Buying an apartment building in Udon

Post by **robinudon** » August 18, 2012, 9:33 am

Hi,

I have been looking at apartment buildings with between 10-20 rooms for rent.
They are usually occupied by students & are in the thb2000-thb3000 range.
It seems to be a reasonable % return on investment & the tenants aren't demanding about the rooms & facilities.

Has anyone had experience in this type of investment, if so are there any real pitfalls & is it worthwhile long term.
I am really looking to set up the lady & hopefully recoup my investment along the way, maybe a dream in Thailand...555

Any help, advise is welcome,

Rob

Post by **rct** » August 18, 2012, 10:16 am

Just for an example, what is the approximate price range of the building to buy it, and thus cost per room to buy?

Will help understand the yield.

Post by **BobHelm** » August 18, 2012, 10:50 am

Unless you have considerable experience in this area & a deep knowledge of the area that you intend to buy in & probably 'friends in high places' I would suspect that the chances of an actual return on assets are about as large as owning a bar.

If you have the capital to invest in a 20 room apartment block & want to be a landlord then you would probably be better investing it in a house in 'Falanland' where the laws are designed to protect both the landlord & tenant.

Do not forget that YOU cannot own the land. Even if done as a business & through a company the Falang ownership must be in a minority to the Thai.
That is a huge risk to your capital...
As for the income side there are also all sorts of risks. Tenants fleeing in the middle of the night, property damage, rent collection, officialdom hassle to name but a few off the top of my head.

Do what you like, it is your money after all, but you must consider the money lost immediately that you have bought the building. ANY return will be a bonus....

Post by **trubrit** » August 18, 2012, 11:52 am

Rather cynical but true Bob .My daughters inlaws own a 40 room apartment near Nong Sim, quite a basic place but only 2k a month plus electric and water. Their tenants are mostly students who are a consistent headache. They crowd 4or 5 into a room designed for 2, throw roudy parties sometimes involving the police being called. drug arrests have been made from time to time. Of course with so many kids it's also difficult to pinpoint who's responsible for paying the bills. The owners live in a house adjoining. They are now so fed up that they are demolishing both the apartments and their house and have plans to rebuild a more upmarket place and concentrate the tenancies to adults, mainly from the teaching and government professions. They have done their research and found there will be a ready market for them, limiting occupation to two persons per room .They have set a budget of 6mill for the rebuilding. When I pointed out , as they are both retired and in their sixties, there is no chance they will see a return on their investrment in their lifetime, I was told, it's not for them but for their children and grand children and of course my step daughter will also benefit .

So to the Op I would say. If you are looking for a living from it now, forget it, there are many better ways of investing money for a more immediate return. If however you are seeking to provide security long term for the generations to come. Go for it .

Post by **robinudon** » August 18, 2012, 1:56 pm

Thanks guys for the advice.

It was really for the lady but it appears that it is too big a pill to swallow, being a landlord to a bunch of losers.
I will look for an alternative solution, the object is to make the lady accountable now & self sufficient eventually.
We won't be here forever despite popular belief to the contary....

Any ideas are welcome, would like to think I would see at least some of my money back before I go...555

Cheers,

Rob

Post by **Ray.Charles** » August 18, 2012, 9:47 pm

Rob, my wife is doing what you seem to be looking for. I also know a Thai/American couple who not only owns/operates a ‘room-for-rent’ for the student-types, but is also looking for opportunities to own more. The couple lives in a nice apartment in the building. Obviously, the personality style suitable for any career, or small business ownership, especially for a landlord should match that of the person.
Here is the outline of my wife's project:
Location: We live in a village about 12 km west of the Ring Road and Non Sam Rong corner. She preferred a location that would be on our way to the city, and within 1 or 2 km of the Ring Road as her customer base will be working in Udon city. It should also be close to markets, small shops and eateries. She has bought the land now. It is connected by a private driveway to the main road behind a complex of 4 shop-houses being built.
The building: 27 rooms (4m X 6m to 5m X 7m) in three stories, with some covered parking space. Out of the 27, one will be for the live-in maid/caretaker, and another one she will keep for her use.
Engineering: She expects the drawings to be completed and approved by October.
Construction: She is looking for a contractor to start the work in October/November. She has been told to expect to pay 6,000++ baht/square meter for construction.
Expected Rent: 2,500 to 3,200 baht /month/room.
Rate of Return: At about 100,000 baht per room for the land, and construction cost of about 250,000 baht per room, one can expect about 6% RoR with inflation protection.
The reason behind putting in these details in the post is to invite comments/suggestions/warnings from the readers. In particular, she would welcome recommendations for a contractor.
She(we) would also very much welcome suggestions from trubrit and others who writes ‘If you are looking for a living from it now, forget it, there are many better ways of investing money for a more immediate return”.

Post by **Bertie_Wooster** » August 19, 2012, 4:50 am

I always wondered if a female only type apartment, no male guests allowed, would mitigate some problems.

