Leasing

[flightest]

can anyone tell me roughly what the price of a lease would be for a bar in soi patong, its just off bangla road near the patong tower,any help appreciated

[LivinginKata]

Depends on a number of factors, but I expect EXPENSIVE. Without appearing too negative, you might just as well throw your money into the wind and save yourself any more hassles as 9 out of 10 bars fail in the first year.

Much better to buy somewhere freehold. I know that's much more expensive (and not so easy), but at least you have something to show for your money.

[flightest]

Depends on a number of factors, but I expect EXPENSIVE. Without appearing too negative, you might just as well throw your money into the wind and save yourself any more hassles.

Much better to buy somewhere freehold. I know that's much more expensive (and not so easy), but at least you have something to show for your money.

thanks for reply, iam well aware of all the risks involved in leasing a bar, i have been quoted a figure and iam just wondering roughly what bars in that area are currently paying

[pagallim]

Read this post, and at first wasn't keen on posting. However, on reflection. The fact that you've made this post poses a few suppositions. You've (maybe) never had a bar before. Have you done a plan on rent/stock/staff? Do you know what is necessary each week/month to sustain the bar? Have you got discount agreements in place for stock? Have you got a stock control plan in place?

What a bar 'pays' is directionally proportionate to the level of management that exists. Poor management, poor profits. Think about a business plan, what it's going to cost you in terms of rent/staff. Establish your profit levels on drinks (and food, if you're going to do it). Who are you going to 'entrust' with the management of your bar? What are you going to pay them?

If your idea is to let your girlfriend open a bar where you have a 'home from home', then forget it, you'll very quickly realise that perhaps this wasn't a good idea. If you're serious, have a specific plan, location, staff recruitment scheme, then maybe you can realise the dream.

[MJo]

Plenty of advice how to live your life, none seem to know the going rates though.

Shame, just interested on the rates myself with no intention to get involved anything in that industry...

[69690jay]

excuse me I was going to comment then changed my mind, ok I will make a comment, price for bars anywhere on the island depend on the owners state of mind/bank account. If you are buying an existing operating business the keymoney/rent price involved will reflect the success of the bar. A successful bar will not be cheap. Vise-versa.

50k month would be low for good location with 60-100sq. meters floor space. 1m to 5m key money

10k month go-go bar 10sq. meters one dancing pole ten bar stools, block of wood to drive nails into , icebox, shared stereo system side by side with 20+ other identical bars. 100k to 500k key money

be careful, make sure the contract is bombproof, ie have a reputable lawyer check it.

Edited October 11, 2009 by 69690jay

[hkt83100]

Whatever you are going to spend, just make sure it is not more than what you calculated to loose without doing any harm in your "business plan" (This is about monthly expenses). In other words, if you never had a business like that in Patong before, best choice is to forget about it - the quicker the better.

[katabeachbum]

can anyone tell me roughly what the price of a lease would be for a bar in soi patong, its just off bangla road near the patong tower,any help appreciated

100k to 3 mill key money. 10k-100k month rent. 3 year agreement. Pending on previous record. For a bar. If you just rent a location without existing bar, look at the low numbers.

I would use a lawyer in Phuket town, or even better BKK, not Patong

[HDRIDER]

Hi

The best way to be a millionaire in phuket is to start with 2 million

[ESB7]

Soi Eric is 3 mil key money and 35k a month rent, thats for a 5 year contract....

[katabeachbum]

Soi Eric is 3 mil key money and 35k a month rent, thats for a 5 year contract....

5 years if you are lucky. A contract longer than 3 years MUST be registered in land deed to be valid.

[LivinLOS]

Plenty of advice how to live your life, none seem to know the going rates though.

Your not giving enough info and the question is really too variable..

Seen bars go for a few 100k.. Bangla fronted bars could pull up to 10m.. Rents from token amounts to 10's or more thousand per month.. Etc etc etc.

[gotlost]

Hey buddy don't tell anyone but have I got a deal for you.

[flightest]

Read this post, and at first wasn't keen on posting. However, on reflection. The fact that you've made this post poses a few suppositions. You've (maybe) never had a bar before. Have you done a plan on rent/stock/staff? Do you know what is necessary each week/month to sustain the bar? Have you got discount agreements in place for stock? Have you got a stock control plan in place?

What a bar 'pays' is directionally proportionate to the level of management that exists. Poor management, poor profits. Think about a business plan, what it's going to cost you in terms of rent/staff. Establish your profit levels on drinks (and food, if you're going to do it). Who are you going to 'entrust' with the management of your bar? What are you going to pay them?

