Retired Foreigners Wanting To Make Apartments For Rent In Bangkok - Whats The Best Way?

[Neole]

My dad and mom, over 60 yrs old, want to buy land in bangkok, make a 200 flat housing complex, and give the flats out for rent.

Whats the best way to do it? Is it legally possible to own the land?

What about work permit, or what kind of visa etc would be required?

Once I know its possible and the basics, I will get them to hire a legal firm to handle it.

[LaoPo]

For Thai and/or Farang Senior citizens ?

Basically it's a good idea but I wouldn't do that in a city like Bangkok...

Cha Am/Hua Hin springs to mind.

Laopo

[GuestHouse]

If your parents are not Thai citizens they cannot own land.

Their idea of building for Farangs in Bangkok requires that they build where the Farangs live in Bangkok - essentially in the ghetto that is the Sukhumvit Road area (and incidentally arguably the highest land prices in the city).

I also observe that building a 200 unit development is a SERIOUS investment, the kind of money that would, if only left in an interest bearing bank account, would provide a significant monthly income (without the risks of moving the money to Thailand).

Tell your parents to skip the legal advice and get financial advice on where to invest their money to obtain a good income without risking their capital.

[Neole]

The flats will be for thai workers/families mostly. Building the complex and getting tenants is not the difficult part.

The difficult part is the land ownership/company ownership. How can they manage this without having an outsider owning the land? Can the land be owned by a company that my parents are owners of?

GuestHouse - it is true they could get significant income from investing the money, but they have this much extra cash, and they would like to carry on working. They have been active all their life and would like to keep themselves involved in business, and this idea appealed to them.

[LaoPo]

The flats will be for thai workers/families mostly. Building the complex and getting tenants is not the difficult part.

The difficult part is the land ownership/company ownership. How can they manage this without having an outsider owning the land? Can the land be owned by a company that my parents are owners of?

GuestHouse - it is true they could get significant income from investing the money, but they have this much extra cash, and they would like to carry on working. They have been active all their life and would like to keep themselves involved in business, and this idea appealed to them.

Are your parents 'Farang' ?

If so, why are they looking for enormous problems....?

But, I'm sure there are lots of people able to help your parents get rid of their money.....Maybe it's better for you they invest their money in a more safe, stable and secure way.

LaoPo

[Neole]

Yes, they are farangs.. but this is starting to look like not so good an idea. If anyone has any idea of wether it can be done or not, do let me know.

[thaihome]

It can be done, but working with construction companies at that level and later managing the complex would require some one to be fluent in Thai. The best they could hope for would be the money behind the project, they would not be able to run it themselves.

TH

[LaoPo]

Yes, they are farangs.. but this is starting to look like not so good an idea. If anyone has any idea of wether it can be done or not, do let me know.

Maybe it would be a good idea if you're talking 'Farang' seniors, renting for 3, 6 or more months a year (apart from the visa problems) or maybe even buying, but you need a reliable (there you go...) local Thai business partner.

If they are in their sixties it would be hard work even if they were 'just' supervising

IMHO...lots of headaches.

LaoPo

[Irene]

Neole,

Everybody on this thread is spot on with the observations that both your parents are looking for trouble. However, I was stuck by your comments that:

"but they have this much extra cash, and they would like to carry on working. They have been active all their life and would like to keep themselves involved in business, and this idea appealed to them."

Therefore, it would be difficult for you to convince them to give up this romantic idea of owning a workers' complex. Even for a Thai with no legal hindrance, he still has to think twice. First, dealing with multitude number of people with a few thousand baht rental per person, you have to like people a lot. Second, you are in a competitive field of supplies since there have been many Thais who have gone into this venture with some things to do. May be by now, all the ideal location has been taken. Third, as an owner, you are also responsible for a large number of human lives and possessions. Fourth, your parents would have to be more than active unless they have a few good deputies. Fifth, I do not think stress on this type of business is good in prolonging their well-beings. It is not easy to resell.