Post by **farlong68** » August 19, 2012, 4:56 am

how about senior only or assisted living medical labour very afforable in udorn john

Post by **robinudon** » August 19, 2012, 10:06 am

farlong68 wrote:how about senior only or assisted living medical labour very afforable in udorn john

I don't think Thais & most farangs in Udon could afford that type of service.
In my country, it is very expensive to be old & sick, particulary if you need care.

Straight up rental accom. to decent people is a better way.
Cheap rent attracts the worst tenant generally, keep the rents higher, good accom. & better tenants.

Post by **Ray.Charles** » August 19, 2012, 11:09 am

Interesting ideas.
We have seen a 'female-only' building.
But, never seen a 'senior citizen' type one. Is there a market in senior expats willing to live in an age restricted building with options, e.g. living assistance, organized shopping trips, club facilities, in-house meals, etc.

Post by **Jed** » August 19, 2012, 11:43 am

I've always thought if I had the money, that an "assisted care" facility would be a winner here.

Would be so much cheaper with Thai labor, caregivers, etc.

Not sure about the medical side though. Basic care would be possible; otherwise, transport to local clinics or hospitals.

After this, I reckon there's a niche for counseling: for expats, couples, cultural adaptation, addiction, phobias, tempers (?), etc. Not sure what this would involve license-wise, or if possible for a Westerner to do here. Maybe someone knows.

But a niche-specific apartment building in Udon sounds like a good idea to me...

Post by **parrot** » August 19, 2012, 12:04 pm

There's an apartment across the street from a friend of mine, renting to mostly university students. Locked gate at night. The owner lives in an adjoining home.....rules the apartment with an iron fist. My friend says no problems with trouble, noise etc.
Another friend had an apartment go up only a km or two away.....also renting to university students. No iron fist, open access day/night......much more noise/problems.

Another friend had an apartment style building near the Coke factory in Khonkaen. When she lived in an adjoining apartment, she had few problems. But then she allowed a relative to live there and manage the place. The apartments soon filled up with groups of traveling salespeople.......5-10 renting a single room. Your maintenance problems are going to grow along with the headaches.

Separate but related subject: There's an 'assisted home care' facility on the western ring road near Tanadorn Housing Estates. I have not been inside, but here's some websites for info:
http://www.udonhomecare.com/NP-15092-ร่วมงานกับเรา.html

As much as I'm not prepared to cash in the chips on living independently, we have a live in maid/gardener (on property bungalow). Husband/wife, they've been with us for a year....it's more of a luxury at this point in life, but I could envision it becoming a bit like assisted living further down the road. Impossible to do back in the US unless you've got money burning holes in your pockets. Quite easy to do here....the hardest part is finding quality workers.

Post by **douglas** » August 20, 2012, 5:57 pm

Hi,
Bob. inquired at the land office, in Udon, a couple of years ago. Can't remember all the details, about owning land in LOS, if you are not aThai. I was told, if you have a Thai bank account in LOS, with at least, i think, 100MB in it. Then you can, as a non Thai, purchase land in your name. Can't remember the exact time requirements. Otherwise you have only a 49% share in the land.
It might have changed now, i would like to know. Don't fancy another trip down to the land office.
Cheers Doug.

Post by **BobHelm** » August 20, 2012, 6:15 pm

1 Land ownership by foreign nationals

1.1 - Foreigners cannot own land in Thailand but (in theory) individual foreigners can own land up to 1 rai (1600 square meters) in specified areas for residential purposes through a Board of Investment regulation (section 96 bis Land Code Act) which requires in addition to the land purchase a 40 million baht investment into Thailand in specified assets or government bonds beneficial to the Thai economy. IF granted (unlikely) it is under strict conditions and the land must be located in specified areas and requires approval of the Minister of Interior. Moreover this ownership is not transferable by inheritance, therefore limited to the life of the person granted the right to own the land for residential purposes under this exception. In practice, even if you would be very rich, this is not a viable option. Besides this one exception land ownership in Thailand is strictly prohibited for foreign individuals read more...

1.2 - Foreign companies with substantial investments benefiting the Thai economy may have special privileges and exemptions for land ownership granted under section 27 of the Investment Promotion Act, under section 44 of the Industrial Estate Authority of Thailand Act or section 65 of the Petroleum Act (only for the duration of their business in Thailand) read more....

1.3 - The foreign controlled Thai company with a majority Thai shareholding (in number of shareholders and percentage of shares) is through preference shares the only vehicle available for foreigners to control their investment in land in Thailand. Even though land ownership by a partly (up to 49%) foreign owned Thai company is as such not illegal under Thai land laws, the legality and land ownership by most of these partly foreign owned companies is controversial if not illegal. The Thai government is since 2006 restricting and discouraging the misuse of Thai companies to circumvent foreign property ownership restrictions in Thailand. read more...

