Managing retirement income

[MahasarakhamMitch]

Hi guys and gals

I would like to retire to Thailand in the next 15 years. My missus has a couple of plots of land and a house in Maha Sarakham (which I like but I doubt that I could live permanently).

We have a mortgage free house with a current value of about £500k. We have a rental property which is worth about £200k

When the time comes I'm thinking we would sell the main house and buy 2 smaller homes for £250k each. We would have our other rental property so that leave us with 1 house as a bolt hole in the UK. And 2 rental uk houses bringing in about £1500 after taxes, fees and repair fund.

My first pension at 57 is small - only £75 per week. Our second pension matures at age 65 at £300 per week.

I'm not sure if £1800 per month is going to be enough at age 57. I know £3k per month will be ok at 65 but I really want to enjoy Thailand before we both get too old.

What would you guys do?

How easy is it to manage rentals from abroad?

Any thoughts kindly appreciated

[berybert]

Its the question of, are you going to live in Thailand 24/7 on holiday, or are you going to live there normally.

If you live a normal life then the money will be more than enough.

If you want to go out and party all day every day then it wont last long.

Cant imagine partying 24/7 will be much fun after a couple of months.

[Oxx]

Why bother with property? The government is increasingly making the tax situation unattractive for rental homes.  The income stream is unreliable.  You investments aren't diversified.  (Consider what would happen to property values and income if a major local employer pulled out.) You are highly exposed to the GBP/THB exchange rate.  And property is extremely illiquid.  (What if you suddenly needed a large sum to pay for medical expenses or somesuch?)

 

Do you really need to keep a home in the UK? Wouldn't it be easier and cheaper just to stay in an hotel or B&B for your return trips?

 

I completely sold up.  Invested the proceeds offshore to avoid UK income tax.  And transferred my pensions offshore (harder to do now).  By severing all my UK ties I hope to be deemed non-domiciled upon my death, so my estate will be free of IHT too.

[meatboy]

with all the wealth he says he has,and he wants to KNOW if 18,000gbp.will be enough [850,000bht] a month,

that should be enough for you,wife,wife's family and all the rest of your extended relatives.

your not trying to take the p--s are you.

[1FinickyOne]

Tenants can be unreliable and worse, destructive... being an absentee landlord invites trouble. A good management company will take care of some of that risk but too often, they are content to take their % when they don't have to do anything and don't have any real concern for your property... being a landlord can be a real pain.

[meatboy]

40 minutes ago, kenk24 said:

Tenants can be unreliable and worse, destructive... being an absentee landlord invites trouble. A good management company will take care of some of that risk but too often, they are content to take their % when they don't have to do anything and don't have any real concern for your property... being a landlord can be a real pain.

yes K24 let that be a warning,we left our house in the uk.to be managed by a rental agent,after 4months the rent was in arear's

it took a yr.to get the tenant out,then we found out it was in a mess.

we paid for it to be cleaned and the garden and the garage to be emptied[skip needed] all in all that cost over,300gbp.plus 2,000gbp rent,took over 12months to sell at a loss 0f 40,000gbp.on previous value.

and the agent took 10% of the rental.

[alfieconn]

2 hours ago, Oxx said:

Why bother with property? The government is increasingly making the tax situation unattractive for rental homes.  The income stream is unreliable.  You investments aren't diversified.  (Consider what would happen to property values and income if a major local employer pulled out.) You are highly exposed to the GBP/THB exchange rate.  And property is extremely illiquid.  (What if you suddenly needed a large sum to pay for medical expenses or somesuch?)

 

Do you really need to keep a home in the UK? Wouldn't it be easier and cheaper just to stay in an hotel or B&B for your return trips?

 

I completely sold up.  Invested the proceeds offshore to avoid UK income tax.  And transferred my pensions offshore (harder to do now).  By severing all my UK ties I hope to be deemed non-domiciled upon my death, so my estate will be free of IHT too.

Quote

Why bother with property?

Good yield's,  probably averaging average 4-5 % rental yield p/a and capital appreciation 5-10% p/a over the last 20 year's.(Obviously this can't be a  guarantee  for the future)

Quote

The government is increasingly making the tax situation unattractive for rental homes.

Not if your in the lower tax bracket

Quote

The income stream is unreliable

rubbish

Quote

You investments aren't diversified.  (Consider what would happen to property values and income if a major local employer pulled out.)

Where has the Op said that all his properties are local.

 

Quote

You are highly exposed to the GBP/THB exchange rate.

