Opening A Resort.

[LANDOFSMILE]

Hi,

This is my first post, however I have been reading posts on this forum for a while.

I am 36 years old, married to a Thai lady, we have 2 kids, and we currently live in the UK.

We are planning to open a resort in Krabi in the future.

We currently have about 40 Million Baht, which is not enough to buy the land and build what I have in mind.

For what I have in mind I estimate we will need 65 Million Baht.

Currently I have two plans, and was looking for some feedback / advise.

Plan 1.

Buy the land I need, at todays price this would be about 20 Million Baht.

(Would it be possible to buy the land in one of my childrens names?)

Continue working & saving / investing for another 5 or 6 years, then move to Thailand to build the resort.

Plan 2.

Buy the land for 20 Milion Baht, and use the spare 20 Million + a 25 Million Baht bank loan to build the resort.

(Would a Thai bank even lend us the money?)

All feedback is welcome.

[keestha]

Hi,

This is my first post, however I have been reading posts on this forum for a while.

I am 36 years old, married to a Thai lady, we have 2 kids, and we currently live in the UK.

We are planning to open a resort in Krabi in the future.

We currently have about 40 Million Baht, which is not enough to buy the land and build what I have in mind.

For what I have in mind I estimate we will need 65 Million Baht.

Currently I have two plans, and was looking for some feedback / advise.

Plan 1.

Buy the land I need, at todays price this would be about 20 Million Baht.

(Would it be possible to buy the land in one of my childrens names?)

Continue working & saving / investing for another 5 or 6 years, then move to Thailand to build the resort.

Plan 2.

Buy the land for 20 Milion Baht, and use the spare 20 Million + a 25 Million Baht bank loan to build the resort.

(Would a Thai bank even lend us the money?)

All feedback is welcome.

OP,

The land could be put on the name of one of your kids, if he/she has Thai nationality. The alternatives would be establishing a company limited who then buys the land, or putting the land in your wife's name.

Yes Thai banks do lend money to build resorts, the land plus what is built on it will function as collateral. Banks are much more willing to consider a loan if you have started building already, plus of course they will want to see the building plan.

[GuestHouse]

First ask yourself why you want to open a resort.

I'm presuming to provide an income for you are your family.

If so then start making a business plan and consider the following:

How much do I need to make in this business?

How much do I NEED to invest to make that income?

What return would I receive on my money if I invested elsewhere?

My observations are as follows:

According to your figures you want to run a business which has a huge investment that falls in to two parts.

Part 1 - A land purchase that consumes 2 thirds of your investment (and is at the moment the sticking point for your making the move)

Part 2 - An investment in facilities required to run the business

Note: It is actually the facilities that make you an income - not the land.

Note also that land cannot be owned by you - a purchase in the order you are speaking of is a huge investment where you maintain control - it is a huge 'gift' to someone else where you cannot maintain control.

My advice would be:

Consider leasing a piece of land on which you build the facilities you need to run your business (Prime locations are far more likely to be available for lease rather than for sale).

Or better still, consider leasing an already existing resort and invest in building the business.

--

Now I know the idea of leasing is a bit like giving money out in rent that you will not get back when you close the lease - But remember TiT (This is Thailand) - buying land is GIVING MONEY AWAY THAT YOU MAY NOT GET BACK.

--

Save the huge amount you want to spend on land - leave it where you have control over it (ie back home or if you like in some other jurisdiction that recognizes you have the right to own your own property/maintain control over your own money) .... and.... in doing so make sure that you reduce by a huge factor one of the most likely causes of you loosing all you have.

[LANDOFSMILE]

Thanks for the replies,

I have also been considering leasing an existing resort, and this is definately the safest option for me.

This would allow me to limit my investment in Thailand, while leaving the majority of my capital in the UK.

I am very comfortable with my UK investment strategy, so this should be the logical solution.

(I had to laugh at the replies to my post on UK investments, some people are so suspicious).

The thing which is preventing me from doing this, is that I really dislike the idea of building up a great business

which can later be taken off me by the landlord.

Ultimately plan is a very long term one to build up a great business which I can later pass on to my kids,

and to enjoy the best quality of life possible while I am doing it.

