Flipping Houses

[digibum]

I did a search for this and didn't find anything that wasn't archived (2011 was the most recent post).  Anybody doing any flipping in Thailand?  

 

The wife (Thai) and I live in the US at the moment but we've given some thought to making another overseas move in the next few years.  Obviously she would prefer we move back to Thailand but I'm not ready to sit around and do nothing all day on a retirement visa.  There are other places we can move to where I can be much closer to the US (six hours by plane instead of 20) and thus continue to invest in US real estate via joint venture deals with people I've done deals with in the past.  I'm giving up a chunk of the returns by taking on a partner but presumably I'm doing little or no work.

 

So, I was thinking about buying some houses in Thailand for cash, renovate them, and then flipping them for a profit (hopefully - haha).  It's something both my wife and I have done successfully in the US before so we know the business model pretty well.  My wife being Thai should have no problem holding the land in her name.  I'm useless with a hammer so I don't plan on doing any of the physical labor myself (and never have on any of our renovations) so the "working in Thailand" issues should be minimal.  

 

Is anybody else doing this that could offer some insights?  

 

I see places upcountry that are in up in coming towns that seem like they would be perfect opportunities to buy some distressed property and fix it up to current standards.  

 

In fact, my wife sends a few hundred bucks a month back to her family and I even suggested that she just buy a distressed property, fix it up, and then offer it as a rental and let her family property manage the place.  Let them keep the rent after paying the mortgage so we don't have to worry about going down to Moneygram every month.  As long as it was generating enough cash flow, presumably my wife would have an asset in her name back in Thailand that she could sell off and keep the proceeds from.  

 

Unfortunately, I quickly realized that this wasn't something we could do remotely as her family didn't grasp the concept of distressed property and kept sending us rental ready places that we would be underwater in.  

 

Not to speak ill of my in-laws but my wife has financed three of their business ideas (against my recommendation) which have all failed.  One of the reasons I suggested this solution was that it would hand them a business that would be difficult for them to screw up (since we would be making most of the big picture decisions) and in addition to giving them some cash every month it would also be an excuse to decline any future "business" investments since they already had a business.  :-)

 

Not that I give a patooty what my wife does with her own money but it's never that simple.  She tells me about some business idea that her family has, I point out all of the reasons why I think it's a horrible investment (while trying to steer clear of pointing out the fact that her relatives would fail at selling water in a desert), she agrees that it's a horrible idea, they guilt her into funding it anyway, she sends them a few thousand bucks, and then when it goes bad, she's in a bad mood that she just threw away a bunch of money and in a mood with me because she doesn't want to lose face with me by admitting she sent them the money and they lost it all.  

 

So while I don't care what she does with her money, I have an obvious vested interest :-)

 

Just to pre-answer the question, I'm really not aiming to own rental properties in Thailand.  Yes, I know I just said that was what we were going to do but that was with my wife's money and it was to solve a very specific problem.  If I was going to hold rentals, I would much rather do that in the US where I'm already quite familiar with the laws.  Land lording can sometimes be litigious and I don't want to find out what I don't know about Thai law in court.  Also, I don't fully understand all of the rules around mortgages in Thailand and leverage really has a massive impact on your cash on cash returns.  I also am concerned about how much debt could be put in my wife's name with only her rentals as income whereas I can use my investment income back in the US to demonstrate that I have the funds to service new debt.  

 

Maybe in a few years, with a few dozen real estate deals under my belt, I'll feel more comfortable land lording in Thailand but at least initially I want to be in and out.  I want my cash back quick.  Cash in, cash out, no banks, mortgages, or tenants to deal with.  

 

I know some people flip pre-construction contracts and places like Bangkok and Pattaya are much more difficult for this kind of investing due to the amount of new inventory constantly hitting the market but it seems like someone has to be flipping.  

[Peterw42]

One thing to consider is Thai people dont often buy 2nd hand and much prefer new. Religion, superstitious etc, someone may have died there or the spirits of the old owners live there etc. I dont think its straight foward for a foreigner to get a mortgage here without a local job, on a house they technically cannot own. 

