Do Thai Banks Lend Farang Mortgages?

[ronnoi]

Greetings from New Zealand. I am 47 and married to a thai national; we are considering moving to Pattaya and buying a bar; obviously thru a good company like Sunbelt, we are no fools....however, we could require finance and do not see much written about this... Obv the business would have to have good books, and a good lease, or freehold, any ideas???

Cheers

Kiwi

[Sunbelt Asia]

Seller financing takes place in most cases rather than bank financing. The Seller knows it’s a good business and is more apt to finance than the bank. The banker just like in New Zealand is going to look at what happens to the business if you get in a car accident. If they valued the business on that stainless steel equipment you have in the kitchen, it won't be worth much if the place is closed if you are in bed. As many bankers tell me, I sure am not going to be serving beer that night if the owner can't. Unlike a house, if something happen, the house value is not going to be affected if you're sick. The business value is determined by the management. The seller is more a risk taker and if you and he can make that leap of faith that you are a good manager. He is more apt to finance than the bank.

Of course this is all based that you are convinced yourself, that your debt service will be taken out of the cash flow. The business has enough income to provide your family a comfortable living after paying any debits owed the Seller. The great thing also about Seller financing you can be creative; the Seller knows that December and January are better months than June or July in Pattaya. Perhaps you can have double the investment to give the Seller those months and nothing due in June or July or you can defer the investment for a balloon after the high season. There are no rules. Lot of times it comes down to personality between you and the Seller. Both of you’ll need to feel comfortable and take that leap of faith. More likely with the Seller especially if he’s motivated cause he needs to relocate, burnt out, etc. If by the chance, the business is losing money, the Seller won’t finance as he knows he won’t collect your monthly investment. Hence I like Seller financing better than the bank.

[Digger]

Nothing against Sunbelt Asia but dont forget they work for and are paid by the SELLER of the business, therefore extreme caution needs to be employed if looking at acquiring a bar. Considering the current regime on nightlife restrictions, opening or buying a bar seems to be one of the most reckless things to do in Thailand at the moment - Seems odd to me that almost every bar I have visited in Pattaya over the last 2 weeks was surprisingly quiet and this is considered the peak season.

However, opening a bar outside of Pattaya, in one of the growing farang suburbs might be a good idea if you want to look at something. You could buy the land at a cheap price, design and build your own place and be in a better position to obtain bank financing - particularly if you add on some rooms for rent. You could even structure it properly and get a work permit if you emphasise more the accomodation side as opposed to the bar.

Just a thought

[ronnoi]

Nothing against Sunbelt Asia but dont forget they work for and are paid by the SELLER of the business, therefore extreme caution needs to be employed if looking at acquiring a bar. Considering the current regime on nightlife restrictions, opening or buying a bar seems to be one of the most reckless things to do in Thailand at the moment - Seems odd to me that almost every bar I have visited in Pattaya over the last 2 weeks was surprisingly quiet and this is considered the peak season.

However, opening a bar outside of Pattaya, in one of the growing farang suburbs might be a good idea if you want to look at something. You could buy the land at a cheap price, design and build your own place and be in a better position to obtain bank financing - particularly if you add on some rooms for rent. You could even structure it properly and get a work permit if you emphasise more the accomodation side as opposed to the bar.

Just a thought

Thanks for your advice, I will certainly be cautious and look into accomodation also

[Blindman]

Seller financing takes place in most cases rather than bank financing. The Seller knows it’s a good business and is more apt to finance than the bank. The banker just like in New Zealand is going to look at what happens to the business if you get in a car accident. If they valued the business on that stainless steel equipment you have in the kitchen, it won't be worth much if the place is closed if you are in bed. As many bankers tell me, I sure am not going to be serving beer that night if the owner can't. Unlike a house, if something happen, the house value is not going to be affected if you're sick. The business value is determined by the management. The seller is more a risk taker and if you and he can make that leap of faith that you are a good manager. He is more apt to finance than the bank.

