Key Money For Shophouse In Lamai

[joeyb]

I will be moving to Lamai in the next 9-15 months. In the last year I have spent 3 months in Thailand and roughly half that time in Lamai. I originally wanted to get an apartment plus open a shop somewhere else. I now think a shophouse is the way to go. Rent is not a problem, but this whole "key money" thing is new to me. I've spent hours reading the old posts and feel I have a pretty good grip on everything.

My question is this. How prevalent is key money in Lamai for trying to rent a shophouse? I did enquire about some while I was there. For instance, the 2 new shophouse vacancies along Beach Rd in the center of Lamai (kind of by the entrance to the Night Market) are 20,000 baht per month, but the key money was 2,000,000. Too much for the kind of shop I'm looking to open. I also found some way off the beaten path that required no key money. I would definately sacrafice an older place for a good location. I saw a lot of empty shophouses for rent so I feel positive that I will be able to find something "close to the action" and with minimal KM. Is this realistic?

One last question. I talked with some thai vendors at the Night Market who told me that rent was 2000 baht per month for a booth. Can a farang rent one of these and hire a Thai to work it? Assuming, of course, go thru all the proper steps of setting up my company and all that. I am an American so I can own my business without having to go the whole 51/49 deal. I am just curious so that if I do open further away from the main walking traffic that I could have a secondary location and quite cheap as well.

Thanks in advance.

[churchill]

Go for the best location you can afford - re price -It's down to negotiation - if you can afford to pay rent upfront you should be able to reduce the key money required . You have to have a pretty successful business to pay 2M plus 20,000 per month , especially if it is only a 3 year lease , to get any decent returns . What are you planning to sell ?

[SamuiJens]

Sure you can rent a booth and have a Thai working it! BUT I would live in Samui at least a year before get into a working envirement since there have been thousands like you that have gone down with the ship. You need to really know the business culture here and how it works.

Good luck, but be careful! Words of wisdom on Samui!

Edited April 11, 2008 by SamuiJens

[Pushit]

I will be moving to Lamai in the next 9-15 months. In the last year I have spent 3 months in Thailand and roughly half that time in Lamai. I originally wanted to get an apartment plus open a shop somewhere else. I now think a shophouse is the way to go. Rent is not a problem, but this whole "key money" thing is new to me. I've spent hours reading the old posts and feel I have a pretty good grip on everything.

My question is this. How prevalent is key money in Lamai for trying to rent a shophouse? I did enquire about some while I was there. For instance, the 2 new shophouse vacancies along Beach Rd in the center of Lamai (kind of by the entrance to the Night Market) are 20,000 baht per month, but the key money was 2,000,000. Too much for the kind of shop I'm looking to open. I also found some way off the beaten path that required no key money. I would definately sacrafice an older place for a good location. I saw a lot of empty shophouses for rent so I feel positive that I will be able to find something "close to the action" and with minimal KM. Is this realistic?

One last question. I talked with some thai vendors at the Night Market who told me that rent was 2000 baht per month for a booth. Can a farang rent one of these and hire a Thai to work it? Assuming, of course, go thru all the proper steps of setting up my company and all that. I am an American so I can own my business without having to go the whole 51/49 deal. I am just curious so that if I do open further away from the main walking traffic that I could have a secondary location and quite cheap as well.

Thanks in advance.

Pay 2Mil key money and you will probabloy never see your money again, sounds like a scam and is NOT realistic.

[Khun Jean]

Keymoney is a way to get you out when it is renewal time, and it happens very often. In Lamai i have seen it happen 3 times to succesful businesses. Italian restaurant, resort and a bar all within one year. Turnover is enormous.

Being close to the action is worth almost nothing. Everything is where the action is. Nobody walks even 50 meters from the very beaten path so stick to the main beach road and other well visited locations.

The next few months it will the right time to go look around. Lamai will be deserted in many places. Something you can not imagine if you have been there in high season. And with deserted i really mean deserted. Sure you have a few people walking around but they live there and are probably not interested in your wares. Not knowing what kind of business it is i can only tell if you need people walking by then there are only a very few places where at least you can sell enough to pay the rent and maybe make a decent profit. Until of course it is renewal time and the owner knows you are making money. He will want all of it, not a percentage, but all of it without doing anything in return for it. It is because others will see you are successful and will pay the increased rate without even thinking or making a plan.