 

[trogers]

Thais in general can only afford to buy with a mortgage and banks don't offer easy terms on refurbished houses, esp in poor locations.

[Peterw42]

If you watch TV in the west there are all sorts of property flipping shows, dedicated cable channels with reality shows, home improvement shows, renovating for profit, makeover shows etc. Those shows dont exsist in Thailand because the economy and concept of flipping/renovating houses doesnt exsist. Also, renovating for Thai buyers would be a lot different to renovating for western buyers. Its no use putting in a big western kitchen when the Thai buyers will cook and wash up on the patio.

Edited April 24, 2017 by Peterw42

[digibum]

2 hours ago, Peterw42 said:

One thing to consider is Thai people dont often buy 2nd hand and much prefer new. Religion, superstitious etc, someone may have died there or the spirits of the old owners live there etc. I dont think its straight foward for a foreigner to get a mortgage here without a local job, on a house they technically cannot own. 

 

 

I would be paying cash for flips like I do in the US.  You can't get a mortgage on a flip in the US either.  The house, in the condition it's in when I buy it, would not pass inspection.  When I'm done, sure, the person I sell it to can get a mortgage on it but not pre-rennovation.  

 

I have no desire to deal with Thai banks and Thai mortgages thus why I have no desire to own and rent them out.  I just don't think you can get a high enough cash on cash return renting without leveraging the properties (at least it's tough in most major markets in the US) and since I can't/won't take a mortgage with a Thai bank, I've ruled that out as an investment possibility.  

 

And the purchases would be in my wife's name.  Given that all of the work would be done by contractors and she knows enough about flipping to give direction, I don't see any issues in terms of work permit for me.  Literally, I've done flips where my total involvement has been wiring funds, calling the contractor and meeting him at the property and checking up on him from time to time to make sure we're on schedule.  It's not like the TV shows where you're ripping down walls and putting on a new roof yourself (though some people do that, more power to them).  If I had to do roofing it would take me 10x longer than a professional and cost me 5x as much.  I don't have a craftman's bone in my body :-)

 

I've head the same about ghosts and such but I simply can't believe that every house in Thailand has only one owner and once that owner wants to sell their home the new owner burns it to the ground and builds a new one.  There are Thai real estate sites, in Thai, with existing homes.  Somebody is buying them.  

[Peterw42]

36 minutes ago, digibum said:

I've head the same about ghosts and such but I simply can't believe that every house in Thailand has only one owner and once that owner wants to sell their home the new owner burns it to the ground and builds a new one.  There are Thai real estate sites, in Thai, with existing homes.  Somebody is buying them.  

Yes people are buying, but it does have an effect on the overall demand for renovated properties, and as others have said the banks are not keen on lending for them. New builds are relatively cheap and desirable, outside of expat areas affordable for average Thais. You would need to find an area were you can buy, renovate and sell at a profit, and still be under the price of a new build as the new build will always be more desirable.

My wife owns a 2 story, 4 bedroom 2 bathroom new build in an estate with swimming pool , gym, security, 40ks west of Bangkok, probably worth 1.8 mil. A fixer upper in the same area is probably around 1.5 mil. Not much of a margin there to flip.

Edited April 24, 2017 by Peterw42

[digibum]

3 hours ago, trogers said:

Thais in general can only afford to buy with a mortgage and banks don't offer easy terms on refurbished houses, esp in poor locations.

Not sure how to word this because I'm not disagreeing with you but I am :-)

 

First off, nowhere did I say poor locations.  There are lots of towns outside of the major farang hotspots where the cities are growing.  Businesses are moving in, BigC's, etc.  Jobs are available.  And the population is exploding not because of birthrate but because people are going there from smaller villages in the area for the jobs.  

