore!

[MaeJoMTB]

No issues on my part with house not being in my name.

But the 'global bank' will have issues with that.

[bangmai]

unless it is a non-collateralized personal loan. Someone posted on here a while back that homes were generally priced at 16 times annual rent. During the GFC in the US, I bought three at 3-5X. 20-30+ is common in the pricier markets, and that same poster said it was 50X in Taiwan. A sweetspot might e a firesale price of 1 to 1.5 million, with a rental price of 10-15K per month. Typically in the 4 million range..you will see rents of 20K...and under a conservative rule of 40% for ALL expenses...that would be a net of 3.6% which is less than a REIT would pay you in dividends (with almost zero exit costs). But, you still, want your own nice place for your family...so it's not all about the yields. The renters rant and rave about not having to do repairs, but for me, it is easier to do most myself. Recently, my 27 yo faucet was leaking. I went to B&B, got a nice one for 639 THB, brought it home, and installed it, also discovering the water line jacket had dry-rotted. An extra 59 THB down the street. So I got a brand new faucet, that I can use and enjoy, under warranty, and will add to the value when I resale. A small price to pay, as opposed to rent. Otherwise, it's call the landlord, who will call the plumber, who will give me a window of 2-4 hours, will always try to band-aid it, and then two more trips when it fails again...all in a foreign language...no thanks! And the rotted line, would have been a large liability, when it did finally rupture.

But to reiterate, an old row-house in the old city would be something your family could treasure for centuries. I would much rather be on a rooftop garden of a 4 storey row-house, with the bar almost in sight, than the back patio of a 400 sm monstrosity in Baan Bark Bark.

[stament]

No issues on my part with house not being in my name.

But the 'global bank' will have issues with that.

Joint mortgage

[Konini]

I remember reading on TVF about 6 years ago a summary of cost-effectiveness. Somebody (I forget who) had done all of the hard work collating house prices, inflation and returns over a very long period and plugged them all into a spreadsheet. His figure, which most people agreed on, was that it will take 40 years to break even. That is, having the money invested and paying rent vs buying a house outright and paying only local taxes and insurance/maintenance. This means if you own the house for 40 years and one day, you're ahead of the game. It also means to the majority of us that unless we have a Thai family to leave it to, renting is the better way. This is also the case in Australia - once the emotion of owning your own home is taken out, most people would be financially better off to rent, especially those who have no mortgage and sell their house.

When we sold up 9 years ago, our house sold the same day it was put on the market and we had a shortfall of 4 months and had to rent. The return we got on the price of the house more than covered the rent, we had no maintenance costs, rates, water rates and only contents insurance and we lived in a bigger house which was newer than the one we had built and in a much better area. Your mileage may vary, but we were definitely better off renting and were mobile on 4 weeks notice after the initial lease term. Negotiating long term leases is very possible - landlords both here and back home like nothing more than a long term tenant (as long as they aren't trouble).

We still have apartments in Melbourne and a house in England, so we have rental properties, but we will never buy again for ourselves to live in. You need to do some serious number crunching to find out what would be best for you and your family..

[jimmym40]

We live just down the street from 89 plaza. We love it here. Close to everything. Banking, markets, food stalls, restaurants, 7-11, Tesco Lotus (small), all in walking distance. Lived here over 2 yrs. No problem flooding, except the roads build up water on the edges with heavy downpours.

My vote is to BUY. Why throw away money on a monthly basis. It adds up. Plus, if you get an a__hole as a landlord that doesn't fix things you'll be on the move again. Just take your time and if you do BUY, research the area thoroughly, including the neighbors property. Yes, properties have escalated immensely in the last 3 yrs, but if you are looking at a 10 yr stay, there is still a lot of room for price increases. I'm sure you've heard, LOCATION, LOCATION, LOCATION very important.

Good Luck and have a enjoyable search for you dream home.

[stament]

What is the average house inflation the last few years in CM and more importantly what is expected? Do banks here publish that sort of info like they do in the UK?

[fang37]

What is the average house inflation the last few years in CM and more importantly what is expected? Do banks here publish that sort of info like they do in the UK?

I cannot provide statistics - are there any? Although CNX is #2 city in LOS, it is not large.

My personal observation - DEFLATION.

[Ozziepat]

If your Thai wife is anything like my Thai wife (and I suspect most others), renting long term is not in her vocabulary. It's cultural, and owning property is one of the imperatives. She will never feel truly at home in a rental; and purely financial arguments, no matter how convincing to an accountant, will fall on deaf ears. If you haven't experienced this yet, you probably will if you ever start veering toward rent rather than buy. So, good luck finding the right place. Cheers.

[stament]

Ozziepat you are right she does think along the same lines, security I think. To be honest not that disimilar to us English. We as a nation like to buy our home whereas Germans on the whole rent.

[arunsakda]

Most important thing to remember in Thailand is never invest more than one can afford to lose.

Secondarily not to purchase a home to be registered in a woman's name.