1.4 - According to section 93 of the Land Code Act, a foreigner who acquires land by inheritance as statutory heir can have ownership in such land upon a permission of the Minister of Interior. Note that section 93 applies only to ownership of land by foreigners under a treaty (section 86) and NOT to foreigners receiving land as a statutory heir from their Thai spouse. There is currently no treaty in place allowing foreigners to own land in Thailand, therefore no foreigner will be given permission by the Minister of Interior. They can inherit the land as a statutory heir, but cannot register ownership and must sell the land within one year from the date of acquisition.

http://www.samuiforsale.com/knowledge/o ... and.html#1

Are foreigners allowed to buy land or property in Thailand?

Thailand land law generally prohibits foreigners from owning freehold land in Thailand. However, there are various exceptions in the law regarding this issue. There are also other methods available for acquiring valid and legal rights to land and real estate in Thailand that do not amount to outright ownership.

What are the different ways of acquiring land rights or purchasing property in Thailand?

2.1 Land Leases: Although Thailand real estate law restricts land ownership rights to non-Thai citizens, foreigners may hold 100% interest in a Thailand land lease. Thailand lease law allows a 30-year maximum lease period, with the possibility of renewing the lease for additional 30 year periods.

2.2 Company Ownership: Thailand registered companies with majority Thai ownership are able to buy land in Thailand. In the past it has been common for foreign nationals to acquire an interest in Thailand real estate as minority shareholders in a Thai majority company.

2.3 Investment: Thai real estate law allows foreigners to buy and own a limited amount of land based on investment of 40 million baht for five consecutive years, provided that the land is used for residential purposes.

2.4 Thai Spouse: According to Thai real estate law, a Thai spouse of a foreigner may be allowed to buy land or property in Thailand in his or her own name. However the married couple may be asked to sign declarations at the Land Department to state that the funds used are the separate property of the Thai spouse. This may have the effect of waiving any claim on the land or property by the non-Thai spouse. This may become problematic in a divorce case as it may be difficult for the non-Thai spouse to prove that the land was marital property. In this case, a skillfully drafted Thailand prenuptial agreement may come in handy to minimize the risk to the non-Thai spouse.

2.5 Usufruct Habitation and Superficies: A non-Thai may acquire a life term interest in certain types of property rights in Thailand. One example, a usufruct, is a right to use (and profit from) land and is similar to a leasehold but is non-transferable with some important differences.

http://www.thailand-lawyer.com/land_purchase.html

So, yes, you are technically correct douglas. With an investment of £2M you could legally buy a plot of land to build your home on, but not for other purposes.
The individual should probably also be examined under the mental health act as to their sanity.

Post by **maaka** » August 21, 2012, 10:07 am

good one Bob..2m UK Pounds for abit of dirt, is a bargain...hahahaha

Raymondo, greetings again matey ( and wifey too).

As to your question. You remember where we first met. Well I live /lived there on that road in a 20 sometime very run down apartment block that catered for students, and rats. The family that own it, took me in some years back, and they are good to me, so I stay there even though the place is dirty with that well worn look..it cost 2000b a month..they have 3 students to a pokey wee bungalow size room, its cheaper that way for the rural parents who send their kids to town for schooling, if they bunk up together with mates from the same school..

Old Mama had a tough looking muay thai dude act as security guard /handyman, and he kept the teenagers under control with his 1000 mile stare, and his partner acted as fairy godmother to the students when they had accidents on thier bikes, were being accosted by older boys, and things of that nature...the place is /was generally quiet thanks to Rambo, but the little buggers do drink like fish, and roar out the gates on thier motorbikes, but at least you can sleep at night if the dogs next door let you.

the place is full most of the time except when the kids have holidays and bugger off back countryside...like I said the rooms are very old and very dirty, you cant even scrub the dirt out, and the mattrass looks like its been peppered with buckshot from nibbling insects, that I am sure still live up my nose..That trip I met you, I actually slept on the tile floor, rather than risk that mattrass, but even then there was no lighting at night, but I managed , not sure my back did.I could only stay the week as someone was moving in after that..so in short Matey, there is demand even for dirty old places at 2000b. I think its a good idea if managed well and have a good security man about..I did notice that the BIB showed up every week for there tea money, signed a little book, but that was it..so there are outgoings...hahaha....

I meet a thai lawyer lady who build a new three storey , 9 room bungalow complex inside the Ring Road, by the harley shop, at 3000b a month..the rooms were the same size as Old Mama's but everything was brand spanking new, including the mattrass, and those rooms were snapped up by working couples, not students...anyway thats all I can add Matey...I still plan to catch up with you again hopefully this year..take care

Post by **Ray.Charles** » August 21, 2012, 12:07 pm

Maaka, my wife and I would be looking forward to seeing you this year, and would definitely like to have a dinner or two or three together.

Post by **maaka** » August 21, 2012, 2:13 pm

Rodger that Ray..sounds great.. I will pencil you in...hahahaha

Post by **aliasjohn** » February 19, 2016, 3:26 pm

Hi Rob
Did you go ahead and buy the apartment complex? If so how was your experience and are you glad you went ahead with it.
Cheers
John