Some Words of Advice for Newbies
Due diligence is the name given to the process of investigating the details of a potential investment, including the verification of material facts. Wishful thinking, on the other hand, is an interpretation of the facts as one would like them to be rather than as they are.
If you regularly visit online expatriate forums, you will read plenty of stories about people who bought property in Phuket, or anywhere else in Thailand, and afterwards found themselves with big problems on their hands. Which approach do you think most of those investors took when they decided to buy their property?
In fact, many people buying real estate in Phuket appear to exercise less due diligence than they would when purchasing a property in their home country. There are a number of reasons for this. One reason is that decisions are sometimes made in haste due to the time constraints of overseas trips. Alternatively, difficulties and misunderstandings can easily arise when trying to evaluate and negotiate purchases from a distance. Another reason is the language factor, which makes doing your homework just that much more difficult. The intoxicating allure of a foreign country and the fact that Phuket property for sale is relatively inexpensive can also result in caution being thrown in the wind.
Thailand is unique in many ways and it does have its share of problems. But it is not an inherently bad place in which to invest in real estate. It is, however, surely a bad place in which to be a lazy, poorly-informed or inept investor.
There are a number of factors you need to be aware of before committing to any real estate purchase (or long term lease) in Thailand. These include:
- The nature of land titles in Thailand (if you propose to buy or lease land)
- The legal framework that determines how foreigners may (or may not) own or control land, buildings or apartments/condominiums in Thailand.
- Current market conditions such as sales price (both asked and achieved) for both new and older property, rental prices, time taken to sell or rent and
- The fact that in Thailand there can be a huge difference between what is written in the rule book, what you will be told by various people involved in the process, and what actually happens in real-life.
Information concerning the first point can easily be obtained by some research over the internet. You can simply use a search engine to identify relevant pages within, for example, the websites of Thai law firms. This material will give you a good basic knowledge about the subject. Some websites also provide English language translations of relevant Thai laws. If you are interested in condos rather than houses or villas, you might want to locate and study the relevant sources such as the ‘Condominium Act’ which was amended in 2008 to give the buyers more protection.
Reliable information on the second point is more difficult to find, as the topic is complex, the information sources more dispersed, and there is a great deal of misinformation in circulation. Again, a good starting point is the websites of the more reputable Thai law firms AND reputable real estate agencies in Thailand.
Generally speaking, the only real estate in Thailand that can be owned by foreigners is certain condos or buildings built upon land owned by a Thai. These controls on foreign ownership are a major constraint on real estate investment in Thailand and are not about to be liberalized any time soon. Many foreigners seek loopholes or alternative means of acquiring or controlling real estate, but most of these methods feature an element of risk or uncertainty and some are even illegal.
Some of the procedures more commonly discussed in the media or online include:
- Buying through a Thai company
- Buying land in the name of a child
- 30 year leasehold
- Buying land in the name of a Thai spouse with various protections in place such as usufructs, leases, or mortgages
Obtaining accurate real estate market information is equally problematic and takes a great deal of determined searching. There is information out there, but it is neither integrated nor particularly user friendly. Much of it also tends to address only limited segments of the real estate market.
With regards to the last point, many people who are new to the process and idea of buying property in Thailand and just started their research, bemoan the fact that they are having difficulties in obtaining a clear and precise answer to their questions. These people have to understand and realize that this is not Europe or Australia but Thailand and that there often is no precise answer. This is not to say that research is pointless, but it does not mean that you must develop a certain level of general knowledge and then exercise your own judgment.
As well as information that is specific to real estate investment, it is also recommended to spend some of your time to inform yourself about other related issues. What is the best way to transfer your money to Thailand, how to select a bank and open an account and the nature of Thai tax regulations. Factors such as these can have a significant impact on the cost of your investment.
To conclude all the above, I am sure you can agree that you better not go the distance on your own, but that you should get assistance from reputable, experienced professionals.
We here at ‘Tropical Properties’ – Real estate, can assist you with all the above matters.
Source: www.property-report.com