Of course this is all based that you are convinced yourself, that your debt service will be taken out of the cash flow. The business has enough income to provide your family a comfortable living after paying any debits owed the Seller. The great thing also about Seller financing you can be creative; the Seller knows that December and January are better months than June or July in Pattaya. Perhaps you can have double the investment to give the Seller those months and nothing due in June or July or you can defer the investment for a balloon after the high season. There are no rules. Lot of times it comes down to personality between you and the Seller. Both of you’ll need to feel comfortable and take that leap of faith. More likely with the Seller especially if he’s motivated cause he needs to relocate, burnt out, etc. If by the chance, the business is losing money, the Seller won’t finance as he knows he won’t collect your monthly investment. Hence I like Seller financing better than the bank.

Hi guys

Just some Questions if you could help me.

So i presume Thai banks do lend falangs money for morgages.

- Do they do the same for investment properties

- What % would be required for a deposit ( downpayment ) for the property

I understand that it would be best for me to go PTY LTD ( Corp)

- If it is possible for my corp to get loans for investment properties and the corp has the money for the deposits , am i limited to the amount of houses or condos i can buy due to the fact that I ( falang) am 49% owner of the corp and my wife and daughter whom are Thai nationals own 51%..?

- Do thai banks have negative gearing like here in Australia..?

- What is the average % return you would expect on a house and condo investment ..? Does the return differ depending which area or city you buy in..?

- What % is company tax , is there a threshold.

- What % is personal income tax and its tax thresholds. ?

If theres anything that you guys think i missed out and should have asked , do tell me.

I've only just started planning a few days ago to move to Thailand so would appreciate any advice i can get.

Cheers

Simon

[Digger]

Seller financing takes place in most cases rather than bank financing. The Seller knows it’s a good business and is more apt to finance than the bank. The banker just like in New Zealand is going to look at what happens to the business if you get in a car accident. If they valued the business on that stainless steel equipment you have in the kitchen, it won't be worth much if the place is closed if you are in bed. As many bankers tell me, I sure am not going to be serving beer that night if the owner can't. Unlike a house, if something happen, the house value is not going to be affected if you're sick. The business value is determined by the management. The seller is more a risk taker and if you and he can make that leap of faith that you are a good manager. He is more apt to finance than the bank.

Of course this is all based that you are convinced yourself, that your debt service will be taken out of the cash flow. The business has enough income to provide your family a comfortable living after paying any debits owed the Seller. The great thing also about Seller financing you can be creative; the Seller knows that December and January are better months than June or July in Pattaya. Perhaps you can have double the investment to give the Seller those months and nothing due in June or July or you can defer the investment for a balloon after the high season. There are no rules. Lot of times it comes down to personality between you and the Seller.  Both of you’ll need to feel comfortable and take that leap of faith. More likely with the Seller especially if he’s motivated cause he needs to relocate, burnt out, etc. If by the chance, the business is losing money, the Seller won’t finance as he knows he won’t collect your monthly investment. Hence I like Seller financing better than the bank.

Hi guys

Just some Questions if you could help me.

So i presume Thai banks do lend falangs money for morgages.

- Do they do the same for investment properties

- What % would be required for a deposit ( downpayment ) for the property

I understand that it would be best for me to go PTY LTD ( Corp)

- If it is possible for my corp to get loans for investment properties and the corp has the money for the deposits , am i limited to the amount of houses or condos i can buy due to the fact that I ( falang) am 49% owner of the corp and my wife and daughter whom are Thai nationals own 51%..?

- Do thai banks have negative gearing like here in Australia..?

- What is the average % return you would expect on a house and condo investment ..? Does the return differ depending which area or city you buy in..?

- What % is company tax , is there a threshold.

- What % is personal income tax and its tax thresholds. ?

If theres anything that you guys think i missed out and should have asked , do tell me.

I've only just started planning a few days ago to move to Thailand so would appreciate any advice i can get.

