South East Asia has always had a special appeal for me. I first began spending time there about 5 years ago. I love the organised chaos of the roads in Bangkok, the food that is cooked right in front of you, and the haggling at the markets. Amazing.
Altogether I have spent over 3 months in Thailand and I have so many fond memories, add to that the fact that it is halfway to Australia and QANTAS offers a stopover of only 45 minutes which gets you to Oz quicker. It's a great destination.
I usually spend a week stopover on the way back to the UK. It gives me a break after 2 gruelling weeks with the family and friends and the 2 hour massages for around £7. What more could you want? :)
So naturally l thought if I'm spending so much time here l might as well buy a property. Then naturally if I am prepared to buy and have done extensive research why wouldn't my investors also buy as well?
Having looked into Phuket property before the tsunami, I thought I would check out Pattaya (pronounced “Pat-e-ya”) which is only around 1 hour 20 minutes drive from the new international airport in Bangkok (the capital).
Pattaya is a seaside town (tick-These ticks and crosses are my due diligence) with a new highway which will mean it will only take around 45 minutes to get to and from the airport. (tick).
Pattaya has 3 distinct property markets.
The first is the local market. The properties are priced between 1 and 3 million Baht (70 Baht to £1) So £15,000 - £45,000. Sounds good right. Well maybe not. Unless you are a local it's unlikely you would buy at this level.
You could only rent to locals and the investment returns I don't feel would be great enough. (Cross)
The second and most interesting market is the 20 to 30 million Baht. £285,000 - £430,000. Incredible you say? Well thats what I thought too. In fact forget incredible — l was downright shocked. But this is the market of the off plan speculators. In my books, another word for 'speculator' is 'gambler' and hopefully you know by now what I think of gamblers.
I do believe you can make money on these, but only by 'flipping' before completion but obviously there are no guarantees with prices already so high. Incidentally, this market has seen an incredible amount of growth so that waterfront apartments are as expensive as central London, Sydney or New York. (Cross)
I feel that this market has been driven by paper gains rather than underlying fundamentals. I see this happen quite often, and it's one of the reasons I deal in properties 99% of people would rent.
The final level is the 5 to 9 million Baht. So £70,000 - £130,000. This is the retirees' and expats' market. You would be more than happy with these houses. 3-4 Bedrooms, large open spaces, ensuites, parking and best of all - air conditioning.
These I feel would be ideal for investment and present your best opportunities. (Tick)
Rentals are great as a lot of major multinationals have offices in Bangkok and the expats are happy to commute up daily or it's cheap enough to rent a place in Bangkok during the week while spending the weekend home in Pattaya. (Tick)
As an investor in Thailand the first thing you have to realise is that you cannot own land (Cross) so at present you have two choices: either buy in the name of a Thai company and have Thai nationals who own it (but you have a signed deed saying you can replace the Thai nationals at any time). It's a reasonably secure way of buying.
The other way and the way that is becoming more accepted is a freehold/leasehold similar to what we are use to in the UK. A lot of new builders are structuring ownership this way.
BUT… The Thai government has an unfortunate habit of changing laws so you may find yourself at the wrong end of a change. They made a decision early in 2006 that effectively stopped or severely curtailed foreign ownership (Cross) and the stock market began to spiral downwards so rapidly that they changed the law back by day's end. This sort of government backpeddling is a potential warning sign. (Cross)
The country has had 18 coups since 1932, although the past 15 years have seen none until 2006. Whilst they have all been peaceful coups, they still create political instability. (Cross) On the other hand a coup to a Thai person is probably like on of our Labour politicians voting with the Lib-Dems so it's not that big a deal in reality.
