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THAILAND HOUSING SITUATION 2009 Property sales in most centres have slowed & but Thailand is not badly affected by the subprime crises as at April 2009. But properties may drop as people realize their financial situation deteriorates. In places like Pattaya as at November 2008 the tourism figures have dropped 50% and theres many condos not started construction and some have slowed due to the lack of buyers--Pattaya also has a gflut of buildings. More foreigners are staying home as the crises bites into all economies & Thai Banks are not saying much to help with lower interest rates & Bank fees which are over the moon -- the Thai families that owqn the Banks want to extract as much out of people as possible & even the fees to withdraw from another town are not documented and should not be passed on to account holders. It will be a buyers market next year as more Thais need to shed properties they don't need or cannot forfeit on their mortgage payments. Many condo complexes in places like Pattaya have stopped & there will be a surge of unfinished condo units soon as people are now wary of investing in condos that are not finished to completion. Developers rely on at least 22% pre sales to stay ahead of their borrowing and without unless they have the cash they themselves will end up in deep water. In Chiangmai the situation is no better and a lot of this is due to the political unrest which does not assist foreigners wishing to buy in Thailand. Some hotels have been built with thoughts of a Casino happening but theres now too many Guesthouses & Hotels. FOR AN UP TO DATE ANALYSIS OF THAILANDS BANKING SITUATION GO TO:BUYING A BUSINESS IN THAILAND
THE BAR: As you will see many Realties in Thailand do not sell bars. The reasons are simple. Bars do not make money and those that do are sold via word of mouth just like the West & cost min 3 - 50m baht. "Thus why should Realties be blamed for something that does not work-- bars are it? Many bars are run by Thai girlfriends whose money comes from retirees or boyfriends wanting to do something different. The old saying" I've always wanted to own a bar to tell the folks back home"- only trouble is many make nothing!!!!!! but relieve the pressure from their own countries to relax knowing they have a bar. Those who try can have a partnership but looking at any bars here; do not go on any bookkeeping as basically thats a complete waste of time. If a partnership, most of the income is under the table & if a company Ok then normally there is a work permit available and the books have had yearly audits but still many are underwritten. If you buy a business without a company then forget looking at the monthly take period. Most bars that do work are owned by expats who have lived here for years---they succeed as they know the whole environment and most GOOD bars sell by word of mouth not advertised. Some will even resort to loading up customers as a front eg. one place on the river we know that has since gone bust?? did this. Also rents can be high eg Loi Kroh 25-35,000 baht and Thapae Rd 40,000 baht a month.Moonmuang Rd 50,000 baht a month. Add over double this and thats what you need just to cover your costs per month =100,000 baht a month at the least. WHAT HAPPENS: When a foreigner comes to Thailand they forget that they must have income over and above all the "slow period" which is April thru to November. Its not easy now when you think of say Pattaya with over 1200 bars and ChiangMai with around 700 plus bars & restaurants all competing for the same baht & the prices for beer, food & services increasing. If you have 500,000 baht then you can run a shoe box in a Bar centre with 50 others blaring out separate music for maybe 1 year before your money runs out or your brain dries up. You need twice this amount or even more just to survive the off season and the girlfriend?? To have a business in Thailand now you need money, real money? not just dreams. One guy we know got another partner who had lived here for maybe 3 years--had no money but had a good mouthpiece. He convinced an Aus guy to start a bar/restaurant and as he knew all the ropes became a partner. The rent money due went to MrX and this same guy even sold him 3 Thai cows that belonged to the neighbour. Finding this out the buyer of the business got a nasty shock but he still has the business lucky for him. Mr X actually turned out to be a fraudster and was arrested in Chiangmai and deprorted back to Australia by the Commonwealth Police. It can and it does happen. WHAT YOU ARE UP FOR: RESTAURANTS, shops,Shophouses 1/. Cost of the business. This is usually key money and can vary. The key money will depend on the income this biz makes if any but usually covers the chattels and alterations AND WHAT THE SELLER THINKS HE IS WORTH. Normally just forget about the key money ---try and think what it would cost you to do the place up from bare (scratch) and now you have the listed price. In Pattaya, Chiangmai etc in 2009 shophouse landlords will charge rents from 20-50,000 baht a month then watch your business after the first year they want 100,000 baht key money per year bonus ----sometimes even ask for sas shre of your business or youre out --- or even ask for more money the second year. Answer: buy your own building if this is the case as it will save you headaches as each year the landlord will get greedier?? 