Everyone is exposed to exchange rate change unless their investments are in Thai baht, i take it your investments are not in Thai baht ?.

 

Quote

What if you suddenly needed a large sum to pay for medical expenses or somesuch?)

Easy, OP just has to make sure he has Medical Insurance.

 

 

For Op, be wary of advise from people who have sold up in the UK over the last 20 year's.

 

 

 

 

 

[bazza73]

To answer the OP's first question, he has more than enough funds to finance retirement in Thailand.

 

IMHO the OP does not need the stress of being an absentee landlord. Too many things can go wrong. Keep the 200K property as a bolthole, sell the house. There are many options to generate income from the 500K, such as dividend-paying shares, bonds, index funds, peer-to-peer lending and annuities. All without the costs of maintaining rental properties, and at much better yields.

 

I sold my house in Australia because I had had enough of going back to Australia and having to spend at least a month getting the house and garden back up to scratch. I've lived in Thailand for 8 years. I have generated enough income each year from investment to live comfortably in Thailand, and my capital base is basically the same as when I started. And that's less capital than the 500,000 GBP the OP has.

 

The only thing I maintain in Australia now is my private health insurance.

[CharlieH]

Post using colored font removed.

[elgordo38]

6 hours ago, kenk24 said:

Tenants can be unreliable and worse, destructive... being an absentee landlord invites trouble. A good management company will take care of some of that risk but too often, they are content to take their % when they don't have to do anything and don't have any real concern for your property... being a landlord can be a real pain.

This is about the best advice your going to get. Tenants are a pain. If you go back for a visit rent. Currency fluctuation is also to be considered the government wants to keeping lowering it to increase exports they do not care a RA about you. From what I hear from an British friend his pension has remained stagnant for the last 15 years no COLA. When you move away from your home country said country wants to stick it to you like a monthly blood donation at the Red Cross. 

[robertson468]

As said before, I would suggest that £1,800 is quite sufficient to live in Thailand in a good quality rented house (with shared pool) and eat out a couple of nights a week.  Two bedroom House about 25-30K (=£610-730), assuming you are going to have the occasional visitors.  Electric about £75pm, meals from £50 and much less, depending on where you go and if you like Thai food.   Can get good Thai meal at good Thai Restaurant for about £10 per head.  Motor bike rental about £120.  Leaves you about £700pm for food, clothes and other entertainment.

 

Would suggest you live here for a couple of years before selling UK Property and investing money in property here, which will become very tempting.  Like any other "wonderful place" people can go off Thailand with their very different way of life than a developed Country.  Personally, I eventually sold and built my own little Resort on Koh Samui, which brings me 12% ROI, plus my own pensions (strangely enough) of £1,800 and has provided me with a very comfortable life style, such as own three bedroom/bathroom house, Housekeeper, swimming pool to share, a couple of hundred meters from the sea, unoccupied land behind us so we can walk out dogs (may not last for another 10 years though!), frequent meals out and entertainment and one trip to somewhere else in Thailand, one trip somewhere in Asia and one trip to another Continent, per year. 

 

Personally I am very happy, and have many friends who feel likewise, but there are many in the Country who, for one reason or another, have sadly returned home and are little bit embittered by their experience.

 

Hope all this helps and would be very happy to help more if you like, if you pm me.

[MahasarakhamMitch]

Its the question of, are you going to live in Thailand 24/7 on holiday, or are you going to live there normally.
If you live a normal life then the money will be more than enough.
If you want to go out and party all day every day then it wont last long.
Cant imagine partying 24/7 will be much fun after a couple of months.

Thanks for the reply, yes we intend to live permanently in Maha Sarakham as my wife owns a house and a few pieces of land

[MahasarakhamMitch]

with all the wealth he says he has,and he wants to KNOW if 18,000gbp.will be enough [850,000bht] a month,
that should be enough for you,wife,wife's family and all the rest of your extended relatives.
your not trying to take the p--s are you.

Good god, no I don't have £18000 a month
I would have £1800

[SpeakeasyThai]

7 hours ago, Oxx said:

Why bother with property? The government is increasingly making the tax situation unattractive for rental homes.  The income stream is unreliable.  You investments aren't diversified.  (Consider what would happen to property values and income if a major local employer pulled out.) You are highly exposed to the GBP/THB exchange rate.  And property is extremely illiquid.  (What if you suddenly needed a large sum to pay for medical expenses or somesuch?)

 

Do you really need to keep a home in the UK? Wouldn't it be easier and cheaper just to stay in an hotel or B&B for your return trips?

