Buying a house

[Guest]

>>>>I think this is a practice that is ripe for abuse.<<<<

 

 

 

i think i will have to warn my bank about those criminal sorts.

'mind providing me of more details, please?

[SingaporeSteve]

jjsushi said:

Actually I need to make a corrrection my friend made deposits into his account every week for 6 months before he was approved for a loan by a Thai bank. The bank required this along with a letter from the " employer" in order to make a loan of about 1mm bt. My friend has told me that he can replicate this formula at several banks because the banks have no way of communicating with each other or check that he borrowed money from another bank.

 

I think this is a practice that is ripe for abuse.

 

There is now a Thai credit bureau that does track exactly what your friend is doing. Banks make you sign a disclosure agreement and also gain your consent to submit your name, address, ID card etc to the credit bureau. The credit bureau will being up any other loans and outstanding debts as well as arrears. By law the supplying companies (eg banks, credit cards, charge cards, must send you a copy of what they send to them so every year, I get a nice letter from Amex advising what they have passed on to the said credit bureau. same with Siam Commercial when I had a mortgage with them.

[Guest]

I have at last had my house completed,it has been a very frustrating time,and also very stressful,but at last its over,and now its time to enjoy.

I formed a company to buy the house,with 6 Thai and myself as directors,i then took forms back to the UK and got my daughter to sign them,along with a copy of her passport i returned to Los,one of the Thai directors was removed from the company and my daughter was registered as an equal partner to me,so in the event of my death,she will not have any problems selling my house.

I have also sold my condo, making a clear profit of 7% over my buying price.

I have had my condo for three years,and have probably stayed in it a total of 18 months,so i have saved the cost of accommodation for all that time.

I think that this proves buying is best if you intend to stay in Thailand about 50% of the time.

[Guest]

Your condo doesn't look like a good investment to me. Did you pay maintenance, mortgage interest, insurance, or taxes while you owned it? Even if you somehow avoided these costs , a 7% per cent return over three years is about 2.3% annually. That's not a good return. You could get more than that in US Treasury Bonds..

 

But at least you didn't lose money. Congratulations on building your house!

 

Khun Pad Thai

[expatinasia]

Cheers!

I planned to buy a townhome and, in Thailand, it's the same hassle of buying a single-family residence. I went to Sunbelt Asia and set up a company. A month later when I got the company stamp and registration papers, I realized that Sunbelt had spelled the company name two different ways, and neither one was correct. Additionally, there were several other spelling errors throughout the paperwork. The paperwork was resubmitted, and I waited yet another month. When I got the forms, it was too late to buy the property that I originally wanted. I bought a condo instead. So, there are other companies besides Sunbelt Asia that can do what you want...

[Guest]

I planned to buy a townhome and, in Thailand, it's the same hassle of buying a single-family residence. I went to Sunbelt Asia and set up a company. A month later when I got the company stamp and registration papers, I realized that Sunbelt had spelled the company name two different ways, and neither one was correct. Additionally, there were several other spelling errors throughout the paperwork. The paperwork was resubmitted, and I waited yet another month. When I got the forms, it was too late to buy the property that I originally wanted. I bought a condo instead. So, there are other companies besides Sunbelt Asia that can do what you want...

I don't have any experience with Sunbelt, but I am very leery of one stop shops that claim to do everything from acting as broker to handling the property registrations to setting up the Thai majority owned company necessary for a non-Thai to own property here. There is an obvious conflict of interest in having one company handle everything.

 

This is not a question of honesty (again, I know nothing about Sunbelt), but incentives. The best predicator of future problems is to look at the incentives. When there are conflicting incentives, there is a much greater liklihood of getting ripped off.

 

When someone is acting as a broker, it is in their interest to get the deal done, irrespective of price and problems with registrations (see this week's The Economist for its review of a great book, which is unfortuantely titled "Freakonomics", which discusses this very issue with real estate brokers.) A title company or lawyer handling property registrations isn't incentivized to get the deal done irrespective of problems with the property or the transaction. They are more likely to provide truely independant advice, but not much help in selling your property.

 

This is true eveywhere. In the US, the corporate scandals involving the accounting firms occurred because those accounting firms were doing everything, and there were no external checks and balances. This is why under Sarbanes-Oxley the accounting firm that does your audit, for example, cannot also provide independant valuation or legal services. This creates obvious conflicts of interest.

 

Now if this was such a problem in the US - which is much more transparent than Thailand - that they passed a law to prohibit such conflicts of interest, imagine the situation here in Thailand. Look at the headlines in today's papers about continuing corruption problems in connection with the new international airport. The potential for serious problems here is much greater. And it is much harder to fix those problems here as well.

 

And again, I really am not making any judgements about any particular company. What troubles me is the conflicts of interest that are obviously created when one company purports to do everything. You need checks and balances, particularly here in Thailand.

[SingaporeSteve]

Gadfly1 said:

I planned to buy a townhome and, in Thailand, it's the same hassle of buying a single-family residence. I went to Sunbelt Asia and set up a company. A month later when I got the company stamp and registration papers, I realized that Sunbelt had spelled the company name two different ways, and neither one was correct. Additionally, there were several other spelling errors throughout the paperwork. The paperwork was resubmitted, and I waited yet another month. When I got the forms, it was too late to buy the property that I originally wanted. I bought a condo instead. So, there are other companies besides Sunbelt Asia that can do what you want...

