Exploring Fractional Property Ownership in Thailand: A Foreigner's Guide

Fractional property ownership is an emerging trend in the Thailand real estate market, offering an alternative approach to property investment. This model allows individuals to purchase a share in a property rather than buying it outright. But is fractional property ownership the right choice for you? Let's explore the factors to consider.

First, we must understand some basic obstacles when you consider purchasing property in Thailand;

• A foreigner cannot own land, they can only lease land for 30-60 years, plus extension

• A foreigner can build on the land and own the building, but the land is still leased

• Thai banks do not provide financing for a foreigner (exceptions for Chinese using Chinese banks)

• A foreigner can purchase a freehold condo, but they must transfer the entire purchase amount from their home country to a Thai bank and convert to Thai baht

• If a foreigner is married to a Thai, they could purchase land in the Thai’s name, but there is risk if the relationship status changes

• Investment property can be purchased under a business entity, different Thai laws apply based on the nationality of the investors with US having the most favorable options

In summary, unless you have the cash to pay 100% of the full balance of the purchase price, it’s not a good idea to purchase a condo outright. This is where fractional ownership can be a good option for foreigners who fit the following profile;

• You want to own property in Thailand

• You may not want to live in the property full time

• You like the idea of earning rental income on the property

• It's easier to sell fractional ownership if there are any life changing events and you can not longer spend time in Thailand

Fractional property ownership can be appealing for those who desire a vacation home in Thailand but may only utilize it for a few weeks or months each year. Instead of bearing the full cost and responsibility of owning a property that remains vacant for much of the year, fractional ownership allows individuals to share the expenses and upkeep with others.

Additionally, fractional ownership provides a more affordable entry point into the Thailand property market. By purchasing a fraction of a property, investors can enjoy the benefits of property ownership without the hefty upfront costs associated with buying a whole property. This makes it an attractive option for those with limited financial resources or those who wish to diversify their investment portfolio.

Furthermore, fractional ownership offers flexibility and convenience. As a fractional owner, you have the freedom to use the property during your allotted time and can potentially generate rental income during periods when you're not using it. This flexibility makes it suitable for individuals with varying schedules and lifestyle preferences.

Some examples of fractional owned properties include, but not limited to the following;

• Multiple people own a condo and agree to allot time frames or days to use the condo per year, or open the condo for rent during the allotted time

• Crowdfund the acquisition of a multi-tenant building where owners could use different units at different times of the year, and any available units are open for rent with income being shared to the owners

• Crowdfund under a business entity to acquire land and build villa’s where the villas can be rented at a big discount by the investors, and available villas can be rented for income which is used to pay for upkeep and return profits to the investors

However, fractional property ownership also comes with its drawbacks. One of the main concerns is the potential for conflicts among co-owners. Since multiple individuals share ownership of the property, decisions regarding maintenance, renovations, and usage rights must be collectively agreed upon. Disagreements over these matters can lead to disputes and may impact the overall ownership experience.

Moreover, selling fractional ownership shares can be challenging. Unlike traditional real estate transactions, finding buyers for fractional shares may require more time and effort, especially if the property's value has fluctuated since the initial purchase. Additionally, certain restrictions or limitations imposed by the property management may affect the resale process. One of the reasons that KandiPlaces is exploring tokenization of property ownership is because using crypto as a representation of ownership allows for the resale of shares and avoids all the paperwork associated with standard fractional ownership.

Before deciding whether fractional property ownership is right for you in Thailand, it's essential to assess your individual circumstances and preferences. Consider factors such as your budget, usage requirements, investment goals, and tolerance for shared ownership dynamics. Additionally, conduct thorough research on the specific property and fractional ownership structure to ensure alignment with your objectives.

In conclusion, fractional property ownership offers a unique opportunity for individuals to invest in the Thailand real estate market while sharing the costs and responsibilities of property ownership. While it may not be suitable for everyone, it can be a viable option for those seeking affordability, flexibility, and access to vacation properties in Thailand. By carefully evaluating the pros and cons, you can determine whether fractional ownership aligns with your investment strategy and lifestyle preferences.