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

[Dakhar]

What will happen is, there will be about 90% ocupancy, but only 60% will be reported, the "friends" will pocket the 30% funds and whatever other income is going to be given to them for property up-keep.

I say this because I have seen this done before.

Also, these folks may be honest.... but you must understand something about Thais. FAMILY is everything.

They probably have a drunk POP00p hamock dweller cousin that gambled everthing away, and is on the verge of selling his daughter, if only she was over 10 years old.... but alas she is not. So then he approaches his FAMILY for the funds...

all of a sudden these honest folks for some strange reason feel it is their duty to provide, and they will do so by ripping off your Falang parents... because in all honesty your parents can afford it, and so they will rip them off without any remorse.

I say this too, becasue this has happened in our business many times.

RUN as others have said.

[Khun Jean]

so mut negativity!

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

In Thailand. Very difficult.

Better to make money somewhere else and spend it here.

[maxcrc]

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.

Try Panama. The country is booming , there is money you cannot even imagine and if you take money thre no questions are asked, money is always welcomed.

There is corruption also, but you have the right to buy whatever you want and set up the company you want...

that s one of the easisest countries in the world to invest in (if you have money of course)....

and right now the country is booming impressively.

Edited February 29, 2008 by maxcrc

[maxcrc]

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.

I heard 50 million, but I am not sure. That s lots of money, with this ammount of money (lucky them) I wouldn t take such a risk... even the less profitable of the investment would give a return enough to live like kings....

[naka]

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.

Neole, your parents do not need to invest in Thailand just to settle.

You should also suggest that your parents hand over your inheritance prior to

going into a business venture in Thailand ... "With good friends" Not joking

Better they buy bonds, shares etc. then sit back and reeeelax.

Naka.

[Naam]

why does t-r-o-l-l come into my mind?

[GuestHouse]

Why is the son posting and not the parents?

[rgs2001uk]

Why is the son posting and not the parents?

could be the son is about to rip off the parents, cant be bothered waiting for his inheritance to finance his stay in the kingdom.

this story has so many holes i could drive a bus through them.

[ChiangMaiThai]

If you're serious about building a 200 room condo, please leave Thaivisa and go to one of the more reputable BKK law firms.

[Irene]

Wow! That was lovely and to the point. It was short and helpful to the questioner.

[gjones]

Foreigners can buy, both residential & commercial property in Thailand. The current laws & legal options available to potential foreign (non-Thai) purchasers are :-

Ownership methods:

I. Condominium:

Acquiring a condominium is gaining in popularity amongst foreigners. A condominium is a building that can have its separate portions sold to individuals or groups for personal property ownership.

Foreign purchasers are allowed under Thai law to purchase and own condominiums in Thailand.

There are five classes of criteria which alternative qualify foreigners as owners of condominium:

a) Holding a residency permit under Thai Immigration law, or

Permitted to stay in Thailand under the Investment Promotion law (BIO), or

c) A Thai registered entity with at least 51% of share held by Thai shareholder, or

d) Foreign juristic entity in receipt of a promotion certificate under the Investment Promotion law (BOI), or

e) A foreigner or foreign entity remitting a foreign currency into Thailand, or withdrawing money from Thai Baht account of the persons residing abroad, or withdrawing from foreign currency account.

Fortunately the last criteria applies to most foreign condominium purchasers and therefore it is the most typical way for foreigners to buy a condominium in Thailand.

According to the condominium act, foreigners or a foreign legal entity normally can acquire up to, but not exceeding 49% of a condominium block (direct freehold).

If a foreigner wants to register the purchase at the Land Office he has to submit a letter of guarantee from the condominium juristic person which proofs the proportion of foreign ownership among other documents. If the quota of 49% is already used, he can set a Thai company to purchase a condominium without restrictions. Another option is leasing. Condo-minium leases, like land leased are generally prepaid for 30 years with option s of renewing for two additional 30 year periods. In effect, the pre-paid rent is the same as a freehold or purchase price.

