The dynamic Thai real estate market is particularly attractive. It remains accessible in terms of price and allows to benefit from very efficient rental yields. But before signing for a studio in Bangkok, a villa in Phuket, or an apartment in Chumphon, it’s best to have a few points of reference. So, without further ado, let’s dive into this blog and learn some of our advice that is important to keep in mind when buying real estate in Thailand.
1. To become an owner in Thailand is legal
Let’s tackle this point at once because this subject circulates much information, sometimes contradictory. Very clearly: a foreigner can completely become the owner of a property in Thailand. On the other hand, he must imperatively respect certain rules. For the purchase of an apartment in a condo, the property must be part of a residence of which at least 51% of the apartments have been previously sold to Thai people (“condominium act”).
The rules are different for the purchase of a villa (or a house). The law specifies that a foreigner cannot buy land in his name. On the other hand, he can rent a piece of land, even for a very long time (30 years maximum, but renewable), and build a house on it, which he will own. Therefore, it is important before signing anything to make sure that this is the case to avoid many problems.
2. Sources of financing
If you need to take out a loan to complete your real estate investment in Thailand, do not count on the banks of the Kingdom to grant it to you, even if you are able to bring guarantees. It is possible if you do business in Thailand, have resided there for many years, or if you are married to a Thai national, and still, it is not guaranteed.
So how to do it?
The solution is to ask your bank in your country of origin. Of course, you will have to prove that you have a contribution and that you can afford the repayments. However, banks are reluctant to take on this type of project because they do not know the foreign markets (in this case, Thailand), and they cannot take a guarantee on a property located in a country where they do not have a foothold.
The bank will often ask you for a mortgage guarantee on another property you own locally, in the country where they are based. It is important to keep this in mind. In some cases, it may make more sense to keep a property in the United States, for example, and rent it out, which may allow you to borrow money (if you also have a small deposit).
The big real estate developers active in Thailand are well aware of these realities and propose original financing solutions to invest in. Rather than selling it and not being able to count on a bank financing, complementary. After a contribution equivalent to 50% of the amount of the property, the remaining 50% to be refunded are covered by a system of rental guarantees for a given period.
The rental guarantee consists in paying you rent, whether or not the real estate group rents your property. In this case, this rent is used to repay the loan granted by the developer, at zero interest, in certain cases. It does not make you a gift! Simply, given the dynamism of tourism, the developer has no problem renting your property. It is a win-win situation.
3. Adopt a different way of thinking
It’s not easy, but try to adopt a “reading grid” a little different from the one you are used to. There can be a discrepancy between the brochure and the reality. For example, if in the United States a promoter presents you with a brochure of an apartment, you may think that, in reality, this property is in accordance with the photos and the description is given. The law does not allow to do anything. In Thailand, it is a little different.
So, the day you discover the property, you will think that the seller is trying to fool you, to steal from you. This can indeed be the case; there are swindlers everywhere. But this “gap” also has the function of leaving room for compromise. There is room for negotiation! So if you are faced with this kind of situation, there are two possible attitudes. Either you slam the door, believing that your interlocutor is not reliable.
Or, you sit down, kindly point out that the account is not there and tell him your conditions. Take advantage of this, in passing, to ask him to provide you with information on the management of the condo in order to verify that investments are not already planned and to know how decisions are made.
4. Beware of the deal of the century!
There are very good deals to be made in Thailand in real estate. And even extraordinary deals! But do not rush. The real estate market is globally healthy, the real estate agencies are professional, and laws frame the transactions. Therefore, there is no reason for a property to be sold below the market price. The apartment can be quite correct, but it is better to go a little further in its investigations.
That said, price differences can indeed be displayed for comparable properties on the same street. This happens especially in Bangkok. This is related to the condo’s amenities and its proximity to the subway or the Sky Train, which is a serious asset for getting around the capital.
Of course, the apartments closest to the stations are more expensive, but they also rent much better, especially to the expatriate community. As everywhere in the world, in Thailand, the location of a property has a huge influence on its price, at the purchase but also at the resale, which we sometimes tend to forget when investing.
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