Is This Too Cheap?

[sillybilly]

A close thai friend has been offered a 7 room guesthouse with tour shop to lease in CM for the price of 100000 baht and then 10500 baht per month ongoing... Is this too cheap and should I ask him t o try and avoid the offer or is it a realistic price???

Sorry but I`m not up to date with what the prices are for a business in Chiang Mai.

If I`ve posted in the wrong section please move for me.. Thanks.

[supergoondu]

Where is it located? And does it needs further intensive repairs and renovation? And what's the reason for the owner to give up his guesthouse? Sounds a tempting offer to me.

[john b good]

If it sounds too good to be true it will be "will be too good to be true"

caveat emptor

[topben]

stay away unless it's small change for your friend .......

[NancyL]

Does your friend have experience in running this type of business? Is this something he wants to do 20 hr/day, 7 days a week? How much additional investment will he need to make to improve the property and implement a marketing campaign? Has he developed a profit and loss statment on a spreadsheet where he can play with various "what-if" scenarios for planning?

If he likes the looks of the property and has the money, then go for it it; it sounds like a charming place to live. But if he's thinking of this as a business venture then he needs to answer some very hard questions. If he never successfully operated a business in his home country, then it's doubtful he could do it here even if they gave him the property for free.

[jaideeguy]

Another important consideration is 'how much time is left on the present lease??'

Considering the number of businesses failing due to the economy and glut of competing businesses, the low price doesn't surprise me. It's a buyer's market....but buyer beware!!!

Check thaivisa classifieds for comparisons and you will be amazed at how many businesses are for sale.

[orang37]

A close thai friend has been offered a 7 room guesthouse with tour shop to lease in CM for the price of 100000 baht and then 10500 baht per month ongoing

Sawasdee Khrup, Khun Sillybilly,

You've already had very insightful comments regarding whether or not your friend has ever had experience operating a business like this before, and whether your friend has the drive, stamina, stick-to-it-ness, for the very labor-intensive work of running the business, developing it. And you've already had insightful comments regarding the lack of information in your post about the current condition of the place, and what investment would be required to make it "go."

My one comment would be that without your telling us the terms of the lease (how many years, does the owner have the right to raise the rent under what circumstances, what is the lessee's liability in case of natural disaster, or arson, or whatever), and without clear knowledge of who exactly owns the land and owns the property, what existing liens may exist on the property that may result, during your friend's tenure as lessee, the transfer of ownership and/or possible abrogation of the lease.

In other words, imho, you and your friend, need a lawyer, and to do a great deal of "due diligence" to discover exactly what you are investing in.

And, of course, TIT, beware of scams : even the two farang owner/publishers of the newsletter that was the director ancestor of CityLife magazine, one of whom had been the honorary British consul, the other of whom was a Chiang Mai resident for countless years, were scammed out of a lot of baht many years ago by a Thai posing as the owner of a building; they found out, after they moved in, they had no legal right to be there, and had to move.

Can we assume that you personally are going to be an investor in this venture ? Knowing that might lead you to better advice from the many farangs that are here on TV who have experiences running businesses here (I and I are not two).

best, ~o:37;

[cmsally]

Just a few quick points.

Would you/he be sub leasing or leasing direct from owner.

How long left on the lease.

Who is owner of property and what is their business reputation like.

What is the location.

What is the price of the rooms.

What are average running costs - ask to check previous water/elec. bills.

Does this place have a license for hotel/tour use - if operating illegally you may have to pay off whoever.

I think the 100k might be money for the present tenant, you may find this is not applicable if contacting owner directly.

[sillybilly]

Many thanks for everybodys words of wisdom. The person my friend was going to lease the business from keeps on changing the price so he has made the right choice and is keeping well clear...

As much as I too would love to have my own business in Chiang Mai, I also understand that it would be extremely hard and perhaps too complicated so I might just leave it as a dream...

Thanks again everybody.

[hmficc]

A close thai friend has been offered a 7 room guesthouse with tour shop to lease in CM for the price of 100000 baht and then 10500 baht per month ongoing... Is this too cheap and should I ask him t o try and avoid the offer or is it a realistic price???

Sorry but I`m not up to date with what the prices are for a business in Chiang Mai.

If I`ve posted in the wrong section please move for me.. Thanks.

I did that for 20 years. HISO and SOSO. Your 2 most happy days? the day you buy and the day you sell.