I don't have any experience with Sunbelt, but I am very leery of one stop shops that claim to do everything from acting as broker to handling the property registrations to setting up the Thai majority owned company necessary for a non-Thai to own property here. There is an obvious conflict of interest in having one company handle everything.

 

This is not a question of honesty (again, I know nothing about Sunbelt), but incentives. The best predicator of future problems is to look at the incentives. When there are conflicting incentives, there is a much greater liklihood of getting ripped off.

 

When someone is acting as a broker, it is in their interest to get the deal done, irrespective of price and problems with registrations (see this week's The Economist for its review of a great book, which is unfortuantely titled "Freakonomics", which discusses this very issue with real estate brokers.) A title company or lawyer handling property registrations isn't incentivized to get the deal done irrespective of problems with the property or the transaction. They are more likely to provide truely independant advice, but not much help in selling your property.

 

This is true eveywhere. In the US, the corporate scandals involving the accounting firms occurred because those accounting firms were doing everything, and there were no external checks and balances. This is why under Sarbanes-Oxley the accounting firm that does your audit, for example, cannot also provide independant valuation or legal services. This creates obvious conflicts of interest.

 

Now if this was such a problem in the US - which is much more transparent than Thailand - that they passed a law to prohibit such conflicts of interest, imagine the situation here in Thailand. Look at the headlines in today's papers about continuing corruption problems in connection with the new international airport. The potential for serious problems here is much greater. And it is much harder to fix those problems here as well.

 

And again, I really am not making any judgements about any particular company. What troubles me is the conflicts of interest that are obviously created when one company purports to do everything. You need checks and balances, particularly here in Thailand.

 

I would agree with this - I sold an old house of mine held through a company and the inhouse lawyer for the real estate agent was handling the seller and buyer sides together. As it was that company had not got accounts up to date at the date of completion, which the lawyer was fully aware off however he did not tell the buyer. Being that I am an honest sort, I sorted it out after completion and paid the audit fees etc for the accounts, but I suspect 9 out of 10 people would have just walked away laughing. The real estate agent was no better in this either. Quite shocking really.

 

Cheers

[SingaporeSteve]

gunneruk said:

I have at last had my house completed,it has been a very frustrating time,and also very stressful,but at last its over,and now its time to enjoy.

I formed a company to buy the house,with 6 Thai and myself as directors,i then took forms back to the UK and got my daughter to sign them,along with a copy of her passport i returned to Los,one of the Thai directors was removed from the company and my daughter was registered as an equal partner to me,so in the event of my death,she will not have any problems selling my house.

I have also sold my condo, making a clear profit of 7% over my buying price.

I have had my condo for three years,and have probably stayed in it a total of 18 months,so i have saved the cost of accommodation for all that time.

I think that this proves buying is best if you intend to stay in Thailand about 50% of the time.

 

Gunneruk, Just a small thing, but you should be structured to have 7 shareholders, not 7 directors. Any director can sign away the assets of the company unless you require two or more signatures. The safest way is that only yourself and your daughter are directors and that EITHER of you can sign for the company. In the event of your demise, she can simply sell the company via change of directors. However if she is not a director, she cannot sign for the company and sell an asset - shareholders have little or no power to do that.

 

Cheers

[Zorro]

The more i read these threads the more reluctant i am to ever buy any real estate under the existing property laws in Thailand.

 

Who needs the hassle?

 

It seems even for the retiree it is just much easier to leave all investments offshore and save yourself all the headaches of doing business in Thailand and enjoy the good things that Thailand has to offer like food, weatherm woman etc

[Guest]

The more i read these threads the more reluctant i am to ever buy any real estate under the existing property laws in Thailand.

 

Who needs the hassle?

 

It seems even for the retiree it is just much easier to leave all investments offshore and save yourself all the headaches of doing business in Thailand and enjoy the good things that Thailand has to offer like food, weatherm woman etc

I think this is true. I also think it is possible for professionals who know the market and know what they are doing to make good investments.

 

One of the big problems is that other incentives (TGs) are often operating when someone decides to buy property in Thailand. Because of those other incentives, buyers are often not thinking with their head, or at least not with the head that rests on their shoulders.

 

Another problem is transaction costs. The cost of getting it done right here is much higher than in the US, which is counterintuitive since you would expect professional services to be cheaper here like (almost) everything else. But they aren't.

 

If you pause for a moment, let the big head do the thinking, and then realistically and carefully assess the local environment, you can see why. Unless you live here and pay attention to the real estate market, you know much less about the investment you are about to make then everyone else involved, including those who will profit from the transaction. Thailand consistently scores poorly on corruption indexes. The potential for conflicts of interests is greater here, which means that the risks associated with having one person do everything is even greater. The law is thinner and it is much harder - often impossible - to recover compensation if you are cheated; you therefore need to pay far closer attention to preventative measures. And for each part of the transaction you need to find a firm that is (a) honest, ( competent and © can communicate complicated issues to you in English. People tend to forget the importance of this last point.

 

If you amortize these much higher costs over a US$30 million project, the economics may make sense. But when you amortize them over a 10 million Baht house (what I personally consider a minimum for a good place these days) the economics becomes very tenuous. And then of course there is the risk (read last week's edition of The Economist) of worldwide burst in the property bubble.

 

Happy house hunting!