As to the intended question, whether it is possible for farangs to run this type of businesses. The answer is definitely possible. Look at a few boutique hotels owned by Europeans, their lawyers must have guided them to do so at a huge fee. You need building permission, "hotel" permit, structure in land ownership, company shareholders that are things I can think of. They are all possible at a price and your parents will get closer to a real scene of paying tea money etc. With that, perhaps you can convince them to take up business of such like 7-11 to keep them busy. The return on investment could be miserable but with their attitude they might be happier. I know of many Thai well-to-dos of the same like are also looking for somethings to do and mostly end up in restaurant business because their maids and wives are good at their home cooking. I would say 90% of them failed miserably after realising how hard to run a restaurant as different from home-cooking.

Why don't you start another thread, asking what could be an ideal business for people like you mom and dad who like to be active but not concerned with profit? I very much like to know the answers because I know quite a few who have been asking this type of question.

[naka]

I assume your parents have completed similar projects in their homeland, how many ?

Naka.

[Neole]

Sorry I did not mention one important thing -

The actual operation, rent collection, maintainance, water and electricity supplies, and even the contract for construction etc will be handled by a thai family who are close family friend of ours. They will be handling the promotion, getting customers etc as well. This would include advertising in sony etc offices in the form of pamphlets/brochures to get their workers to stay in the condo. My parents would not even need to supervise most times, except when there would be need for finance. They would be living in one of the condos. The thai family members who are helping would receive a monthly salary.

I just needed to know how it could be handled so the actual ownership of the business and land and building would stay in the hands of my parents and not the thai family. What kind of visa/permits they would require.

[Neole]

thaihome, LaoPo, Irene - thanks for the replies. As I said in the last post, they would not really need to run it themselves, and we have trusted thai people to help us.

[Neole]

naka - they do have experience in the construction business, but they dont have experience in the rent-out-condo business. The thai family who would help us also has experience in construction, but not in the rent-out-condo business.

[Neole]

Irene - they would not like to do small business like 7-11 or a single restaurant, as that would appear too 'low status' to them. They would take up something larger scale only, or not work at all.

The condo business should fetcth monthly 500,000 baht, if all 200 condos are full with 2500 baht per month. It would be a slightly classy condo, with swimming pool etc. Maintainance and salaries should take 100,000 baht maximum.

[GuestHouse]

The thai family who would help us also has experience in construction, but not in the rent-out-condo business.

ALARM

ALARM

ALARM

THIS IS NOT A DRILL .... THIS IS NOT A DRILL ...... THIS IS NOT A DRILL

ALARM

ALARM

ALARM

Do the right thing and put some distance between Thais and your parent's money.

[samran]

"close family friend".

Love it.

IF you want to invest in something like this, I'd approach an established property construction company...say Raimon Land, who are looking to do stuff in the social welfare sphere (from what I've heard).

[PattayaParent]

I think the only way they could do it is set up a legitimate Company with the Thai friends as 51% shareholders and your parents as 49% shareholders.

But they will have to find out the legalities of loaning the investment money the the Thai family for their 51% shares and safeguarding its return. And considering their age how the company shares would be distributed (to you I assume) on their death.

[Neole]

Well the actual construction would be done by a proper contruction company, the thai family would only handle the condo day to day affairs like collecting rent etc.

[Neole]

I think the only way they could do it is set up a legitimate Company with the Thai friends as 51% shareholders and your parents as 49% shareholders.

But they will have to find out the legalities of loaning the investment money the the Thai family for their 51% shares and safeguarding its return. And considering their age how the company shares would be distributed (to you I assume) on their death.

Someone suggested similar, with some thai people being partner share holders, and their undated resignations signed in advance. Not sure if that works perfectly.

[Khun Jean]

Starting something similar but smaller in Hawai sounds better to me. Don't need 200 condo's. around 4 would be enough to get the same return. And the 'bonus' of real 100% ownership.

Unless you are american. Then it might be possible to have 100% ownership here in Thailand.

For the amounts of money that needs to be invested i would never ever invest if not 100% ownership or if with a partnership the other partner(s) coughing about equal amounts.

Thailand is not the best (i think not good at all) for investments involving land. The world is big and there are much more oppertunities where ownership is not so complicated as here.

If it is a way to help the Thai family, a good thing in itself, there are so many ways to help without involving large quantities of money upfront/invested.

Being busy, maybe volunteer work to help the less fortunate can be very fullfilling. And with the money still in the bank earning interest it would be possible to support a lot of thai families.

