Buying Business But Need Bank Loan? Possible

[Lomsak]

Hi

I want to buy a small "condo" block that has 10 + rooms ( each room rented out to students)

existing thai owner is running it as successful business, and can provide proof of monthly income.

I cannot afford the full asking price, in cash.

If i put down 65% or 70%, do you think any way i can secure a business loan from a Bank for the balance.?

Assumptions

1: that details on current income performance reliable, and bank would be happy with these.

2: when buy the building, assume chanote provided, and Bank holds that for security.

3: appreciate that loan from Bank , in value would need to be less than actual value of building on chanote.

4: Bank can see monthly income from business, and as they take first charge over chanote, they have proof the loan can be serviced/ repaid.

Plan would be that i as falang, buy with thai partner.(as a business, or at worst case ownership entirely in thai name)

(But thai partner in their own right cannot loan money as unfortunately black listed for two years due to outstanding credit card debt)

Would be great if we could form a limited company, put in 65-70% of the funds/assetts, and bank loan us the balance required to buy the existing business.

Advice please, as whilst cuatious and sceptical about any business for sale, actual performance, this looks initially a possible good retirement income .

thanks

[stgrhe]

What you are talking about must be apartment and not condos.

[Lomsak]

yes sorry, they are 1 room apartments for students.

[donx]

yes sorry, they are 1 room apartments for students.

Who is going to own the land? You? Are you Thai? If not then are you planning on having a Thai company own the land? If so, then to be legal you will only be allowed to own 49% of the company.

[schmutzie]

yes sorry, they are 1 room apartments for students.

Who is going to own the land? You? Are you Thai? If not then are you planning on having a Thai company own the land? If so, then to be legal you will only be allowed to own 49% of the company.

I think the OP already mentioned, indeed desired, the formation of a company.

To the OP:

Can you not form a company with someone else (than what I assume is you partner) who doesn't have outstanding credit card debt?!!

Have an informal chat with a bank about requirements.

Look up the local business association/society for your country in Thailand. Maybe someone can give you a little friendly face to face advice.

What kind of return are you expecting on investment? Have you compared to other options?

Why is the owner selling?

Have you had the building surveyed?

I obviously have no personal experience doing this. You seem excited, but just be careful you don't drag your retirement fund down the drain.

If you have convinced yourself that it's a good investment, then I think that's the first step towards convincing a bank also.

Edited September 3, 2010 by schmutzie

[Lomsak]

i am english.

assumption at this early stage is the building and the land will be on chanote.(but agree will double check, as will be crucial for us as security and mandatory for bank)

Would set up thai company, and 49% ownership would be ok.

[InterestedObserver]

i am english.

assumption at this early stage is the building and the land will be on chanote.(but agree will double check, as will be crucial for us as security and mandatory for bank)

Would set up thai company, and 49% ownership would be ok.

Stop and think a minute. You want to put up 65-70% of the money yet only own 49% of the company. The land title deed (Chanote) will be in company name, thus not readily available as security for your investment, your Thai business partner is broke and in debt, and the bank will hold on to the Chanote to cover their investment.This can only end poorly for you.

Edited September 4, 2010 by InterestedObserver