Real Estate in Thailand

Apr
09

Real Estate on Koh Samui: A Great Guide for Busy People

If you want to build a business or live on Koh Samui, knowing all possible issues that you may encounter is a must. Smart, rich people, make rational decisions after enough contemplation, and we are determined to provide you with all necessary knowledge for a successful purchase of rentable property on Samui.

There are many factors that demand attention and have a myriad of nuances, but understanding the bigger picture should often be prioritized more than trying to study each case extensively. We give you a comprehensive guide with all possible advice that will make the process of purchasing a villa on Samui easier.

Nuances of Geography

Koh Samui may seem like a small patch of land. It is only 247 km2 and accommodates less than 63 thousand people. Nonetheless, driving across the island takes about an hour. The route will go through a lot of various landscapes and environments. Koh Samui is indeed a land of contrast with different small towns and individual settlements formed by luxurious Samui villas.

If you plan to prioritize lively valuable places for investments, choosing Bo Phit and Chaweng is a wise choice. In some cases, getting something in Choeng Mon could also be quite profitable. All these settlements are very close to all various spa-centers and attractions. Real Estate in these areas has more liquidity and can be resold at any given moment of time.

When contemplating whether you should buy a patch of land for business, be aware that properties are subjects to dozens of legal nuances. For example, areas with access to the beach have their usage conditions demanding compliance.

Reliability Over Attractiveness

Due to the diversity of environments and landscapes, the amount of various buildings is quite surprising. Developers heavily invest in building structures according to local laws and multiple guidelines. Choosing the right house is very important.

A villa on Koh Samui may look appealing and exciting, but it may have problems regarding substantial factors like the size, location, floor plan, materials used, and foundation. Remember that the visual appeal can be easily changed after the purchase. Scores of essential parameters determine the very quality of life and reliability of the structure will be “set in stone.”

Law and Real Estate on Koh Samui

Procedures and the general line of actions for property purchasing in Thailand do not differ from such processes in other countries. Working with an established agency that has experienced staff and allowing them to make all arrangements is a good idea in general.

The problem is the difference in perception of the law. Your home country may have different rules and legal procedures regarding various operations with real estate meaning that at least some form of legal advice will be required.

Hiring an experienced Thai lawyer is often a necessity especially when purchasing a considerable amount of land or thinking about opening an LLC to own property under its name.

We will gladly provide you with all necessary consultations and legal advice if you need it. Contact our specialists to learn more.

Get Better with Money

One of the problems that any foreign investor will encounter is that Thai creditors may not even consider an idea of giving a foreigner funding for development. Having a substantial amount of bahts is critical.

Some businessmen count on receiving credit for development purposes, but external sources of funding can be found only outside of the kingdom. You can obtain a necessary sum by liquidating some of your assets. Having enough money will give you more freedom when analyzing options and bargaining with the seller.

Some developers will readily give you a different price if you can arrange the transition of funds within a particular time frame.

Holding Deposit

If you do not want purchased property to be listed amongst other properties for sale, paying portion upfront can be the only way. The amount is about $3200 (100 thousand baht) for condominiums, houses, and apartments or $6400 (200 thousand baht) for a villa on Koh Samui.

This deposit must be paid right after you put your signature under the reservation agreement which is usually composed by the developer, but you can actively participate by hiring a lawyer who will represent your interests.

There must be a clause in the document that allows you to retract the deposit in case a due diligence check is failed which can problematic and some lawyers may even advise against finalizing the deal.

You will have precisely 45 days to conduct all research and inspections regarding the property before entering the final agreement.

Investigate The Property

Purchasing a piece of land or a villa on Koh Samui is a significant financial decision that will most certainly affect your investment portfolio. Due diligence is not an option. It is a necessity when to comes to proper evaluation of your investments.

While preemptive research allows you to identify most efficient available options in the whole Thai market. However, all consecutive inspections and thorough audits allow you to determine if the reward justifies the risk. Due diligence is a complicated process that involves several steps.

Here they are:

Find whether the property is subjected to legal access.

Inquire about possible encumbrances such as mortgages and other debts.

Investigate the seller and ensure that they have all rights to sell the property.

Investigate the legal status of the property to avoid conflicts with local laws.

Investigate the company that is sold together with the property. The company should not have debts and unpaid taxes.

All these steps will help you to ensure that your purchase will be a productive investment that will not cause any problems.

How to Make a Right Choice

There are several important legal issues regarding the type of property. Foreign buyers must be flexible and search for ways to own real estate on Koh Samui.

You may be interested in purchasing a villa, an empty patch of land, or a small house, but every option have its advantages and disadvantages regarding available possibilities to own them. The core problem for foreigners is their inability to acquire the freehold in their name. Searching for a specific solution for each case could be problematic.

You should also take into consideration other important factors determining the real value of the deal and the future rentability of the building. We have an incomplete list of other critical aspects worth thinking about.

Here’s the deal:

Security. Villas on Koh Samui are more protected and can be a better choice when it comes down safety and overall security infrastructure.

Maintenance. Periodic repairs and improvements may cost more in places that are harder to reach or demand better materials and finishes. This affects your rental returns.

Resale. Some types of property are more comfortable to sell than others. You should always try to purchase only high liquidity assets.

Rentability. Several essential factors affect his parameter: the number of bedrooms, geolocation, price, accessibility, surrounding infrastructure, and many others.

Add-ons. Additional rooms, summer houses, private pools, and similar assets will also significantly affect rental returns.

Do Your Homework

It is quite essential to conduct some research on your own without being affected by someone opinion. In our case, the importance of understanding the rental market is imperative. Investing in real estate property on Samui is a relatively low-risk investment, but it can hurt your overall portfolio if returns do not justify your efforts. If you want to allocate your resources efficiently, do your research and analyze the market.