A further restriction according to the Condominium Act is that a foreigner must bring currency into Thailand to finance the purchase of the condominium. However, expats which are working in Thailand can use funds earned in Thailand on condition that their funds are paid into a non-resident account.

Further, the purchaser must obtain a Foreign Exchange Transaction form(FET) from the bank as proof of the remittance. This form will be issued by the receiving bank and is filed at the Land Department when the foreign purchaser registers the purchase. The amount of money fixed in the FET form must cover the whole of the condominium price. Should the remittance be less than $20000 USD, the bank will issue a "credit advice" in English which is not acceptable by the Land Office as proof of remittance for the condominium purchase. In case of this, the purchaser has to ask the bank to issue a "letter of guarantee" as evidence of remittance.

II. Investment / BOI:

Since 2002, a foreigner is permitted by the Ministry of Interior to purchase land up to one rai (1600 square meters) for residential purpose, on condition that he invests 40 million Baht in Thailand, for some purpose other than ownership of real estate itself. Actually, this option is problematical for the majority of foreign investors because of the legal restrictions involved and is relatively seldom used.

III. Leasing:

Leasing is a popular and straightforward option to acquire a property in Thailand. The maximum duration of a lease permitted under Thai law for non-commercial usage is 30 years, (for commercial usage 50 years), renewable for two additional terms of 30 years (commercial usage 50 years), if contractually agreed.

IMPORTANT! Any land leased for more than 3 years must be registered at the Land Department or it is only enforceable for the first three years.

It is possible under Thai law to lease land as an individual rather than through a Thai company.

IV. Corporate Ownership:

A further option is to establish a Thailand-registered company, preferably a Thai limited company, to acquire land. It needs a minimum of 7 different shareholders at all times, but only one director who can be a foreigner. At the beginning this director may have to be Thai in order to apply for the Tax ID and VAT registration of the Company. Thai law (land Code) requires that at lease 51% of the shares are held by Thai nationals and a maximum 49% of the shares may be owned by foreign shareholder because the land Code prohibition on foreign land ownership includes not only foreign individuals, but also Thai registered companies in which foreigners own more that 49% of the shares. Because there's no restriction under Thai law that one share must equal one vote, it is allowed to issue classified shares: The A-Shares ("Ordinary Shares") where the holder one share is entitled to one vote and the B-Shares ("preferred Share") where a shareholder must have multiple shares in order to obtain one vote. The foreign shareholders will subscribe to all A-Shares, whereby the B-shares are held by Thai holders. This structure enables the foreign minority shareholder to hold fewer numbers of shares, but in fact control the company by voting rights.

Since the foreign shareholder of the Thai Company can be a natural or a juristic person, it is possible to use an off-shore entity, e.g.a BVI (British Virgin Island) Company, for tax efficiency.

V. Managed Estates:

Currently, managed estates are very common. They all vary in structure. Normally the managed property is offered as a freehold purchase through Thai companies or with a leasehold structure concerning the buildings in combination with subscribing to a certain number of shares in a Thai company, which owns the land underneath the properties that are leased. This structure is advisable because the lessees of the buildings are more secure when they are also indirectly the "joint-landlords". With a land owning company which effectly protection that a lease is protected from being terminated by requiring typically at lease 75% of the owners to terminate a lease.

The potential problem with an "owner operated" managed estate is the necessity for the majority of the owners to confer & meet with each other. This may not be deemed as a practical or indeed attractive commitment

[blizzard]

it is a good point. tis isnt a place to get serious buznit advice..............lol!

[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.

Neole, your parents do not need to invest in Thailand just to settle.

You should also suggest that your parents hand over your inheritance prior to

going into a business venture in Thailand ... "With good friends" Not joking

Better they buy bonds, shares etc. then sit back and reeeelax.

Naka.

I had already that in mind, but my parents would like to continue doing some business. Not a small scale biz like a single restaurant or seven eleven.