My advise would be, rent something for a longer time, long enough to be able to establish yourself and make money even if you have to pay a little more every month. In the long run it will be worth it. If it not works out you can sell the lease to another. For that make sure it is transferable. If it does work out, keep looking around for another place to move to with better conditions. It will make your currunt owner nerveus and maybe he will think twice about increasing the rent and keymoney, but don't count on it. Always have a plan 'B'.

2 million bath keymoney is not something special. Many places have rediculously high keymoney. Still people pay it, so for the owner it is smart to do it. If it is smart for the renter, let's say i personally would not start a business unless i have a normal rental price, a long contract and a good location. Patience is the key. Wait for the oppertunity. And for that you have to be there and ask around, leave telephone numbers, talk with many people etc.

Credit crunches all over the world, i think a few oppertunities will arise soon , especially when the foreign stream of dollars/euros/pounds are not worth the same as some time ago.

[joeyb]

OK, let me be clear. I would NEVER pay 2M baht!! As I said in my OP, this is way too much for what I have in mind. I'm trying to avoid paying KM all together as it sounds more like a bribe or kickback.

I have a college education, 10 yrs experience in this field in the US, and have made 2 more trips to Samui to further study the situation. Living on Samui for a year before opening shop makes little sense to me as what I am going for involves very little start-up money. One year on Samui only takes money out of pocket and brings nothing back. It also gives my competition a year advantage on me. Also, currently there is no real competition to speak of which is why I don't really want to get into the specifics of what I would be selling.

The shophouse scenario makes the most sense for me at least at the start. But, it wouldn't phase me in the least to rent an apartment and also a shop. I just want to know if it's possible to rent a decent shophouse with little or no KM.

[joeyb]

Khun Jean,

Thanks for the response. I agree with alot of what you said. I do plan on moving to Lamai, then making a thorough search for the best location/price mix. If i have to wait a few months to get what I'm looking for no problem. That's kinda why I enquired about the Night Market so I could sell product and have money coming in without having a proper shop up and running yet.

There is a lot of negativity on this KS board. And while I don't need anyone blowing smoke ..., I feel that the negativity is overwhelming a ttimes. I have done all the prudent business planning that can be done and yet at the end of the day it is hard not to be effected by the loud and numerous voices crying the sky is falling. I have listened to what they are saying and for some it may make sense. But, I don't fall into 99% of the reasons why "thousands have gone down with the ship". In fact, being an American gives me a giant advantage over almost all of my would-be competitors.

[SamuiJens]

Khun Jean,

Thanks for the response. I agree with alot of what you said. I do plan on moving to Lamai, then making a thorough search for the best location/price mix. If i have to wait a few months to get what I'm looking for no problem. That's kinda why I enquired about the Night Market so I could sell product and have money coming in without having a proper shop up and running yet.

There is a lot of negativity on this KS board. And while I don't need anyone blowing smoke ..., I feel that the negativity is overwhelming a ttimes. I have done all the prudent business planning that can be done and yet at the end of the day it is hard not to be effected by the loud and numerous voices crying the sky is falling. I have listened to what they are saying and for some it may make sense. But, I don't fall into 99% of the reasons why "thousands have gone down with the ship". In fact, being an American gives me a giant advantage over almost all of my would-be competitors.

I'm lost joeyb, why is being an American such an advantage over say a Canadian or Europeans? Please enlighten me!

Edited April 11, 2008 by SamuiJens

[Khun Jean]

Samuijens, 100% ownership for one thing.

Joeyb,

I think you should also really consider Chawaeng, if you need the numbers walking by. Lamai compared to Chaweang is very quiet. It is nice for a holiday but for business....

Chaweang also has a much longer 'season'. The high season is very short in Lamai, in Chaweang the difference is less dramatic.

I had tens of paying customers every hour in my shop in high season, low season it was more 5-10 a day. Some neighbours even closed shop for a few months. It was that quiet. And Thai people not really close shop if there was a change of making money.

Go through at least one cycle of high and low season before setting up something permanent.

Another point to be aware of is the copycat culture. If you have a product that sell good and is copyable be afraid. If you give your product something only you can do that would be much better.

Edited April 11, 2008 by Khun Jean

[joeyb]

SJ,

I didn't know Canada had an Amity Treaty with Thailand. But, if they don't, then that's the reason.

[breezein]

2 million key money in Lamai no way key money is a scam.

e.g 2,000,000 key money 36 months @ 20,000 totals 2,720,000 divided by 36 = 75,555bt per month no way not even in chaweng.

[Mark Wolfe]

I have a college education, 10 yrs experience in this field in the US...