Most coups have been backed by the King. Thai people have an amazing allegiance to their king, wherever you go in Thailand you will see him, and as long as the King has backed the coup everything is alright. (Tick)
The King is the real power in Thailand, he has been an active participant and a representative of the people, and is a stable force in a thriving country. (Tick)
The problem Thailand faces is that the King is getting old and may one day pass the throne onto his young son who is renowned for irresponsible antics. So no one really knows just how he will take to the position of King or whether the people will take to him. This could cause an instability in the investment market. (Cross)
One of the biggest things overlooked when inexperienced investors seek out exotic new investment regions is how to get your money back. Oftentimes the capital growth is fantastic, so your £20,000 investment doubles and doubles again (so you now have £80,000). This is a paper profit until you actually sell it or remortgage it.
So the essential question is not often will I make money? but how will I get paid? or who will sell it for me?, who will buy it from me?, how much tax will l pay?, how much will I have leftover? Or if you don't want to sell it how will l make the equity work for me?.
Often the answer is you won't. You won't remortgage it and you won't sell it, or if you do you'll need to accept considerably less than you want for it.
In Thailand mortgages are very tight. The Asian economic crisis hit Thailand particularly hard, and in fact they've only just now started continuing a number of concrete highways which stood unfinished and vacant above the ground level. These massive highways stretch for miles with no entrance and no exits and are amazing to see.
The bottom line is Thai banks don't trust farang (foreigners) so you might be made to jump through hoops just to get a 50% mortgage. And if you thought getting a mortgage was hard, try remortgaging. So that kind of leaves selling as the option which kind of goes against our entire philosophy.
All in all, I decided that it would be better to rent out a 5 star hotel or villa on the beach for 2 weeks a year than to own a property which has so many variables.
If you are interested in buying in Thailand, you can definitely make some money but as always 'Do your due diligence?' I am happy to give you the research that we undertook before I went if you are interested.
Live with passion,
Brett :-)
PS. I love Thailand and if you get to go make sure you hire a bike and get out into the real Thailand rather than just around the cities and tourist places. The people are lovely and the food is soooo good.
------------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
The Best Time To Buy Is...
Now.
Yes, it's a cliche, but allow me to explain why it holds true in all markets.
In our business we love property values that grow quickly because it builds our portfolios and makes our investors happy with their decision to purchase. The flip side is that while this is happening the demand for property is good and developers offer less discounts which means you need more money to invest in property and therefore less people want to invest (or at least the sales are more painful for them.)
The trick is to view a constant return that you will achieve.
So — when developers give you the big 15% discount, the market is probably stagnant, so you'll see a net return of 15%. But when the market is galloping, your capital growth will be at say 7% and your discount will be lower at say 8%-10%. Your net return may be around 15%-17%.
Either way you are making around the same return even though you might not see it.
Of course, this is a massive over simplification since there are so many factors that l have overlooked but the important thing is this: you are going to need to invest some money. How much will depend on the market and the structure.
If you buy in a stagnant market then you get in cheap but you have to cash flow the ongoing costs so it's good for your capital and bad for your cash flow. If you buy when it's a hot market it costs you more capital but because of the growth your cash flow is better.
I hope this explains why the answer to the age old question of 'When should you buy?' is always Now, today, right this moment!!
-------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
Yes, it's a cliche, but allow me to explain why it holds true in all markets.
In our business we love property values that grow quickly because it builds our portfolios and makes our investors happy with their decision to purchase. The flip side is that while this is happening the demand for property is good and developers offer less discounts which means you need more money to invest in property and therefore less people want to invest (or at least the sales are more painful for them.)
The trick is to view a constant return that you will achieve.
So — when developers give you the big 15% discount, the market is probably stagnant, so you'll see a net return of 15%. But when the market is galloping, your capital growth will be at say 7% and your discount will be lower at say 8%-10%. Your net return may be around 15%-17%.
Either way you are making around the same return even though you might not see it.
Of course, this is a massive over simplification since there are so many factors that l have overlooked but the important thing is this: you are going to need to invest some money. How much will depend on the market and the structure.