[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.

Try Panama. The country is booming , there is money you cannot even imagine and if you take money thre no questions are asked, money is always welcomed.

There is corruption also, but you have the right to buy whatever you want and set up the company you want...

that s one of the easisest countries in the world to invest in (if you have money of course)....

and right now the country is booming impressively.

But they would like to settle in thailand and do business there. They have friends in thailand.

[Neole]

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.

They are not, but they are not business partners, they are salaried emplyees. Not the whole family even, maybe just the dad and a daughter or son. The daughter/sons have good paying jobs currently, as engineers in Sony etc, so its not sure who would like come and work full time, but they have agreed someone or the other will do it from their family.

If the 40 million baht complete ownership rule applies, then we dont need any partners at all. The company/condo would be owned totally by my parents.

[Neole]

What will happen is, there will be about 90% ocupancy, but only 60% will be reported, the "friends" will pocket the 30% funds and whatever other income is going to be given to them for property up-keep.

I say this because I have seen this done before.

Also, these folks may be honest.... but you must understand something about Thais. FAMILY is everything.

They probably have a drunk POP00p hamock dweller cousin that gambled everthing away, and is on the verge of selling his daughter, if only she was over 10 years old.... but alas she is not. So then he approaches his FAMILY for the funds...

all of a sudden these honest folks for some strange reason feel it is their duty to provide, and they will do so by ripping off your Falang parents... because in all honesty your parents can afford it, and so they will rip them off without any remorse.

I say this too, becasue this has happened in our business many times.

RUN as others have said.

Even though we trust the family thoroughly, what you are saying could be true. The family is quite well off, with each member owning a house/apartment and car in bangkok, with a good job coming from a college degree.

Still, my parents are shrewd business people, and will not be ripped off so easily. The main thing is, they will be staying in the condo itself and it will be difficult to hide much from them.

[Neole]

Why is the son posting and not the parents?

They are not really internet people. Emails and websites are ok, but forums are still a mystery to them.

[Neole]

If you're serious about building a 200 room condo, please leave Thaivisa and go to one of the more reputable BKK law firms.

I will, when I and my parents visit thailand in June.

Till then I was just trying to get a feel of the situation. No bangkok firm is going to be so negative for sure, so it gives me a different point of view from here.

[GuestHouse]

Even though we trust the family thoroughly, what you are saying could be true. The family is quite well off, with each member owning a house/apartment and car in bangkok, with a good job coming from a college degree.

Still, my parents are shrewd business people, and will not be ripped off so easily. The main thing is, they will be staying in the condo itself and it will be difficult to hide much from them.

Have you ever seen the movie 'The Treasure of the Siera Madre'?

[Neole]

II. Investment / BOI:

Since 2002, a foreigner is permitted by the Ministry of Interior to purchase land up to one rai (1600 square meters) for residential purpose, on condition that he invests 40 million Baht in Thailand, for some purpose other than ownership of real estate itself. Actually, this option is problematical for the majority of foreign investors because of the legal restrictions involved and is relatively seldom used.

III. Leasing:

Leasing is a popular and straightforward option to acquire a property in Thailand. The maximum duration of a lease permitted under Thai law for non-commercial usage is 30 years, (for commercial usage 50 years), renewable for two additional terms of 30 years (commercial usage 50 years), if contractually agreed.

IMPORTANT! Any land leased for more than 3 years must be registered at the Land Department or it is only enforceable for the first three years.

It is possible under Thai law to lease land as an individual rather than through a Thai company.

