Is It Safe To Purchase Off Plan Property In Thailand? Part 2.
Payment terms are another factor. In Thailand it is common practice to spread your payments during the construction period, therefore you are not obliged to pay until a certain stage of the construction has been completed.
Regular progress reports should be sent, with most recent pictures to ensure all works are proceeding and the various stages are being completed.
Any developer who is requesting more than 40% upfront is considered high risk and therefore one should be wary of investing until they see concrete evidence that the construction is progressing and others are investing at the same time. In some special cases if this is not the developer’s first project and there is a strong credibility track record, then there is good reason to feel secure and by requesting more upfront you will almost certainly receive some form of discount off the purchase price.
It has been known with certain developers in the Bangkok region to request approximately 10% upfront and 90% on completion. These are unusual cases, however these developers have extremely strong financing in place and are highly recognized within the market, therefore they are able to offer such terms to their clients. The norm in other parts of Thailand is approximately 2-5% of the purchase price to reserve the property and approximately 25-35 % of the purchase price on signing the sale and purchase contract. Due to the demand and as mentioned above the abundance of off-plan units these days, these terms can normally be negotiated on, providing that what you are requesting is realistic. If you are intending to purchase multiple properties within a development, this will also help you to add some flexibility with the terms if need be. Your real estate agent will often have the best way in which to assist you on this, as they will most of the time know what the developers will be inclined to accept.
In Thailand foreigners are not eligible for financing therefore payments staged as such does assist many buyers that need to spread these. This also helps people take advantage of the exchange rates at times, as many need that extra help should they not be receiving a very good exchange rate at the time of purchase and then have time to allow this to benefit them.
Some off- plan projects do allow foreigners to largely invest from the start, whereby if the client is able to put down a substantial amount in the beginning when signing the contract, the developer will offer them some form of return until the end of completion. Of course if this is on offer, again one should consider how long company has been around and how reputable they are.
Looking at lovely designed computer images is always nice, but what you really need to be looking at is some kind of show/mock up room. It is very important to see what kind of real layout is provided with all the materials and what one can expect in terms of quality. Also pay close attention to the finishing’s as their nothing more off putting that shoddy workmanship. As the standards of construction are constantly improving than that of say 5yrs ago, you still need to know certain standards are being met. In Thailand the standards previously were quite different to what western folk had been accustomed too. As mentioned these have improved and modernized. Any professional development company will now almost always employ a foreign project manager, with building experience to ensure everything is built correctly and to a high standard.
If a show room is not available, then there must also be a deadline as to when this is ready, as one cannot simply wait forever for this to be done and there is no point having this ready at the end of the project.
One should also consider that if they are wanting to rent out their property, who the company will be appointed in terms of rental and management. Mostly these services are offered by one company and therefore will be known as the “Rental Management” company. Where one can use this to their advantage, is in the decision making process, if looking to purchase a particular off-plan unit. If this is the case and the developer has chosen to work with a large, highly credible, national or international rental management company and you consider these large companies have their reputation to uphold, therefore they have to do their own due diligence to ensure this will not in any way hurt their reputation. A very thorough due diligence process will be carried out and this literally has done the job for the client. You may even request to see evidence that this company has a standing agreement with the rental company as this will help you to feel more secure that the project holds strong credibility. In terms of evidence, perhaps you can request to see any form of signed agreement between the two companies that will stipulate the period which has been agreed upon. Again the longer the period, the more confidence you as a buyer will gain.
Having all these things in place or seeking answers to questions that may arise as a result of these factors, is considered a good form of your own due diligence. If you are satisfied with all the evidence that has been presented, then there is no reason not to proceed. Chances are you are investing in a good piece of property and if this can save you money instead of having to purchase something already finished simply because you are nervous of going with off-plan , you could be losing out. Times are changing and there are some great opportunities currently available which can earn you decent returns as well as the opportunity for strong capital growth. So it can be worth your while comparing what is on offer and seeing just what you can get for your money.