Year On Year Lease For Land, Is This Dodgy ?

[scorpio]

hi,

dont know if im in the right forum but here goes, im currently in negotiations with a guy who,s selling a bar in pattaya, he originally had a 2 year rolling lease on a bar in pattaya, im very interested in buying and i emailed him today to tell him its a deal if he can ask land owner to give me a 3+3 year lease, he said the land owner was giving him a 2 year rolling lease but now wants only to give a year on year lease. whats the pitfalls with this / i dont want to go and buy this place then end up making the place nice and spending money on it only for the landowner to turn around next year and tell me that the land / yearly lease cannot be renewed.

should i take a risk with this or run from it. im wondering if the landowner could be contacted directly by my thai wife and she could talk with them, the guy who owns bar now is farang.

whats your thoughts.

THANKS IN ADVANCE

[PattayaPhom]

Walk away...my word is my bond etc mean nowt in Thailand....get at least 3 years and as you said +3 again.

[scorpio]

thanks mate, was thinking the same myself, ive asked the guy to send my wife the landowners number so my wife can maybe negotiate a new lease so i,ll look more into it and see what happens.

[dezy1801]

If your looking at investing money don't bother with a bar in Pattaya unless you have a very good clientel but even then its pretty much non-profitable, bars open and close all the time in Pattaya as there are thousands all over.

[Khun Jean]

It is just calculating.

Can you make enough money in 3 years to have a profit. If you could make it profitable in 5 take a 5 year contract, if it is profitable enough in 10 make sure you have a 10 year contract, etc.

If not then it is not worth it, unless you like it as an hobby.

Too many times rents get raised so much that making profit is a lot harder or even impossible.

Remember that most bars have customers (if they have any to speak of) that like the style the current owner has. Also many bars have customers that come exclusively for the owner.

If the bar is bought, expect to start from zero and work you way up from there.

[LennyW]

Just tell the current tennant that the only way you will consider the deal is to have a 3+3+3 from the owner, if he cannot make that happen then look somewhere else. I have a suspicion that the current tennant is trying to make his own deal without the knowledge of the owner!

Do not accept a one year term!

[taninthai]

Quite possible the current owner had a 3 year lease and wants to get out before lease is up therefore trying to get you to take over his final year lease

I think a bar is one of the worst bussiness you can get into in Thailand there is a thread running in the samui forum about running a bar some guy spent 6 million bht running his bar over 6 or 10 years can't remember which hesays good experience and some good times had but no profit at the end of it

[yankee99]

I know this is a old post. 3+3+3 seems to be a standard way of doing business here is this correct? Are the terms already set for the two renewals. Does the lease remain in affect if the property is sold? I am trying to get a feel for how risky these leases are.

[Delight]

My knowledge is very limited -however.

A 3 year lease does not have to be registered -so is attractive to landlords.. A 2 year rolling lease is new to me(that said I am no expert-just know several bar owners )

Typically a lease starts with a down payment (usually referred to as Key Money) then the rent is paid monthy.

If the bar owner has significantly added material value to the property then the land lord will often try to double the rent for the next 3 year period -hoping that the bar owner will simply leave. The landlord then sells the bar and generates a new lease-collects the key money , the rent level being reduced to normal. The process then repeats. The land lord would hope to sell the bar every 3 years.

The picture I paint does not reflect the total scene -but for certain landlords try this scam.

With respect to the OP's question -the only deal that you can do is with the landlord.

You need to be convinced that there is a future for you with this bar.

[yankee99]

^^^^ I am not talking about a bar but a well established business. Are you saying the equipment and fixtures become the landlords property?

[Delight]

^^^^ I am not talking about a bar but a well established business. Are you saying the equipment and fixtures become the landlords property?

I'm a little confused. The OP referred to buying a bar.

It seems to me that there is no legal separation between the building -which the bar owners does not own -and the 'fixtures' which the bar owner has paid for.

If the bar owner leaves -then the 'fixures' become the property of the land lord. That could suit most landlords.

The counter to this landlord scam is a threat. The threat to remove all the 'fixture' -down to the last floor tile. For certain I am aware that this method has been employed . it always seems to work.