Buying a Bar in Pattaya

[Surelynot]

2 hours ago, brianthainess said:

I have never understood why people "buy" a bar, for millions

Agree.....invest the capital....returns will more than cover the rent.........then you are free to move if things are going pear-shaped..........unless you are ultra-confident of growing the business rapidly to sell on...555...fat chance .

[OneMoreFarang]

On 4/17/2021 at 8:25 AM, Danderman123 said:

I am a firm believer in buying at market bottoms, and this has got to be the bottom of the market for bars in Pattaya. So, I am looking at purchasing a partial interest in a small bar.

 

Please don’t waste my time telling me that it’s a bad idea. 
 

What I am looking for is data:

 

What is the market value of a shophouse bar that averages about 15,000 baht a day in revenues? I am looking for order of magnitude estimates, or accounts of past ownership.

 

Are there advantages in terms of visas in buying into a bar?

 

Any tricks or traps in conveying the money to the current owners?

 

Are there any risks beyond losing my investment plus the possibility of infinite capital calls when the bar loses money?

I am sure now is a good time to buy - if you know what you are doing.

Unfortunately for you is that you seem to know very little. Otherwise you wouldn't ask here.

The problem with that is that obviously you can learn from some information on TV - if you are lucky and receive answer from experienced bar owners. But it seems in this forum you also often get lots of comments from people who don't know much about what they write...

What you attempt to do is like asking people how to drive a F1 car. Give me enough tips and tricks and I will be able to do it with lots of competition around me. Sorry, no, that is not how it works.

If you really want to get your own bar then learn. Visit successful bars and look why they are successful. And visit bars which are not successful and learn from them. And then there are for sure many bars which are not successful but they could be successful if they would be run by someone who knows what he/she is doing. Do that work, and do it in low season and in high season and learn. And maybe, best case, a year later you will have acquired lots of experience. And then, and only then, should you try your own luck. And even then be aware that lots of successful bar owners bought another bar and they tried to copy the success from one bar to another. And many failed - even with a decade and more of experience. Can you do better than that? Maybe...

 

[Surelynot]

1 minute ago, OneMoreFarang said:

Unfortunately for you is that you seem to know very little.

????

[OneMoreFarang]

1 minute ago, Surelynot said:

4 minutes ago, OneMoreFarang said:

Unfortunately for you is that you seem to know very little.

????

Someone had to tell him. And I did it not to hurt him but to warn him that without knowledge in that business he won't have success in that business.

[timendres]

Many a guy has fantasized about owning a bar in Pattaya. Whether they will admit it or not. Buying in a distressed market is as good an excuse as you will ever find.

 

You will not get any realistic numbers form this forum, unless a previous bar owner is generous enough to share.

 

What you should do is find an experienced mamasan who can build you a spreadsheet with all the numbers including "tea money and incidentals". She will also be able to provide you details of all of the pitfalls and traps that the numbers cannot capture. She will also know the area and can recommend locations. She may even become your most valuable employee. Deal her in on the upside, if you want to ensure success.

[khunPer]

On 4/17/2021 at 3:25 AM, Danderman123 said:

What I am looking for is data:

 

What is the market value of a shophouse bar that averages about 15,000 baht a day in revenues? I am looking for order of magnitude estimates, or accounts of past ownership.

 

Are there advantages in terms of visas in buying into a bar?

 

Any tricks or traps in conveying the money to the current owners?

 

Are there any risks beyond losing my investment plus the possibility of infinite capital calls when the bar loses money?

Value of property, i.e. shophouse, is the market value in the area – location is an important factor, if not the most important factor – i.e. what has similar property been sold for recently?

 

Value of the business is independent from the property, and depending on numerous factors. You can count a typical rent for the kind of property on the location, often rent is based on 8 percent to 12 percent annually of the property's buying price, but can be lower, and also higher if the market price in general is higher. Let's say it's a 4 million baht worth typical shophouse, then you should count 400k baht a year or around 30k to 35k baht a month as rent. But the location can make to town house worth more than the "normal price" for similar quality town houses, and then the calculated rent will also be higher.

 

A business in Thailand is often sold with "key money", which can be a relative high sum, but doesn't include any ownership of property, other than inventory like bar desk, fridge(s), tables, chairs, lighting, pool-table(s) etc. You need to calculate that sum, and its interest, into your budget, either as surcharge of the property value, and thereby rent, or as business "goodwill" money, which got nothing to do with the property, but what the specific business is worth depending of past performance and location. You might be able to sell the bricks, but you business might for several reasons be worthless in resale, so a fairly short time-frame is needed for recover of key money.

