Bank Loan To Build Resort

[womble]

I have leased some land on a 30 year lease and wish to build a resort.

Does anyone know if the bank will lend money for this using the 30 year lease as collateral?

What % of the value of the lease if any will they lend?

[Morden]

What advice did your lawyer give you before you signed the lease?

[Okidoki]

To be able to get financing in Thailand it seems that you need to be a Thai company, have the land, have started the construction and sold at least 30-50% of the project.

[Solosiam]

I have leased some land on a 30 year lease and wish to build a resort.

Does anyone know if the bank will lend money for this using the 30 year lease as collateral?

What % of the value of the lease if any will they lend?

Why would they lend you money on something you are borrowing?

It's not like they can get anything back if you default

[CWMcMurray]

Who are you leasing it from? Are you looking for a partner? Because unless the property holder is willing to put it up as collateral your chances are slim to none. It is difficult to get financing as a foreigner to begin with and a lease is not much in terms of collateral.

So you want to build a resort and after 30 years then what, just let the land owner have it? If you are going to make that type of investment on his land it might be worth it to try and bring him into the buisness.

[keestha]

Cases that I have seen of foreigners getting bank credit to build a resort or a hotel, they always had a Thai company limited that owned the land, and it was a prerequisite that not only the foreigner, but also at least one of the Thai partners had the right to sign on behalf of the company. A bank will be much more willing to consider a loan if construction has already started. Also, the bank will want to see that you can put up part of the investment yourself.

[torrenova]

I don't normally knock posts or posters but is this guy for real ?

Might as well bury your cash on the land and see if it grows if you have leased the land without any thought of financing except putting your own hand in your own pocket.

[capco1]

Have you made sure that a resort is even allowed on the land you leased? sounds like you just leased a parcel of land that you're stuck with!

[womble]

I don't normally knock posts or posters but is this guy for real ?

Might as well bury your cash on the land and see if it grows if you have leased the land without any thought of financing except putting your own hand in your own pocket.

I have the $ to construct 50% of the resort now, the initial plan was to build in 2 stages, the 1st stage to be built immediatley then the 2nd stage to be completed at a later date after saving $ from profit of running the resort and also after various other investments can be cashed in.

My 1st post didn't really explain properly, but I was just wondering if it would be possible to recieve finance in order to complete the project all at once rather than do in 2 stages, and if that was an option what it would cost in repayments etc.

I'm not one for bank loans, infact I have never owed banks any money at all, which is why I know nothing about loans in Thailand, which is why I am asking here.

I doubt i'm about to break the habit of a lifetime and start borrowing now, but it doesn't hurt to check all options......................

[Morden]

I asked earlier what advice your lawyer gave you. You haven't answered so I guess you haven't got legal advice.

Here's another question. This sounds like a major business project. Did you prepare a business plan? If you didn't, you should do it now. You're unlikely to get money from anyone without a viable plan. This is not a loan for a car!

Your instinct has been to avoid borrowing from banks. I'd say your instinct is right in this case. As others have already pointed out, you have no collateral. If you're a US citizen, you have some rights that ordinary farang do not but I doubt whether they are enough to help you through this alone.

LOS is littered with failed resorts. There are, I would guess, even more failed farang resort owners. You don't say from whom you leased the land but you would not be the first farang to lose what he has built. In fact, the more successful the business, the more likely you may be to lose it. That's not a cynical view or one that is critical of Thais or Thailand. It's just the way it's likely to be.

In other words, I think that you are about to lose money you don't have, even if you can get a loan. If you are now tempted to get a loan in your own country backed by your collateral there, think very carefully about that too. I know of someone who did that and he has 20 years of debt - and he lost the resort.

[blizzard]

resorts make a ton of money...............LOL!

go for it guy. id like to invest if you dont mind.....hehehe

[simon43]

resorts make a ton of money...............LOL!

[\quote]

Hmm, as I sit here at my own resort at 5.30am, (I'm up at this early hour because the resort is 100% full with guests, even in this rainy season), I have to agree that resorts DO make a ton of money

Simon

Also, back to the original question - our resort is also on rented land and my Thai wife did enquire about a loan before we started construction last year. The banks said 'no chance', and that was for a Thai person.

[Oleg_Rus]

****

+1

The clearest post ever.

I think the topic starter just made it up. Who would lease anything, without even plan 2 steps ahead ?

Edited August 26, 2007 by Oleg_Rus

[dee123]

"The Last Resort" BY Don Henly and Glen Fry.