[LANDOFSMILE]

On the subject of any potential land purchase.

I would only make this investment if the land was in one of my kids names.

They are half British, half Thai and still very young.

[RakJungTorlae]

On the subject of any potential land purchase.

I would only make this investment if the land was in one of my kids names.

They are half British, half Thai and still very young.

Careful they don’t sell it for some candy. I world not lease it at all. All thou lease business seem to go down the toilet or have many problems. Get he land in your wife’s name as she is your wife (family) and have 2 kids. Wala have land. 40 million ? hmm I think you don’t need to borrow more form any bank too. if you take your time you can get things done very cheep.

[LaoPo]

Thanks for the replies,

I have also been considering leasing an existing resort, and this is definately the safest option for me.

This would allow me to limit my investment in Thailand, while leaving the majority of my capital in the UK.

I am very comfortable with my UK investment strategy, so this should be the logical solution.

(I had to laugh at the replies to my post on UK investments, some people are so suspicious).

The thing which is preventing me from doing this, is that I really dislike the idea of building up a great business

which can later be taken off me by the landlord.

Ultimately plan is a very long term one to build up a great business which I can later pass on to my kids,

and to enjoy the best quality of life possible while I am doing it.

You gave a smart and clever answer yourself.

Stay away (for the time being) to invest all your money into 1 venture; ventures are sometimes profitable, sometimes not.

If you're into the latter category, you lose all of your money.

Be smart and think twice, especially if you invest your money in Thailand.

LaoPo

[froggshw]

Guesthouse..LaoPo...very good advice...the OP would do well to listen to wisdom shared

[cynthialee]

dont do it!

soundman say one reason for failure is undercapitilization and you fit well in this category.

or do you have lots of money but just dont want to invest it. if this is the case you shouldnt do it anyway as you dont have the utmost faith in your project.

im also assuming you have lots of experience running a resort. which one doesnt need running a restaurant upcountry.

its a rare case where one sounds like they have all their ducks lined up to succed.

if your main goal is to leave a legacy to yr kids u may want to rethink. most kids could care less about runnung the family business.

and what do you mean by resort. bed and breakfast place place with 5 rooms. or a real one with 100s of rooms.

sounds like you may have too much money or not nearly enough.

Edited July 7, 2008 by cynthialee

[LANDOFSMILE]

Cynthialee,

Your reply is very strange.

How is it possible for you to determine that I do not have every faith in my project?

My questions were wether it is possible to protect my investment by owning the land in one of my childrens names &

if a Thai bank would be prepared to lend on a project of this kind.

As much as I love & trust my wife, I had already concluded that to buy the land in my wifes name is not something I will be doing.

If I could own the land, set up a business & borrow money in my own name then I wouldn't have posted.

Why do you think that with 65 Million Baht I would build either a B&B with 5 rooms or a huge resort with 100's of rooms.

To clarify when I say resort, I mean a 3 star 18 room hotel + 6 bungalows, restaurant & pool on 2.5 Rai of land, 150 meters from a top quality beach in Krabi.

I am however in agreement with you that I am probably a little undercapatilized at this point in time.

[FarangCravings]

On the subject of any potential land purchase.

I would only make this investment if the land was in one of my kids names.

They are half British, half Thai and still very young.

Careful they don't sell it for some candy. I world not lease it at all. All thou lease business seem to go down the toilet or have many problems. Get he land in your wife's name as she is your wife (family) and have 2 kids. Wala have land. 40 million ? hmm I think you don't need to borrow more form any bank too. if you take your time you can get things done very cheep.

Are you off your trolley are you advising him to put the land in his wifes name JESUS if you cant give intelligent answers then dont post

[Gary A]

Forty million baht is a lot of money. My advice would be to NOT be in any hurry. Move over here and look around until you find a place you are comfortable with. When you see the ideal spot, I'd say it will jump up at you and you will know it is right.

If you fail, there is a good chance that you will never have that much capital again.

[RakJungTorlae]

On the subject of any potential land purchase.

I would only make this investment if the land was in one of my kids names.

They are half British, half Thai and still very young.