2/. Signed contract with a lawyer preferably and not the other person's lawyer but once you pay a deposit you are committed unless the seller breaks the contract. This is binding so forget coming up with stories if other places around the vicinity say your buy makes nothing??? Remember if you have done your homework then theres no need to talk to others around town --anyway how would they know what skills and theme you are about to break into!! as they will copy. If wanting to claim on your tax ask before you sign that you can list the lease under your company name or partnership name. This is important as you need to have expenses if on a work permit and things in the Company name to claim on. 3/. Make sure the business belongs to the seller & check chattels etc & if the bills are paid before you sign. We have seen where the telephone is in the previous person's name & the landlord says you have to oay for this if you want on --- some landlords pay nothin even leaks you have to pay for. Don't change anything unless you ask permission. eg if you cut the locking mechanism (not padlock)]on a roller door you can be had up by the landlord for a new door & you have to pay for it. 4/. Leases in some areas are down to year by year which means if you make any money next year the lease could increase. In ChiangMai around the night bazaar some bars have month by month leases but 1 year leases are more common now and if youre lucky maybe a 3 x 3 year lease or even 5 year lease then youre doing well. Watch our for leases with 3 year contracts and some in Changklan Rd want 20,000 baht plus for shophouses empty and 6 months paid up front; 3 months deposit. In Nimmanhemin Rd a good shophouse near the Amari Rincome will be up to 50,000 baht per month & more and 3 year contracts. Remember Changklan Road floods every year and places to stay away from are night bazaar ground floors & Nong Hoi where it floods each year. 5/. You need a partnership if you have a Thai partner but remember if you need a work permit & you believe your business will work go for the Company and work permit. You have more protection than a limited partnership but its up to you as you know best. 6/. Licenses: The holder of the property (Thai) must hold the cigarette, liquour & food licenses in their name. Therefore the premises leased are in the name of a Thai or a Company. You can protect yourself with a contract written up by a law Office. ( Essential ) Foreigners cannot hold the license. 7/. Talk to the neighbours about flooding, power & water cuts & music or factories. If you have girls then expect to pay tea money to the local constabulary & don't sell viagra unless you hold a pharmaceutical license. You cannot rent DVDs etc unless you have a license etc 8/. Make sure power etc is paid up and bills clean & the power isn't being used by the neighbour before you sign on the dotted line. If not make a clause in the lease. 9/. Most of all you need good luck? as in Chiangmai owning a bar is a lifestyle not a money making business but with the right PR and hospitality skills there have been success stories. It is entirely up to you. Estimated closts per month with 4 employees, Company, monthly social welfare, expenses is 50,000 baht 10/. Once you are happy to buy then you will be asked to pay a deposit. This can be anywhere from 10-30% down. Read it carefully as after you sign there is no going back --you are committed. If either party defaults then the other receives the deposit but the terms of the agreement are plain. We are talking about a business now so don't try to ask for 1/2 back if you are at fault or say your mama is sick and needs urgent medical care. This is Thailand and a binding contract & you alone are the signee not your mama. Good luck. OTHER BUSINESSES: Good businesses that have a company are the way to go. Make sure they have audited books and use a lawyer to help. Ask us or check on this excellent website for help. www.thaiexpatlaw.com have lawyers and great legal help for everyone.. OUR ADVICE: 2009: Buying into a Business in Thailand: If you want to work in Thailand then you need a work permit, Office & staff. This means you need a Thai company. To set up you need to show 2m baht for share capital and have enough money for your business setup and 4 Thai employees ---- not nominees; wages, tax including VAT, Office, social welfare and withholding tax etc. Be aware this will cost around 1-1..5m baht the first year of business so buying into a new or existent business expecting a work permit take this into consideration on the asking price. Being a partner in a business with a work permit will cost min 3m baht if there is goodwill in the business and the books are sound. This includes 2m baht for the company change and 1m baht goodwill costs. For each work permit you must have 4 Thai employees on your books and they will be interviewed by the labour office so make sure you have proper workers not nominee workers given to you by a friend or the business that forms your company---it is you that will get the blame if you are caught.! If you have the money and plan worked out then buy the land with a company & build or buy existing property and renovate. This way you eliminate any problems with landlords and you have full control of your business and land via a Thai Company. We will help those with excellent advice on locations to even obtaining the right manager for you if you use our services. Having your own property will also provide you with a better resale value should you decide to sell later or even lease and the fact you will sleep at night. We do assist all buyers of property and we have our own builders, architects and staff on hand to help you. Check out www.thaiexpatlaw.com
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[ THAI LAW HELP SERVICE ]: We have many more properties. Just ask us. Let us broker your business or property. If we don't sell we don't charge you. Selling or wanting to Buy a Guest House, Restaurant, Business, Bar or Office then just ask us. We do not charge you to find your business. We even guide you to the best deal & help you form a company, partnership, year visa, agreements, leases, accounting services, taxation etc right to offering you FREE hardcopy promotions if you use our services.[ Thailand Property Update 2008 ] [ Thai Property speculation & subprime ] [ Thailand Property Vs the West ] [ Read Thailand Property Hedge funds ] [ Thailand Property Investing ] [ Bangkok Bank lends to foreigners ]
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