Owning vs Renting: the basic economics

[johnnybgood]

Why spoil the thread for people who are looking for info................???

Some blinkered posters admit they can't even be bothered to read the thread i.e. 8 pages .....

Basically if you can't afford to ante up a mere one million baht which is sweet eff-all in any western currency.....

.....please just don't sit down at the table... go play the slots @ 10 baht

[peterb17]

It's all very strange- there seems to be a total obsession with money. Not actually living somewhere you call home.

I own a condo and rent a house. ( for the dog! )

I care very much about the surroundings I live in, to me every piece of furniture, lighting, fabrics, pictures, electrical goods, china , linens- even the design and style of cutlery is very important - has to be chosen with great care.

Renting can be problematic - when you are surrounded by ghastly furnishings- not a home .

I was lucky with my landlord who agree to take away the awful plastic sofa and other naff furniture - mind you it's a 15M house and the rental would probably give most TV members a heart attack . All replaced.

People seems so obsessed with ' investments' and tiny percentages. I'm probably lucky- I intend to depart this mortal coil with very little- you can't take it with you- but then I have no dependents

So buy yes, make a home and rent if it is some where stylish.

[losworld]

You would be a fool to buy here now. Thailand is not a good investment. Overpriced. Under serviced. Politically unstable. Not only is investment fading it is running for the hills of Vietnam and Cambodia.

[huawei]

Why spoil the thread for people who are looking for info................???

Some blinkered posters admit they can't even be bothered to read the thread i.e. 8 pages .....

Basically if you can't afford to ante up a mere one million baht which is sweet eff-all in any western currency.....

.....please just don't sit down at the table... go play the slots @ 10 baht

Million buys you nothing these days, that's worth buying.

[zaZa9]

Buying....You have a hard appreciable asset, you may do what you want to the property (its yours)

Well if the purchase is a condo or apartment , you really cant change much without the permission of the body corp can you?

You cant enclose a carport or balcony , you cant change any aspect of the exterior usually , and you'd even need to ask permission to take out a wall or even get a puppy!

So you may NOT do what you want.

And if its a house on land ( and that land is essentially someone elses land by law ) , then its not YOU with the appreciating part of the asset , is it ?

So I cant agree with what you have to say at all.

[GOLDBUGGY]

You seem to be making a lot of assumptions I find hard to follow, except that it costs money to put a roof over your head.

For example under your best case scenario you have 2.5 M Baht in which you can earn 125,000 Baht Tax Free from a Dividend paying 5%. It is possible to earn 5%, which is a good Dividend, but I doubt Tax Free. In Canada you would have to pay anywhere between 15% to 25% on taxes and depending on your income level. So at the low end you would pay 15% and have left 106,250 Baht. Divide that for 12 months rent and it is now 8,850 Baht a month.

But lets say you are correct and you do earn 125,000 Baht a year Tax Free on Dividends. You now need to find a property that your lowest bid price is 2.5 M Baht and he will rent that to you for 10,000 Baht per month. You might find a place in the middle of nowhere, but in the city this would be very difficult to do. I would venture to say this rental price would be closer to 15,000 Baht to 20,000 Baht a month, or 180,000 Baht to 240,000 Baht a year.

But not wanting to argue issues here, lets say your best case scenario is all true. That you preserve your capital of 2.5 M Baht, you earn 125,000 Baht a year on after Tax Dividends, and you do find a place of equal value you can rent for 10,000 Baht a month, which covers your rent money. So now I ask you: "What have your gained by doing this?". At best you break even for that year. Is rent going to stay at this same price for the next 10 years or so? How about 20 years then?

I have rented for quite awhile in Thailand and I will tell you were your maintenance fees come into play. When your toilet plugs up or your air-conditioner stops in your rented condo and your landlord doesn't come to fix it. Especially when you are only paying him 10,000 Baht a month. When you took good care of your rented condo but the landlord keeps your 2 month rental deposit (happened 3 times out of 4). When his mocrowave over n or a burner on the stove goes, and you either replace it or go without.

I am not against renting here and in fact think everyone should do that when they first come here and until they decide they are going to stay and where they are to live. Buying is a big commitment and this is not for everyone. But to suggest renting is better than buying economically, is not correct. Renting here is like anywhere else over time. A losing proposition! . ,

[GOLDBUGGY]

I am a landlord in my country and a renter here. Don't tell me that a rented house is not a home. That is so arrogant. For thousands of reasons the majority of people are renters. Children do not know the difference. Your wife could care less. Its only the western mind that is unhappy renting.