[jumnien]

I think posters are being a little daft on the value of resort land that is leased. There are many large resorts in Thailand built and financed on leased land. My neighbor's in Bangkok have a nice hotel on leased land - Four Seasons on Ratchadamri. It's not impossible or necessarily bad business just because its leased. I use to lease land to a guy who operated it as a golf course and driving range. We both did quite well. He got a great deal while he leased it and I made a mint when I waited to sell it.

[womble]

To make a few things clear.

The land is beachfront. I have enough cash of my own to build half the resort which from the business plan I have made should turn a handsome profit, after the second phase is complete the profit should be pretty crazy.

From my calculations resorts can and do make a lot of $$$.

Yes I have legal advise, JSM, I use them for all my business in Thailand. I didn't discuss finance options with them as i've only just started looking into this.

Board members here seem to jump to all types of conclusions.

I simply asked what finance options there were and it seems I have been condemed for not taking legals advise, having no $ to construct etc etc.

If people put as much effort into properly asking questions as they do in finding ways to put down posters this forum would be significantly better.

Question for Simon43, how many rooms is your resort in Phuket?

[Morden]

If people put as much effort into properly asking questions as they do in finding ways to put down posters this forum would be significantly better.

That's rather rude of you! You asked a question related to a major undertaking without providing relevant background information and now criticise those who offer advice. You presented what looked like a half-baked idea and got an understandable reaction.

If you have half the money and think you can make it pay, go ahead with that and use the profits to fund further development if the business volumes demand it. You have 30 years to get your investment back before the owner has the right in law to thrown you out. Even if you have an option to renew the lease after 30 years, the land owner will not be forced by the law to renew it.

If you took legal advice and neither sort nor were offered information about finance, you should sack your lawyer, yourself or both! This might be a tropical paradise dream for you and your lawyer might have made some money but, the reality is that it's a hard-nosed business venture - and you're off to a poor start.

In a nutshell, you are unlikely to get finance from a legitimate source and that should have been obvious to you and your adviser. I suggest that you get some business planning software, do some more research and get planning. Do a SWOT analysis and budget at the very least.

And please don't ask for advice if you're going to attack those who try to help.

[percy2]

If people put as much effort into properly asking questions as they do in finding ways to put down posters this forum would be significantly better.

That's rather rude of you! You asked a question related to a major undertaking without providing relevant background information and now criticise those who offer advice. You presented what looked like a half-baked idea and got an understandable reaction.

If you have half the money and think you can make it pay, go ahead with that and use the profits to fund further development if the business volumes demand it. You have 30 years to get your investment back before the owner has the right in law to thrown you out. Even if you have an option to renew the lease after 30 years, the land owner will not be forced by the law to renew it.

If you took legal advice and neither sort nor were offered information about finance, you should sack your lawyer, yourself or both! This might be a tropical paradise dream for you and your lawyer might have made some money but, the reality is that it's a hard-nosed business venture - and you're off to a poor start.

In a nutshell, you are unlikely to get finance from a legitimate source and that should have been obvious to you and your adviser. I suggest that you get some business planning software, do some more research and get planning. Do a SWOT analysis and budget at the very least.

And please don't ask for advice if you're going to attack those who try to help.

Read what you quoted and found so rude again.

Cheers

[simon43]

Womble - It's small, just 10 bedrooms. But there is a reason for this. A hotel is defined as having 12 rooms or more. By restricting the 'resort' to 10 bedrooms, we cut out a whole load of legal paperwork, backhanders etc etc. We don't need a hotel licence because we are not a hotel, (FYI, hotel licences in Phuket often require a big backhander - It took a friend of mine more than 5 years to get his licence and the local OrBorTor threatened him legally all the way for 5 years!!)

I would rather open 2 10-bed resorts than a 20-bed hotel...

Simon

[womble]

If people put as much effort into properly asking questions as they do in finding ways to put down posters this forum would be significantly better.

That's rather rude of you! You asked a question related to a major undertaking without providing relevant background information and now criticise those who offer advice. You presented what looked like a half-baked idea and got an understandable reaction.

If you have half the money and think you can make it pay, go ahead with that and use the profits to fund further development if the business volumes demand it. You have 30 years to get your investment back before the owner has the right in law to thrown you out. Even if you have an option to renew the lease after 30 years, the land owner will not be forced by the law to renew it.

If you took legal advice and neither sort nor were offered information about finance, you should sack your lawyer, yourself or both! This might be a tropical paradise dream for you and your lawyer might have made some money but, the reality is that it's a hard-nosed business venture - and you're off to a poor start.