If your idea is to let your girlfriend open a bar where you have a 'home from home', then forget it, you'll very quickly realise that perhaps this wasn't a good idea. If you're serious, have a specific plan, location, staff recruitment scheme, then maybe you can realise the dream.

thanks for reply, firstly there is no key money involved and no girlfriend, i know what the staffing costs are, i will be partners for 12 months with the current person who is leasing the bar,after that i will take over, i have known this person for seven years and they have had the bar for around 10 years, it has many returning customers year in year out and i have spent time at the bar myself in high and low season

again many thanks for all the replies.

[LivinLOS]

thanks for reply, firstly there is no key money involved and no girlfriend, i know what the staffing costs are, i will be partners for 12 months with the current person who is leasing the bar,after that i will take over, i have known this person for seven years and they have had the bar for around 10 years, it has many returning customers year in year out and i have spent time at the bar myself in high and low season

again many thanks for all the replies.

So if there is no key money all you have to pay is the rent / lease, there is no 'how much' purchase price as your surely not buying the land..

When is the lease renewal up ??

[katabeachbum]

So if there is no key money all you have to pay is the rent / lease, there is no 'how much' purchase price as your surely not buying the land..

When is the lease renewal up ??

Who said there will be a renewal

[MJo]

Plenty of advice how to live your life, none seem to know the going rates though.

Your not giving enough info and the question is really too variable..

Seen bars go for a few 100k.. Bangla fronted bars could pull up to 10m.. Rents from token amounts to 10's or more thousand per month.. Etc etc etc.

Difficult for me to give any info as i'm not looking to lease one.

However the OP was asking "can anyone tell me roughly what the price of a lease would be for a bar in soi patong, its just off bangla road near the patong tower,any help appreciated"

[pagallim]

Plenty of advice how to live your life, none seem to know the going rates though.

Your not giving enough info and the question is really too variable..

Seen bars go for a few 100k.. Bangla fronted bars could pull up to 10m.. Rents from token amounts to 10's or more thousand per month.. Etc etc etc.

Difficult for me to give any info as i'm not looking to lease one.

However the OP was asking "can anyone tell me roughly what the price of a lease would be for a bar in soi patong, its just off bangla road near the patong tower,any help appreciated"

You're correct. However, for many resident people, the 'alarm bells' started ringing, and hence the diversity of comment/advice, which ultimately can be accepted or rejected. Bottom line is that any/everyone does what they want, and long may it remain like that.

[flightest]

So if there is no key money all you have to pay is the rent / lease, there is no 'how much' purchase price as your surely not buying the land..

When is the lease renewal up ??

yes iam only paying the rent, there is a long lease available,

[LivinLOS]

So if there is no key money all you have to pay is the rent / lease, there is no 'how much' purchase price as your surely not buying the land..

When is the lease renewal up ??

yes iam only paying the rent, there is a long lease available,

OK so the whole OP on the price is really what is the price of rent ?? As your not paying key money.

Rent ranges in the low 10s of k per month usually.. But if the current owner is gifting you the bar without key money that says he isnt making money even with only the rent (otherwise why would he gift it away).

[pagallim]

OK so the whole OP on the price is really what is the price of rent ?? As your not paying key money.

Rent ranges in the low 10s of k per month usually.. But if the current owner is gifting you the bar without key money that says he isnt making money even with only the rent (otherwise why would he gift it away).

Agreed. It sounds like you're going to take on the liabilities, as well as the (supposed) profits. Buyer beware. Bottom line, do you need to do it? Is it just 'a good idea'? I know that many of the comments to your post err in the negative, but this is usually for good reason (posters having knowledge of similar situations). In the words of many thousands of BG's - 'up to you'.

[flightest]

Agreed. It sounds like you're going to take on the liabilities, as well as the (supposed) profits. Buyer beware. Bottom line, do you need to do it? Is it just 'a good idea'? I know that many of the comments to your post err in the negative, but this is usually for good reason (posters having knowledge of similar situations). In the words of many thousands of BG's - 'up to you'.

there are no liabilities, but thanks for the warning

[rawaireddragon]

Very easy....as with every business valuation..(in Thailand)......

3 times the annual net profit (audited and tax paid). assuming 10 year REGISTERED LEASE DIVIDED BY THE REAL LEASE eg. annual net profit 400,000. (audited tax paid) X 3 = 1,200,000 Real lease 3 years = 400,000..........thats the price of the lease.

If the figures stack against this.forget the rest of the negatives. That is how to value the business.

[pagallim]

Very easy....as with every business valuation..(in Thailand)......

