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.
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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.
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- 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.
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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.
- 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?
- 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!).
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.
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.
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.
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.
- 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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