 

What are the costs of producing a 15k baht daily turnover? Do you sell drinks for double up the cost, or triple up the cost (i.e. sell a beer for 80 baht or 120 baht); what's the costs of primary staff like trusted accountant; running costs for electricity, and water, and insurance(s); and external accountant and auditor; salary/costs for hosts and/or serving staff; etc,? What's left is what you have to pay for rent, i.e. buying the property, and key money, i.e. the value of the business. You might have between 5k bah and 10k baht from a 15k baht turnover left after paying cost price for beverages, and your running costs might easily 3k baht or more a day, so you could have a margin of from 2k baht up to perhaps 7k baht for profit and recover of investment, and interest, which could be a calculated loss of interest if you had invester money in something else. Don't expect the bricks to raise in value, the'll rater be worth 10 percent less a year in Thailand, but the land under the bricks normally increase its value over time.

 

So lets say you have between 2k baht and 6k baht profit a day, not more than maximum 350 days a year in sunshine and tailwind, i.e. 700k baht to around 2 million baht a year, minus your salary/dividend of 50k baht per month (if taking what's needed for extension of stay based on work permit), or 600k baht a year. If you cannot charge a triple-up for beverage, you have next to nothing for the investment, i.e. the business shall be almost free of charge, and your gain will be the raise of price for the land under the bricks. However, if you have little more than 1 million baht a year in business profit after tax, you can pay a sum based on the number of calculated years to recover you initial investment plus it's interests, i.e. if five year (some business counts only three years) for the business; business and bricks might be worth a cost price in the level around from around 6 to 7 million baht and up to 12 million baht, plus resale value of the land under the bricks.

 

The hidden figure might be if any brown envelopes change hand to allow the business operation and opening hours, such extra costs reduce the sum you can afford to safely invest.

 

Advantages in terms of visas can be obtaining a non-immigrant B-visa and extension stays based on work permit. You will need to set up a Thai company limited with a registered capital of not less than 2 million baht, and you need four Thais employed (preferably paying Social Security for them); and remember that that you cannot own more then 49 percent of your company, you need minimum three shareholders, unless you are a US citizen, then you can own it all. Expect the show proof of a monthly salary in the level of 50k baht and income tax paid thereof. You can have benefits from joining the Social Security system as an employee, which will cost you 1,500 baht a month (750 baht off your salary, 750 baht from the company).

 

About tricks or traps in conveying the money to the current owners, you will pay a deposit when signing a sales contract for buying property, it could be 10 percent of the sales price, or whatever is agreed. The balance is normally paid in cash (which might be agreed as a cashier's cheque from a bank) at the land office when the property's title deed is registered to the new owner (i.e. a Thai company limited or a Thai national); seller normally pay sales tax, buyer normally pays transfer fee ans stamps, but any split of costs can bee agreed different in the sales contract. Key money or like, fx. paying for inventory, will normally be cash upon handing over of the business; make sure there is a contract and a proper receipt. Before signing anything, check that you, or your manager, or your company, can obtain the necessary permissions, herunder permission to sell alcohol, and eventual play music.

 

Risks beyond losing my investment, you might in worst case scenario – and that's always worth to include in one's planning – be responsible for paying compensation to third party, and the possibility of an amazing Thailand experience with an extended stay in Bangkok Hilton or like premises; there are a number of examples available from most book store selling English language litterature...????

 

It's always wise to remember the old saying: Never invest more in Thailand than you can afford to loose...????

Edited May 23, 2021 by khunPer

[kingofthemountain]

25 minutes ago, Neeranam said:

And a Toyota Fortuner

Or a mercedes

[scubascuba3]

1 hour ago, kingofthemountain said:

Maybe he is thinking that if he is one of the ''owners''

he will get more attention from the working girls in ''his'' bar ?

 

He is going to be very disapointed about it

 

There was a massage\bar on Buakhao last year where the french owner wanted to train the girls, most need it lets be honest but they were having none of it and left

[charliechoc]

dont do it. But if you're stupid enough to ignore my advice theres  a pom on youtube who you should watch. his name is bryan flowers. He is the so called expert on bars. at least he thinks this

[kingofthemountain]

36 minutes ago, dlclark97 said:

If you must buy into a bar at this time be prepared for 2-3 years of constant losses. 

It's not for nothing if most of the commercial lease are 3 years agrement

rince and repeat, the only ones earning good money were the thai landlords

owning the building\land 

they must be impacted also now with all the closures and the empty shells

however they have made such fortunes in the previous years imo they can wait

at least 2 or 3 generations before to start to feel a real financial bit on their lifestyle

[natway09]

Read my lips.