Cheers

Simon

The simple answer to if banks lend on investment properties is a resounding no - too many non performing loans from the 97 crash to allow that to happen again. Banks wont even lend money on bare land these days. Mortgages in Thailand are designed for people who actually want to live in the house and pay off the mortgage from their salary. Therefore answering your other questions seems hyperthetical to say the least. Some further points:

Banks do not provide mortgages to farang as such. Some will lend to the Thai company set up which owns the house and land however this decision to lend is based on your creditworthiness as an individual (still following ?). In essence you have to be a sure fire financial bet for some to even consider giving you a mortgage and even then its only likely to be something around 50% of the appraised value - which is invariably considerably lower than what you are paying as they take no account of air con units, kitchens, marble floors etc all of which bump up the price. They use a standard price for building per square meter and a typical market price for land per t-wah and chuck on a bit more if you have a pool.

To be considered a "sure fire" bet - you must have a work permit here and considerably more in salary (generally 300-400% more than the monthly mortgage payment) in order to be considered. In addition you have to have a substantial deposit - based on the above valuation. Banks do not like lending outside their province. So if your job is in Bkk, unlikely to even consider finance anywhere other than Bkk. Furthermore, they look for signs of continued staying in Thailand i.e 3 yrs or more continuous high paid job, wife, family etc. If you meet all these criteria, they may put your application through to Head office for consideration.

Dont mean to sound negative, but I have been through this twice and its hard work. I met all the criteriabut they would still only lend 2,000,000 on a 5,500,000 property.

Speculative property investments, buy to let etc are a big no no here.

hope this helps

[Blindman]

###### right it helps digger.

The more i read in this forum about property , the more it turns me off about the idear. I knew that it was going to be different obviously cause its another country , but how different ' i had know idear'.

Ive returned to Australia 4 years ago to start over again. For the last 2 years i've had my own companyand am earning 120k AUD a year. Being in this position i thought i couldstart now to invest in Thailand and in 6- 8 yrs time sell what ever else i have here and go to Thailand permanently.

Now i'm thinking why on earth should i go through with such a thing. I still will go and reside there in the future , but now im considering i'd better invest in property here in Australia collect the rent and live comfy in Thailand.

Looks like the only property i'd end up buying there would be the one i reside in.

I read georges site in regardes to property last night and even my wife couldnt believe how hard it was .

I was hoping to read at least some positive storys in other posts in regards to property , but have yet to come across any.

i'm not an educated person , but it doesnt take a genius to figure that perhaps thailand is not the right place for me to invest.

Blindman

[the gentleman]

ronnoi - dont buy a bar mate, in my experience, more go broke than make money. You would be entering into the highest risk business in the country. There are also the hours that you put in, dealing with drunks, organising girls lives and generally living a boring life, that is run by opening and closing hours - 7 days a week.

Doing any kind of business here, can be hardwork, but a bar, amongst 10,000 other bars - big risk.

If you have a bit of money, why dont you look at buying a house/condo, that you can rent out, you wont make a lot of money, but it is safer and if you can please the banks with a credit rating/proof of income/payments - they will accept you, if you fall within the criteria.

I would hate to see another farang go broke, or another one with permanent liver damage.

[the gentleman]

P.S. If you are looking at freehold, that is another matter, you will own it, via your wife or your company. You could also rent it out and sit back.

[penelope]

Greetings from New Zealand. I am 47 and married to a thai national; we are considering moving to Pattaya and buying a bar; obviously thru a good company like Sunbelt, we are no fools....however, we could require finance and do not see much written about this... Obv the business would have to have good books, and a good lease, or freehold, any ideas???

Cheers

Kiwi

Come on mate, where is that kiwi "number 8 wire" mentality.Surely you can come up with a more original business plan than a "bar". Something original and unique is more likely to persevere than something that has been done many times before.And I am assuming that you don't have much money(if you require finance to start a bar), therefore let your ingenuity be your capital.

[Sunbelt Asia]

Nothing against Sunbelt Asia but dont forget they work for and are paid by the SELLER of the business, therefore extreme caution needs to be employed if looking at acquiring a bar.