 

And in a lot of these cities, locals have just let their properties go to crap.  About two years ago when I was in Thailand I looked at one property that was a row of shops with living lofts above them (the entire thing was vacant).  The owner of the property had obviously never invested a single baht in maintaining the property.  Why can't you buy that, spend a bit of money making the shop fronts look nice, fixing up lofts up so people would actually want to live above their shop, fill it with tenants, and then flip it to a Thai investor interested in the income?  

 

And why wouldn't a bank lend on that?  This is the part where I'm NOT disagreeing with you since I honestly don't know enough about Thai mortgages.  You have an income producing property, in great condition, what bank doesn't lend on that and why?  

I don't slap a coat of paint on it and expect to make money.  On the project I am currently working on we tore out several walls to open up the living space, replumbed the entire house, replaced the tubs and showers in both bathrooms, all new flooring throughout the entire house, completely changed the layout of the kitchen space, landscaped the front and back yards, new cabinets in the baths and kitchen, all new appliances, etc.  This place will look better than it did when it was brand new.  No joke.  

 

We're only about half way done and last time I went to go check up on it two of the neighbors came out and thanked me for fixing the place up.  The renter who was living there before had completely destroyed it and it was the neighborhood eyesore.  

 

I don't buy in bad neighborhoods.  The first thing I look for when I drive up to the house is whether the neighbors have pride of ownership in their properties.  No point in fixing up a house in a bad neighborhood.  Nobody wants to buy that.  I buy the rundown house in the good neighborhood or in a neighborhood that might have been bad before but you see 4, or 5, or 6 homes that have all been recently renovated.  

[trogers]

31 minutes ago, digibum said:

Not sure how to word this because I'm not disagreeing with you but I am :-)

 

First off, nowhere did I say poor locations.  There are lots of towns outside of the major farang hotspots where the cities are growing.  Businesses are moving in, BigC's, etc.  Jobs are available.  And the population is exploding not because of birthrate but because people are going there from smaller villages in the area for the jobs.  

 

And in a lot of these cities, locals have just let their properties go to crap.  About two years ago when I was in Thailand I looked at one property that was a row of shops with living lofts above them (the entire thing was vacant).  The owner of the property had obviously never invested a single baht in maintaining the property.  Why can't you buy that, spend a bit of money making the shop fronts look nice, fixing up lofts up so people would actually want to live above their shop, fill it with tenants, and then flip it to a Thai investor interested in the income?  

 

And why wouldn't a bank lend on that?  This is the part where I'm NOT disagreeing with you since I honestly don't know enough about Thai mortgages.  You have an income producing property, in great condition, what bank doesn't lend on that and why?  

I don't slap a coat of paint on it and expect to make money.  On the project I am currently working on we tore out several walls to open up the living space, replumbed the entire house, replaced the tubs and showers in both bathrooms, all new flooring throughout the entire house, completely changed the layout of the kitchen space, landscaped the front and back yards, new cabinets in the baths and kitchen, all new appliances, etc.  This place will look better than it did when it was brand new.  No joke.  

 

We're only about half way done and last time I went to go check up on it two of the neighbors came out and thanked me for fixing the place up.  The renter who was living there before had completely destroyed it and it was the neighborhood eyesore.  

 

I don't buy in bad neighborhoods.  The first thing I look for when I drive up to the house is whether the neighbors have pride of ownership in their properties.  No point in fixing up a house in a bad neighborhood.  Nobody wants to buy that.  I buy the rundown house in the good neighborhood or in a neighborhood that might have been bad before but you see 4, or 5, or 6 homes that have all been recently renovated.  

Surf the webpages of the banks on repossessed houses for sales if you want to know how banks look at refurbished houses. The deco and interior of a repossessed house left vacant for years carry little value.

[Hereinthailand]

Thais will pay the same full price for a trashed house as one with new paint and all cleaned up, you are dreaming this isnt the usa. The one next to me just sold for a stupid price like all real estate in thailand right now, they have redone everything themselves. The only good deals are the repos and you will not get a chance to buy them, they go to the wealthy friends of the bankers.

[digibum]

2 minutes ago, trogers said:

Surf the webpages of the banks on repossessed houses for sales if you want to know how banks look at refurbished houses. The deco and interior of a repossessed house left vacant for years carry little value.