It is all about "margin" & unless you create something special that ain't gonna happen in Pattaya with a nice  Place down the road selling beers for 45 Bht  you have to match it ?

Rent, key money, salaries, Tea money,electricity, licences,(4 of) internet, True Visions, consumables,& of course obviously stock.

On top of that you have replacements ,TV's computers, glasses,taps, toilets, bar tops etc do not last forever, & R&M is high these days where you need to keep it "sparkleearchly"

or customers will go elsewhere.

In my 5th bar in Bangkok but would never consider a  Pattaya bar only a good nightclub where my opening statement does not matter so much

Good Luck, but do your honest homework to be fair.

Having a Thai own & be seen to operate  will also make your road easier with

the special greedy forces

 

[DefaultName]

I'm a bar user, not an owner.  My thoughts on what makes a successful bar;

 

• Personality - owner or manager or mama or girls, or the bar cat, has to have something that makes customers choose that bar and not another.
• Gimmick - something unique that draws the customers; pool, darts, girls with huge ****, happy hours, naked jelly wrestling, whatever, something that other bars don't have.  And a warning; if your gimmick works, there will be 20 copies in a month.
• Location - sounds trite, but few bars survive without it.  I've seen excellent bars 10 yards off Soi Bukhaow die a death when crappy ones actually on the Soi do OK.  Also, look at any beer bar complex; the ones in front are busy, the ones behind not so much.

Finally, buying a share in a bar makes you totally dependent on the man who is there every day, stories abound about the "front man" disappearing with the cash, sometimes after selling the bar again.  Or, the mama leaves and takes the girls to her new bar, you're left with a share in a bar that doesn't even have a waitress to sell a beer.

 

IMO, hands off seldom works, you need to be involved.  I'm not saying don't do it, just be prepared to walk away from any money you put in.

 

[Thingamabob]

You may be disappointed at the prices being asked for leases (or freehold if you have a Thai partner). There is a tendency here to raise prices when times are hard. Defies logic, but that's the way it is..

[Surelynot]

Just now, Thingamabob said:

You may be disappointed at the prices being asked for leases (or freehold if you have a Thai partner). There is a tendency here to raise prices when times are hard. Defies logic, but that's the way it is..

Just before Nana closed down I was sat with one of the mama-sans......beer 160 Baht.......I said that is crazy, why are you charging so much?......"because we have no customers"!!!

[OneMoreFarang]

49 minutes ago, timendres said:

Many a guy has fantasized about owning a bar in Pattaya. Whether they will admit it or not. Buying in a distressed market is as good an excuse as you will ever find.

 

You will not get any realistic numbers form this forum, unless a previous bar owner is generous enough to share.

 

What you should do is find an experienced mamasan who can build you a spreadsheet with all the numbers including "tea money and incidentals". She will also be able to provide you details of all of the pitfalls and traps that the numbers cannot capture. She will also know the area and can recommend locations. She may even become your most valuable employee. Deal her in on the upside, if you want to ensure success.

And she will also know all the tricks to make sure she makes the most profit for herself. 

Or why else should she help that farang who doesn't know what he is doing?

[Surelynot]

8 minutes ago, OneMoreFarang said:

And she will also know all the tricks to make sure she makes the most profit for herself. 

Or why else should she help that farang who doesn't know what he is doing?

Best way round that...........I did this....... "give her the place" and she pays you a fixed monthly amount.........in effect sub-let the bar......anything extra she can make each month she gets to keep...............watch her whip those girls into shape..

Edited May 23, 2021 by Surelynot

[joecoolfrog]

On 5/19/2021 at 2:40 AM, Danderman123 said:

I have no interest in operating a bar, or buying a majority share.

 

my interest is only in buying a small stake in an existing bar. 

Serious question ; Why would any decent bar owner sell you a stake ?

Im sure there are many who are desperate for a cash injection to stay afloat , not sure that would be a good investment though.

[Surelynot]

Just now, joecoolfrog said:

not sure that would be a good investment though.

Pretty damn sure it wouldn't be........555

[Andy from Kent]

On 4/17/2021 at 8:25 AM, Danderman123 said:

 

What is the market value of a shophouse bar that averages about 15,000 baht a day in revenues? I am looking for order of magnitude estimates, or accounts of past ownership.

 

 

You seriously come to TVF to garner factual information to help you make a business decision?

 

 

[Nojohndoe]

On 5/19/2021 at 7:56 AM, Danderman123 said:

I did some due diligence on buying a bar. The most significant information is that bars are cheap, on the order of a million baht, two million baht, maybe 3, for a shophouse type bar, depending on location and goodwill.

