Hughes Krupica: High season property tips

Baby steps
If you think you can learn everything about a project or property from being in the sales office, then I guess you may also buy a car by inspecting the specifications provided to you at the showroom by that attractive show room salesperson. If you don’t think this way, then some of the matters that you should check are as follows:

1. How much cash does the developer have to finish the  project, without you?
2. Is there a large bank loan taken out on the project land, which could be ok, provided the developer can actually service the loan.
3. Is the project land legal? This isn’t a question of whether there is a land title document in existence – of course, there will be one of those, it’s a question of inspecting the entire history of the land; sometimes more than 60 years worth of old land title documents need to be checked at the land department.
4. Is the developer being sued for anything in the courts?
5. Is the timing of the construction phase of the development completely reliant upon sales – and therefore a moving feast?
6. What is the type of legal ownership being offered and is the developer / sales team / agent able to eloquently describe this to you without struggling. If they oversimplify, then you won’t get the true picture. If they get caught up in technical language, then you definitely need help and advice, as they probably do too...
7. Is the access way, from the public road to the front door of your prospective property, free and clear of impediments, and legally registered?
8. What is the asset management plan for any ‘common area’ in the project: landscaping, lighting, refuse collection, road resurfacing, amenities upkeep – gyms; saunas, spas, yoga rooms, restaurant facilities – they all require maintenance. Someone has to pay – that will be you. Have the projected fees been projected on a decent set of financial assumptions and is there a professional management company or a team assigned, or ready to be assigned, post-completion?
9. The big crunch for many investors – the rental programme. A rental programme, like a real estate agent, can take on many disguises. It can be your friend, your dinner partner, and then your enemy who doesn’t pick up the phone anymore. If you are buying for the comfort of knowing that you are to be ‘guaranteed’ a yield, then you need to take advice on the guarantee, the format of the programme, how the gross operating expenses are calculated, how your share is calculated after the guarantee expires, who is backing the guarantee in the event the project isn’t as successful as hoped. Really, a rental programme is sometimes worth looking into almost as much as the property itself.

So, whilst I prepare to leave my Phuket property home, which I bought eight years ago and which has doubled in value, to drive to my office in a marina where I may, if I ever had the free time, set sail around the sunny pristine vistas of Phuket and the surrounding islands, please take your time to choose your dream second/third/fourth home, or the next property purchsase which ought to beat the yield of any investment fund manager.

By Desmond Hughes (Senior Partner) of Hughes Krupica.
Hughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Marine; Dispute Resolution; and Litigation, operating in Bangkok and Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia. www.hugheskrupica.com