 

This feels a bit like we're playing a game.  I never said anything about flipping in poor neighborhoods.  You responded that banks don't offer attractive financing in poor neighborhoods.  I never said anything about houses left vacant for years.  You respond about the value of homes left vacant for years.  I've not used the word "refurbished" at all, you seem to keep confusing refurbish instead of what I said which is "renovate".  

 

Anyway, it appears that the answer to my original question of whether or not anybody here has any experience in this area seems to be "no."  

 

[trogers]

2 minutes ago, digibum said:

 

This feels a bit like we're playing a game.  I never said anything about flipping in poor neighborhoods.  You responded that banks don't offer attractive financing in poor neighborhoods.  I never said anything about houses left vacant for years.  You respond about the value of homes left vacant for years.  I've not used the word "refurbished" at all, you seem to keep confusing refurbish instead of what I said which is "renovate".  

 

Anyway, it appears that the answer to my original question of whether or not anybody here has any experience in this area seems to be "no."  

 

A borrower on a mortgage who defaults would mean to a bank a repossessed house in a old neighbourhood, and one more added onto their webpages...

[Hereinthailand]

Lots of people have exp. here in housing, you just are not listening. The market here isnt anything like what you are used to dealing with. even the thais dont try doing what you want to do because its just not feasible. If you dont want to hear the truth dont ask questions. and if your thai wife doesnt know this maybe you should keep your money in a safe place.

[digibum]

4 minutes ago, trogers said:

A borrower on a mortgage who defaults would mean to a bank a repossessed house in a old neighbourhood, and one more added onto their webpages...

 

Again, where did I say anything about buying defaulted mortgages, repossession, or anything that you're talking about?  Are you even reading what I write or do you have a keyboard shortcut that posts responses?  

[digibum]

3 minutes ago, Hereinthailand said:

Lots of people have exp. here in housing, you just are not listening. The market here isnt anything like what you are used to dealing with. even the thais dont try doing what you want to do because its just not feasible. If you dont want to hear the truth dont ask questions. and if your thai wife doesnt know this maybe you should keep your money in a safe place.

 

Have you done any flips?  

[Hereinthailand]

You just dont get it Einstein. Last post for me.

[trogers]

14 minutes ago, digibum said:

 

Again, where did I say anything about buying defaulted mortgages, repossession, or anything that you're talking about?  Are you even reading what I write or do you have a keyboard shortcut that posts responses?  

I am saying...You may be cash rich...but your buyers would need to get a mortgage.

 

Should the bank only gives out mortgages at 50% of sales price, how many buyers would you find who have cash to cover the down payment?

[maprao]

Simple answer is your business model that works well in the US will not work here in Thailand.

 

Any Thai encouraging you to follow this route should be viewed with extreme caution.

 

 

 

 

 

 

 

[Peterw42]

OP, I used to flip property in Australia, my whole life. 25 Plus condos, 6-8 houses, plus all the houses I lived in over the years. I would love to continue to do it here, given that the labor and goods are cheaper, but after lots of research I have found it to be a completely different market here, not much of a second hand market to any degree, not a big margin between old properties and renovated/new builds. Very easy to over Capitolize here and people will still want the new build. Even renovating for yield here doesn't seem to work as Thai people are happy to own property with no yield.

One thing I think you can do here is have a property portfolio for rental yield. Its not hard to find decent rental returns and the returns can be improved by some renovations.

[digibum]

11 hours ago, Peterw42 said:

OP, I used to flip property in Australia, my whole life. 25 Plus condos, 6-8 houses, plus all the houses I lived in over the years. I would love to continue to do it here, given that the labor and goods are cheaper, but after lots of research I have found it to be a completely different market here, not much of a second hand market to any degree, not a big margin between old properties and renovated/new builds. Very easy to over Capitolize here and people will still want the new build. Even renovating for yield here doesn't seem to work as Thai people are happy to own property with no yield.