 

The issue isn’t so much the valuation of the bar, but potential losses from future adverse events.

As part of your considerations  my advice would  be to get outside of thinking in terms of availability, affordability because yes despite that being true to some extent you need to think in terms of the actual viability.

As some have already made clear those Bars that are still  operating are those which have not only some financial reserve backing but  established "connections' in addition.

A new or ressurrected  venture ,which will need compete for an already devastatingly depleted customer base with little chance of recovering to pre pandemic level for quite some time, would need be quite exceptional in the face of existing competition.

There are probably "adverse" potential events unspoken to potentially ensure potential losses .

 

 

 

 

[joecoolfrog]

2 hours ago, Surelynot said:

The only possible reason I can think of is to launder money

Certainly wouldn't be the first to do that lol.

[OneMoreFarang]

15 minutes ago, Nojohndoe said:

recovering to pre pandemic level

I don't know about Pattaya. But as far as I know in Bangkok high season at the end of 2019 was not exactly exiting. Business was far better in earlier years and it seems many new Thailand visitors are not so interested anymore in gogo-bars and beer bars. They order online.

Personally I still prefer bars compared to online order. But it seems I and people like me are not the majority anymore.

Even long established bars have less and less business because the number of the regulars is going down. Old and dead people don't visit bars so much anymore.

[kingofthemountain]

13 minutes ago, OneMoreFarang said:

I don't know about Pattaya. But as far as I know in Bangkok high season at the end of 2019 was not exactly exiting. Business was far better in earlier years and it seems many new Thailand visitors are not so interested anymore in gogo-bars and beer bars. They order online.

Personally I still prefer bars compared to online order. But it seems I and people like me are not the majority anymore.

Even long established bars have less and less business because the number of the regulars is going down. Old and dead people don't visit bars so much anymore.

I agree

 

even in Pattaya the traditional Thai beer bars were already in decline long time before Covid 19

 

The younger guys seem to prefer to order on line or to find their ''partner'' in discos like I-bar\insomnia where they have less the impression to be with bar girls prostitutes

Edited May 23, 2021 by kingofthemountain

[Nojohndoe]

5 minutes ago, OneMoreFarang said:

I don't know about Pattaya. But as far as I know in Bangkok high season at the end of 2019 was not exactly exiting. Business was far better in earlier years and it seems many new Thailand visitors are not so interested anymore in gogo-bars and beer bars. They order online.

Personally I still prefer bars compared to online order. But it seems I and people like me are not the majority anymore.

Even long established bars have less and less business because the number of the regulars is going down. Old and dead people don't visit bars so much anymore.

Agree. A consequence of the  pandemic has been an acceleration of consumer behaviors.

A friend some time back suggested that Malls  might be potential multi level skating rinks but he had to laugh in agreement when I suggested that not a good idea because most active people involve themselves in "sport" online now.

 

[Neeranam]

What a  sad thread. Pattaya bar owners must be the most loathsome creatures.

 

Why renunciate like normal 60 year olds do?

[Simple Jack]

My auld man was very wise. Taught me this lesson at a very young age.

 

"Don't invest, loan or gamble money you can't afford to loose"

 

Imho. I very much doubt Pattaya will recover anytime soon. If at all. I made a little coin In the new plaza 2007/2008. But those were way better days.

Either way. It's you're life. I wouldn't recommend it. But i wish you good luck & success either way.

[Ireland32]

I think test drive employees is the M.O.

[thesetat2013]

Forgive me to understand this correctly. You will buy a piece of a bar? 

If this is case I would say beware. My friend did this. 10% ownership for a % of the profits. In the end he got ripped off. Seems if the contract states the name of the bar.  Then the owner can make any excuse to claim the need to close. Even (which is the case of my friend) the rental agreement being cancelled. Then the owner can simply change the name of the bar and reopen under the new bake and new rental agreement. Thus, causing you to lose your investment all and legally have no grounds to make a claim for fraud or for any breach of the contract. 

Just an FYI to look out for in your search. This is not saying it would happen to you. But I would avoid a few small bars in LK METRO.  Not to mention any names. 

[timendres]

3 hours ago, Neeranam said:

What a  sad thread. Pattaya bar owners must be the most loathsome creatures.

 

Why renunciate like normal 60 year olds do?

 

Like beauty, loathsomeness is in the eye of the beholder.

[thailand49]

No need to ask question just dive in and make it happen since things are at a rock bottom there is only one way and that is up!  Go ahead make our day!????