What is "this field"?

I don't want to overwhelm you with more negative statements, but setting up a shop in Lamai or anywhere on Samui is a bad idea. I have a university education (BS Business Management), and 23 years' experience in Asia (two years living on Lamai). The only people who really make money are the Thais that own the land/building who get the rents.

Seriously, I can't think of any product that would sell well enough to cover the costs of rent and living to make a profit over just being able to survive here (meagerly). There may be a few exceptions, any poster feel free to point these out, should they exist, but I don't know any place that I look at and think, "Shrewd move setting up that place."

Khun Jean is right about the low season, but I might add that there are a number of "low seasons." Expect a few good months and then suck wind for the rest of the time.

By the way, my take on key money is that it is the thing that you MUST get back out of the place when you sell (to the next unsuspecting farang); otherwise, your hand-to-mouth existence will turn into a loss.

Unless you have some astounding idea for a shop, think again.

PM me if you want private advice.

M

[Pilchard]

I just want to know if it's possible to rent a decent shophouse with little or no KM.

On a main beach road No is the simple answer, on a side street or back street yes.

Key money is just a tax Free advanced rent , you won't be getting a tax receipt from the land lord.

2 million key money in Lamai no way key money is a scam.

e.g 2,000,000 key money 36 months @ 20,000 totals 2,720,000 divided by 36 = 75,555bt

per month no way not even in chaweng.

50k per month plus key money is very common in Chaweng beach road, now 100K for front row in new Mr Chaweng plaza

[SamuiJens]

SJ,

I didn't know Canada had an Amity Treaty with Thailand. But, if they don't, then that's the reason.

So that's why Ameicans are so looked down on by the other nations of expats!

Except me, that is!

Edited April 11, 2008 by SamuiJens

[Noodles]

Another point to be aware of is the copycat culture. If you have a product that sell good and is copyable be afraid. If you give your product something only you can do that would be much better.

I think this may be your biggest hurdle. A friend of mine had a great unique idea and brought

it to samui. The thais here made it very difficult for him to operate, out of jealousy and greed.

In the end he sold it on to them to save the headaches.

Good luck with what ever it is you are doing.

[churchill]

OK, let me be clear. I would NEVER pay 2M baht!! As I said in my OP, this is way too much for what I have in mind. I'm trying to avoid paying KM all together as it sounds more like a bribe or kickback.

I have a college education, 10 yrs experience in this field in the US, and have made 2 more trips to Samui to further study the situation. Living on Samui for a year before opening shop makes little sense to me as what I am going for involves very little start-up money. One year on Samui only takes money out of pocket and brings nothing back. It also gives my competition a year advantage on me. Also, currently there is no real competition to speak of which is why I don't really want to get into the specifics of what I would be selling.

The shophouse scenario makes the most sense for me at least at the start. But, it wouldn't phase me in the least to rent an apartment and also a shop. I just want to know if it's possible to rent a decent shophouse with little or no KM.

If you want a good location you will have to pay - if your product is as good and unique as you believe perhaps you do not need a prime location and people will come to you and then you can find a shophouse very cheaply- It depends if you are selling to tourists or locals and what your product is !

[Khun Jean]

Another thing has to be discussed before final plans are made.

That is the visa situation and the form of the business. Although 100% owned is possible, working in that same company might be difficult or even impossible. Sure you can be a manager, but is that the goal. Having Thai employees only when necessary to follow the rules is another of those hurdles.

Paid up capital is another one. A lot of red tape. Anyway if the business idea is good all these things can be overcome. Just don't underestimate all of those steps. It is hard to get all these things just right.

Some assistence is required i think.

[joeyb]

What is "this field"?

The same as yours only with a minor in Marketing. My experince is in Retail Sales and Marketing. I curruently run a store in the US with revenue exceeding $1M a month. This is what I do for a living and why I went to college (and to play college football). I have studied this situation for a year now and have looked at all the pros/cons. I'm not looking to become a millionare or to move permanately maybe 3-7 yrs (but who knows). My start-up cost is very low and my break-even sales are such that I could easily weather the low seasons. I have read this forum (and others) backward and forward. I'm not some pensioner who worked the last 30 yrs in IT (or whatever) and now wants to open a beer bar.

MW, most of your experience seems to be in Journalism and teaching English. Which is fine, but mine is directly related to the day in - day out running of a business. The fact that you cannot think of a business that "makes money" is probably directly related to your choice of careers. Some people see what others don't. You see stories and unique and creative ways to tell them. I see business opportunities. Trust me, when I say that the fact you don't see "them" is very encouraging to me.

