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Monkey Butt Holdings: buying land in Thailand (part 2 of 3)

9/29/2022

12 Comments

 
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​I just closed on a piece of land here in Thailand, so I thought I’d jot down a few notes.
 
My friends in the real estate and mortgage biz in the US will get a kick out of this, so enjoy part 2 of 3 (and click here to read part 1).
 
***

  • I think the best part of this whole entire experience is that the Thai government let me name my corporation anything I wanted. 
 
Really? ANYTHING?
 
I settled on “Monkey Butt Holdings.” (T-shirts and swag coming soon.)

  • I kept waiting for someone to stop me, pulling me aside and saying, “No, no, you can’t do that with a business here,” or the adult in the room to chastise me, but alas, Monkey Butt soon became official.
 
  • Corporation formed (without having to look under bridges for homeless board members), the next step was to make an offer. The negotiation took place almost strictly between the two Thai wives, with all of us foreign dudes on the sidelines scratching our heads.
 
  • I offered to put a 20% deposit down…but they wanted more! 
 
  • Corporation formed (without having to look under bridges for homeless board members), the next step was to make an offer. The negotiation took place almost strictly between the two Thai wives, with all of us foreign dudes on the sidelines scratching our heads.
 
  • I offered to put a 20% deposit down…but they wanted more! ​

There are no rules or standard to that, but they just wanted some quick cash up front. They even asked for a bigger down payment, to which my buddy’s Thai wife got heated and threatened to call the whole deal off. So, the seller’s wife acquiesced, and we settled on 20% down.

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  • There are no title or escrow companies here! The deal was registered through a local authority who is sort of like a village chieftain. But it’s not a primitive setup at all, as real estate attorneys and official documents are involved. 
 
  • There’s no earnest money deposit with your original offer, you just hand over the whole deposit immediately once you agree on a price and then draw up a contract. 
 
That’s right, the sellers get to hold onto the deposit! If you back out of the deal for any reason, you better believe you lose that money.  

  • Financing isn’t available for foreigners through Thai banks. It may be possible, but you’d probably have to have a ton of money in a Thai bank, a business and plenty of 
collateral here, official residency, etc. 
 
The rates would be sky high and the payment window very small by our standards. Some foreigners may get So, I had to pay cash.
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  • Remember that when many foreigners buy property in Thailand, they want to pay cash. As I mentioned, Thailand (and especially the Pattaya area where I live) is a huge bank/laundry mat for foreigners who want a safe place to park/clean their money, often times they scoop up condos, buildings, or businesses as quickly as possible. 
 
Property here is particularly popular with Chinese buyers and often Russian, Indian, etc.
 
  • That’s especially true of new condos. I remember seeing a new condo development that was just in the presale stage. Driving by one morning, there were about 50 people in line, most of them holding duffel bags or designer bags. They were filled with cash! 
 
This group of people in line were mostly Chinese nationals who were holding bags of cash right there in the street to put down a deposit on a condo - or a few of them – sight unseen! They didn’t even need to go look at the units!
 
  • Where else in the world can you hold a bag of cash on the street and not worried about getting jacked?!

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  • I did open a Thai bank account just to hold the money I saved in the three months before we closed on the deal. To open the account, they wanted my lease agreement and I had to go down to the immigration office to get an official form stamped as well as very awkward headshot photos that have me looking like I’m in a hostage video. 

  • After my Thai company was formed and I had saved the needed funds, we could close on the property early. That meant taking out the money in cash and bringing it to the land office to hand to the sellers. 

  • I was planning on going to the bank on my mountain bike, fill up my backpack with the cash, and pedal home as fast as possible. But, my good friend, Big John, here offered to pick me up in his truck and run security.
 
  • John is 6’7” tall and served in the military all over the world in some really nasty shit, so he’s about the best person to have watching your back!

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  • At the bank, the teller handed me eight stacks with one hundred thousand Baht each without blinking, and John drove me on back home. We were scheduled at the land office early the next morning, so I was committed not to do something stupid in the next twelve hours that might jeopardize my life savings!
 
I could imagine just stepping out for “one beer” and stumbling back home around 5am sans money but with a brand new tattoo and wedding ring to show for it. 
  • I didn’t want to be the dude who fumbles the ball heading into the end zone, so I forced myself to stay home.
 
  • Once John dropped me off and I locked my door, I surveyed my apartment. Where should I hide the money? 
 
I needed a secure spot that wasn’t obvious like under my pillow, wouldn’t get thrown out, damaged in a plumbing leak, and could stand up to a fire in case the entire building lit into flames.

​
  • I got it! I neatly placed the stacks of Thai Baht notes in a Tupperware container and placed it in my freezer. COLD hard cash, baby! 
 
  • Believe it or not, it wasn’t my first rodeo storing copious stacks of cash in a freezer. 
 
Back in the day when I was a humble house painter in Connecticut, scraping and clawing my way through 80 hours per week of manual labor, I could put away some good cash by the end of the season.
 
I was completely unaware about how the whole “adulting thing” worked. I thought that if you put cash in the bank, the IRS would automatically know about it, and you’d be screwed come tax time. 
 
So, I took $75,000 in assorted bills and wrapped them in foil and put them in my mom’s freezer for safekeeping.
 
She even used to joke that one night, she’d accidentally take one of the foil packets out and defrost it for dinner.
 
  • Fast forward about six months and I was ready to head west to Sacramento, California. I knew that it was not wise to be walking around with that much cash (nor could I fly with it), so one day after work, I took the foil packets out of the freezer and drive them down to the local bank branch.
 
