Sunbelt Asia: Key Money?

[johnnyk]

I'm thinking of getting into the guest house biz down the road by buying an existing enterprise. I understand the key money is to buy the lease. So when the lease is 3X3 years renewable or something similar does this mean the key money must be paid at each renewal or is it one time upfront simply to buy it from the tenant/holder.

Is there a minimum size for a gh to provide a decent living (THB50-60K a month)rather than hand-to-mouth? Good areas at reasonable prices (not Phuket or Samui)?

Thanks for any help you can offer.

[Sunbelt Asia]

What is Key Money?

Payment made to a landlord as an inducement to assure a rental. Now some Landlords use it ass a excuse in Thailand as the country has no Credit Bureau and will collect a portion of the money upfront. They then report the balance as the real payment so they pay less tax.

In this case, it would be every year or three years. Example on one Lease.. three year contract. Key money paid of 1.4 million and the rent now is 2,000 Baht per month. This is on Walking Street so of course in three years, their would be key money of 1.5 million.

If it’s treated as a gift for a premium site. Lets say, the rent is 200,000 Baht per month. The Key money was 500,000, this would in most cases be a one time charge and no key money would be paid on the renewal..

Acquiring an existing business. The investment you make and give to the Seller is not Key money. This would be a one time charge in most cases. On existing businesses, in most cases no key money needs to be paid to the Land Lord.

We have Guest Houses in most parts of Thailand. Visit our site to see some of the business summaries. www.sunbeltasia.com

Happy New Year.

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