Before any information is given out on a business, we require the prospective buyer to approve the following ...

The Buyer acknowledges that Sunbelt is acting as agent of the seller and all fees due Sunbelt are, and will be the responsibility of the seller. Seller's agent is an agent who acts under a listing agreement with the seller and acts as the agent to the seller only. A seller's agent has affirmative obligations to the seller including the fiduciary duties of loyalty, obedience, disclosure, confidentiality, reasonable care and diligence, and accounting in dealing with the seller. In addition, a seller's agent has affirmative obligations to the Buyer and Seller of honest dealing and disclosure.

Once again this same document is needed to be approved at the closing table. In the asset purchase or share purchase its spelled out what our fee is. We are professionals and keep everything in the open.

Now saying that, for 20 years, I have been representing the "transaction." The business transfer has to be a " win win" for both sides. I don't know one transfer that went thru that was one sided, if it was, it would never go to closing. We teach our associates that and as we are the Worlds largest business brokerage, they listen to us.

I was personally called yesterday by two different buyers of a business,which was acquired for over 100 million Baht thanking me. They never would of been able to acquire the business without our help. I honestly believe they are right. The Seller was very tough and we were able to solve several issues the Seller was adament about. The Seller consisted of two parties as well. One gentleman who has health problems is very grateful , the other 'know it all" seller was so so but I had to set him straight. Otherwise it never would of happen on the transfer.

I do find that most of the time, we help the buyer more as the sellers can be the side with the most demands. We then have to be problem solvers so both sides are happy. If the Seller stays unreasonable and won't budge, we simply advise the buyer to pass. We have 800 listings so its not like they are the only business.

Sometimes we get a fee from the buyer who has hired us on a finder fee basis for a particular business but still it never changes. We represent the transaction. It simply won't work any other way.

Ask around and you'll find out why we are very proud to state we are Sunbelt Asia. Thats why our motto is "Integrity and Confidentiality"

[Sunbelt Asia]

Surely you can come up with a more original business plan than a "bar".

We do have Bars as listings. In the last year, six were acquired with Sunbelt Asia help. That’s out of 120 businesses that were acquired so it’s only around 5% of the transfers we did. As the businesses are already acquired, we can disclose the names.

They were Molly Malone’s and Scruffy Murphy’s in Phuket, Kilkenny in Pattaya( Tailor who sold his lease and they tore down the building to make this bar), Winking Frog( renovated a massage place and converted it) Madame Claude( The buyer already sold it and made $ on it as he now has a new baby girl) and Blue Bar BQ. Two other opportunities both over 30 million Baht fell thru because of Landlords not willing to extend the lease to nine years. BRRR!

Every one of those these acquisitions, the new owners are very happy. They also would state that without our help, they never would be the new owner. In every case, their were issues that we had to solve such as Landlords, non competes, training period by the old owner, fire insurance the Landlord wanted in his name, the wife wanting more money than the ask price, the Seller being a Dragon Lady, shareholder votes, post dated checks wanted by the Landlord, family of the Seller, wife being emotionally attached as being there for 25 years, etc etc.

As for Bars, I’ve said it before and say it again. Most make money in Thailand at least in Bangkok. ( not talking on the beer bars) You need a good location and be a good manager. You are not a good mgr, for your sake, find one that is. Hazard of the business is a bad liver and guys insisting to have a drink with you. If you suffer from this, get a manager you can trust.

[Maverick]

When I saw the business plan - Kiwi and Thai wife want to open a bar in Pattaya I immediatley thought this must be a wind up but the more I think about it.......... if kiwi is mad enough to want to go into that business now could be a good time - with the negative PR re closing times and Pattaya suffering as a destination as so many alternatives i would imagine quite a few owners want to sell so the prices will be lower. Having personally invested (not run myself) and lost money on a Pub I can say it's a scarey business and destroys many people due to the unrelenting pressure of opening almost every day of the year and the myriad problems that are encountered. But Kiwi's are hard workers and if he stays healthy and gets a cheap deal good luck to him.