  • I walked up to the teller, still wearing my dirty and splattered painting clothes, looking like I’d just crawled out of a dumpster, and told her I wanted to make a deposit. 
 
I then slid her five foil packs containing $75,000 in frosted cash!
 
  • The poor lady had no idea what to make of it. She called her manager over, who looked me up and down like I was actually robbing the bank, before finally just doing the transaction.

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  • Fast forward twenty-two years (my God!) and at least I put the cash in nice Tupperware this time, to make it presentable and avoid freezer burn. 
​
Click here to read part 3 of Monkey Butt Holdings: buying land in Thailand!

-Norm :-)
12 Comments

​Monkey Butt Holdings: buying land in Thailand (part 1 of 3)

9/24/2022

7 Comments

 
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I just closed on a piece of land here in Thailand and the process was way different than buying real estate in the US, so, I thought I’d jot down a few notes.

I have a ton of friends in real estate and mortgage in the US, so I know they’ll get a kick out of this. 
 
***
  • I’m currently living in Jomtien, Thailand and just bought a plot of land nearby.
 
  • My best friend here, Scott, is a US dude who retired in Thailand. He’s pretty experienced with the real estate market here, having bought and sold several properties and even built a home. 

  • Scott owns a nice piece of land in Rayong, a town along the coastline an hour or more from Bangkok. His land sits in the midst of jungle forests and a rubber tree farm, but still less than two kilometers from the beach.
 
  • There was a one-Rai lot for sale right next to him (by the way, they use “Rai” here to measure land, with one Rai being 1,600 square meters or just under .4 acres), so I grew interested. 
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  • The land is owned by a French guy who works as a SCUBA instructor (frightening scenes from that French SCUBA instructor in the movie Along Came Polly with Ben Stiller and Vince Vaughn come to mind!) and his Thai wife. They bought the land a long time ago and now are subdivided and selling smaller lots. 

  • In a few years, my buddy Scott will start building his permanent home on his land, so I thought it would be cool to have the adjoining lot. In particular, I want us to build one giant pool, I’ll be able to play with his five dogs without having to do any cleanup or buy food, and I can show up at his front door around dinner time.

  • Financially, it also makes sense – the land is only 1,000,000 Baht. 
 
What?! A million!?
 
Relax, big hitter – that’s only $29,500 USD or so. 

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  • I’ve been working my ass off like 70 hours per week, 7 days per week for the past three years, so I had a little money sitting in the bank. With a US inflation rate north of 9%, I didn’t feel like seeing my cash lose a bunch of value every year, so I thought a (small) real estate investment would be wise. 
 
  • I’ve also been super interested in buying and investing in property abroad, and see people buying beautiful condos in Costa Rica, beachside bungalows in Nicaragua, posh flats in Medellin, Colombia, etc., and thought it was my time. (I almost bought a piece of land in Nicaragua this past spring for a great price but I snoozed on it too long. But I will look there again!)
 
  • So, how does a real estate purchase work here in Thailand?

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  • Technically, foreigners aren’t even allowed to own land. If you’re not Thai, you can “buy air, not earth” freehold, which means it’s super easy to buy condos. 

  • And so many foreigners do buy condos here. In fact, the area where I’m at is like a big bank where people from all over the world come to dump their money into Thai real estate, knowing that it’s stable, safe, and will never go down in value. 
 
  • Thailand’s real estate is the easiest and safest avenue for people who don’t trust their banking system, government, economy, the strength of their currency, are running from tax collectors, or want to launder illicit money (a huge thing here!).
  
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But I digress. 

So, you can buy condos all day long and own it free and clear, but buying land or property (like a house) is not accessible to foreigners…UNLESS they go through a convoluted and super risky process. 

  • You have to first form a corporation which will hold ownership of the land. The corporation has 5 people on the Board of Directors and at least 3 need to be Thai. 
 
  • But the real power of the corporation lies with the Director, who makes any important financial decisions. When you first form the corporation and buy the land under its umbrella, the Director has to be Thai. 
 
  • That’s the risky part. You’re giving 100% control to a Thai person (as it would be risky with any person, but ripping off foreigners is an artform here), who could literally just take your land and there’s nothing you could do about it. 
 
That actually happens all the time here as foreign dudes buy land, houses, or businesses and put them in their girlfriend’s name. BIG mistake, and the dude often finds himself ass-out with no recourse.

  • Thankfully, my best friend here is married to a Thai woman who is rock solid, and I trust her completely. (Let me say as many nice things about her as I can here!) 
 
So, she’s the temporary Director until after the deal closes. Then, after a week or whatever, the corporate charter can be legally changed and I will be the Director.

  • To fill out the company’s board we found two “dummy” members– a couple of Thai people who will put their names on the corporation for a few bucks but have no involvement or even knowledge.

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  • The Philippines has a similar corporate and real estate setup where you need to trust a local person as the swing vote on the board of directors, but there you can’t install yourself as Director eventually.  

  • So, I’ve heard of seasoned expats in the Philippines actually finding some random homeless dude under a bridge and giving them a few bucks to be on the board. They know the guy (or gal) will never have the knowledge or means to ever look up the company, find the land and the owner, hire an attorney, etc.

  • However, I opted against this “random homeless guy under a bridge” method of real estate acquisition, as charming as it sounds.
***

-Norm :-)

P.S. Click here to read part 2!


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    Norm Schriever

    Norm Schriever is a best-selling author, expat, cultural mad scientist, and enemy of the comfort zone. He travels the globe, telling the stories of the people he finds, and hopes to make the world a little bit better place with his words.   

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