Questions About Starting A Guest House

[khunMato]

We are starting to talk about investing in a smaller guest house.

I have some questions regarding this that I would be very grateful if I could have some help with.

First of all, we are talking about doing it in Pattaya (a city with its share amount of tourists). My (Thai) Mrs and I have lived there before and we were happy with, around, 30 000 Baht per month.

1. How many rooms - I have made some calculations and it seems like the smallest place we would want, to support the 2 of us, would be a place with 12 rooms.
   
2. If we have 12 rooms, in an annual average, how many rooms would be let out on a monthly basis?
   
3. In Pattaya, how much would a place with around 12 rooms cost? We are looking for a place in "the centre" or out on Pratamnak.
   
4. I have many years of remodelling/renovation experience and due to my background, have a modern and up scale place- is there an market for "better looking" places that equals 2-300 Baht more in a daily fee, thinking of around 7-900 Bht/day?
   
5. The first and second year, how well are those years compared with the following years?
   
6. How does most customers find to your place? I guess internet is the big one, how is it with the "walk in" customers?
   

I would be most grateful if someone could help me out with 1, 2 or all questions.

[CharlieH]

Personally I think you are dreaming, you headed for a huge expense and possible money pit. You wouldnt be allowed (legally) to do any renovations etc yourself without a work permit, even volunteering needs one.

You have so many pitfalls and hoops to jump through, put that against the capital expenditure and you have to ask is it worth it. The answer invariably is NO. Couple that with never being able to own that building (wife only) or work in it (without said permit) and you have a potential disaster waiting to happen.

But that's just my opinion as everyone who comes here seems to want to own or run a bar of small hotel etc and 90% of them (if not more) end in disaster and possible financial ruin. Think it through, take off the rose colored glasses and be realistic and you'll come to the same decision.

The way to make a small fortune..............start with a big one.

[khunMato]

Personally I think you are dreaming, you headed for a huge expense and possible money pit. You wouldnt be allowed (legally) to do any renovations etc yourself without a work permit, even volunteering needs one.

You have so many pitfalls and hoops to jump through, put that against the capital expenditure and you have to ask is it worth it. The answer invariably is NO. Couple that with never being able to own that building (wife only) or work in it (without said permit) and you have a potential disaster waiting to happen.

But that's just my opinion as everyone who comes here seems to want to own or run a bar of small hotel etc and 90% of them (if not more) end in disaster and possible financial ruin. Think it through, take off the rose coloured glasses and be realistic and you'll come to the same decision.

The way to make a small fortune..............start with a big one.

I realize that there will be pitfalls, of cause we plan to have a work permit. Not planning to take this huge change in our lives, with an "unforgiving" step.

Also, not interested in stepping into an other discussion but I can own a building, not land. Like I said, an other discussion. We haven´t planned to buy a house, we want to start with rent the place, sorry if I weren´t clear on that. My hole life I have changed my life in different directions, so I will probably do so again.

The reason for my questions was to get a true grip and understanding of how everything is in this business from someone that has done/is doing it.

[jamescollister]

OP sorry to say, many try and most fail. Trust your wife and have the cash to buy, you may make a living.

Don't think 12 rooms will justify a work permit, wife plus 2 full time staff, plus your work permit will be for running the hotel, not doing construction.

Step very carefully before parting with money. Jim

[dksharron]

I do not know when you lived in Pattaya on 30,000 / month, but I am going to guess it was a while ago.

That is not much any more.

If you are going to rent a place, then all of your investment in the building is going to be left when you leave.

If you are able, it would be better to buy the building.

12 rooms is pretty small to operate and employ staff. Do you best to find a larger place, if you can afford it.

Best of luck to you.

[Phronesis]

Warren Buffett, the world's most prominent investor, has suggested "Never invest in something you don't understand."

Clearly you don't understand the business you want to invest in, other wise you wouldn't of posted a raft of questions to be answered by stangers on a website.

