Moving to Thailand Is Not Easy! (3 stories)
What are the most common pitfalls related to moving to Thailand has been discussed in great detail here and on other sites. Great many of them are linked to choosing and trusting the wrong partner (both life partner and business partner), and succumbing to alcohol, drugs, and bad habits. However, even perfectly sober and even minded individuals can find themselves in a tough spot after moving to Thailand.
Story 1: Dieter
Dieter is a 54 year old civil engineer from Karlsruhe. For as long as I have known him, Dieter has been managing large construction projects around Europe. Dieter has been married for 29 years and has two sons, aged 27 and 24.
After getting divorced in late 2004, Dieter went to Thailand in the summer of 2005 to get some rest and to think about his life. The company he has worked for for the past 7 years was undergoing massive restructuring and Dieter was offered a handsome financial package on top of an early retirement possibility. He visited Thailand twice before with his family and already then Thailand seemed like a good place to live. With his professional experience, Dieter was sure opportunities were abound in Thailand. While resting in Koh Samui, he looked around and considered building holiday villas and selling them for profit. He has checked the prices of land, construction materials, labor cost, reviewed prices of villas offered on the market, talked with builders, lawyers, real estate agents. With his experience in the construction business, he believed that nothing could go wrong. He decided to move to Thailand in early 2006, invest his savings of $ 450,000 to buy 3 plots of land, build 3 villas and sell them within a year for $ 200 – 250,000 each. This way Dieter was expecting a handsome profit of $ 200 – 300,000 His early retirement plan paid only $ 400 per month which should be enough to cover his basic needs in Koh Samui.
In reality, the progress was a little slower than Dieter had expected and it took him quite a while to choose suitable land plots, fight with the bureaucracy and start construction. There were some delays and cost overruns too, so by the end of 2006, Dieter’s savings were almost gone and all three houses were about 80% finished. Thanks to his good standing with his bank in Germany, Dieter was able to secure personal loan to finish one villa. The first villa was ready to sell by June 2007. It took Dieter a full 5 months to sell the first villa for $ 175,000, around $ 50,000 less than he had expected. At this moment, Dieter was financially much worse off than he had expected when he started the construction. Firstly, it took him much longer to finish and sell the first house, therefore he had spent considerably more money himself. Secondly, the personal loan he took in Germany meant an unexpected cost, and thirdly, he has also underestimated the construction budget and overestimated the selling price which has left him with a much slimmer sales margin. After repaying his loan in Germany, Dieter finished his second villa by March 2008. With almost no cash left, Dieter agreed to sell his second villa for $ 178,000 in August. By the end of 2008, Dieter had finished his third villa. Now, in the middle of the financial crisis, he could not hope to sell it for more than $ 150,000, everybody told him. So with a property worth some $ 150 with an uncertain outlook to sell and less than $ 100 in the bank, Dieter was wondering where his savings were what had gone wrong.
Story 2: Martin
Martin is 63 and retired. Martin has lived most of his live in Atlanta where he worked for a government institution. Martin has been divorced for almost 10 years; his only daughter is 44 and lives in Montreal.
I am not sure about Martin’s pension savings, but he has told me that the proceeds from his pension plan plus income from investments in a portfolio of mutual funds earned him more than $ 36,000 per year until 2007.
Martin moved to Thailand in 2007. He settled in Pattaya, rented a condo and bought a truck. The first year he lived like a king, enjoyed eating in restaurants, drinking beer in the evenings and he befriended a few girls from the bars. Although he did not plan to touch his savings, on several occasions, such as the purchase of the new truck or buying new furniture for his condo, he took money from his investment portfolio. Every time he convinced himself that this was the last time and that in the future he would save money again and grow his investment portfolio back to where it was before moving to Thailand.
By mid 2009 Martin told me that his already meager investments are performing poorly and his income dropped to less than $ 1000 per month. He has complained that his condo and his truck cost him already more than he was earning. His options were not very bright. Martin had moved to Thailand to enjoy his retirement and not to live a modest life of counting every baht, he also does not want to move back to the US.
Story 3: Frank and Pui
Frank is a 37 year old logistics consultant from Leeds. Frank moved to Dubai in 2001, divorced his wife in 2002 and married a Thai lady, Pui, who he met during his holiday in Thailand in 2003. Frank and Pui have lived in Dubai for three years. When Frank’s contract expired in late 2007, they decided to move to Thailand in March of 2008.
Frank decided to develop an internet auction site for expats and long term visitors in Thailand. He found ready made software that would need just a bit of fine tuning and customization and planned to invest in search engine optimization that would make his site easy to find with Google and Yahoo and he was expecting profits by the end of the year. Frank launched his site in September 2008 and it did not perform hoe he had hoped. Dealing with the Indian company that had sold the software package was lengthy and development costs were mounting. The search engine optimization also did not work as Frank had hoped – by May 2009 the site was still not listed anywhere near the top of the page, in fact not even on the first 3 result pages with searches in Google, Yahoo, or MSN. By the end of 2009, the traffic on the site was still miserable and the few visitors who somehow wandered on to Frank’s auction site were disappointed by the lack of activity and few auction items and left without ever coming back. By this time Frank realized that driving the site towards commercial success would cost him a lot of money in paid advertising and site promotion which he simply did not have. During the second half of 2009, Frank tried to attract investors or sell his auction site, all to no avail. For lack of better options, Frank and Pui have decided to move back to Leeds in January 2010.
I could have chosen among ten or so similar stories. These are simply the ones I consider somewhat more typical with elements that repeat in several life stories that I have observed or have heard. I hope that reading this can prevent you from making the same mistakes or at least can make some of you be more critical when considering your move.
These stories are all very sad, but all show a lack of foresight and a lack of understanding of the market they were getting into.
When retiring, one really ought to take a conservative approach.