Careful they don't sell it for some candy. I world not lease it at all. All thou lease business seem to go down the toilet or have many problems. Get he land in your wife's name as she is your wife (family) and have 2 kids. Wala have land. 40 million ? hmm I think you don't need to borrow more form any bank too. if you take your time you can get things done very cheep.

Are you off your trolley are you advising him to put the land in his wifes name JESUS if you cant give intelligent answers then dont post

I am so not in the mood to answer this

[cynthialee]

if you also r considering leasing an existing resort i just thought you may not be completely sold on your project.

yours sound like a project that if doesnt work youll be in deep shit for a long time, financially speaking. your project sounds a lot bigger than the i want to open a 10 seat upcountry cafe with my thai gf.

what does yr wife think about not wanting to put everything in her name. she gave you 2 kids what else does she need to do?

your actions speak louder than your words.

Edited July 7, 2008 by cynthialee

[GuestHouse]

A resort/hotel/guesthouse has some merrits amoung which is access to BOI approval and all that comes with it.

If the OP's plans run to 21(?) rooms - check the precise number - then the business would be elligible for BOI approval and with that rights to own land + work permits and non immigrant B visas.

I would therefore suggest that the OP take advice from a Thailand based business advisor - Sunbelt Asia and Indo-Siam spring to mind.

---

what does yr wife think about not wanting to put everything in her name. she gave you 2 kids what else does she need to do?

your actions speak louder than your words.

Is it really necessary to make comments about the OP's relationship with his wife - I know he's discussing persnal wealth beyond that of most people - but still I can't see why the green eyed monster needs to rear his head and make personal attacks.

[AFKAFSinLOS]

Some reasonable advice from various posters above.

The maxim of leasing before you buy can be a decent one. However, if you're going to do this with a resort, be very careful. Either buy the resort and land; or lease the resort and land. Think very carefully before buying the resort, while leasing the land. A resort is not a busines you can just pick up and move to another location, in the same way you lease an office and then change premises. The resort and location are linked.

Building/ owning a resort on someone else's land puts you at their mercy. It runs the risk of them deciding they could do a better job and don't need you; hiking rates when the initial contract is up; etc etc. Also if you want a lease for any sensible period of time that will likely require a substantial deposit.

As Gary A says, you've a decent amount of money by Thai standards, which you could use to generate investment income with significantly less risk (but perhaps less reward) than the business risk you're talking. Take your time.... Don't turn that small fortune into an even smaller one...or at least be prepared to cope when you do...

[cynthialee]

op wants to do something on a grand scale and you say leave the wife out of it.............you got to be kidding me mr house!

[AFKAFSinLOS]

what does yr wife think about not wanting to put everything in her name. she gave you 2 kids what else does she need to do?

your actions speak louder than your words.

Is it really necessary to make comments about the OP's relationship with his wife - I know he's discussing persnal wealth beyond that of most people - but still I can't see why the green eyed monster needs to rear his head and make personal attacks.

Agree with you Guest House. The only thing I wasn't sure of is whether Ms Cynthia was posting out of envy as you suggest, or out of ignorance. It often makes sense for financial as well as other reasons to spread assets over different names in a partnership/ relationship, but Cynthia sounds like someone who wouldn't be aware of that. Either way, as you say looks like flaming to me...

[GuestHouse]

op wants to do something on a grand scale and you say leave the wife out of it.............you got to be kidding me mr house!

No, I said you should leave comments about his relationship with his wife out.

[Pushit]

OP should talk to a professional consultant like Sunbelt.

[cynthialee]

oh sorry!

i thought not putiing the land thing in the wifes name was some r concerned she leave the op with nothing. but we all know thats not the case here. theres deeper reasons as akak insinuates.

ya know, not all thai ladies are out to fleece their farang husbands.

Edited July 7, 2008 by cynthialee

[meom]

Maybe the OP should first come and live in Thailand for 1-2 years before investing his money?

[cynthialee]

you on to somehting meom.

another piece of advice h e doesnt want to hear is this. get a job sweeping floors at a resort in the area to see what you getting yrself into.

[Sir Burr]

You say your children are young. What if they don't want to become resort operators when they grow up?

With the amount of money you have, you could leave it in the UK and live a very, very nice life-style in Thailand on the interest.

