There is a strong urge for many expats to own their own home in Thailand, not a good idea. A foreigner can’t own the land their property sits on. A non-Thai cannot own land. They can own the building on the land. You have to lease the land back from a Thai. A foreigner can sometimes own apartments or condominiums, under the Thailand Condominium Act. Many expats have purchased property and are happy with their purchase. Let’s just say, others aren’t so happy.
It’s simply cheaper and makes financial sense to rent. Let’s take the condo I live in, for example. It’s a beautiful three bedroom, 2 bath, furnished, luxury condo with 3 pools, just five minutes from the beach. The selling price for one of these units is $160,000. There is a 30 year lease, you never actually own the condo. The monthly ownership fee is $320. This covers management, security, pool service, gardeners and maintenance. If I invest $160,000 at say 6%, it comes out to be $800 a month plus the $320 for the monthly maintenance fee. That’s a total of $1,120 a month. I rent for $800 a month! By buying the unit, I would lose $320 a month and tie up a considerable amount of principal.
What about appreciation? Condos aren’t like fine wine, prices go down as they age. Construction standards are poor. They age miserably. The prices of condos where I live are going down in price. People don’t pay a premium price for second hand units. The more expensive the unit, the smaller the market is and new units are opening every day…and not selling. The building goes on relentlessly and unsold inventory just keeps rising. There is a housing bubble in Bangkok and Phuket.
Condos are often badly managed. The money for the maintenance is squandered, spent on silly things or more likely just pocketed. A strong owner’s committee has to oversee how fees are being spent or else it disappears. Often the owners of a condo project go bust or fees simply aren’t paid. Fees collected are barely adequate to pay for costs. With a lack of basic services, building maintenance just doesn’t happen and value of all units in the project goes down!
There are the usual problems with living in a condo. Noisy neighbors or noise from outside, you name it. Factors that are easily solved in the West can be a nightmare in Thailand. When you have a problem in Thailand, it is not always easily solved. Trying to solve it often escalates it to another level and you’re left with one way to fix it…move!
Everything I’ve written about condos goes for houses as well. I have a friend who built a luxury home on spec. It’s a gorgeous home, he originally put on sale for $550k. A few years later it’s still unsold at $390k. Renting a property in Thailand is the way to go. It suits expats to rent because they can come and go as they please and not have money tied up in a country with an unstable government.
I suggest investment elsewhere and use the income from those investments to rent in Thailand. Places do sell, but the market is slow. There are plenty of places to rent. Rents in various parts of the country vary widely. In Phuket 10,000 baht ($300) a month would “buy” very little for a foreigner; however in Chaing Mai it could mean a very comfortable house or apartment. Rents are always negotiable with the low season is the time to shop. A year-long contract is the way to go, bearing in mind that the owner will want to charge more for the high season. Try and avoid doing business with a Thai landlord by the way. Make sure your lease spells out exactly how a deposit is to be returned.
Bottom line: Save your money, rent in Thailand.