One thing I think you can do here is have a property portfolio for rental yield. Its not hard to find decent rental returns and the returns can be improved by some renovations.

 

Thanks for being one of the only people to actually have experience and offer some valuable information :-)

 

Just to make sure I'm understanding you correctly, let's say there are two properties about a 10 minute drive out of downtown Khon Kaen.  Both are, for the sake of argument, 3 bed 2 bath, on the same size lots.  And let's further say that one has been very well maintained, AC is new, some small upgrades have been done, and is move-in ready.  The other house has been lived in by slobs who who have not lifted a finger to fix or maintain anything in 10 years.  Water damaged walls, mold, etc.  All-in it would take about 100,000 baht to bring the house up to the condition of the first mentioned house but the current owner has neither the cash nor the desire.  They would rather sell for whatever the market will bear.  

 

Are you saying that there's 100,000 baht or less difference in the prices of those two homes?   I'm not saying I don't believe you.  I'm simply asking the question.  

 

Does that math change depending on the price of the asset?  For instance, you see that a lot in markets with low value assets.  Literally, there's nothing you can do to improve the value in some markets (like many sub-$50K USD properties in the US).  But, what if you're talking about a 10m baht or 20m baht property? Is the market so slanted that you can't buy a 10m baht rehab for 8 or 9m and put some money into it and get 10m?  

 

As far as rentals, zero desire.  :-)  I don't even like doing rentals in the US so no chance I would want to deal with being a landlord in Thailand.  In real estate I stick mostly with flips and buying defaulted mortgage notes.  That was a choice I made specifically because I don't want to deal with tenants or broken toilets at 3am.  No contractors or lawyers have ever called me at 3am :-)

 

 

[digibum]

12 hours ago, maprao said:

Simple answer is your business model that works well in the US will not work here in Thailand.

 

Any Thai encouraging you to follow this route should be viewed with extreme caution.

 

 

 

 

 

 

 

Sigh, yet another person who has added in their own biases.  I never said a Thai was encouraging me to do anything.  What I very clearly said was that my wife and I are looking at moving out of the US again.  She would prefer Thailand but I don't want to move back to Thailand unless I can do something to keep myself busy.  Thus my interest in finding out whether or not flipping houses in Thailand is viable.  

 

See . . . nothing about any Thai person trying to convince me of anything.  

 

 

[digibum]

15 hours ago, Hereinthailand said:

You just dont get it Einstein. Last post for me.

 

No, I really don't get it.  I don't understand why when I specifically asked for people with experience, you, having no experience, decided to offer an opinion.  

 

[digibum]

15 hours ago, trogers said:

I am saying...You may be cash rich...but your buyers would need to get a mortgage.

 

Should the bank only gives out mortgages at 50% of sales price, how many buyers would you find who have cash to cover the down payment?

 

It seems like you have a very specific situation in your mind and no matter what else is said you're going to continue to argue your point using that frame of reference.  

 

Nobody seems to be able to explain why there is a seemingly thriving market for pre-existing homes YET banks don't lend or require 50% down for pre-exisitng homes.  

 

And that flies in the face of facts I know about the market like I just got done speaking to a buddy earlier today who purchased a pre-existing home in 2016 just outside of BKK with 10% down (loan and property are in his wife's name).  I know at least half a dozen people who have purchased pre-existing homes in Thailand and didn't put anywhere near 50% down.  

 

Are you talking about loans being offered to farangs?  Are you assuming every Thai person is a dirt poor farmer with zero job history or credit?  

 

And I'm not arguing with you for the sake or proving myself right.  I really am trying to get the correct information.  It doesn't help when people say obviously untrue stuff like Thais don't buy pre-owned houses because of ghosts when you can easily find Thai real estate websites with hundreds of pre-owned homes for sale.  

 

[trogers]

That's one mystery you will find out about bank mortgages in Thailand. They can offer 100%  financing for brand new condo units, and only 60% for that 15-year old build across the road.

 

I am talking about loans to Thais...and this is a major reason why the secondary real estate market in this country is passive.