3 times the annual net profit (audited and tax paid). assuming 10 year REGISTERED LEASE DIVIDED BY THE REAL LEASE eg. annual net profit 400,000. (audited tax paid) X 3 = 1,200,000 Real lease 3 years = 400,000..........thats the price of the lease.

If the figures stack against this.forget the rest of the negatives. That is how to value the business.

Good comment. Think that the potential problem here though is that the OP hasn't defined the lease duration, or the terms for renewal.

[flightest]

Very easy....as with every business valuation..(in Thailand)......

3 times the annual net profit (audited and tax paid). assuming 10 year REGISTERED LEASE DIVIDED BY THE REAL LEASE eg. annual net profit 400,000. (audited tax paid) X 3 = 1,200,000 Real lease 3 years = 400,000..........thats the price of the lease.

If the figures stack against this.forget the rest of the negatives. That is how to value the business.

Good comment. Think that the potential problem here though is that the OP hasn't defined the lease duration, or the terms for renewal.

the lease is 42000 baht a month, extending the lease is not an issue

[LivinLOS]

the lease is 42000 baht a month, extending the lease is not an issue

If I had a dollar for...

If extending the lease is not an isssue it tells you the bar has no value or is a breadline operation.. Otherwise the landlord would resell the lease every few years for its value, the fact renewals are not an issue tells you volumes about the profit potential.

But what the hel_l.. its a 500k a year rental, its one of the lower cost ways to see what the bar life is like with only minimal risk.. But please dont think its going to be your retirement, make sure you have another source of income and way to live here.

[rawaireddragon]

the lease is 42000 baht a month, extending the lease is not an issue

It is very unusual not to have some element of key money payable at the end of or start of a new lease. Please before signing up have a meeting with the landlord and get a NEW lease drafted with a specific time scale. 1 year doesn't cut it. Try three, because IF you do make a sucess you will have a tangible asset to sell, with no clearly defined lease term all your hard work could be for nothing. Also if you want to stay on and the bar starts getting busy dollar signs will appear and your lease of 1 year will suddenly include big key money for renwal. Don't take any verbal agreement for granted, nor believe a "good hearted" landlord. This I know from bitter experience. Rawai residents may remember the Beach Club saga on Rawai Beach last year! I have a some really good lease agreements which I am happy to share with you that are cut and dried in your favour. Just PM if you want them.....and good luck

[katabeachbum]

the lease is 42000 baht a month, extending the lease is not an issue

If I had a dollar for...

If extending the lease is not an isssue it tells you the bar has no value or is a breadline operation.. Otherwise the landlord would resell the lease every few years for its value, the fact renewals are not an issue tells you volumes about the profit potential.

But what the hel_l.. its a 500k a year rental, its one of the lower cost ways to see what the bar life is like with only minimal risk.. But please dont think its going to be your retirement, make sure you have another source of income and way to live here.

Then I would "extend", or rather make a new lease before entering any agreement.

In your own interest, dont enter more than 3 years agreement unless registered in land deed, cause that makes the agreement illegal and can be canselled by landlord or court at any time. a 3 + 3 year lease is by law illegal unless registered and payed taxes for.

Edit BTW, I have no experinece with bars, but 6,5 years of property purchase/sale/lease/rental in Phuket

Edited October 14, 2009 by katabeachbum

[LivinLOS]

Then I would "extend", or rather make a new lease before entering any agreement.

In your own interest, dont enter more than 3 years agreement unless registered in land deed, cause that makes the agreement illegal and can be canselled by landlord or court at any time. a 3 + 3 year lease is by law illegal unless registered and payed taxes for.

Edit BTW, I have no experinece with bars, but 6,5 years of property purchase/sale/lease/rental in Phuket

From my understanding of the law on leases I took it a bit different.

A lease (not recorded on the land title) is contract law, contract law here being very weak. If the lease is recorded on the land title it become a real right and is much easier / automatic to enforce. This is why most bar leases are simply contract law and not recorded on the land title, its in the land owners interest. Anything longer then 3 years is not illegal, its still contract law, but longer then 3 years CAN be registered on land title but highly unlikely that would ever happen. The 3 + 3 is the same as a 30+30 or any other contract, its not illegal per se its just unenforceable in reality.

Anyway thats kinda irrelevant on a short bar lease.

[LivinginKata]

The reason that just about all owners do not give a 3 years or more lease is that ...

1) A 3 year or more lease must be registered with the land office.

2) Tax must be paid (by the land owner) on the annual lease income.

3) Once a lease is registered the owner cannot revoke it within the term of the lease (other than the lease holder dies)

4) The owners does not want the Thai government knowing anything about his/her business and assets.

These days owners prefer to to lease year by year, then they can jack up the rent each year as they see fit.