Edited February 28, 2008 by Khun Jean

[rgs2001uk]

danger will robinson danger.

if it sounds too good to be true it probably is, if you see a bandwagon its too late, etc etc etc.

if this is such a sure fire winner, lets see the business plan, 200 rooms at say 4000 baht per month, the numbers dont add up.

how much are the other partners putting up, what do they bring to the table?

there is one born every day, why do i never meet them?

tell the thai family to take this folly to the hsbc and report back to us, with the exact hsbc reply.

[freitag1]

Don't invest in Thailand. So many other and safer ways to invest your money that also offer a decent return (8 - 9 % with medium risk)

[Khun Jean]

I also want to comment on the 'They have been active all their life and would like to keep themselves involved in business'.

I have a few friends and family members in that situation. One of them had this idea of starting up a few businesses and be an advisor/manager. It costs him a lot of money, finaly he gave up on it and started a new business to get back al the money lost.

He said to me 'I was stupid to BUY myself a JOB'. Good lesson learned. (This not happend in Thailand. but under 'normal' laws and business rules/mentality in his own country)

So many things to do instead of being involved in business. I suggest trying out some hobies or try to find some latent talents like golf, painting or playing an instrument. Can be very fulfilling and who knows, they might enjoy it.

[Irene]

Neole,

With your new information, I would say the situation is worse with your parents not involving in the operation but only taking in income and paying expenses whenever required leaving your Thai friends to cover the grassroots. Irrespective of the good friendship, the whole concept is to open holes of the tills for the Thai friend to dip in. Either the Thai friends are really really honest (which is a rare commodity) or not bright, I would not be surprised the friendship could end in future. Threat of legal actions or even bodily harm could result.

However, I can sense that the investment sum to your parents is an extra cash and not significant in their heart, losses are bearable if at least the property still remains intact for your parents. Irrespective of the warnings etc., if your parents still like to go along with that route and expects only of some legal protection on the land and buildings, then I strongly suggest you to approach those law firms that have dealt with this situation before in designing a right company structure. Most likely they will come out with 51:49 shareholdings of a small registered capital with mortgaged loans to the company. I do not recommend you to rely exclusively on whatever said in this forum, a final review from an honest and reputable legal firm is a must.

[PattayaParent]

I think the only way they could do it is set up a legitimate Company with the Thai friends as 51% shareholders and your parents as 49% shareholders.

But they will have to find out the legalities of loaning the investment money the the Thai family for their 51% shares and safeguarding its return. And considering their age how the company shares would be distributed (to you I assume) on their death.

Someone suggested similar, with some thai people being partner share holders, and their undated resignations signed in advance. Not sure if that works perfectly.

As far as I'm aware the shareholders don't have to be on the Board of Directors running the company but you'd have to talk to an expert in company structure in Thailand (Sunbelt Asia perhaps???)

If the cost of the Project is going to be over 20 million baht (I think, maybe 40 million) then they can get a BOI investment approval and be able to own the company 100% themselves.

[Neole]

If the cost of the Project is going to be over 20 million baht (I think, maybe 40 million) then they can get a BOI investment approval and be able to own the company 100% themselves.

Thanks, that could be very useful. I will find out more about this.

[Neole]

I also want to comment on the 'They have been active all their life and would like to keep themselves involved in business'.

I have a few friends and family members in that situation. One of them had this idea of starting up a few businesses and be an advisor/manager. It costs him a lot of money, finaly he gave up on it and started a new business to get back al the money lost.

He said to me 'I was stupid to BUY myself a JOB'. Good lesson learned. (This not happend in Thailand. but under 'normal' laws and business rules/mentality in his own country)

So many things to do instead of being involved in business. I suggest trying out some hobies or try to find some latent talents like golf, painting or playing an instrument. Can be very fulfilling and who knows, they might enjoy it.

That is good advise about not buying themselves work..

But they would like to be active is business, as thats what they like.

[Neole]

And one of the main reasons for investing in thailand is..

they want to settle in thailand.

so that makes doing business in other countries more difficult.

[blizzard]

so mut negativity!

when is someone gonna come up with an idea that actually sounds workable!

[torrenova]

Are these good Thai friends putting up some cash for 51% of this business ? Doesn't seem so from this seat. Don't walk away. Run.