Edited January 15, 2013 by Phronesis

[khunMato]

To all that tries to make me believe this is a bad idea

• forget all about work visa, I have that covered
  
• in collage I read hotel management, I think it made me ,somewhat, understand a business I have not invested in before. - to Phronesis, Warren Buffett did not know his businesses before he started either
  
• after collage I studied engineering and I think that my masters is a good proof that I am quite familiar with mathematics.
  
• as I am 31 at the moment, believe me when I say that I didn´t live in Pattaya too long ago, I am not a person that cares about "looking good" and all the economy around that issue - 30000 Baht can take you a long way
  

I am sorry if I have not been clear in my questions. I am not interested in any "get away, save your money, be safe and stay in your current life, etc." from people that lacks the experience.

I asked the following questions (a bit amended)

1. How many rooms - I have made some calculations and it seems like the smallest place we would want, to support the 2 of us, would be a place with at least 12 rooms.
   
2. If we have 12 rooms, in an annual average, how many rooms would be let out on a monthly basis?
   
3. In Pattaya, how much would a place with around 12 rooms cost? We are looking for a place in "the centre" or out on Pratamnak.
   
4. I have many years of remodelling/renovation experience and due to my background, have a modern and up scale place- is there an market for "better looking" places that equals 2-300 Baht more in a daily fee, thinking of around 7-900 Bht/day?
   
5. The first and second year, how well are those years compared with the following years?
   
6. How does most customers find your place? I guess internet is the biggest one, how is it with the "walk in" customers? help from other travel agencies?
   

And I only want to have answers to my questions, from people with experience from related businesses.

See me as a guy that has fouled my own government on 10 million Baht and need a way to launder that sum of money and I am best friend with police Lt.Gen. Panu Keudlabphol (immigrations commissioner), i.e. I don´t care about anything other than about what I have asked for or other related information (information that can help, not scare me).

[prestburypark]

Sounds trollish to me, are you Thai? I do believe a bit of research will show you the definition of a guesthouse here is the number of rooms, over a certain number (look it up) it is defined as a hotel and that puts it into a protected job/thai only vocation..

I think that an online confession to wanting to launder your ill gotten money is perhaps an indication of a severe lack of judgement and mental health advice might be more fitting in your circumstances. Chock Dee

[khunMato]

Sounds trollish to me, are you Thai? I do believe a bit of research will show you the definition of a guesthouse here is the number of rooms, over a certain number (look it up) it is defined as a hotel and that puts it into a protected job/thai only vocation..

I think that an online confession to wanting to launder your ill gotten money is perhaps an indication of a severe lack of judgement and mental health advice might be more fitting in your circumstances. Chock Dee

// Thai script removed, this is the English language forum, you can use Thai in the Thai language forum //

Something for the users whom have inserted an "answer" to nothing and to their narrow minds

Edit: No I am not Thai, I just know in what areas my brain and its energy should be placed.

Edited January 17, 2013 by metisdead

[dddave]

If you are indeed serious, I'd suggest you and your wife spend several months in Pattaya doing groundwork. Seek out and stay in owner occupied GH's and try to get to know the owners ans see what they have to say. Join the local Ex-Pats Club where you'll meet other GH owners and various other business people. Perhaps you'll be able to find an already existing GH where you could take over the management. It's always better to start with an existing business that has some cash flow than starting from scratch with no initial cash flow.

During the long low season, I have inhabited many GH's where I was the only occupant. It's not an easy business.

[rgs2001uk]

Sounds trollish to me, are you Thai? I do believe a bit of research will show you the definition of a guesthouse here is the number of rooms, over a certain number (look it up) it is defined as a hotel and that puts it into a protected job/thai only vocation..

I think that an online confession to wanting to launder your ill gotten money is perhaps an indication of a severe lack of judgement and mental health advice might be more fitting in your circumstances. Chock Dee

// Thai script removed, this is the English language forum, you can use Thai in the Thai language forum //

Something for the users whom have inserted an "answer" to nothing and to their narrow minds

Edit: No I am not Thai, I just know in what areas my brain and its energy should be placed.

From what you have written above sounds like you have all the answers already.

What will kill you is the rents being asked.