 

For wealthy Thais, why would they buy from you when they have the cash to do what you intend to do, and decorate to their personal tastes...?

Edited April 25, 2017 by trogers

[Peterw42]

33 minutes ago, trogers said:

That's one mystery you will find out about bank mortgages in Thailand. They can offer 100%  financing for brand new condo units, and only 60% for that 15-year old build across the road.

 

I am talking about loans to Thais...

Its not uncommon for the banks to have a dedicated representative at the new housing estate or condo block. Or a display set up in the foyer of the bank. Go into the bank and inquire about a loan to buy a 10 yo renovated House and the bank guy will nod and give you brochures for the new build estate down the road, that the bank is invested in.

I think the OP is missing your point, the banks control the money and they prefer to lend on new property, and that diminishes any 2nd hand market. Thai people will buy based on which new estate is throwing in a new iphone.

Edited April 25, 2017 by Peterw42

[Peterw42]

4 hours ago, digibum said:

And I'm not arguing with you for the sake or proving myself right.  I really am trying to get the correct information.  It doesn't help when people say obviously untrue stuff like Thais don't buy pre-owned houses because of ghosts when you can easily find Thai real estate websites with hundreds of pre-owned homes for sale.  

 

Hundreds for sale indicates an over supply, not a demand. 

[realenglish1]

In general its a bad Idea Right now the housing market here in Thailand is way over inflated by the builders

 

Expect a housing correction and until and when it happens I would not flip anything other than pancakes 

[elgordo38]

On 4/24/2017 at 0:45 AM, digibum said:

they guilt her into funding it anyway, she sends them a few thousand bucks,

This part scares me because after I am gone my g/f will have a nice chunk of money and I am afraid her family would "guilt" her out of most of it. 

[topt]

OP the other issue you may want to consider is the sourcing of contractors who will do the work. You may find it difficult finding contractors that you would consider competent enough especially if you are trying to flip to a tight budget. More than enough posts have been written on this plus I have experienced it personally even when using a Thai speaker on my side who was fully engaged in the process.

[Saladin]

On 4/24/2017 at 0:17 PM, digibum said:

 

Have you done any flips?  

You are obviously experienced whereas most respondents on Thai Visa are inexperienced on any subject they comment on, so don't be put off by them. There is always a pool of Farangs here who have never operated a business in their life (or didn't do it right) who can't wait to shoot down any entrepreneurial ideas. But I would advise you to live here for a year or so and do your own research before jumping in off the deep end.

[funandsuninbangkok]

On 4/23/2017 at 8:29 PM, digibum said:

 

I would be paying cash for flips like I do in the US.  You can't get a mortgage on a flip in the US either.  The house, in the condition it's in when I buy it, would not pass inspection.  When I'm done, sure, the person I sell it to can get a mortgage on it but not pre-rennovation.  

 

I have no desire to deal with Thai banks and Thai mortgages thus why I have no desire to own and rent them out.  I just don't think you can get a high enough cash on cash return renting without leveraging the properties (at least it's tough in most major markets in the US) and since I can't/won't take a mortgage with a Thai bank, I've ruled that out as an investment possibility.  

 

And the purchases would be in my wife's name.  Given that all of the work would be done by contractors and she knows enough about flipping to give direction, I don't see any issues in terms of work permit for me.  Literally, I've done flips where my total involvement has been wiring funds, calling the contractor and meeting him at the property and checking up on him from time to time to make sure we're on schedule.  It's not like the TV shows where you're ripping down walls and putting on a new roof yourself (though some people do that, more power to them).  If I had to do roofing it would take me 10x longer than a professional and cost me 5x as much.  I don't have a craftman's bone in my body :-)

 

I've head the same about ghosts and such but I simply can't believe that every house in Thailand has only one owner and once that owner wants to sell their home the new owner burns it to the ground and builds a new one.  There are Thai real estate sites, in Thai, with existing homes.  Somebody is buying them.  

Better off flipping water buffalo. Ask the i laws to sell you some old sick ones. No problemo