 

I completely sold up.  Invested the proceeds offshore to avoid UK income tax.  And transferred my pensions offshore (harder to do now).  By severing all my UK ties I hope to be deemed non-domiciled upon my death, so my estate will be free of IHT too.

Where did you invest offshore and what returns do you get? I ask because i am invested in UK shares and the budget is going to hammer me next year. Most appreciate a response. Thanks.

[bazza73]

9 minutes ago, MahasarakhamMitch said:

 

Good god, no I don't have £18000 a month
I would have £1800

I think he meant 18,000 a year. On 1800 GBP at current conversions, it's about 77,000 baht per month. Unless you are into big karaoke bar sessions, that's more than enough, particularly living in the boonies.

One more piece of advice - don't buy property here. Rent.

[xylophone]

13 hours ago, berybert said:

Cant imagine partying 24/7 will be much fun after a couple of months

Been there, done that (when I first came here) and you are quite right, it wasn't much fun after a couple of months!!! Now settled into a couple of nights out a week and that's fine these days.

[xylophone]

13 hours ago, MahasarakhamMitch said:

We would have our other rental property so that leave us with 1 house as a bolt hole in the UK

Personally I think that is sound thinking, because who knows how the OP will be thinking a few years after his move to Thailand?

 

There have been other threads whereby folk who have sold everything in their home country and moved abroad, and then wanted to return home have found that they couldn't afford to buy a house in the country they left, because prices (demand) and inflation had done their work.

 

In addition, there are good rental property agents around, and of course no one ever gets to hear about them, because it is the bad ones who make the headlines. A reputable company should be able to do this for you, and yes they will take a commission, but that's the name of the game.

[SpokaneAl]

It does not matter if your real estate is spread throughout England, you still lack diversification - everything is in rental real estate. And as others have mentioned, acting as a long distance landlord is difficult. 

 

You mentioned your anticipated yields on that property. Go a few months with a missing tenant or some major repairs and your yield prognostications go through the floor.

 

Real estate is about as illiquid as it gets, with an often long time line between wanting to sell and the actual culmination of the deal. Plus there are usually fairly high costs involved.

 

We owned real estate on the other side of the world once, and that was enough to convince us never again.

 

All of our investments are in diversified no load mutual funds. I can get the money within a few short days or modify our investments via communication directly with the fund company with no transaction costs.  Maintaining a diversified portfolio with a decent mix of stocks and bonds via mutual funds ain't brain surgery and has worked well for us.

 

Plus I don't want to spend my retirement years worrying about some rental property. 

[losername]

OP.  One further advantage to keeping the bolthole in UK many contributors refer to is that it would be much easier to argue that you are not and do not intend to be non-resident.  Hence you will stand a better chance of maintaining your right to NHS services.  Years ago, when I moved here, I had no idea they could simply pull the plug and deny me NHS benefit as they did in 2015. 

[catman20]

great idea if you have not been divorced by that time  and lost all of your assets 

Edited March 10, 2017 by catman20

[Grubster]

I think you should 1st come here for a couple years before making a final decision, but having real estate back home is probably a bad idea. Even if you went back you would probably be better off renting, it just gives you so many options and as has been stated here already you will probably do much better on other investments that have no headaches involved.    Good luck

[ableguy]

For me renting my house and living i

n Thailand was a ,bloody nightmare , even though I had a company to handle finding tenants and collecting the rent , I lost money having to constantly fly back to sort out the house after tenants trashed it. Sell your properties and rest easy.

[khunPer]

It's like a rubber-band, it's totally depending on your life-style. For quite a number of retired £1,800 – i. e. around some 75,000 baht – a month is more than enough; for others it can hardly last for one day. To be honest, I think many a Forum-member can live for that and less.

 

I myself retired in Thailand at age 57, and had an annual budget just around 900k to 1 million baht – i.e. same as you plan – and even there has been some inflation/price increase, it's not that much. I survived excellent – the budget included my tiny half-Thai daughter and her expenses, and my lovely Thai girlfriend (her own income, she saved up, after mutual agreement, so I paid for all of us) – and I always had enough money in my pocket, not to think too much about spending. However, you and I may have different priorities in life-style...

 

With you back-up finance in UK and later higher retirement pension, I would not worry too much, if your life-style is what by most shall be considered as a "normal life-style" – wish you goo luck...