Got my Condo in 2008. Almost everyone advised against it, but it has turned out to be one of the best decisions I ever made.

Edited August 5, 2015 by arunsakda

[CMKiwi]

I rented a condo for a while and had an agreement with the landlord/landlady re maintenance. If I found anything that needed replacing or repairing I would advise them as to the cost of the parts and do the repair/replacement myself. They in turn would cut that price from my monthly rent.

It worked well until they started to ask that I spread the repayment over a few months..... then things went downhill. But initially it was a good agreement and they got better workmanship on repairs carried out.

The next condo I rented had a far better landlady and the same agreement worked a treat. Her condo is top notch nowadays and requires very little maintenance due to using good quality materials and fittings.

I say rent is the way to go

[mamborobert]

There are just so many variables in this decision/topic and no one size first all.

It would probably be helpful if people outlined there own relationship status as that colours the advice given ( a single or married retiree couple probably would not have the option to buy or would rather stay closer to amenities/transport in the city proper).

To me if you are married to a Thai buying is the only option (the house not the Thai).

Apart from the cultural/security reasons surely a spouse would want there Thai partner to have some financial security in their old age after they themselves have passed on. Generally spouses are younger and women live longer anyway, and will be (culturally) looking after you as you age....staying in a house is far cheaper and (to me) less stressful, than changing house/rental as you age, or more preferable to ending up in a maximum security twilight home.

I can't understand the amount of blokes here that shuffle of this mortal coil and leave their spouse nothing...no house, no money at all or insufficient in the bank or no access to an ongoing pension. If there is no children or they lack the compassion/finances then they really are stuffed.

Going back to the OP I think the location location location argument matters SOMETIMES......whilst this may sound like an argument against buying its not like they have strict zoning laws here. A model estate can be next to a brickworks or pub strip or factory. I think the further out you go the cheaper the land or house is and whilst we all need some stimulation in the city its only 20 minutes to half an hour away for a lot of places and we don't need to make that trip everyday or in rush hour.

Building or buying comes down to maths and the level of any bargain/refurbishment. Having said that, happy wife happy life. You gotta live somewhere so why not give your spouse the (possible illusion of) being the significant decision maker. If your wife has never owned a house before this is a significant face and achievement for her. At some point we all get some joy vicariously through the happiness of others, particularly those closest to us so it does the OP some benefit as well.

Depending on your age are you really interested in the fire sale or appreciation arguments.....I want a home that you can live happily in preferably to end game, its not all a capital gains decision, remember moving house is rated just under death of spouse for stress levels . If its for a shorter window as you have indicated then really you are not buying it for you, or indeed for your wife.....you are simply housing yourself until you move on so established closer to the city makes sense for you, perhaps not so for your wife. I would have thought that for six years (and the presumption that you are then leaving Thailand) renting would be a far better deal (no loans, wider choice of properties, flexibility on location, total rental period, quick departure if need be, etc. There may be no profit in it but you would expect renting to be cash neutral over buying/building in a short period as others have already mentioned.

Another counter on this is the exchange rate....over time than can reduce by half your gains, or double it regardless of the property your buy/build, and the exchange rate may also affect demand for your property if it is built/tailored towards western appeal, your ability to pay loan, or indeed rent could become easier/harder).. So if you think you are doing this for capital appreciation (with a view to possibly moving back to your home country again) factor this in. Good luck with that. There are muti million baht properties that are not moving sale wise so I find it difficult to think of property in Thailand as a sure and easily convertible investment.

Buy and be happy and thanks for the topic...looks like it will be interesting

Edited August 5, 2015 by mamborobert

[jimmym40]

Great post above (mamborobert). Nicely written. I agree with every word...

[Rancid]

I bought a house about 9 years ago and lived there for 6 years. I went home and have rented the house for about 3 years. If I add up what it cost me and what I would have rented at for similar, plus the current rent then my break-even point is next year.

It has apprecated quite a bit but that really isn't relevant as it isn't for sale. When we start living there part time again then we have free accommodation that owes us nothing, so that has worked out well.

The house I bought I thought was well located for future city expansion, I bought at an OK price and renovated it to what I wanted. It always comes down to what it costs as opposed to what its rental yield is. Not sure if the current market is the time to buy, seems it is always about being able to spot a good deal that is also quiet, not near airports or railways, and doesn't include a local karaoke joint. If this current bubble pops though there could be some good deals around, the big question is if and when.

[T_Dog]

We built a house years ago and we were very fortunate to have sold it last year. Would not build or buy now in a country run by a military junta and with future events that could potentially be unfavorable to expats. Never has the adage "don't invest anymore in Thailand than you are willing to lose" been more true.

[khwaibah]

We built a house years ago and we were very fortunate to have sold it last year. Would not build or buy now in a country run by a military junta and with future events that could potentially be unfavorable to expats. Never has the adage "don't invest anymore in Thailand than you are willing to lose" been more true.

Kind of like "Hey buddy I have a deal for you on a bar." Not