If you buy in a stagnant market then you get in cheap but you have to cash flow the ongoing costs so it's good for your capital and bad for your cash flow. If you buy when it's a hot market it costs you more capital but because of the growth your cash flow is better.
I hope this explains why the answer to the age old question of 'When should you buy?' is always Now, today, right this moment!!
-------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
The 2 greatest concepts in property!
Lets look at the 2 most important financial principles that will guarantee you become a Set and Forget property millionaire.
The first is Leverage, it is the lesser of the two but means that we can use the second much more effectively. Leverage from a property perspective means borrowing capital to invest. It will take the form of either a mortgage, personal loans, credit cards. I will leave the last 2 out and focus exclusively on the mortgage aspect.
A mortgage represents huge capacity for leverage.
Say you had saved £10,000 assume you could buy a property with this and that property after a year was worth £20,000. You have made £10,000 or 100% return on investment.
In this example you have not used any leverage.
Now lets say you took that same £10,000 and went to a bank and borrowed £90,000 at 10% interest rate. Then using the £10,000 and the amount borrowed you bought 10 properties with your £100,000.
At the end of the same your each of your 10 properties has doubled to £20,000. You have just made £100,000 less interest of £9,000 (£90,000 x 10%) so £91,000. So without leverage you made £10,000 and with it you made a cool £91,000. Hopefully you can see why leverage is such a great facility.
The second and more powerful concept is Compounding. Albert Einstein said of compounding that it was the 8th wonder of the world. I am inclined to agree.
Compounding works like this, you invest £1 as a child and each year you are paid 10% interest. So at the end of:
» Year 1 - £1.10
» Year 2 - £1.21
» Year 3 - £1.33
» Year 4 - £1.46
» Year 5 - £1.61
» Year 10 - £2.37,
» Year 15 - £3.83,
» Year 20 - £6.16,
» Year 25 - £9.92,
» Year 30 - £15.98,
» Year 35 - £25.74,
» Year 40 - £41.45,
» Year 50 - £130.08
Now think for a moment if you added £1 at the end of each year. The results would be outstanding:
» Year 10 - £20.12
» Year 20 - £69.73
» Year 30 - £198.39
» Year 50 - £1,397.69
You will notice that what would have taken 32 years will now take just 10 years. Then think about after 50 years the results are amazing. £130 versus £1,397. You will notice that in the first few years you will not notice much effect but as the years go on the effect is massive.
The reason compounding works is best explained in my all time favourite book on finances. The Richest Man in Babylon by George C Classon. How therefore may we put our gold to work?; My first profitable investment was a loan I made to a man named Aggar, a shield maker. Once each year did he buy large shipments of bronze brought from across the sea to use in his trade. Lacking sufficient capital to pay the merchants, he would borrow from those who had extra coins. He was an honorable man. His borrowing he would repay, together with a liberal rental, as he sold his shields.
Each time I loaned to him I loaned back also the capital increase, but its earnings likewise increased. Most gratifying was it to have these sums return to my purse.
I tell you, my students, a man’s wealth is not in the coins he carries in his purse; it is the income he buildth, the golden stream that continually floweth into his purse and keepth it always bulging. That is what every man desireth. That is what thou, each one of thee desieth; an income that continueth to come whether thou work or travel.
Great income I have acquired. So great that I am called a very rich man. My loans to Aggar were my first training in profitable investment. Gaining wisdom from this experience, I extended my loans and investments as my capital increased. From a few sources at first, from many sources later, flowed into my purse a golden stream of wealth available for such wise uses as I should decide.
Behold, from my humble earning I had begotten a hoard of golden slaves, each laboring and earning more gold. As they labored for me, so their children also labored and their children’s children until great was the income from their combined efforts.
If you would like a simply definition - Compound Interest is the interest which is calculated not only on the initial principal but also the accumulated interest of prior periods.
Understand and use both these concepts and you are a huge step towards that armchair.