[virgomjh]

19 hours ago, MahasarakhamMitch said:

We have a mortgage free house with a current value of about £500k. We have a rental property which is worth about £200k

When the time comes I'm thinking we would sell the main house and buy 2 smaller homes for £250k each. We would have our other rental property so that leave us with 1 house as a bolt hole in the UK. And 2 rental uk houses bringing in about £1500 after taxes, fees and repair fund.

My first pension at 57 is small - only £75 per week. Our second pension matures at age 65 at £300 per week.

I'm not sure if £1800 per month is going to be enough at age 57. I know £3k per month will be ok at 65 but I really want to enjoy Thailand before we both get too old.

I am in a very similar situation. 58yrs old with £500k UK property, small current pension, Thai wife and planning to retire in Thailand next year. But I don't have the extra rental property. I certainly think it will be possible for you to make the move now rather than waiting, but have an alternative suggestion on the strategy. I would rent out the £500k property and sell the £200k property.

 

I agree with the other posters about the hazards of remote letting, and you will be walking right into this problem if you split the £500k property into two £750k/m properties. Assuming your £500k property is in a good location and condition you will attract a 'higher quality' of tenant paying around £1300-£1600/m and greatly reduce the risk of problems. If you sell the £200k property and invest it with a broker you will be able to use the returns to top up your rental income pending state pension age, and enable you to purchase medical insurance or simply pay the cost if the need arises. You may have to eat it into a bit depending the standard of living that you want in these intervening years, but you will still be in a very strong position at 66.  

 

I also agree with the posters who suggested you don't need to retain a 'bolt hole' because you would be able to use the £500k property to rent accommodation in the UK if you did ever need to return. Regarding the general strategy of retaining and renting out your property, I personally believe that in the current climate this is the right way to go, rather than selling up and investing cash funds. Despite Brexit, it is in my view a reasonably safe bet that UK property prices will continue to increase at 3%+ pa for the foreseeable future and this combined with a potential 3%-5% net rental return is hard to beat. As other posters have pointed out you will be exposed to exchange rate fluctuations with this route but it a case of balancing out the risk reward ratios of all the options, and it is  unlikely that the rate will fall sufficiently to offset the gains from retaining your UK property.

[mrfaroukh]

14 hours ago, meatboy said:

with all the wealth he says he has,and he wants to KNOW if 18,000gbp.will be enough [850,000bht] a month,

that should be enough for you,wife,wife's family and all the rest of your extended relatives.

your not trying to take the p--s are you.

He said 1500 a month which is 18000 a year.

[murraynz]

if retiring to thailand,i always think it is a good idea to retain one property in your home country,especialy in popular areas of nz or australia,property is a very good investment and the increasing property values takes care of inflation,at 65yrs old, i may well last another 30+yrs....i have a number of rental properties and i have also found that it is no good trying to get decent property managers---so i am now selling houses to invest in commercial property,gives better return % and secure long term leasees,with tenants paying all expenses..i actually wont need to use the income,can live very nicely from nz pension and income from one thai rental condo,,..i defered moving to pattaya until i could set things up securely for the future...it takes many yrs of sacrifice to get to this position,but i think it is worth it---i can litterally live like a king----but my other advise is---do it much earlier than 65....probably better to diversify a little with shares and/money market.....

[GavinK]

Don't forget that buying 2 properties to let will attract higher stamp duties these days, and keeping a uk home will still give you a council tax liability, and count against you if wanting to claim non-uk residence status (may not be an issue if only uk rental income). 

[fletchsmile]

On 3/10/2017 at 7:38 AM, Oxx said:

Why bother with property? The government is increasingly making the tax situation unattractive for rental homes.  The income stream is unreliable.  You investments aren't diversified.  (Consider what would happen to property values and income if a major local employer pulled out.) You are highly exposed to the GBP/THB exchange rate.  And property is extremely illiquid.  (What if you suddenly needed a large sum to pay for medical expenses or somesuch?)

 

Do you really need to keep a home in the UK? Wouldn't it be easier and cheaper just to stay in an hotel or B&B for your return trips?

 

I completely sold up.  Invested the proceeds offshore to avoid UK income tax.  And transferred my pensions offshore (harder to do now).  By severing all my UK ties I hope to be deemed non-domiciled upon my death, so my estate will be free of IHT too.

Totally agree with all the above. Particularly the exchange rate, liquidity and tax risks.