I have had one tenant 10 years on a 15 year mortgage. Do you think I am stupid to raise rent 50% on them? Of course not. We both know they are buying my house for me, but it is their home.

And if someone should come along and make you an attractive offer on this house which you can't refuse, what would you do? Share this profit with the people renting, or kick them out in the street, if need be?

[CrummyJuggler]

I am a landlord in my country and a renter here. Don't tell me that a rented house is not a home. That is so arrogant. For thousands of reasons the majority of people are renters. Children do not know the difference. Your wife could care less. Its only the western mind that is unhappy renting.

I have had one tenant 10 years on a 15 year mortgage. Do you think I am stupid to raise rent 50% on them? Of course not. We both know they are buying my house for me, but it is their home.

And if someone should come along and make you an attractive offer on this house which you can't refuse, what would you do? Share this profit with the people renting, or kick them out in the street, if need be?

I cannot throw them out mid-lease to make a quick buck, but either side can choose not to renew at end of term. An "attractive offer" would need to be 20-30% above market. Its nice to dream but that won't happen when there are other similar homes for sale at market value. Would rather raise rents gradually with inflation and give myself a raise.

Sent from my KFFOWI using Tapatalk

[WorkingTourist]

Well if the purchase is a condo or apartment , you really cant change much without the permission of the body corp can you?

Sure you can. Only exterior changes need permission from the community, and while you would mostly be interested in interior changes (where you need no permission), I have seen many examples of exterior changes where permission was given (often installing new windows in older condos or making changes to balcony layout/dimensions).

All the community should care about is that the overall building looks nice, as if you make stupid interior changes, thats nobodys business but your own.

Of course you cant damage the load bearing columns or the utility pipes.

[mogo51]

with the hurdles and limitations put in front of us here in Thailand, it is a no brainer - rent.

Regrettably, I did not work this out until I had made the stupid decision to buy.

[smotherb]

The long and the short of it in a nutshell.... if you intend to live in Thailand, this is good time to buy,

if not, rent....

Intending and reality are not the same. Circumstances in Thailand are changing, few are for the better. If things do get worse, how many of us will keep our intentions to stay; especially, if we are able to go without leaving a considerable amount of our net worth buried here?

[bazza40]

No,it's a con job by America on the rest of the world. Without reserve currency status, the American dollar would be in the toilet.

What do people think "reserve currency" means? It's not the case that the dollar is imposed on the world and therefore the US has an advantage. It's the case that central banks, international organizations, commercial banks and others like to hold dollars and settle trades in dollars. Nobody forces anyone to do this. The dollar is acceptable precisely because people think it will retain its value and be acceptable. It's true that oil is traded in dollars, but there's nothing stopping any trader receiving their dollars and instantly turning them into pounds, baht, whatever. This, of course, would put downward pressure on the dollar. The markets are deep and liquid and the transaction costs are miniscule. People looking for some big conspiracy theory as to why the dollar is acceptable are kidding themselves. People just think that 1) you can repatriate a buck in the US and buy something worthwhile, and 2) the US authorities will manage their currency to ensure that this remains the case.

If people didn't think this there isn't a power in the world that could stop them selling the dollar and settling transactions in something other than dollars.

You may be right. I think the next 5 years will tell if what you say holds true. Debt is either repaid, or defaulted on.

[Naam]

You would be a fool to buy here now. Thailand is not a good investment. Overpriced. Under serviced. Politically unstable. Not only is investment fading it is running for the hills of Vietnam and Cambodia.

one man's foolishness is another man's wisdom. foolish is insulting other people by calling them fools without having the slightest idea about their preferred lifestyle, their priorities in general and last not least their financial means.

in this context please note that "one man might consider a million to be a fortune, another man might consider a million to be peanuts."

[MaeJoMTB]

in this context please note that "one man might consider a million to be a fortune, another man might consider a million to be peanuts."

Are we talking Baht, $$s, Euro or GBP?

[bazza40]

in this context please note that "one man might consider a million to be a fortune, another man might consider a million to be peanuts."

Are we talking Baht, $$s, Euro or GBP?

A village Thai would probably consider a million baht to be a fortune. Doubt you'd find many falangs that would.

[jamie2009]

If you buy an article it means you physically own it, you 'buy' a house in Thailand it is never 100% per cent yours so you never own it plus the land it's on belongs to some one else.

[roiethome]

It really depends upon personal circumstances: do you require a mortgage or do you have the cash.