Live with passion,
Brett Wood
-----------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
The first is Leverage, it is the lesser of the two but means that we can use the second much more effectively. Leverage from a property perspective means borrowing capital to invest. It will take the form of either a mortgage, personal loans, credit cards. I will leave the last 2 out and focus exclusively on the mortgage aspect.
A mortgage represents huge capacity for leverage.
Say you had saved £10,000 assume you could buy a property with this and that property after a year was worth £20,000. You have made £10,000 or 100% return on investment.
In this example you have not used any leverage.
Now lets say you took that same £10,000 and went to a bank and borrowed £90,000 at 10% interest rate. Then using the £10,000 and the amount borrowed you bought 10 properties with your £100,000.
At the end of the same your each of your 10 properties has doubled to £20,000. You have just made £100,000 less interest of £9,000 (£90,000 x 10%) so £91,000. So without leverage you made £10,000 and with it you made a cool £91,000. Hopefully you can see why leverage is such a great facility.
The second and more powerful concept is Compounding. Albert Einstein said of compounding that it was the 8th wonder of the world. I am inclined to agree.
Compounding works like this, you invest £1 as a child and each year you are paid 10% interest. So at the end of:
» Year 1 - £1.10
» Year 2 - £1.21
» Year 3 - £1.33
» Year 4 - £1.46
» Year 5 - £1.61
» Year 10 - £2.37,
» Year 15 - £3.83,
» Year 20 - £6.16,
» Year 25 - £9.92,
» Year 30 - £15.98,
» Year 35 - £25.74,
» Year 40 - £41.45,
» Year 50 - £130.08
Now think for a moment if you added £1 at the end of each year. The results would be outstanding:
» Year 10 - £20.12
» Year 20 - £69.73
» Year 30 - £198.39
» Year 50 - £1,397.69
You will notice that what would have taken 32 years will now take just 10 years. Then think about after 50 years the results are amazing. £130 versus £1,397. You will notice that in the first few years you will not notice much effect but as the years go on the effect is massive.
The reason compounding works is best explained in my all time favourite book on finances. The Richest Man in Babylon by George C Classon. How therefore may we put our gold to work?; My first profitable investment was a loan I made to a man named Aggar, a shield maker. Once each year did he buy large shipments of bronze brought from across the sea to use in his trade. Lacking sufficient capital to pay the merchants, he would borrow from those who had extra coins. He was an honorable man. His borrowing he would repay, together with a liberal rental, as he sold his shields.
Each time I loaned to him I loaned back also the capital increase, but its earnings likewise increased. Most gratifying was it to have these sums return to my purse.
I tell you, my students, a man’s wealth is not in the coins he carries in his purse; it is the income he buildth, the golden stream that continually floweth into his purse and keepth it always bulging. That is what every man desireth. That is what thou, each one of thee desieth; an income that continueth to come whether thou work or travel.
Great income I have acquired. So great that I am called a very rich man. My loans to Aggar were my first training in profitable investment. Gaining wisdom from this experience, I extended my loans and investments as my capital increased. From a few sources at first, from many sources later, flowed into my purse a golden stream of wealth available for such wise uses as I should decide.
Behold, from my humble earning I had begotten a hoard of golden slaves, each laboring and earning more gold. As they labored for me, so their children also labored and their children’s children until great was the income from their combined efforts.
If you would like a simply definition - Compound Interest is the interest which is calculated not only on the initial principal but also the accumulated interest of prior periods.
Understand and use both these concepts and you are a huge step towards that armchair.
Live with passion,
Brett Wood
-----------
Brett Wood is an author and property investor. He runs a successful property investment consultancy in the United Kingdom. His strategies have helped thousands of investors to get on the property ladder and build successful property portfolios.
Originally from Australia where he was a successful mortgage broker he moved to the UK in 2002 and since then has build a massive portfolio of off plan and new build residential properties in the UK, Spain, Slovakia and Australia.
For further details contact Brett Wood at http://www.yourpropertyclub.com or directly on 0870 042 1188.
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