Cheers!

[Orion76]

Why so many foreigners want to own a bar in Thailand is beyond me.

It seems that in every street with 10 money losing bars there is always a 7-11 making big bucks

Use your brain, pick a business that will earn you a living, rather than trying to make your hobby your business.

[DaveYo]

I made a recent inquiry also of about getting some bank financing or loan in Thailand and it involves a car and a home and also property since I am married to a Thai Citizen. I have not tried the business aspect as of yet.

From what I was told, the banks will not loan money out to foreigners, they will loan it out to a Thai citizen, and then there are other criterias that the Thai person has to meet before such approval of a loan. Some of such criteria is thier job and how long they have worked for such company, their income per month, how much they have in their savings account, etc, etc>>> and some other criterias which is too numerous to mention here. As to the Foreigner, the farang has to at least meet>>> half down payment up front, and then be a guarantor for the rest of the loan, and then they will check on your income etc criterias before such is approved to make sure you can pay for it if the Thai person defaults on that loan. Also if the Thai person defaults it also affects your Credit history in Thailand. So one needs to be awful careful whom your going to allow to be the owner from such loan etc etc, because even if the Thai person defaults, they still own the home, property or car and perhaps even the business if they are majority owner. Very very risky.

From what I do know and understand from previous inquiries, is even if you are approved the foreigner cannot own the home or any property outright by Thai Law, the Thai person owns it. You might be able to own the car if you pay for it completely. From what I understand you can lease or be first lien holder (like the Banks do on loans) but you need to have some legal documents pertaining to such. It is indeed very complex, and all it takes is one simple mistake or some part of the language in the legal document saying something else and you can kiss everything goodbye especially your investment.

I am not that familiar on its scope, so the only safest way for me to go about this is have a very good lawyer who will protect you and your interests to do this kind of work and have your life in his good hands (hopefully). Finding such a lawyer is another matter. Since I am a USA citizen, I will first start with the USA Embassy and ask them who they can trust and take it from there. Since you are an Australian, go to your Embassy and ask them for help and advice. That is their jobs to protect you.

This is all I know of to the present time based on the preliminary inquiry via a phone call as to what they told me. My current reaction to this information is like having the blahs or saying whoa I need to check this out deeper etc. It is not like OK everything is cool. I have not gotten any deeper due to time contraints and personal things at current . So the rest remains to be seen as to its outcome. But it does give me lots of hesitation and makes me want to triple check everything before getting to that stage.

Daveyoti

[karenfraser18]

Yes they do but I think the rates are a little higher. Iam not sure if you need a co-signer or not. The best bank for farang's to do business with is the Bangkok Bank main branch at Sala Daeng.

[Orion76]

From what I was told, the banks will not loan money out to foreigners.

False.

They do loan money to foreigners, a car loan is especially easy.

But don't even ask if you don't have a work permit and a solid income.

[DaveYo]

Oh, hmmmmm, I wonder about this myself and now more curious as to why I was given that answer. This is strange.

I will check on this further. Obviously getting more intriguing as this post goes on.

Daveyoti

[teacher]

Get yourself a few small condo's and rent them out. Not big money but a better return on your money. You can own them with or without a company. Just show the money came from outside Thailand.

[Digger]

Oh, hmmmmm, I wonder about this myself and now more curious as to why I was given that answer. This is strange.

I will check on this further. Obviously getting more intriguing as this post goes on.

Daveyoti

Yes, I found car finacning easier than house, however you sure need a work permit and solid income for them to consider you. Also almost without exception, you need a Thai guarantor unless putting down between 40-70% of the car price as a deposit. The issue of guarantors is getting more sticky as they now look to ensure that the guarantor has an income required to keep up/pay of the loan.

Hope this helps

[Zendesigner]

double

[Zendesigner]

Why do would you want to buy a new car here if you dont have the money and need financing???

the answer is leasing.

Plain renting if looked in carefully is the same price as buying and without the risk.