I designed and built my own house in Thailand to be low energy low maintenance quality finish for about 3M thb., cash paid.

To rent the equivalent standard of house the capital cost would only see me through for 8 years of rental, and with double the utility bills.

Investing the 3M in some secure account would only yield one third of the monthly rental cost.

Therefore, for me, owning is the best investment.

I am sure others will disagree.

[bazza40]

It really depends upon personal circumstances: do you require a mortgage or do you have the cash.

I designed and built my own house in Thailand to be low energy low maintenance quality finish for about 3M thb., cash paid.

To rent the equivalent standard of house the capital cost would only see me through for 8 years of rental, and with double the utility bills.

Investing the 3M in some secure account would only yield one third of the monthly rental cost.

Therefore, for me, owning is the best investment.

I am sure others will disagree.

You DON'T OWN the land in Thailand. You may own the house you built on it; however, that ownership is hedged with so many legal traps any falang is in for a financial hiding if they decide to insist on their rights. And how many stories are there on TV about relatives of the Thai GF/wife etc. mortgaging the property without the falangs knowledge?

Sorry, but you are delusional if you think it's your "own house".

[Naam]

It really depends upon personal circumstances: do you require a mortgage or do you have the cash.

I designed and built my own house in Thailand to be low energy low maintenance quality finish for about 3M thb., cash paid.

To rent the equivalent standard of house the capital cost would only see me through for 8 years of rental, and with double the utility bills.

Investing the 3M in some secure account would only yield one third of the monthly rental cost.

Therefore, for me, owning is the best investment.

I am sure others will disagree.

You DON'T OWN the land in Thailand. You may own the house you built on it; however, that ownership is hedged with so many legal traps any falang is in for a financial hiding if they decide to insist on their rights. And how many stories are there on TV about relatives of the Thai GF/wife etc. mortgaging the property without the falangs knowledge?

Sorry, but you are delusional if you think it's your "own house".

what happens to, what you think is your "own house" in your home country, when they carry you to the crematorium or the graveyard?

[Naam]

in this context please note that "one man might consider a million to be a fortune, another man might consider a million to be peanuts."

Are we talking Baht, $$s, Euro or GBP?

take your pick

[jamie2009]

It really depends upon personal circumstances: do you require a mortgage or do you have the cash.

I designed and built my own house in Thailand to be low energy low maintenance quality finish for about 3M thb., cash paid.

To rent the equivalent standard of house the capital cost would only see me through for 8 years of rental, and with double the utility bills.

Investing the 3M in some secure account would only yield one third of the monthly rental cost.

Therefore, for me, owning is the best investment.

I am sure others will disagree.

You DON'T OWN the land in Thailand. You may own the house you built on it; however, that ownership is hedged with so many legal traps any falang is in for a financial hiding if they decide to insist on their rights. And how many stories are there on TV about relatives of the Thai GF/wife etc. mortgaging the property without the falangs knowledge?

Sorry, but you are delusional if you think it's your "own house".

what happens to, what you think is your "own house" in your home country, when they carry you to the crematorium or the graveyard?

At least you owned the the property and the land 100% before that !

[Naam]

It really depends upon personal circumstances: do you require a mortgage or do you have the cash.

I designed and built my own house in Thailand to be low energy low maintenance quality finish for about 3M thb., cash paid.

To rent the equivalent standard of house the capital cost would only see me through for 8 years of rental, and with double the utility bills.

Investing the 3M in some secure account would only yield one third of the monthly rental cost.

Therefore, for me, owning is the best investment.

I am sure others will disagree.

You DON'T OWN the land in Thailand. You may own the house you built on it; however, that ownership is hedged with so many legal traps any falang is in for a financial hiding if they decide to insist on their rights. And how many stories are there on TV about relatives of the Thai GF/wife etc. mortgaging the property without the falangs knowledge?

Sorry, but you are delusional if you think it's your "own house".

what happens to, what you think is your "own house" in your home country, when they carry you to the crematorium or the graveyard?

At least you owned the the property and the land 100% before that !

that's of course a big consolation which makes you rest more peacefully

[jpinx]

"There's no pockets in a shroud." is a very true saying, but so it the one that says "Where there's a will, there's relatives."

[Naam]

"There's no pockets in a shroud." is a very true saying, but so it the one that says "Where there's a will, there's relatives."

since i retired (1989) i keep a sign in my study "FLY FIRST CLASS, YOUR HEIRS WILL!"