As for buying a propety in the areas mentioned outright, you will probably get a better return on the SET.

[Blackandwhite]

As an onlooker in the forum I see very little chance of this being possible unless there is a large outlay of Capitol. The only way to make money in Thailand is this

Luck or You to plenty to invest on various large projects such as international franchise businesses talking millions.

The other thing you will need is lots of business experience as you will need to be very quick to see any strains the business is under, you will need to be able to work most of the questions out you have asked.

I suggest if you have some money to spare on investment then you invest in low risk investments in your own country and then follow your dreams to Thailand.

Do not throw money at this idea it is a huge risk

Only my thoughts as an onlooker please do not take any of my suggestions or thoughts as set in stone it is just an opinion

[finy]

Do yourself a favor and start an online business.

Safer and more lucrative.

[Humbugged]

Do yourself a favor and start an online business.

Safer and more lucrative.

How do you know that ?

[Humbugged]

I find you being best chums with Lt.Gen. Panu Keudlabphol perhaps a bit visionary.

I could not see this chap being best pals with someone that lves on 30k baht a month.

He most likely spends that amount on a friday night at the local karaoke.

[finy]

Do yourself a favor and start an online business.

Safer and more lucrative.

How do you know that ?

I have friends on 5 figures and my blog will eventually go that way.

But it's a silly question anyway.

Starting an online business with less than a thousand dollars is obviously safer than pumping your life savings into a property that your Thai wife controls.

And obviously it's much easier to scale an online business that's already making money than to add extra rooms onto your guest house.

[simon43]

I've owned 5 guesthouses in Thailand over the past 10 years. I still own 2 of them and they were all profitable, although some more than others.

None were in Pattaya, but I worked in Pattaya for a year and I question whether the small-hotel sector is not already flooded with similar businesses.. My businesses are in Phuket, but not in areas that are popular with tourists, (but are still popular with hotel guests...).

One problem of running a guesthouse in an area that's already got many guesthouses is that there is cut-throat competition. Some guesthouse owners seem rich enough to run their businesses as a 'hobby' and will drop their room-rates to a pittance, simply to get a customer through the door. They cannot be profitable, and their actions will make it extremely difficult for you to run your business according to 'normal business rules'.

You need to choose your guesthouse location very carefully so that you can avoid intense business competition.

If you rent a guesthouse building, then you will likely have to pay key-money upfront, and your rental period will be rarely more than 3 years, because 3 year+ leases have to be registered at the government land office and tax paid on that lease. This means that your thriving little business will be in danger of 'expiring' when the landlord doubles your building rent after 3 years....

If a guesthouse has enough rooms to be classified as a 'hotel', (typically 12 or more in Phuket, but that rule may be different in other areas), then a foreigner is certainly allowed to legally manage that type of business - it's specifically covered in Thai Law.

A hotel designation ==> more paperwork and higher taxes. (My businesses have the word 'hotel' in their names, but they are not designated as hotels because they have less than 12 rooms).

A 10-room guesthouse can be easily managed by you and your Thai partner, a cleaner and a cook. You do not need many staff at all.

Simon

[simon43]

...is obviously safer than pumping your life savings into a property that your Thai wife controls.

If you are legally married, then that marriage gives you strong legal protection if things should 'go south'. You are legally entitled to 50% of any asset (except land), if they were acquired after marriage.

To quote you an example. My first hotel was on 30-year leased land and I financed this build after my marriage to a Thai lady. After our marriage 'went south', she tried to claim the hotel as 100% her own. Although it took some patience, she had to finally agree that under Thai law, she was entitled to only 50% of that business, (the leased land didn't enter into the equation). I didn't have to go to Court - she realised that she would lose.

I subsequently sold that hotel and me and my ex shared the money 50/50.

This legal protection is much easier to implement if you are/were legally married.....

Simon

[finy]

...is obviously safer than pumping your life savings into a property that your Thai wife controls.

If you are legally married, then that marriage gives you strong legal protection if things should 'go south'. You are legally entitled to 50% of any asset (except land), if they were acquired after marriage.

