Raising Finance To Buy Land

[chayatom]

I am a long term bangkok resident working for a big multinational company trying to borrow 5m baht to buy a piece of land in Hua Hin for 8.5m baht.I intend to hold the land for two or three years until the political situation and economy have stabalised and then develop some villas on the land to resell.If it takes longer than this i will hold the land until the timing is right.

I have been to see both UOB and HSBC to raise the finance but with no success. As security i have offered my bangkok condo which is worth 16m baht and plan to buy the land through a company i already have established for 5 years and currently owns the condo.

...to me this should be a straightforward loan but the banks tell me they cannot lend on pure land unless i have an immediate development plan regardless of having adequate security and the ability to repay the loan. I couldn't understand whether this was an internal bank regulation or from the BOT.

Can anyone give me some guidance and point me in the direction of a bank who might be a little more flexible

[samran]

unless you have permenant resident in status Thailand, or are a Thai citizen you are going to have a tough time getting a loan.

The other thing about condo's is that the banks got very burnt in 97 and wound up owning lots of condo's. Thai's as a general rule don't like second hand condo's, and this is reflected in the banks policy to lending money for them (I tried to buy a nice second hand place last year, but would only lend me 60% of the asking price). For them, it isn't great collateral me thinks.

[Edonista]

and plan to buy the land through a company i already have established for 5 years and currently owns the condo.

You cannot do that. Land office will not register the land in name of a company with farang partecipation unless all thai stockholders certify they own the company for real and can prove they earned the money they used to subscribe their stocks.

Anyway, why do some folks still insist investing in this country ?

It is forbidden and unwelcome. Mrs Tarisa thinks that when you change your $ in baht to buy whatever thing in Thailand (be it a beer or a villa)you push baht higher and spoil export industry. So she does not want you to spend /invest your money in Thailand. Do as she says please, so we all can have a lot fun watching the consequences

[naka]

The mere fact that you are asking these questions on TV would suggest

that you have absolutely no knowledge of doing business in Thailand.

So better forget it, before you lose all of your hard earned savings.

But if you insist ... Just sell your condo ! how hard is that.

Naka.

Edited May 12, 2007 by naka

[Edonista]

But if you insist ... Just sell your condo ! how hard is that.

He might find out it is much harder then he thought, considering nowadays real estate market.

[chayatom]

You guys are full of opinions but are not answering my question.

My thai partners in my company are substantial, well connected people and having transacted over a 100 land acquisitions in my day job over the past 8 years in Thailand don't presume i don't know what i am talking about and don't know my way around the land office....besides this was not my question.

I personally believe that over the longer term(3 -5 years) i will make money buying land in Hua Hin and i can afford to wait this long or longer if i need to...if you knew what you were talking about you would ask first how much land was i buying and where .....but i wasn't asking for investment advice either

My question was related to arranging finance so if there are any sensible people out there who can point me in the right direction pls rspond.

[Pattayaman]

You guys are full of opinions but are not answering my question.

My thai partners in my company are substantial, well connected people and having transacted over a 100 land acquisitions in my day job over the past 8 years in Thailand don't presume i don't know what i am talking about and don't know my way around the land office....besides this was not my question.

I personally believe that over the longer term(3 -5 years) i will make money buying land in Hua Hin and i can afford to wait this long or longer if i need to...if you knew what you were talking about you would ask first how much land was i buying and where .....but i wasn't asking for investment advice either

My question was related to arranging finance so if there are any sensible people out there who can point me in the right direction pls rspond.

If you need to ask the question it shows you know les than you think you do

[torrenova]

You know the answer already. If you want to borrow Bt5,000,000 simply put Bt5,000,000 in a fixed bank account and the bank in question will advance you up to Bt5,000,000 against it.

As for Hua Hin, I suggested more than a few years ago that it would be a good investment. Pity I didn;t follow my own lead but living outside Thailand at the time and not being able to legally own the land always had me worried.

Your comments do suggest though that if your business associates are so well connected and "substancial", why do you not approach them for the money ?

[chayatom]

You know the answer already. If you want to borrow Bt5,000,000 simply put Bt5,000,000 in a fixed bank account and the bank in question will advance you up to Bt5,000,000 against it.

As for Hua Hin, I suggested more than a few years ago that it would be a good investment. Pity I didn;t follow my own lead but living outside Thailand at the time and not being able to legally own the land always had me worried.

Your comments do suggest though that if your business associates are so well connected and "substancial", why do you not approach them for the money ?

