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INVESTING IN CONDOS IN THAILAND
At the moment the Baht is back to 34 baht = $US1 is a good time to buy condos in Thailand for living only not renting. Be careful and check the background of where you are buying and if they have an effective Juristic Managemement Committee in place & the complex owners have good credentials; and the building are satisfactory. Some companies like a Japanese Company we know ( now partly owned by the large Saha Group but has no connection to this issue) have failed in their attempts to satisfy their buyers. The Japanese Thai company who owns Twin Peaks in Chiangmai did not assist some foreign owners of their newly built complex. This is perhaps the best developement in Chiangmai yet some of those investors (foreigners) have had little satisfaction in having problems remedied by the owner & remains the same. Problems like plumbing and not finishing the condos or abiding by the contract are some fo the issues and we understand some realties have not been paid their comissions. The Thai owner of The Punna complex on the other hand helps and assists foreigners so this is the difference.
The problem will be like many finance companies will find out, the customer or investor getting a bad deal from the owner or Company of the complex & subsequently goes into liquidity mode, cannot service payments to contractors & suppliers or changes its status as in the case of this Company selling shares out to another to overcome their problems. However the case has no changed at all and they are building more. Even contracts are not adhered to and to litigate can take 6-12 months at the very least. Now Condominium complexes must hard sell and look at the building costs going up monthly to cut even or to make a profit but don't listen to sales pitches thats there only 2 left etc-- if the complex stops you lose your money or most of it as by the time you take it to a Thai Court you may find the payments you made are taken up by Court costs and appearances plus legal fees. A case on the superhighway 2 condos were sold to Thai buyers under the impression that foreigners would flock to the new CBD new ofiice district. Many bought on this assumption & within 6 months 2 floors of owners could not service their payments & the condos are hard to even rent. To date there is no CBD office complex.
THAIS BUYING CONDOS
The main risk is borrowing from the bank and can one service the mortage of the condo they wish to buy. Low deposits and 30 years to pay is a long time to pay back a loan especially when many and forget the sales talk of high rental returns and fantastic capital gains -- this is total rubbish. I have seen Thais scramble to buy a condo complex in Chiangmai near Carrefoure and the sales pitch was this area will be the CBD of Chiangmai and foriegners will flock to the area. Oversubcribed within 6 months 2 floors had Thai owners who had second thoughts and started to deaault on repayments. To date 2 years later nothing has changed let alone no CBD has been created??? Remember Thais have credit cards; a car on finance and other monies to pay before you look at the basic cost of living. Telephone marketing by bank staff on commission today allowing Thais access to money for cars, bikes, businesses etc is on a high to get even more Thais into debt. Yes bedt as thats what Taksin Shinawatra has done to the majority poor people in Thailand. Think about it. Marcos (Phillippines) Suharto ( Indonesia) used the strategies is you give plenty opf money to the poor you indebt them fast. They then become pawns for the ruling party. Shinawatra did exactly the same and look what is now happening in Thailand. Remember gasoline has tripled in 10 years and the cost of utilities increased by the same amount.
Here is a simple rule immaterial of the interest rates: When you borrow 1m baht heres what you will pay back: you double the borrowed sum which is now 2m baht and halve it again ie 50% of the loan which now = 2.5m baht you will pay back over the loan term. This is a safe rule of thumb as you must look at interest rate rises, changes in your income, lifestyle, additions to the home, utility and cost of living rises, inflation, holidays, car repairs, school fees, etc. Its now a lot of money to pay back and now can you service this loan in 5 yars time??? Think about it. It so easy to borrow and once you get your loan you are on a high but 30 years is a long time to wait --- in fact a lifetime of paying back money into a hole ---- can or will you be able to do it; what happens if you have an accident or injury or your life changes or your circumstances mean you cannot keep up --- "Once your mortgage goes up, for the first couple of months you might manage, but then you start getting behind," or you want to buy a new car or find out you have used your credit card too many times. This is when you start to stress as you have budgeted from the start using your income to pay back when suddenly these changes in your life occur to manage repayments. Do not listen to sales pitches from Realty staff as they are only interested in their commission, not your ability to repay your loan. Only buy if you need to buy and have the spare cash for that rainy day --it may just pay off. Do not buy because you feel its a good deal and you think in 20 years time you will have a bargain as it will not match your repayments; let alone the 3:1% ratio of income against loan repayment. Today its no where near this ratio so watch out. Better to only have what you need but who are we to say whose right
WHY INVEST YOUR MONEY IN A FINANCE COMPANY
TO A PERSON YOU DON'T KNOW THEN LOSE IT ALL
As more finance companies are going against the wall why are you investing and entrusting your life savings to a finance company. Finance companies undermine monetary policy with a cost advantage gained by attracting deposits from "illusionary" investors who do not realise they are lending money at rates too low for the risk they are taking. If this sector were subject to the same continuous disclosure obligations as listed companies the flow of discounted money into the property market would reduce, and cool that market.
Our advise don't invest in Finance Companies at the moment --buy some gold instead or wait as a bubble is starting to grow & keep the money in the Bank. Buy the gold but put into your own bank safety deposit box not the sellers. Safeguard your fund yourself and do not entrust in a finance company who SAYS they have a portfolio too good to be true-- you will lose.
WHY USE OUR SERVICES:
If you have a property to rent, sell or lease in Thailand then WRITE TO US as we can advertise for you in our hardcopy news in Chiangmai .
BANGKOK REAL ESTATE go to : www.bangkokrealty.biz
NB: The Thailand Real Estate Industry is unregulated & you should only use Realty Companies who are members of the Thailand Real Estate Broker Association. If you are not sure please ask the Realty Company you are dealing with what their REBA number is & if a foreigner, does he she possess a work permit ( blue book to view ). The Realty ID card should be a number like ours: 4601-175-001. On this card yellow baked green typed card will be a start date and expiry date with photo of the Realty person. You are warned that using unregistered Realty Companies you may have little or no comeback. Companies registered with the Broker Association must uphold & maintain certain standards & etiquite. Play it safe and you will not lose.
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