In a nutshell, you are unlikely to get finance from a legitimate source and that should have been obvious to you and your adviser. I suggest that you get some business planning software, do some more research and get planning. Do a SWOT analysis and budget at the very least.

And please don't ask for advice if you're going to attack those who try to help.

Sorry there was a typo on my second post, I meant properly answering questions, not asking. So what I meant was if people spent time answering what is actually asked rather than wasting long posts trying to make the OP look like a fool when infact the original post was simple and only requiring a simple answer from someone who actually knows what they are talking about.

Anyway I simply meant that people on the forum drew all types of conclusions from my post rather than answering the simple questions that I asked which were........

Does anyone know if the bank will lend money for this using the 30 year lease as collateral?

What % of the value of the lease if any will they lend?

I didn't ask people to make asumptions that I was a fool, I asked 2 simple questions, luckily a couple of posters with some experiance answered the questions.

cheers.

Edited August 27, 2007 by womble

[Solosiam]

You don't have any collateral, the land title is not in your possession - you are borrowing some grassland or whatever for x years. How would the bank even know if the chanote or other title was even legal, unencumbered etc....

Instead of jumping down people's throats when you don't like what you hear, why don't you go and see a Bank or an expert and pay for professional advice, like everyone else.

[womble]

You don't have any collateral, the land title is not in your possession - you are borrowing some grassland or whatever for x years. How would the bank even know if the chanote or other title was even legal, unencumbered etc....

Instead of jumping down people's throats when you don't like what you hear, why don't you go and see a Bank or an expert and pay for professional advice, like everyone else.

Point taken...........

[highdiver]

You don't have any collateral, the land title is not in your possession - you are borrowing some grassland or whatever for x years. How would the bank even know if the chanote or other title was even legal, unencumbered etc....

Instead of jumping down people's throats when you don't like what you hear, why don't you go and see a Bank or an expert and pay for professional advice, like everyone else.

Point taken...........

Womble.

when you post sucha question to TV. this will probebly get you the answers you got.

in general terms you can get financing from the bank.

however chances are slim as you are a forigner and you cant put up securities.

but its worth a try

first it all depends on how much money you wish to borrow and what is the loan compared with the asset value of the proposed project.

you will need to go to the bank preferebly with your lawyer and accountant and meet with the banks loan department.

dont do it through your local branch go directly to the head office.

you will need to show them a proper business plan and your expected earnings and prove that the business will be able to support the loan.

the most important is the ratio of expected return on investment.

if you have previous experience in same projects it will be an advantege.

the fact that you have invested in leasing the land and 50% of the project is also an advantage as the bank wants to see you are risking something as well.

if you are working with a reputable forign bank. try and get a letter of recomendation from that bank vouching for you as a reputable crediatble business man.

the bank will ask you details about your knowledge of the resort industry so be sure you know what you are talking about.

the bank will also want to see that you will work with the bank in all finances reagding the project.

I wish you Good Luck.

[womble]

You don't have any collateral, the land title is not in your possession - you are borrowing some grassland or whatever for x years. How would the bank even know if the chanote or other title was even legal, unencumbered etc....

Instead of jumping down people's throats when you don't like what you hear, why don't you go and see a Bank or an expert and pay for professional advice, like everyone else.

Point taken...........

Womble.

when you post sucha question to TV. this will probebly get you the answers you got.

in general terms you can get financing from the bank.

however chances are slim as you are a forigner and you cant put up securities.

but its worth a try

first it all depends on how much money you wish to borrow and what is the loan compared with the asset value of the proposed project.

you will need to go to the bank preferebly with your lawyer and accountant and meet with the banks loan department.

dont do it through your local branch go directly to the head office.

you will need to show them a proper business plan and your expected earnings and prove that the business will be able to support the loan.

the most important is the ratio of expected return on investment.

if you have previous experience in same projects it will be an advantege.

the fact that you have invested in leasing the land and 50% of the project is also an advantage as the bank wants to see you are risking something as well.

if you are working with a reputable forign bank. try and get a letter of recomendation from that bank vouching for you as a reputable crediatble business man.

the bank will ask you details about your knowledge of the resort industry so be sure you know what you are talking about.

the bank will also want to see that you will work with the bank in all finances reagding the project.

I wish you Good Luck.

Thanks........

Just the kind of response I was looking for,

I knew TV wouldn't let me down in the end........

[blizzard]

i bet only wombles believs his profit potential...............lol.

if others believe it financing would be the least of his problems.