Even a couple of days spent in the internet searching for places to rent and analyzing the market regarding rental costs will give you a good understanding which types of property are the best to ensure higher returns.

For example, a luxurious villa on Samui with a private pool will attract wealthy tourists that demand high-quality experience. On the other hand, cheaper condominiums closer to various entertainment centers will attract backpackers and regular tourists.

Smart People’s Choice: It Is All About Neighborhoods

While many think that having a standalone property is excellent, there are many advantages to being a part of a gated community.

Here are some positives:

Improved communal facilities;

Maintenance and management services;

Better security;

Good neighborhoods;

Efficient reliable infrastructure.

Living in such conditions is quite comfortable, but some owners may prefer to be separated from others and pay for all services on their own. This is also a reasonable decision since all services on Samui are relatively inexpensive.

Great Villa and Promising Off-Plans

Koh Samui Real Estate business is quite volatile due to a variety of reasons. One of them is that many objects are not finished yet but already listed for sale. While some of them look great on paper, the final product may differ from what was promised in prospects and marketing materials.

Some may argue that after the finalization of the deal, most developers will lose all motivation to finish the project correctly.

Most off-plan projects are quite exciting since you can also participate in the design process and adjust the development as you like. However, there are some hidden traps that you must be aware of.

Warning! Off-plans are risky. Here’s why:

Delivery time. The developer may promise to finish the project within a specific time frame, but problems with fulfilling such promises pop up all the time. You cannot believe guarantees and have to rely on the trustworthiness of the contractor.

Execution. The CGI image of the project may look amazing, but the harsh reality is usually way less appealing. While most plans typically match your expectations in general, there is always a risk to meet a developer that does not know how to do their job.

Some argue that benefits of purchasing an off-plan villa on Koh Samui far outweigh downsides. The flexibility is a key when it comes to buying property and buying something in development has its share of merits.

Take a closer look at advantages:

The price will be significantly low at early stages of development meaning that you don’t have to pile up a lot of money to purchase something. This is a massive incentive for investors who want more flexibility in their portfolios.

You don’t have to pay the whole sum upfront. In fact, the amount of money you have to invest is often fragmented. Your income source will be less pressured.

The projects are usually flexible and can be changed according to your requirements. You can tailor the structure and its add-ons for specific audiences to improve the rentability. Working together with the developer helps you to create a better investment.

Regulations and Restrictions: Distance to Beach

Depending on the remoteness of the structure from the beach, the land may have some restrictions regarding what and how you can build. Before purchasing a patch of land near the ocean, consider various limitations that you will have to work around.

Here’s the deal:

The first area is within ten meters from the beach line. You cannot even build anything here.

The second area prohibits from building houses larger than 75 square meters and higher than 6 meters.

2 thousand square meters is the limitation for buildings within the 200 meters distance.

The space of structures within the Area 4 which is two hundred meters from the beach area is not limited, but the height should not be more than 12 meters.

Regulations and Restrictions: Elevation

There are three primary levels of elevation that have their restrictions regarding development. You have to comply with these rules to avoid legal problems.

Take a close look:

Level 1. The elevation is less than 80 meters. Some restrictions are applied to hotels and luxury resorts. They must have at least 50% of land devoted to parks and open spaces. Residential areas should have their environment protection facilities and golf courses.

Level 2. The elevation is between 80 and 140 meters. A patch of land should be at least 400 square meters to be developed. Structures should not be higher than 6 meters with at least half of the area devoted to gardens and open space. There are individual guidelines regarding the design and infrastructure.

Level 3. The elevation is over 140 meters. The space dedicated to the structure must be less than 90 m2. Restrictions for level 2 are also used.

Regulations and Restrictions: Land Gradient

The slope of the land is also a significant factor to consider if you want to purchase property in Thailand. On Koh Samui, any villa built on the 35-50 degrees slope must follow several regulations.

The building must not exceed 80m2. At least 3⁄4 of the land should be left for green and walking areas. The patch must be more significant than 480m2. If the slope is more than 50 degrees, you cannot build at all.

Ensuring the Quality

There will be a 5-year structural guarantee, and a 2-year defects guarantee for condominiums that are provided by the government. Some developers may be interested in offering more generous options, but most developers follow the general ruling.

If you want to purchase something other than a governmental condo, you should be looking for a developer that will give you specific guarantees. There is a whole list of possible safeguards that can be provided by developers.

Memorize these types of guarantees:

Structural. This type of warranty will be offered for a period between 3 and ten years. Most respectable developers will give you at least a 10-year guarantee on walls, foundation, roof, and other core structural elements.

Defects. This type of guarantee usually covers every other aspect of structures. The period is lesser compared to structural warranty.

Guarantees from manufacturers of equipment. A warranty from the manufacturer usually accompanies Kitchens, furniture, smart devices, and all other infrastructural components.

You should always negotiate with the developer until a specific agreement is reached. This is especially important when it comes to the return to site policy that forces the developer to remove all defects and problems with the property that were found within first six months of ownership.

A smart thing to do is inquire about guarantees still attached to the property if you are planning to purchase a property from an owner who is reselling it. Some of the safeguards may still be valid and allow you to reduce risks with the investment.

Choose Your Partners Wisely

The local real estate market has its problems and pitfalls that may harm financial interests of a foreign investor. Hiring a good real estate agent familiar with the market is an effective way to purchase properties and receive valuable business advice.

Most professional agencies will help you with searching for the right kind of property, arranging various legal agreements, providing you with legal advice, and helping to hire a capable lawyer to represent your interests.

We will gladly help you with purchasing real estate property on Samui. Contact us now to learn about investment opportunities that you are may miss!

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