Owning vs Renting: the basic economics

[KittenKong]

A close mate and his Mrs just bought a 7 million baht 4 story guest house a stones throw from jomtien beach. I set it up for him on air bnb as well and straight away with zero experience they are booked out with middle class thais and Russians. Living on the ground floor they have zero expenses and I'm thinking about doing the same thing... Whatever you do DO NOT Listen to the jaded posters on TV unless it's info on the cheapest beer in a new beer bar

Your friend must own the only fully-booked building in Jomtien. Everywhere that I look here I see vacancy signs.

[mcfish]

A close mate and his Mrs just bought a 7 million baht 4 story guest house a stones throw from jomtien beach. I set it up for him on air bnb as well and straight away with zero experience they are booked out with middle class thais and Russians. Living on the ground floor they have zero expenses and I'm thinking about doing the same thing... Whatever you do DO NOT Listen to the jaded posters on TV unless it's info on the cheapest beer in a new beer bar

Your friend must own the only fully-booked building in Jomtien. Everywhere that I look here I see vacancy signs.

Firstly let me say your very nieve. Have you ever seen a full house sign? Errm no and obviously the for rent signs are permanent? Think about that..

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[ttthailand]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

[jpinx]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

[trogers]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

And after ten years, that 4 million has its purchasing power reduced by half.

For retirees, the preservation of capital comes first, before risk and returns.

[CharlieH]

Off topic and flame posts removed.

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[jpinx]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

And after ten years, that 4 million has its purchasing power reduced by half.

For retirees, the preservation of capital comes first, before risk and returns.

That (in simplistic form) would imply 5% inflation, but given the negative inflation these days -

http://www.thaivisa.com/forum/topic/891357-thailand-13-straight-months-of-negative-inflation/

--- the retiree is actually in a good position

[mcfish]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

20k a month. Where???

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[MaeJoMTB]

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

And after ten years, that 4 million has its purchasing power reduced by half.

For retirees, the preservation of capital comes first, before risk and returns.

I've made nothing on most of my cash that sits in bank accounts for the past 10 years.

I've lost 40% on money that was 'invested'.

I've made 15-20% by choosing carefully when to exchange from GBP to Baht.

Inflation in Thailand appears to have cost me around 10% over the last 10 years.

(dunno how you rekon it's halved, maybe I just spend my money more wisely now)

Cash in bank account with the flexibility to make the most of exchange rates appears to be the way to go.

Edited February 1, 2016 by MaeJoMTB

[trogers]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

And after ten years, that 4 million has its purchasing power reduced by half.

For retirees, the preservation of capital comes first, before risk and returns.

That (in simplistic form) would imply 5% inflation, but given the negative inflation these days -

http://www.thaivisa.com/forum/topic/891357-thailand-13-straight-months-of-negative-inflation/

--- the retiree is actually in a good position

Actually, 4.1% inflation compounded over 10 years get 50%.

Present deflationary pressure just occurred since last year. But should oil prices resume upwards, we may see significant inflation, given that most prices are sticky downwards.

[jpinx]

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

And after ten years, that 4 million has its purchasing power reduced by half.

For retirees, the preservation of capital comes first, before risk and returns.

I've made nothing on most of my cash that sits in bank accounts for the past 10 years.

I've lost 40% on money that was 'invested'.

I've made 15-20% by choosing carefully when to exchange from GBP to Baht.

Inflation in Thailand appears to have cost me around 10% over the last 10 years.

(dunno how you rekon it's halved, maybe I just spend my money more wisely now)

Cash in bank account with the flexibility to make the most of exchange rates appears to be the way to go.

I'd agree -- cash is safer than bricks, more flexible but needs managing. Bricks are all very well until there is some little problem, like a cement works opening on your back fence (see other thread). A lot of successful investors will admit privately that their perceived expertise is just good luck.

[jpinx]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

20k a month. Where???

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That's been done to death in other threads -

[mcfish]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

20k a month. Where???

Sent from my SC-01D using Tapatalk

That's been done to death in other threads -

Is there a problem for your to supply a link, Why the vagueness?

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[jpinx]

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

And after ten years, that 4 million has its purchasing power reduced by half.

For retirees, the preservation of capital comes first, before risk and returns.

That (in simplistic form) would imply 5% inflation, but given the negative inflation these days -

http://www.thaivisa.com/forum/topic/891357-thailand-13-straight-months-of-negative-inflation/

--- the retiree is actually in a good position

Actually, 4.1% inflation compounded over 10 years get 50%.

Present deflationary pressure just occurred since last year. But should oil prices resume upwards, we may see significant inflation, given that most prices are sticky downwards.

Which country has 4.1% inflation? Oil prices are down for good reason - it'd be a brave man that would bet on them rising significantly.