 

I like to have some property exposure for diversification though. The main ways I do this are:

 

1. Own a place here. Mainly for nesting rather than investing. It's nice to have. Fixes your costs and eliminates some exchange risk

 

2. Real estate investment trusts (REITs) shares. Worth googling. Rather than having say two or three properties and concentration risk and other hassles, you effectively own very much smaller %s of significantly more properties. Similar to mutual funds or unit trusts in some ways. The yields are attractive. The Singapore portfolio I have earns me just over 7% tax free in SGD dividend income ad I can sell any time. Capital is not guaranteed though. Probably best also to stay away from US REITs and US based ETFs for tax/admin reasons. 

 

3. TMB Property Income Fund is a unit trust you can buy through Thailand. The charges are higher than buying the REITs yourself, but managed by professionals. It focuses mainly on Thailand and Singapore REITs. In return for higher charges you have a professional fund manager making the choices, and spreading your risk. A much easier place to start than assessing individual REIT shares

 

Wouldn't want the last 2 to be my only income sources, but they add nice diversification based on property. Then add some equities and bonds based exposures

 

Cheers

Fletch :)

 

 

[smotherb]

On 3/10/2017 at 2:18 AM, berybert said:

Its the question of, are you going to live in Thailand 24/7 on holiday, or are you going to live there normally.

If you live a normal life then the money will be more than enough.

If you want to go out and party all day every day then it wont last long.

Cant imagine partying 24/7 will be much fun after a couple of months.

I am always amused by those who think a couple of thousand dollars a month is plenty. You have to remember, the brunt of his income comes from rentals. I have been an absentee landlord since 1974 and have very nice 3 and 2bdr/2bth units in good neighborhoods. You need someone trustworthy to manage the properties--and professionals want 15-20% or more of the rent each month plus they don't always do the best job; e.g., had a rental place just around the corner from the rental management office, yet there were three families living in my house and tearing it up. Renters are often delinquent with the rent and do damage to your unit far greater than a deposit will cover. What happens to his 1800 quid a month income if one of the renters fails to pay? For you math challenged yahoos, that's 750 quid less that month. I am not sure, but would imagine the UK is quite similar to the US in evicting a non-paying tenant--in Florida it takes 90 days and court and county police costs (over $120) to evict; and more to pay the rental management company to process the eviction in court. So that is three months without rent, 2250 quid plus another 100 quid for costs, plus another fee to the rental management company, unless you go back and spend even more money to process the eviction. Renters can cause major damages to walls, floors, carpets, doors, windows, appliances, toilets and sinks and everything breaks or wears-out. Someday, the roof will need repair or replacement; that is a major cost--I just had to pay $15,000 to replace one. And, all this is if you do not have a mortgage.  Of course, repairs, taxes and insurance are the major costs, even without mortgage.

[bazza73]

4 hours ago, fletchsmile said:

Totally agree with all the above. Particularly the exchange rate, liquidity and tax risks.

 

I like to have some property exposure for diversification though. The main ways I do this are:

 

1. Own a place here. Mainly for nesting rather than investing. It's nice to have. Fixes your costs and eliminates some exchange risk

 

2. Real estate investment trusts (REITs) shares. Worth googling. Rather than having say two or three properties and concentration risk and other hassles, you effectively own very much smaller %s of significantly more properties. Similar to mutual funds or unit trusts in some ways. The yields are attractive. The Singapore portfolio I have earns me just over 7% tax free in SGD dividend income ad I can sell any time. Capital is not guaranteed though. Probably best also to stay away from US REITs and US based ETFs for tax/admin reasons. 

 

3. TMB Property Income Fund is a unit trust you can buy through Thailand. The charges are higher than buying the REITs yourself, but managed by professionals. It focuses mainly on Thailand and Singapore REITs. In return for higher charges you have a professional fund manager making the choices, and spreading your risk. A much easier place to start than assessing individual REIT shares

 

Wouldn't want the last 2 to be my only income sources, but they add nice diversification based on property. Then add some equities and bonds based exposures

 

Cheers

Fletch :)

 

 

Sorry, can't agree, for the following reasons:

 

I've rented in a condo for the last 8 years. My rent hasn't increased in that time -in fact it has decreased because I'm a reliable tenant. My landlord keeps asking me if I want to buy the unit - why would I want his headaches with the body corporate and majority Thai ownership?

 

If I was going to own property, I would own it outright. REIT's and property funds in Australia during the GFC proved to be one of the biggest shark pools around. If the managers weren't ripping out huge management fees, they were borrowing investor money for their own business ventures. Over 90% went under. While I don't know anything about Thai and Singapore funds, it's a reasonable proposition not to invest in anything you don't understand.