[Craig krup]

But not wanting to argue issues here, lets say your best case scenario is all true. That you preserve your capital of 2.5 M Baht, you earn 125,000 Baht a year on after Tax Dividends, and you do find a place of equal value you can rent for 10,000 Baht a month, which covers your rent money. So now I ask you: "What have your gained by doing this?". 1) At best you break even for that year. Is rent going to stay at this same price for the next 10 years or so? How about 20 years then?

I am not against renting here and in fact think everyone should do that when they first come here and until they decide they are going to stay and where they are to live. Buying is a big commitment and this is not for everyone. 2) But to suggest renting is better than buying economically, is not correct. Renting here is like anywhere else over time. A losing proposition! . ,

Your points 1 and 2. You haven't read what I said about the path of dividends and capital value of all the worlds productive assets versus the path of rents and capital values in one poor country, not about the benefits of diversification and the lack of diversification when you buy one asset - i.e. a house in a poor country.

[jpinx]

"There's no pockets in a shroud." is a very true saying, but so it the one that says "Where there's a will, there's relatives."

since i retired (1989) i keep a sign in my study "FLY FIRST CLASS, YOUR HEIRS WILL!"

Has to be the best one yet !!

[beachproperty]

Horses for courses..... someone once said that only a fool gets emotionally attached to his wealth. There is nothing in the equations above to take in the costs of maintaining a building. There's no leaking roofs on a good investment -- currently about 5% available in western markets with an acceptable credit rating.

Actually not optimistic. You can get over 6% fixed term 5 years if you look carefully, with credit ratings too.

As they say here -- up to you

Turning your nose up at 6.6% fixed for 5 years in todays market shows a level of financial arrogance that normal people can not afford.

I'm confused....first it was 5%, then it was 6%, and then it was 6.6%.......Why not just say 10% or 20% since it appears you are pulling straws from thin air.

[steve73]

One point I've not seen mentioned in this thread (although I only skimmed many of the pages) is that in many areas/cases rental is MUCH cheaper than buying a similar property...

For example, where I live there are loads of 30+ year old beach front townhouses (3 & 1/2 floors plus full roof terrace) for rent at around 5-6,000 /month... OK, they're bit shabby but location is fabulous. They're for sale at around 2.5-3 million... and would require a further 1 MM+ to make them perfect. Some have been "done-up" and are asking 4-5 (but with little interest).

The big disadvantage with renting such as this is that it's difficult (as a renter) to justify spending on maintenance/improvement with only a 1 year lease, and there's always a risk that they'll get sold or the rents increased (although rents have not been increased for the last 5-6 years).

I've seen plenty of "Thai-style" houses in many slightly more remote locations where renting beats buying (even if we could), as long as you're prepared to put up with a slightly scruffy place.

It only seems to be the "expat" enclaves where renting is on a par with buying...

[bazza40]

It really depends upon personal circumstances: do you require a mortgage or do you have the cash.

I designed and built my own house in Thailand to be low energy low maintenance quality finish for about 3M thb., cash paid.

To rent the equivalent standard of house the capital cost would only see me through for 8 years of rental, and with double the utility bills.

Investing the 3M in some secure account would only yield one third of the monthly rental cost.

Therefore, for me, owning is the best investment.

I am sure others will disagree.

You DON'T OWN the land in Thailand. You may own the house you built on it; however, that ownership is hedged with so many legal traps any falang is in for a financial hiding if they decide to insist on their rights. And how many stories are there on TV about relatives of the Thai GF/wife etc. mortgaging the property without the falangs knowledge?

Sorry, but you are delusional if you think it's your "own house".

what happens to, what you think is your "own house" in your home country, when they carry you to the crematorium or the graveyard?

It is inherited ( if you have a will ) by your heirs. I'm talking about what can happen here before you die, which would not happen in your "home" country. However, if you want to stick your head in the sand, be my guest.

[jpinx]

Horses for courses..... someone once said that only a fool gets emotionally attached to his wealth. There is nothing in the equations above to take in the costs of maintaining a building. There's no leaking roofs on a good investment -- currently about 5% available in western markets with an acceptable credit rating.

Actually not optimistic. You can get over 6% fixed term 5 years if you look carefully, with credit ratings too.

As they say here -- up to you

Turning your nose up at 6.6% fixed for 5 years in todays market shows a level of financial arrogance that normal people can not afford.

I'm confused....first it was 5%, then it was 6%, and then it was 6.6%.......Why not just say 10% or 20% since it appears you are pulling straws from thin air.

No No -- first it was at about 7%, and then it eased down to just over 5% and now it's back up to 6.6%.

Do try to keep up