Renting gives you the flexibility to move with the markets, but owning will probably satisfy the wife

[thailiban2]

The place I currently rent sells for 4million + baht. I pay 19k a month. I can move to a different area, leave the country or basically go where I want with out really worrying. Since I have been I Thailand I have moved because of noise or other similar crap three times. If I would have bought my condo at the time I would have been stuck.

The way I look at it is that it would take 20 years and payments higher than what I am paying now to own the same condo I am living in now. I am not too old but there is a good chance I won't be around to even make my last payment. So... Why give up the freedom of moving, decrease my cash flow, give myself stress etc etc when I don't have to. If I was 30 years younger and had a family perhaps a different story.

Remember guys, you can't take it with you !

So simple to do the maths -- 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

Hi, would you mind sharing where I can get 6% return for a term deposit? Many thanks!

[mcfish]

Could be worth spreading money around a few them. Some of the micro finance banks look a bit risky but big interest

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[WorkingTourist]

Given the 6% guaranteed yearly yield, I suggest the best option is to buy, for example:

1. Buy condo for 10 million
2. Borrow 20 million at 4% by using condo as security
3. Invest the 20 million at 6%
4. Use monthly yield (100,000) to repay debt

After ~10 years you have repaid all of the debt and still have a condo and the 20 million invested, and you have spent none of your own money.

[seedy]

Off Topic posts - and quoted Replies - Hidden

[farang95]

Given the 6% guaranteed yearly yield, I suggest the best option is to buy, for example:

1. Buy condo for 10 million
2. Borrow 20 million at 4% by using condo as security
3. Invest the 20 million at 6%
4. Use monthly yield (100,000) to repay debt

After ~10 years you have repaid all of the debt and still have a condo and the 20 million invested, and you have spent none of your own money.

very interesting....

[mcfish]

But who will lend farang money here? Those 4 steps look appealing

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[jpinx]

Given the 6% guaranteed yearly yield, I suggest the best option is to buy, for example:

1. Buy condo for 10 million
2. Borrow 20 million at 4% by using condo as security
3. Invest the 20 million at 6%
4. Use monthly yield (100,000) to repay debt

After ~10 years you have repaid all of the debt and still have a condo and the 20 million invested, and you have spent none of your own money.

very interesting....

He's missed a few rather important steps - like the FX, because 6% is not available in Thailand.

[Paul944]

If you make the 6% in roebels or euro's, you still end up with a loss because at the time you convert the money to baht, the baht will have increased 10%.

[trogers]

Given the 6% guaranteed yearly yield, I suggest the best option is to buy, for example:

• Buy condo for 10 million
• Borrow 20 million at 4% by using condo as security
• Invest the 20 million at 6%
• Use monthly yield (100,000) to repay debt

After ~10 years you have repaid all of the debt and still have a condo and the 20 million invested, and you have spent none of your own money.

very interesting....

He's missed a few rather important steps - like the FX, because 6% is not available in Thailand.

Fallacy from the beginning. Which bank would give a mortgage at twice the full value of the security?

[Naam]

Given the 6% guaranteed yearly yield, I suggest the best option is to buy, for example:

1. Buy condo for 10 million
2. Borrow 20 million at 4% by using condo as security
3. Invest the 20 million at 6%
4. Use monthly yield (100,000) to repay debt

After ~10 years you have repaid all of the debt and still have a condo and the 20 million invested, and you have spent none of your own money.

1. Borrow 20 million at 4% by using condo as security

[WorkingTourist]

[…] 4 million on deposit will pay about 20,000 a month on term deposit if you know where to look. By renting one keeps flexibility.

[…] 6% is not available in Thailand.

Glad we got that cleared up!

[PaulineF]

Last year, I had a battle in making decision if I should rent or own a house? Thanks to Perry Allen, she helped me understand the pro's and con's and helped me to get the house that's best for me.

[Paul944]

Last year, I had a battle in making decision if I should rent or own a house? Thanks to Perry Allen, she helped me understand the pro's and con's and helped me to get the house that's best for me.

But did you rented it or bought it? Sometimes the best house for you is not for sale and sometimes it is not for rent.

[Naam]

Last year, I had a battle in making decision if I should rent or own a house? Thanks to Perry Allen, she helped me understand the pro's and con's and helped me to get the house that's best for me.

But did you rented it or bought it? Sometimes the best house for you is not for sale and sometimes it is not for rent.

she's not telling. it's a secret!

[MaeJoMTB]

Owning Vs renting

You risk the losing all your money in the first 15 years Vs you risk losing some money after the first 15 years.

[Craig krup]

You can watch this guy talking about rent/buy Phuket.