To quote you an example. My first hotel was on 30-year leased land and I financed this build after my marriage to a Thai lady. After our marriage 'went south', she tried to claim the hotel as 100% her own. Although it took some patience, she had to finally agree that under Thai law, she was entitled to only 50% of that business, (the leased land didn't enter into the equation). I didn't have to go to Court - she realised that she would lose.

I subsequently sold that hotel and me and my ex shared the money 50/50.

This legal protection is much easier to implement if you are/were legally married.....

Simon

I'm not trying to say the guy will be very unsafe, but only that an Internet business is safer.

He could pay $10 for a domain name, $10 per month hosting, plus some money on Adwords.

Hotel/Guest house - 12 x 700bht - all your rent, tax, staff wages, etc.

Online business - Just find 12 people to pay you for something you make 700bht profit on. Hardly any expenses.

I just think it's safer trying to find 12 people per day in the whole world, rather than a small street in Pattaya.

[Phronesis]

To all that tries to make me believe this is a bad idea

• forget all about work visa, I have that covered
  
• in collage I read hotel management, I think it made me ,somewhat, understand a business I have not invested in before. - to Phronesis, Warren Buffett did not know his businesses before he started either
  
• after collage I studied engineering and I think that my masters is a good proof that I am quite familiar with mathematics.
  
• as I am 31 at the moment, believe me when I say that I didn´t live in Pattaya too long ago, I am not a person that cares about "looking good" and all the economy around that issue - 30000 Baht can take you a long way
  

I am sorry if I have not been clear in my questions. I am not interested in any "get away, save your money, be safe and stay in your current life, etc." from people that lacks the experience.

I asked the following questions (a bit amended)

1. How many rooms - I have made some calculations and it seems like the smallest place we would want, to support the 2 of us, would be a place with at least 12 rooms.
   
2. If we have 12 rooms, in an annual average, how many rooms would be let out on a monthly basis?
   
3. In Pattaya, how much would a place with around 12 rooms cost? We are looking for a place in "the centre" or out on Pratamnak.
   
4. I have many years of remodelling/renovation experience and due to my background, have a modern and up scale place- is there an market for "better looking" places that equals 2-300 Baht more in a daily fee, thinking of around 7-900 Bht/day?
   
5. The first and second year, how well are those years compared with the following years?
   
6. How does most customers find your place? I guess internet is the biggest one, how is it with the "walk in" customers? help from other travel agencies?
   

And I only want to have answers to my questions, from people with experience from related businesses.

See me as a guy that has fouled my own government on 10 million Baht and need a way to launder that sum of money and I am best friend with police Lt.Gen. Panu Keudlabphol (immigrations commissioner), i.e. I don´t care about anything other than about what I have asked for or other related information (information that can help, not scare me).

Troll

University educated...to a Masters level he claims...

and cannot even spell...COLLEGE?

No more help from ole Phronesis for you sunshine.

Go hard with your guesthouse...Luck favours the brave...

[khunMato]

To all that tries to make me believe this is a bad idea

• forget all about work visa, I have that covered
  
• in collage I read hotel management, I think it made me ,somewhat, understand a business I have not invested in before. - to Phronesis, Warren Buffett did not know his businesses before he started either
  
• after collage I studied engineering and I think that my masters is a good proof that I am quite familiar with mathematics.
  
• as I am 31 at the moment, believe me when I say that I didn´t live in Pattaya too long ago, I am not a person that cares about "looking good" and all the economy around that issue - 30000 Baht can take you a long way
  

I am sorry if I have not been clear in my questions. I am not interested in any "get away, save your money, be safe and stay in your current life, etc." from people that lacks the experience.

I asked the following questions (a bit amended)

1. How many rooms - I have made some calculations and it seems like the smallest place we would want, to support the 2 of us, would be a place with at least 12 rooms.
   
2. If we have 12 rooms, in an annual average, how many rooms would be let out on a monthly basis?
   
3. In Pattaya, how much would a place with around 12 rooms cost? We are looking for a place in "the centre" or out on Pratamnak.
   