I have waited 1 yr and will wait 1 more before making the jump. I appreciate all the advice, but I have looked at this from every angle. So I don't enter into this lightly. And let's get real for a second. We're not talking about curing cancer or rocket science here.

I also would never even attempt this if it were not for the fact that I'm able to own MY company 100%. I'll be damned if I'm going to take all the risk, come up with an idea, do all the grunt work only to turn half of it over some lady running a noodle cart next to Family Mart. I'm surprised more Americans aren't here doing the same thing (well, not really, but that's a whole other topic for another day).

I met an English guy on Samui who had no idea that AMericans could own their companies 100%. He told me he to pay off his thai "noodle cart" guy for 2 million baht then went to Malaysia to restucture the company. I could never do that.

[joeyb]

Khun JeanPosted Today, 2008-04-11 08:21:54 Another thing has to be discussed before final plans are made.

That is the visa situation and the form of the business. Although 100% owned is possible, working in that same company might be difficult or even impossible. Sure you can be a manager, but is that the goal. Having Thai employees only when necessary to follow the rules is another of those hurdles.

Paid up capital is another one. A lot of red tape. Anyway if the business idea is good all these things can be overcome. Just don't underestimate all of those steps. It is hard to get all these things just right.

Some assistence is required i think.

KJ, thank you again for posting some really helpful stuff without all the "doom and gloom". I will most definately use Sunbelt or another similar service to haelp me get started and with the visa issues. I am in no hurry and will probably come to Samui this fall one last time to be 100% sure before I make the big jump. Even then i plan on living on Samui a few months before and while everything is being settled (ie, rent, location,etc...)

[misterme]

First of all, good luck.

Second of all a smug attitude while ok on the board may rub Thais the wrong way. I know only a little of Samui, but here in Phuket, a Thai partner is a plus more than a liability.

Third, of the little I do know about Samui, I can vouch 100% that Lamai shophouses are rented out without key money. Thais usually go the other way. They pay 'Louang Naah', a deposit of several months, that you get back after a set term. It's a guarantee that you won't up and leave before your term is up.

Forth... good luck again. Much of doing business in Thailand that is not written in textbooks.

Edited April 11, 2008 by misterme

[Eric1949]

What is "this field"?

The same as yours only with a minor in Marketing. My experince is in Retail Sales and Marketing. I curruently run a store in the US with revenue exceeding $1M a month. This is what I do for a living and why I went to college (and to play college football). I have studied this situation for a year now and have looked at all the pros/cons. I'm not looking to become a millionare or to move permanately maybe 3-7 yrs (but who knows). My start-up cost is very low and my break-even sales are such that I could easily weather the low seasons. I have read this forum (and others) backward and forward. I'm not some pensioner who worked the last 30 yrs in IT (or whatever) and now wants to open a beer bar.

MW, most of your experience seems to be in Journalism and teaching English. Which is fine, but mine is directly related to the day in - day out running of a business. The fact that you cannot think of a business that "makes money" is probably directly related to your choice of careers. Some people see what others don't. You see stories and unique and creative ways to tell them. I see business opportunities. Trust me, when I say that the fact you don't see "them" is very encouraging to me.

I have waited 1 yr and will wait 1 more before making the jump. I appreciate all the advice, but I have looked at this from every angle. So I don't enter into this lightly. And let's get real for a second. We're not talking about curing cancer or rocket science here.

I also would never even attempt this if it were not for the fact that I'm able to own MY company 100%. I'll be damned if I'm going to take all the risk, come up with an idea, do all the grunt work only to turn half of it over some lady running a noodle cart next to Family Mart. I'm surprised more Americans aren't here doing the same thing (well, not really, but that's a whole other topic for another day).

I met an English guy on Samui who had no idea that AMericans could own their companies 100%. He told me he to pay off his thai "noodle cart" guy for 2 million baht then went to Malaysia to restucture the company. I could never do that.

I must admit that I didn't know that Americans could own Thai companies 100%. I take it that when you say Americans, you mean USA as opposed to Canadians, Mexicans, Panamanians etc,etc, all of whom are Americans?

[Mark Wolfe]

MW, most of your experience seems to be in Journalism and teaching English.

I stopped teaching in about 1990, by the way.

Which is fine, but mine is directly related to the day in - day out running of a business.