I drive a ford ranger 4x4 2800 cc which costs me 18000 a month.

if i want to buy the same model it will cost me

200.000 bath downpayment + 48 months of 14.700 bath loan + insurance + cost of repair and accident.

When i rent i get

18000 flat fee

if it breaks down they fix it and give me another one.

AA service

Fully insured

if i crash it it will cost me 5000 bath waiver, i get a new one next day while they wait for the insurance money.

no cost of repairs, just fuel.

always the latest models.

You do the math. You only win when you buy if you plan to be here more then 5 years.

Bart

[Digger]

Why do would you want to buy a new car here if you dont have the money and need financing???

the answer is leasing.

Plain renting if looked in carefully is the same price as buying and without the risk.

I drive a ford ranger 4x4 2800 cc which costs me 18000 a month.

if i want to buy the same model it will cost me

200.000 bath downpayment + 48 months of 14.700 bath loan + insurance + cost of repair and accident.

When i rent i get

18000 flat fee

if it breaks down they fix it and give me another one.

AA service

Fully insured

if i crash it it will cost me 5000 bath waiver, i get a new one next day while they wait for the insurance money.

no cost of repairs, just fuel.

always the latest models.

You do the math. You only win when you buy if you plan to be here more then 5 years.

Bart

I'd agree with you particularly if you have a company and a proper receipt which then allows the vehicle lease cost to be a deductable expense.

However your forgeting retained value of the car. Renting for say 3 years on a pickup would mean approx costs of 648,000 or about 75% of new car value excluding insurance and maintenance costs. However insurance would run to about 20,000 per year and maintenance costs on a new car with full 100,000 km warranty about 2,000 baht per service. The challenge comes to resale. Assuming you sell a Ford Ranger after 3 years, your retained value is likely to be around 40% of purchase price, given the weakness of this brand in the secondhand market (and I know, I have a ford). If you had bought an Issuzu or Toyota equivalent, they would still be worth about 60-70% of the original value and a ###### site easier to sell in Thailand.

So using the same scenario, a Toyota or Issuzu should be considerably cheaper to rent/lease than the Ford - however this is not the case, the rental companies base everything invariably on the purchase not the residual value once the leasing period is up. Thats one big frustration I have of the Thai distributors. As soon as you have left the showroom, they have no quality in motivating you financially to buy another one in say 2/3 years time. Thats partly why you see so few 2/3 year old cars/pickups for sale.

[mearo]

Get yourself a few small condo's and rent them out. Not big money but a better return on your money. You can own them with or without a company. Just show the money came from outside Thailand.

I like the idea of buying a condo and then renting it out. The rental income vs capital outlay, at least in Bangkok, seems reasonable based on the limited data I've seen to date and I reckon there's potential upside on capital appreciation over the next few years.

Anyone have advice on capital gains tax and any issues in getting money back out of Thailand at some point?

[quiggs]

I too am very interested in this route, seems to be the way to go, if you have a Thai person trustworthy enough to own the property for you. Wife, etc. Propert is penuts compared to the states, even in resort areas. Love to hear more.

[englishoak]

Is renting out a good earner? from what i've seen in Bangkok it's not that good and expensive rents are hard to fill.

I have to say that sfter spending a long time looking at Thailand for business interests. It just dosn't interest me anymore. Too many obsticals and lack of security in the system. Restrictions, laws, police, mafia, landlords, long hours,low wages. No i'll invest in the uk where I understand the game and even at the high prices for property it'll guarantee a good return in the future. But i intend to spend in Thailand.

Oh and as for the question about taking the money out of Thailand

I do believe someone here said don't invest more than you are prepared to lose.

[Dutchy]

Yes they do but I think the rates are a little higher. Iam not sure if you need a co-signer or not. The best bank for farang's to do business with is the Bangkok Bank main branch at Sala Daeng.

I will not recommend Bangkok Bank at all, try AIA, (www.aia.co.th) They loan to non Thais, houses are on Thai names but loans are shared. NO problem at all....

Dutchy