Property Owning Again!

[เพลง]

Ok I've read the many opinions on this board about purchasing land under the ownership of a company and it's got me thinking.

Ideally I want to buy a property with my wife-to-be (providing she says "yes" when I ask her in March... wish me luck guys!) and run it as a guesthouse. Now from what I gather (and please correct me if I'm wrong) it is legitamite to set this up under a company, in which I would have 49% of shares and she would have 51%. Regardless of what the property was originally used for, so long as we intend to run it as a guest house then the company can own it. I understand that we would be allowed to live in the guesthouse as well as renting out rooms without violating any law.

This got me wondering... I don't know what our finacial situation will be when we settle in Thailand. There are a lot of variables and we may or may not have the capital to afford a guest house as such. So where are the bounderies... if the company owns a house with 2 spare rooms which we rent out, is that still legitimate? For sure we may have the intention of making a profit from the business but that may not be until such as a time the property is paid for (in the mean time we will be supporting ourselves with other work) another 10 years down the line. Is that still legitimate? Or would we be better off renting and sub-letting in this case?

[stevehaigh]

Ok I've read the many opinions on this board about purchasing land under the ownership of a company and it's got me thinking.

Ideally I want to buy a property with my wife-to-be (providing she says "yes" when I ask her in March... wish me luck guys!) and run it as a guesthouse. Now from what I gather (and please correct me if I'm wrong) it is legitamite to set this up under a company, in which I would have 49% of shares and she would have 51%. Regardless of what the property was originally used for, so long as we intend to run it as a guest house then the company can own it. I understand that we would be allowed to live in the guesthouse as well as renting out rooms without violating any law.

This got me wondering... I don't know what our finacial situation will be when we settle in Thailand. There are a lot of variables and we may or may not have the capital to afford a guest house as such. So where are the bounderies... if the company owns a house with 2 spare rooms which we rent out, is that still legitimate? For sure we may have the intention of making a profit from the business but that may not be until such as a time the property is paid for (in the mean time we will be supporting ourselves with other work) another 10 years down the line. Is that still legitimate? Or would we be better off renting and sub-letting in this case?

the only real problem with the above is you need a minimum of 7 thai sharholders for a company owning land. besides that, of course there is nothing wrong with the company owning the house and land, rent income or not. however, if you do have rent income, declare it for tax and the company wil be "safer", i.e. less likely to be picked on by the gov.

[johnnyk]

the only real problem with the above is you need a minimum of 7 thai sharholders for a company owning land. besides that, of course there is nothing wrong with the company owning the house and land, rent income or not. however, if you do have rent income, declare it for tax and the company wil be "safer", i.e. less likely to be picked on by the gov.

No, you need only a minimum of 7 directors the majority of which must be Thai (ie. 4 Thai and 3 falang is ok). More than 7 would make for a very complicated setup.

[Bobcat]

No, you need only a minimum of 7 directors the majority of which must be Thai (ie. 4 Thai and 3 falang is ok). More than 7 would make for a very complicated setup.

This is wrong.

All Thai companies registered under the Civil and Commercial Code of Thailand require a minimum of seven shareholders. The minimum number of directors is one, not seven. For a company wishing to own land, it must be considered a "Thai" company - meaning that more than half of its shares need to be owned by Thais. This is where the 49% foreign/51% Thai structure comes in. In addition to this, the Thai Land Code stipulates that in order for a company to be registered as the owner of land, more than half of its shareholders must be Thai. Accordingly, 4 out of your 7 shareholders must be Thai.

[เพลง]

No, you need only a minimum of 7 directors the majority of which must be Thai (ie. 4 Thai and 3 falang is ok). More than 7 would make for a very complicated setup.

This is wrong.

All Thai companies registered under the Civil and Commercial Code of Thailand require a minimum of seven shareholders. The minimum number of directors is one, not seven. For a company wishing to own land, it must be considered a "Thai" company - meaning that more than half of its shares need to be owned by Thais. This is where the 49% foreign/51% Thai structure comes in. In addition to this, the Thai Land Code stipulates that in order for a company to be registered as the owner of land, more than half of its shareholders must be Thai. Accordingly, 4 out of your 7 shareholders must be Thai.

Ok thank you. I am pretty confident in my basic knowledge of the Thai company business structure, I'm more worried about wheather the company would be deemed legitimate if it was not making any actual profit until the mortgage can be paid off?

I'm also wondering how difficult it is for a company to get a mortgage on a property. I know for individules it's pretty impossible (not counting Bangkok Bank's laughable "offer"), but is it any less difficult for a newly established Thai company to obtain cerdit?

[johnnyk]

No, you need only a minimum of 7 directors the majority of which must be Thai (ie. 4 Thai and 3 falang is ok). More than 7 would make for a very complicated setup.

This is wrong.

All Thai companies registered under the Civil and Commercial Code of Thailand require a minimum of seven shareholders. The minimum number of directors is one, not seven. For a company wishing to own land, it must be considered a "Thai" company - meaning that more than half of its shares need to be owned by Thais. This is where the 49% foreign/51% Thai structure comes in. In addition to this, the Thai Land Code stipulates that in order for a company to be registered as the owner of land, more than half of its shareholders must be Thai. Accordingly, 4 out of your 7 shareholders must be Thai.