I am quite sure you are qualified to do what it is you do; I know how to run a business too, but the rub here is the thing you want to offer for sale.

The fact that you cannot think of a business that "makes money" is probably directly related to your choice of careers.

Ouch! I'm not living in an ivory tower, nor do I think I know it all. If you have some magic elixir or service (I'm being snide here, no offense...) then I am mucho curious to see how you do. (I might add that the career of writing/editing and design have enabled me to make money to the tune of living in a house overlooking Lamai, so I guess there is that to consider).

We're not talking about curing cancer or rocket science here.

OK, I'll scratch those off the list...of course what we are talking about is, in the end, losing (a lot/some) money.

I also would never even attempt this if it were not for the fact that I'm able to own MY company 100%. I'll be damned if I'm going to take all the risk, come up with an idea, do all the grunt work only to turn half of it over some lady running a noodle cart next to Family Mart.

Having said that, maybe the lady with the noodle cart is one clever business cat.

More to the point, (unless the secret business is noodles...) there are two things to consider carefully: One, can you operate within the law to the extent that you won't be "damned" and have to give away some of your earnings? and two, obviously you must understand that anything that happens here in plain sight is fair game for shakedown money by police, gangs and various and sundry Thais who want a piece of your pie (and there is no recourse to a higher authority, ie law enforcement).

I gave up on the idea of buying land and/or a house because of the Byzantine nature of the "ability" of foreigners to "own" in Thailand. It isn't like being in Cincinnati and just signing some papers and putting down the money and the place is yours for ever and ever. I know you know that, but it is something that you need to scrutinize well.

I met an English guy on Samui who had no idea that AMericans could own their companies 100%.

I don't know what this means; I am pretty sure that company ownership in Thailand is not different for one nationality over another (excluding Thais). If you have a link to a site that confirms this, I'm all ears (or eyes). I don't believe that just because you are an American you can have what no other nationality can get.

Anyway, I am dead curious to see what you product or service could be. Just remember, if it is really unique and successful, the Thais will steal it and repackage it and sell it cheaper and with more horsepower behind the marketing than you as a singe non-Thai could ever muster. Sort of expect to be like the first to sell bottled water, make a killing in the early days, then watch your market hegemony evaporate.

Do I really have to wait a year to find out what it is?

[Rooo]

Americans owning 100% of Thai company? I don't think so.It's all well & fine to have Amity treaty,but try putting it into practice is another story.Be interesting to find out.

[PoorSucker]

Americans owning 100% of Thai company?

So you mean that if the company owns some land you can own thai land

Hmm, I don't think so..

[Heng]

2 million key money in Lamai no way key money is a scam.

e.g 2,000,000 key money 36 months @ 20,000 totals 2,720,000 divided by 36 = 75,555bt per month no way not even in chaweng.

Just because you wouldn't pay it or can't afford it doesn't make it a scam. It's like saying down payments or balloon payments in finance are scams.

[Pilchard]

Americans owning 100% of Thai company?

So you mean that if the company owns some land you can own thai land

Hmm, I don't think so..

100% Correct, Amity companies have restrictions

This is why they are not used more often.

Over the years there has always been rumor of the treaty ending , under pressure from the WTO I think.

As far as I know you still need 4 Thai staff on the books to get a work permit.

From sunbelt http://www.sunbeltlegaladvisors.com/Thaila...mity-Treaty.php

Under the Treaty, Thailand is permitted to apply the following restrictions to American and other foreign investment:

owning land;

engaging in the business of inland communications;

inland transportation;

fiduciary functions;

banking involving depository functions;

engaging in domestic trade in indigenous agricultural products;

and exploiting land or other natural resources.

[Pilchard]

Third, of the little I do know about Samui, I can vouch 100% that Lamai shophouses are rented out without key money.

So why is the OP having such trouble finding one, maybe you could give him some pointers !

[PoorSucker]

As far as I know you still need 4 Thai staff on the books to get a work permit.

Not true, just for extension of Non-B visa within Thailand.

[Pilchard]

As far as I know you still need 4 Thai staff on the books to get a work permit.

Not true, just for extension of Non-B visa within Thailand.

Without of which no work permit can be applied for

[PoorSucker]

As far as I know you still need 4 Thai staff on the books to get a work permit.

Not true, just for extension of Non-B visa within Thailand.

Without of which no work permit can be applied for

You can have a Non-B without 4 Thai staff.

You can apply for WP on visa exempt stamp.

The 4 staff is only when applying for extension within Thailand