How would you deal with the money bottleneck if you were overseas?

7 Replies

Hi Everyone, 

I finally have close to enough money to begin investing in properties. When I was in the US the plan was clear, I'd start with my own money for the down payment on the first house, build up my reputation, and then pursue private money lenders.

Life has weaved an interesting course for me and I find myself out in Pattaya, Thailand. The principles of real estate investment work the same, but there are no groups of real estate investors out here. Which is nice because of the lack of competition, but bad because now I have no local private money to tap into. And Thai banks are generally unfriendly to loans to foreigners, not even considering non-owner occupied units.

My first reaction was that my opportunities would thus be limited. But now I'm interpreting this as an opportunity to get creative. 

What would you guys do to find the private money you needed for deals, if you were overseas?

Hello Gary,

Thailand sounds interesting. What's the market like? I live in Africa and moment and have also thought of investing abroad. Kenya I heat it's easy for a foreigner to get bank loans. 

Chris

Hi Christopher,

Loanwise things are a bit strict here; Thai banks are conservative especially with foreigners. LTV ratios tend to be low as well. As for the properties themselves, I'm restricted to buying condos in buildings that have a "foreigner allotment" still available. The property market here is relatively soft at the moment, and with a lot of foreign pensioners comes a lot of distressed situations. It's just finding the money that's a bit tough!

Originally posted by @Gary Clisele :

Hi Everyone, 

I finally have close to enough money to begin investing in properties. When I was in the US the plan was clear, I'd start with my own money for the down payment on the first house, build up my reputation, and then pursue private money lenders.

Life has weaved an interesting course for me and I find myself out in Pattaya, Thailand. The principles of real estate investment work the same, but there are no groups of real estate investors out here. Which is nice because of the lack of competition, but bad because now I have no local private money to tap into. And Thai banks are generally unfriendly to loans to foreigners, not even considering non-owner occupied units.

My first reaction was that my opportunities would thus be limited. But now I'm interpreting this as an opportunity to get creative. 

What would you guys do to find the private money you needed for deals, if you were overseas?

Hi Gary,

I would still try to pursue brushing shoulders with some of the big boys in Thailand.

Singapore and Malaysia aren't to far away from you so maybe you can attend a few business conventions there. Lots of $$$ there.

Your advantage would be having local market knowledge (as in the US) and tapping into foreign high net individuals.

Personally I think it would be difficult to raise funds here if you are based overseas.

Just my opinion.

Thanks and much success.

"… there are no groups of real estate investors out here."

This is not true, @Gary Clisele .  Here's a small list of Meetups in Bangkok, about a 2 hour drive for you. You can do a similar search for Kuala Lumpur and Singapore and it might be worth a day trip to attend, or at least call the club leader.

"And Thai banks are generally unfriendly to loans to foreigners, not even considering non-owner occupied units."

Perhaps, but there are many foreign banks, including many of the large Singaporean banks that reach far into south Asia that will deal with you, if you are qualified.

While the Sing Dollar is relatively strong right now, and real estate in Singapore is white hot, this is not true for Malaysia. The Ringgit is almost at an all-time low with respect to the dollar and there are deals to be found. I suggest you stay away from the large residential developments in all the local countries, which are always over marketed and hyped to foreigners, though they will include very appealing financing.

Better to stay commercial and look at tenanted multi-story retail shop-lots or professional offices in established areas, in my view. Many of the appealing areas and new properties are completely overbuilt and will sit vacant for a long time until they rent.

No matter the country, don't buy pre-construction. Even if you go residential, pay for the cash flow and find proven properties that the first owner has rented to strong tenants with long-term leases and established expenses. Anything else is a pig-in-a-poke.

Take a short trip to Vietnam and note that they are still at the motorbike stage of development.  This is just above bicycles, where China was when Nixon visited. This is especially true in the north. In fact, India and China now outsource to them. Here, you need a local partner, which might not be hard to find. Ditto Myanmar, from which the genie just left the bottle. This country has an enormous amount of natural resources and potential if you have the patience.

You are sitting in the perfect location, Gary.

If you want an initial set of resources, you might check out Global Property Guide. In addition to regional market data, which is sometimes dated, this site has local lawyers, accountants, and agents you can call to get a better idea of the markets. The larger firms will have regional property reports they will send you.

Good luck.

Great advice to all, thanks for sharing. I emailed a lawyer and got a nugget that I wanted to share as well:

"It is quite common for our investor clients to buy completed units from owners who agree to a payment/financing deal - allowing investors more leverage with their capital."

So basically he's saying owner financing is quite common out here, I'm guessing since bank financing is not. Perfect! :-)

Hi @Gary Clisele

I just wanted to follow up on this post. Have there been any recent developments?

Cory

I know I'm jumping in late here but . . . the principles of real estate investment, while generally the same, can be radically different in application in Thailand.  

As you noted, you're limited to condos because foreigners can't own land.  And most (if not all) Thai banks have no interest in dealing with you unless you're buying a condo for your own living purposes.  

Also, be very careful about "working" in Thailand without a work permit.  There is no real definition of what constitutes work so even rearranging furniture in the furnished condo you intend on renting out could be considered work and if you were caught doing it without a work permit you could be deported and banned from re-entering the country.  

Think it's a little far fetched?  Well, just look at what kind of incentive that you give others to report you. Have a tenant who you evicted?  Maybe as retaliation he might just snap some pics of you working on the condo to get it back in rentable state.  Have somebody that owes you money and they don't want to pay it back?  Hope they don't catch you doing anything that could be considered working.  Their debt gets erased as soon as you're put on a plane back home.  

I've met a few guys in Thailand doing what you want to do.  Most are self-financing their deals and-or working with capital raised amongst other expats that they know and trust.  

To be honest, if it were me (and I do plan on investing in the region at some point), I would invest elsewhere in Asia where your money is more welcome.  Thailand's climate for foreign investment is not great.  You can make Thailand work but look around.  You may be able to do what you want to do in a far more appealing business environment.  

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