IV. Corporate Ownership:

A further option is to establish a Thailand-registered company, preferably a Thai limited company, to acquire land. It needs a minimum of 7 different shareholders at all times, but only one director who can be a foreigner. At the beginning this director may have to be Thai in order to apply for the Tax ID and VAT registration of the Company. Thai law (land Code) requires that at lease 51% of the shares are held by Thai nationals and a maximum 49% of the shares may be owned by foreign shareholder because the land Code prohibition on foreign land ownership includes not only foreign individuals, but also Thai registered companies in which foreigners own more that 49% of the shares. Because there's no restriction under Thai law that one share must equal one vote, it is allowed to issue classified shares: The A-Shares ("Ordinary Shares") where the holder one share is entitled to one vote and the B-Shares ("preferred Share") where a shareholder must have multiple shares in order to obtain one vote. The foreign shareholders will subscribe to all A-Shares, whereby the B-shares are held by Thai holders. This structure enables the foreign minority shareholder to hold fewer numbers of shares, but in fact control the company by voting rights.

Since the foreign shareholder of the Thai Company can be a natural or a juristic person, it is possible to use an off-shore entity, e.g.a BVI (British Virgin Island) Company, for tax efficiency.

Thanks Gjones, this is very helpful.

The best option sounds like 'II. Investment / BOI: ' option, if it can be applied in our case. I wonder if it can be applied, and the building of the condo be separated from the real estate ownership purpose as required by the law?

'III. Leasing': - this also sounds reasonable - 50 years is a long time.

'IV. Corporate Ownership' under 7 shareholders would be the last option.

[Naam]

Still, my parents are shrewd business people, and will not be ripped off so easily. The main thing is, they will be staying in the condo itself and it will be difficult to hide much from them.

yeah right! only "shrewd" business people invest their money in countries where their rights conducting business AND rights of residence are extremely limited and ask their son to clarify open questions by asking them in an internet forum

[Neole]

Have you ever seen the movie 'The Treasure of the Siera Madre'?

No, but I just checked it up on wikipedia.. did not get the point?

[Neole]

yeah right! only "shrewd" business people invest their money in countries where their rights conducting business AND rights of residence are extremely limited and ask their son to clarify open questions by asking them in an internet forum

They havent asked me to clarify, Im doing this on my own. They would be clearing this up with the proper people in bangkok when we are there in June.

[Naam]

Neole,

perhaps i am completely wrong in my assumptions. if that is the case i humbly apologise. but the fact remains that for "us Thailand connoisseurs" the undertaking, respectively the object of the business is based on wrong footings because your parents are foreigners.

Edited March 2, 2008 by Naam

[Neole]

Neole,

perhaps i am completely wrong in my assumptions. if that is the case i humbly apologise. but the fact remains that for "us Thailand connoisseurs" the undertaking, respectively the object of the business is based on wrong footings because your parents are foreigners.

Please dont apologise, its good for me to get all opinions, especially from people actually living there. This is why I posted here, as what the law firms and building contracters etc will give us there might not be the real picture in the long run.

[GuestHouse]

Have you ever seen the movie 'The Treasure of the Siera Madre'?

No, but I just checked it up on wikipedia.. did not get the point?

Skip Wiki and go and rent the movie - It will teach you what you need to know about human nature, money and greed.

[LaoPo]

Our friend Mr. Neole with his 64 posts, so far, is an interesting read... .....and that's an understatement.

LaoPo

[dr_Pat_Pong]

Our friend Mr. Neole with his 64 posts, so far, is an interesting read... .....and that's an understatement.

LaoPo

He is also posting from India. Roy percent TROLL in my opinion.

[LivinLOS]

The main thing is, they will be staying in the condo itself and it will be difficult to hide much from them.

These people.. Obviously millionares (as this is going to cost millions to do).. are going to live in a Thai condo block where the condos rent for 2500 baht per month ??

Why is none of this making sense ??

Also if you really havent understood what people are telling you about the logistics, thai partners / managers / employees, and laws for this venture.. Then the people involved will lose thier shirts.

[Irene]

Our friend Mr. Neole with his 64 posts, so far, is an interesting read... .....and that's an understatement.

LaoPo

He is also posting from India. Roy percent TROLL in my opinion.

Ha! Ha! I like that. It never crossed my mind.