[chayatom]

Heh guys i asked a simple question about raising finance ..... an area where i do not have much experience which is why i posted this question seeking help from more experinced people.

I don't have an additional 5m not already committed elsewhere to add to the 3.5m i am putting into this or felt comfortable asking my thai friends....if i did i wouldn't be posting this question.

If you read my initial question i was getting at the banks reason for not helping me - they will lend to me but only if i have an immediate plan to develop the land not if i want to hold it - does anyone know if this a BOT regulation or the internal rules of the two banks i approached.

Helpful responses are much appreciated

[churchill]

I heard that Bangkok Bank , via their Singapore branch , were lending to foreigners - But this may have now changed in the present climate . Otherwise do you have any overseas assets , to borrow against in your home country ?

Maybe one of the bigger agents , eg Richard Ellis , may have some contacts or offer advice .

Good luck

[Clipped]

so then make a business plan...

[samran]

You guys are full of opinions but are not answering my question.

My thai partners in my company are substantial, well connected people and having transacted over a 100 land acquisitions in my day job over the past 8 years in Thailand don't presume i don't know what i am talking about and don't know my way around the land office....besides this was not my question.

I personally believe that over the longer term(3 -5 years) i will make money buying land in Hua Hin and i can afford to wait this long or longer if i need to...if you knew what you were talking about you would ask first how much land was i buying and where .....but i wasn't asking for investment advice either

My question was related to arranging finance so if there are any sensible people out there who can point me in the right direction pls rspond.

You may know your way around a land office, but I doubt many banks will for what you are wanting to do...

At the end of the day, you are a non-Thai citizen, without Permanent Residence here. For banks, the former are non-starters and they are very hesitiant with the latter for anything beyond a condo. Given this, thenyou are going to be stretching your credibilty with them from the get-go. You are going to up against BOT rules which require foreigners to transfer their funds in from offshore to finance purchases of condo's and the like, which might be interpreted in this manner for your purpose.

Foreigner friendly banks in terms of loans, in my esperience from those who have PR, include Kasikorn and maybe SCB. But, you better know the rules for lending than they do. In each case, those who have gotten loans they are well qualified for had to battle there way past the desk clerk to basically head office before the loans got approved - and these were people who were qualified.

All the best, and please don't turn TV into a slag fest just because you didn't get an answer you wanted.

[lannarebirth]

Are there any liens against the condo and for for how long do you wish the term of the loan to be?

[chayatom]

The condo is free of any liens and i wanted to borrow the money over 10 years.

Thanks for your comments Samran( certainly had no intention of starting a slag fest though) - I think i will go back to the banks with a business plan and see whether they will lend me the money to my

thai company in the knowledge that there might be a delay before i build anything on the land.....seemed from my initial meeting with them that they were implying that this would be the easiest route if not officially condoned. I have spoken to some of my thai friends and they are happy to be genuine investors in the project which will help although i had wanted to keep it for myself to avoid future complications.

Still keen to find out if anybody knows if there is any restriction from the BOT on banks lending money to anyone buying land speculatively.

[solo siam]

The Banks reluctance is down to the fact that it appears you will be using a Thai company just to hold the land, It's not a proper company unless its doing business and so its just a front for you owning the land.

I'm not sure Banks particularly want to lend people money for them to "land bank".

Why not re-mortgage the condo?

[soundman]

The Banks reluctance is down to the fact that it appears you will be using a Thai company just to hold the land, It's not a proper company unless its doing business and so its just a front for you owning the land.

I'm not sure Banks particularly want to lend people money for them to "land bank".

Why not re-mortgage the condo?

I believe this is do-able.

I know an expat who bought a house in KK about 1 1/2 years ago. Initially he approached the bank to borrow about half the required amount. The bank said no way, however, if you buy the property for cash, we will be willing to lend money against your off-shore wage using the house as collaterol.

Cheers,

Soundman.

PS. Sorry, but I don't have any more details at hand such as which bank etc.

[chayatom]

I tried to get a mortgage from UOB and HSBC(who gave me a mortgage 5 years ago!) but neither were interested. UOB bank advertise on their web site for foreign buyers (http://www.uobgroup.com/internationalhomeloan/thailand_homeloan.html) but they were not interested in local expats wanting to buy/remortgage in Bangkok. Seems their scheme is targeted at Singaporeans buying a condo investment not resident here.

...I will try Bangkok Bank as has been suggested.

[quiksilva]

Bank's here do not lend on vacant land for speculative investment at all, even to Thai's. 1997 changed all that. I don't know whether this is a BOT directive or not though.

Edited May 14, 2007 by quiksilva