I meant shareholders, my mistake.

[steveromagnino]

I'm also wondering how difficult it is for a company to get a mortgage on a property. I know for individules it's pretty impossible (not counting Bangkok Bank's laughable "offer"), but is it any less difficult for a newly established Thai company to obtain cerdit?

Not impossible at all; I have a mortgage, I've given advice to two THaivisa members who also have mortgages; it is not difficult at all; and we have no Thai guarantors or anything like that. Ok, i am 1/2 Thai, but since I don't carry the passport, that effectively counted for nothing. That you cannot get a mortgage is simply not true.

With your wife as guarantor, I am sure it would not be hard to get one.

Getting one as a company would be significantly more difficult, unless you are both acting as personal guarantors, then it might be possible.

I'd say if it is not making money within 3 years, you are highly likely to get audited, and if there is no real chance of it making money ever (e.g. 3 rooms probably not going to work) then it could be considered to not really be legitimate.

They might also look at what you are doing; should you want a work permit (and it sounds like you would be working) then you will need 4 staff for each foreigner; so you need to calculate paying all of them as well.

I think guest houses particularly for foreigners with western food, coffee etc - it probably could be a profitable business without too much effort; go for scale though; any less than 7-8 rooms is a waste of time unless it is a high end boutique bed and breakfast, in which case perhaps you can charge a lot more. I'd be more thinking like 15-20 rooms. Otherwise a lot of work for no income.

[Heng]

I'm also wondering how difficult it is for a company to get a mortgage on a property. I know for individules it's pretty impossible (not counting Bangkok Bank's laughable "offer"), but is it any less difficult for a newly established Thai company to obtain cerdit?

Not impossible at all; I have a mortgage, I've given advice to two THaivisa members who also have mortgages; it is not difficult at all; and we have no Thai guarantors or anything like that. Ok, i am 1/2 Thai, but since I don't carry the passport, that effectively counted for nothing. That you cannot get a mortgage is simply not true.

A lot of loans here are given out on the judgement of loan officers. Being half Thai is different than being a true foreigner in a the eyes of a lot of locals.

Curiously, you don't have a Thai id card either?

[steveromagnino]

A lot of loans here are given out on the judgement of loan officers. Being half Thai is different than being a true foreigner in a the eyes of a lot of locals.

Curiously, you don't have a Thai id card either?

No ID card; in the process of asking for these things but they take time; missing all the paperwork as my mum left Thailand as a child and remembers nothing.

The other people I advised were total farang; so I am positive it wasn't my look krueng good looks, devasting Thai wit and poor pronounciation that convinced them to give the loan. Actually, it wasn't until after it was approved that I specifically stated I was 1/2 Thai anyway; but maybe they probaby could have figured it out?

[เพลง]

Not impossible at all; I have a mortgage, I've given advice to two THaivisa members who also have mortgages; it is not difficult at all; and we have no Thai guarantors or anything like that. Ok, i am 1/2 Thai, but since I don't carry the passport, that effectively counted for nothing. That you cannot get a mortgage is simply not true.

With your wife as guarantor, I am sure it would not be hard to get one.

My wife-to-be (fingers crossed) works on a market stool making 3,000bt a month. Is this really enough to secure a mortgage of 4 million bt or more?! Besides she would be giving up her work to run the guesthouse. I would be teaching English (somewhere between 20 and 40,000bt I do beleive) in the day and helping out with the guesthouse/bar in the evening. I guess we'd have another member of staff to help with the bar.

Getting one as a company would be significantly more difficult, unless you are both acting as personal guarantors, then it might be possible.

I'd say if it is not making money within 3 years, you are highly likely to get audited, and if there is no real chance of it making money ever (e.g. 3 rooms probably not going to work) then it could be considered to not really be legitimate.

They might also look at what you are doing; should you want a work permit (and it sounds like you would be working) then you will need 4 staff for each foreigner; so you need to calculate paying all of them as well.

I was under the impression that the ratio was reduced to 1:1 if your wife was Thai? Maybe I am confusing that with something else?

I think guest houses particularly for foreigners with western food, coffee etc - it probably could be a profitable business without too much effort; go for scale though; any less than 7-8 rooms is a waste of time unless it is a high end boutique bed and breakfast, in which case perhaps you can charge a lot more. I'd be more thinking like 15-20 rooms. Otherwise a lot of work for no income.

While I'd love to go for large-scale the lack of capital is a serious issue. The most we could hope, between us, to put up for a deposit would be 3 million. I just dont see us being able to raise the kind of financial invetment for a large operation. I'm not lucky enough to own property in my own country to raise the capital against, which is down to a 50/50 mix of Gordon Brown's "miracle" economy and me arseing around when I was 18 and really had the last chance of getting on the property ladder that most of my generation will see (bitter? me? Nononono!)

Thank you for your feedback so far, it has been most useful and I hope you can answer my lastest batch of queries!

Cheers!

เพลง

[stevehaigh]

They might also look at what you are doing; should you want a work permit (and it sounds like you would be working) then you will need 4 staff for each foreigner; so you need to calculate paying all of them as well.

i have a work permit through my company and didn't need to say anything about staff. only if i want a 1 year visa do i have to pay my "staff".