Edited July 7, 2008 by Sir Burr

[cynthialee]

why doesnt asnyone ask if op has any background in running a resort and actually building one. If he doesnt he might as well marry a bargirl so to speak, theyll rob him blind.

Seems op is quite a good earner, if he just invest in stock index mutual fund just dollar cost averaging, upon his death he will leave mega i millions to his kids. Plus ez to achive his goal of not having HIS wealth in his wifes name.

Does he want to raise his kids in a thai tourist town while trying to make a go of a risky venture. Just for the kids sake id say don t do it sir. You seem to have things in order where you are.

From reading thru most post i didnt see one who thinks its a good idea.

Edited July 8, 2008 by cynthialee

[sgunn65]

I have done a very similar thing to you. All the pundits would say I was mad. But I was undercapitalized and still went ahead. I have leased a resort for an initial three year period so have plenty of time to make the business work. i am fortunate that my very specialized business does not rely on tourism or holiday seasons so expect to get business all year round.

Before you invest a lot of money look at the resorts that are almost empty alot of the time. Ask yourself what is so special about what you have (location, facilities, something different) and what your occupancy will need to be to get a good return. Its a 24/7 job looking after people and being nice all the time can get trying.

I have stayed in alot of resorts around the country and some of them are amazing and incredible value for money. I don't know how they survive. If you are relying on Thai customers as well as farang bear in mind they tend to do packages of 2-3 nights. And if you have westerners is there enough to do to keep them with you for an extended period. Our clients stay 28 days which cuts down on the workload of quick turnarounds etc.

I wish you the best of luck in your venture but would say that until you have a sure thing don't invest everything but test the water. If you do build up a good business in a leased place there is usually the option to buy at a later date and if you get a good name and loyal client base they will follow you. What you do in one place can be replicated elsewhere.

[LANDOFSMILE]

Thanks for the replies,

Does anyone know the specific criteria to achieve BOI approval for a resort, and the benefits it gives?

If it is possible for me to own the land & buildings through a company in my own name, while also gaining a work

permit that is great news.

I will definately been taking advice from a business advisor in the future, but from experience I like to build a

clear vision of what I want to do before seeking professional advise.

When I use professionals it is usually just to put in place the plans I have already decided.

I have decided to tread carefully, as while I am still young enough to start again if things don't work out as planned.

it is better to grind out a few more years at work to increase my capital base & reduce the risk of things going wrong.

We will be going to Thailand for a vacation in October, and I have started lining up viewings on plots of land.

[highdiver]

Thanks for the replies,

Does anyone know the specific criteria to achieve BOI approval for a resort, and the benefits it gives?

If it is possible for me to own the land & buildings through a company in my own name, while also gaining a work

permit that is great news.

I will definately been taking advice from a business advisor in the future, but from experience I like to build a

clear vision of what I want to do before seeking professional advise.

When I use professionals it is usually just to put in place the plans I have already decided.

I have decided to tread carefully, as while I am still young enough to start again if things don't work out as planned.

it is better to grind out a few more years at work to increase my capital base & reduce the risk of things going wrong.

We will be going to Thailand for a vacation in October, and I have started lining up viewings on plots of land.

do you have any background, experience, education in the hospitality trade?

buying and owning a hotel is no the same as knowing how to run one. a fact many investors have learn the hard way.

[farang555]

funny u bring experince factor up.

sounds as if this guy is going to build a 25,000$ house, not a real resort.

[RAZZELL]

A resort/hotel/guesthouse has some merrits amoung which is access to BOI approval and all that comes with it.

If the OP's plans run to 21(?) rooms - check the precise number - then the business would be elligible for BOI approval and with that rights to own land + work permits and non immigrant B visas.

I would therefore suggest that the OP take advice from a Thailand based business advisor - Sunbelt Asia and Indo-Siam spring to mind.

Somewhere on this website you'll find what you need:

http://www.boi.go.th/english/

http://www.boi.go.th/english/about/section7.pdf

Says something about 100 rooms.

http://www.boi.go.th/english/about/basic_incentive.asp

Says, and I quote, "to own land".

Good luck, and keep us posted. It's something I'd be very interested in doing if I had the capital.

RAZZ