Renting Vs. Owning in Thailand
The debate on whether or not you should rent or own a place in Thailand is always a hot topic amongst settled Expats. We can examine a pro’s and con’s list of each and then see which side of the scale has more weight, but I think it would be more prudent for me to start by saying, RENTING OVER BUYING ALL DAY LONG. Some readers may think I’m just stating the obvious, but if that were true why are there so many expats who have bought properties all over the country? Why are condos being built left and right, many of which market heavily to foreigners? Sometimes I don’t get it. There are a few instances I can think of where it would make sense to own, but mostly not.
Wouldn’t it be funny if I warned all of you: “Don’t buy a house in your girlfriends name; she’ll probably kick you out of it and live there with her Thai husband you didn’t know about?” I think more highly of the readers on this site than to go there with you. We all know better. My advice to total newbie’s has always been to never put anything under your girlfriend’s or wife’s name no matter what. Being married to the woman makes no difference, and if you have children with her it makes only a slight difference.
Bad reasons to buy a place in Thailand
1) You can afford to. From the time many of us started learning about personal finance we were all taught that you have to strive to own the place you live in. If someone has the money to own a place they like in Thailand it’s almost instinctual to want to buy.
Consensus- Not a good reason. Just because you have money doesn’t mean you have to spend it. Just because you rent in Thailand (or many other places for that matter) doesn’t mean you aren’t being diligent with your personal finances.
2) Security. If you own a home you never need to worry about finding a place to live. You never need to worry about rents going up to levels you can’t handle. You can rest easy because there isn’t anything major to worry about once your home is paid off.
Consensus- Not a good reason. While it’s good to think long term and to always plan ahead, it’s not a good idea to let fear of the unrealistic influence your financial decisions. It’s true that rents will go up over time; they’ll be higher in 20 years than they are now. But they’re not going to be unreasonably high. Last I checked Thai people live here too, and they drive the rental market in 95% of the country. Thai’s have to be able to afford the rents to keep the demand and supply in check. The worst case scenario in 20 years is that only the most popular cities become pricey. Thailand’s a big enough country to accommodate! Provided you aren’t twelve years old, there’s always going to be a great place in Thailand for you to live at a relatively affordable price. It may not be where you live now, but somewhere. Your grandchildren may not be so lucky, but you’ll be fine.
3) It sounds better. Some people want to be able to say, “I own a house in Thailand.” Renting to them shows a sign of ineptitude in life.
Consensus- It’s a truly ridiculous reason. This isn’t our country; there are strings attached to buying a property that are obviously concerning. If people’s judgments of you have an impact on your financial decisions it’s time to re-evaluate life.
4) Investment. Why line someone’s pocket while their property goes up in value year after year. By buying a property you can make money over time and avoid paying rent.
Consensus- Not a good reason. Rents in Thailand compared to value of properties are lower than in many other places in the world, especially on houses. If you buy a small house for 1.8 million baht and you rent it out for 10,000 Baht (reasonable example), it’ll take you 15 years worth of rent to equal the cost of the home (not including property maintenance). The renter gets the better deal there. For nice condos the rents are higher compared to the values, but the supply has far exceeded demand. There are so many vacant condos on the market, so it hardly seems like a good investment. If you’re buying purely for the sake of making an investment there are definitely better options.
Good Reasons not to buy
1) No financing options. Good luck trying to get a mortgage!
2) Laws don’t favor you. Forget putting it under someone's name; and there’s been heat on the loophole that lets you buy under a token company.
3) Better rate of return on other investments.
4) The supply of nice condos dwarfs the demand, and yet prices on new construction/pre-construction are higher than they should be.
5) The upkeep on house is a pain in the ass as the years go by.
6) Selling a property in Thailand is an uphill battle.
The only time I don’t have a problem with someone buying a place is if they’re very wealthy. If you want to buy a piece of land where you can dock your boats or have a man-made lake, then by all means go for it! If you’re wealthy enough where the poor investment on a place in Thailand is acceptable and basically meaningless to you because you have so much, then I guess there’s nothing stopping you. If you want to buy a piece of land because you intend to make money on this land with a well thought out business plan to put a hotel or factory up, then that’s a whole different ball game. So there are some exceptions, but the average Joe is certainly better off renting.