We’re building a beach cabin!

Lifestyle

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Hey everyone, we are building a beach cabin! …In Thailand! Huh, what? Okay, let’s start over. As many of you know, I was born in Thailand and immigrated to the US when I was young. I still have family ties here and I’m in Thailand for 3 months to help take care of my mom. Unfortunately, she has dementia and it is in the advanced stage. I came to spend time with my mom before she gets worse. I also wanted to talk to them about what to do with our properties in Thailand. Collectively, we have 2 plots of land and 2 condos in Thailand.

Now, it’s near the end of my trip and I want to tell you that my Ultimate goal* is becoming a reality! Well, this won’t be exactly like the RB40 Villa I dreamed of, but it’s a start. So gather round and read about this long complicated story. This whole beach cabin thing is actually my dad’s idea. It started simple and got very complicated, like most of his schemes. That’s how he rolls.

*You can read more about my ultimate goal here – The RB40 Villa.

It all started over 50 years ago…

This story started when my parents got married over 50 years ago. My grandpa (mom’s dad) gave them a wedding gift – a small plot of land near the beach. He used to be rich, but lost it all in a bad Cinema investment. By the time I was born, my grandpa was bankrupt. However, he still managed to transfer a small piece of land to each of his 9 children. My mom’s small plot is 1 ngan, which is 400 square meters or around 4,300 square feet. This is the standard size plot for a city house in Thailand.

The plot is about 300 yards away from Bang Saen Beach in Chonburi. This is a popular beach for Thai people, but not many foreigners know about it. There are many other nicer beaches in Thailand so it’s better to visit those if you come from another country. However, this is the closest beach to Bangkok (70 miles) and it isn’t far to Pattaya (25 miles). When people from Bangkok want a quick beach getaway and some fresh seafood, they go to Bang Saen. The promenade runs along the beach and there are a ton of food stalls there. The seafood here is very fresh because there is a large fisherman wharf nearby.

Lastly, the government is building a new high-speed rail line to connect Suvarnabhumi airport in Bangkok to U-Tapao airport. There will be a stop in Chonburi so it’ll be easier to travel here in the near future.

A Simple Plan

Next year, the Thai government will increase the property tax on empty plots of land. They assume empty plots are investment properties and investors should pay more taxes. If the land has a house or farm on it, then the tax will remain the same. Currently, we pay about $100/year on our empty plot. I’m not sure how much the tax will increase, but my dad doesn’t want to pay more taxes.

He wants to build a house there to minimize taxes. My parents live in Chiangmai, but there is a big issue there every year. Chiangmai is like a bowl. The locals burn their fields annually and the smoke pools in the middle of the city. It’s hazy from March to April and there are a lot of fine particles in the air. My dad is allergic to smoke pollution and usually escapes to the south every year. He likes to go to the beach or hang out with friends in Bangkok. This beach cabin will be a perfect getaway for them.

Why didn’t they build a house earlier? I don’t know. I guess he needed a catalyst to get going. More taxes did it.

Alright, the original plan was to buy a ready-to-build wooden house and put it up. The one pictured below costs about $11,000. It’s a simple studio with a small bathroom. That sounds great to me. The main thing I want is an indoor bathroom. We had an outhouse when I was a kid and never again…

We’d have to run electricity, water, and sewer to the plot, but I don’t think it’ll be a big deal. This plot is in the city so all the services are there. The total price shouldn’t be over $20,000. I am all for that.

It got complicated…

Well, what do you know? The project got more complicated. I’m not surprised, but it is still very annoying.

We have another, bigger plot of land upcountry. My dad got this as a part of the deal when he sold their small Thai restaurant in 1999. The previous owner planted teak trees on the property and hoped they would grow. Teak is termite and pest resistant and it’s a valuable commodity in Thailand. The house pictured above is made from teak. It would be much cheaper if they use another type of lumber.

Unfortunately, our teak trees didn’t grow much. Most of them are still about 8 inches in diameter. Some are bigger. The people that planted them probably didn’t know what they were doing. Anyway, my dad wants to cut down the teak trees and use them to build a log cabin. Also, he wants a bigger place – 2 bedrooms, 1 bath.

He wants to do this because he thinks the teak logs will be more valuable in the future. You can sell the logs in 20 years or whatever. Personally, I’m not sure if this theory will work out. The cost of labor and transportation is going up very fast. In 20 years, it’ll be very expensive to get a crew to take down the house, transport the logs, and process them. I don’t think we’ll get that much money from these teak logs.

In Thailand, there are strict laws to prevent illegal teak logging. You have to get permits and various other things before you can cut down or transport any teak trees. My dad said the law is more relaxed now. It sounds like a lot of headaches to me. But I’ll let him deal with it.

And A LOT more expensive…

So the bigger log house will already be more expensive. My dad needs to hire a crew to cut down and process the trees. Then he’ll have to hire someone to transport the logs across the country. After that, he’ll have to find a carpenter who can work with logs and build a log house. Before that, he needs to prep the site – grade it, run utilities, build the fence, and grease the local palms. He thinks he can get all these things done in a few months. Is he nuts? Absolutely! He always underestimates how difficult a project will be. I think it’ll take a year or two to get everything done. If he’s lucky. I prefer the original simple plan. Just buy a ready-to-build house and put it on the property. But my dad doesn’t like simple.

Another thing came up recently. My aunt owns the plot right next to our plot. She doesn’t want to deal with it anymore and she wants to sell. I told her to figure out a price. It’d be great to have a double plot. That way, we can have a big garden, a parking structure, and an outdoor kitchen/eating area. The land will be a good investment as well. Afterward, I went online and found that a similar size plot sells for 2-3 million baht. That’s 60-100,000 dollars… Wow! These plots cost a few hundred bucks each when my grandpa purchased them all those years ago. The price went through the roof. I guess that’s what happens to land near the beach. Okay, let’s see what my aunt says. Maybe we can pay her in installments.

I’m ready to go home

As you can see, the project got a lot more complicated and a lot more expensive quite quickly. The original budget was under $20,000. Now, it will probably be way over $100,000. I’ll let my dad deal with the project, but I hope he comes to his senses. To me, the extra complexity and ensuring hassles aren’t worth it. The profit from keeping those teak logs is very speculative. If it was me, I’d just buy my aunt’s plot and then put a cheap house on it. I live by the KISS principle (keep it simple). Why make life more complicated if you don’t need to. On the other hand, my dad seems to love complexity. He thinks the more complex the scheme is the better. Jeez, I’m ready to come home. Life is much simpler at the RB40 household.

Oh man, I have a headache. Did you ever start a simple project that got a lot more complicated as time goes on? I really don’t enjoy those.

*We’ll have to put our real estate crowdfunding project on hold for now. I want to increase our investment with CrowdStreet to $200,000 by the end of next year. However, if we purchase my aunt’s plot, we’ll have to put real estate crowdfunding off. There is opportunity cost, but I think a piece of land near the beach is worth it in the long run.

Check out CrowdStreet if you want to generate passive income from commercial real estate. It’s way easier than being a landlord.

Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.