4. I have many years of remodelling/renovation experience and due to my background, have a modern and up scale place- is there an market for "better looking" places that equals 2-300 Baht more in a daily fee, thinking of around 7-900 Bht/day?
   
5. The first and second year, how well are those years compared with the following years?
   
6. How does most customers find your place? I guess internet is the biggest one, how is it with the "walk in" customers? help from other travel agencies?
   

And I only want to have answers to my questions, from people with experience from related businesses.

See me as a guy that has fouled my own government on 10 million Baht and need a way to launder that sum of money and I am best friend with police Lt.Gen. Panu Keudlabphol (immigrations commissioner), i.e. I don´t care about anything other than about what I have asked for or other related information (information that can help, not scare me).

Troll

University educated...to a Masters level he claims...

and cannot even spell...COLLEGE?

No more help from ole Phronesis for you sunshine.

Go hard with your guesthouse...Luck favours the brave...

how many languages do you master, sorry feel you have some knowledge and fluency in???????????? (and native speakers of those languages feel the same about your ability)

I know that you, at best, only know some "tourist Thai", if you knew more you would understand that I am fed up with the replies to my post (even though there have been some smarter replies)

[watcharacters]

As an onlooker in the forum I see very little chance of this being possible unless there is a large outlay of Capitol. The only way to make money in Thailand is this

Luck or You to plenty to invest on various large projects such as international franchise businesses talking millions.

The other thing you will need is lots of business experience as you will need to be very quick to see any strains the business is under, you will need to be able to work most of the questions out you have asked.

I suggest if you have some money to spare on investment then you invest in low risk investments in your own country and then follow your dreams to Thailand.

Do not throw money at this idea it is a huge risk

Only my thoughts as an onlooker please do not take any of my suggestions or thoughts as set in stone it is just an opinion

I thought he covered this kind of reply even though it was thoughtful of you to offer it

[JDGRUEN]

OP - I believe Simon43 has given you some very good experienced advice... you are fortunate that he saw your post and responded.

Also personally - I am not concerned about the way you express yourself or whether your ideas are 'spot on', ill founded, naive or whatever... so here are my comments.

I will add that in your research for a location for your Guest House the level of your competition and their room price point and occupancy rate is one of your greatest areas of needed information and potential downfalls. The advice that you should get on the ground experience in the areas you are investigating is the best advice you'll get.. to the extent you should actually go stay in a Guest House(s) over a weekend in your target area.

In addition one potential customer base is Farangs who are coming into Thailand and are planning to attend one of the various language schools to take advantage of the more available Education Visas. Being able to stay within reasonable walking distances of these schools would be a definite advantage for your Guests and for your business. The security of your establishment - location - safeguards will likely become an issue too in places like Pattaya and Phuket. One only has to read the various TV posts to see how security is becoming an issue.

Edited January 16, 2013 by JDGRUEN

[mccw]

You plan to make 30,000bht pm for self from doing all that hard work. The landlord will make more than this just by giving you the keys. Better to be a landlord I think.

[simon43]

Online business - Just find 12 people to pay you for something you make 700bht profit on

Very easy to say, much more difficult to achieve

Simon

[finy]

Online business - Just find 12 people to pay you for something you make 700bht profit on

Very easy to say, much more difficult to achieve

Simon

It's not going to be easy, but neither is filling a guest house to capacity and there's much less risk involved.

[yoshiwara]

OP - I believe Simon43 has given you some very good experienced advice... you are fortunate that he saw your post and responded.

Also personally - I am not concerned about the way you express yourself or whether your ideas are 'spot on', ill founded, naive or whatever... so here are my comments.

I will add that in your research for a location for your Guest House the level of your competition and their room price point and occupancy rate is one of your greatest areas of needed information and potential downfalls. The advice that you should get on the ground experience in the areas you are investigating is the best advice you'll get.. to the extent you should actually go stay in a Guest House(s) over a weekend in your target area.

In addition one potential customer base is Farangs who are coming into Thailand and are planning to attend one of the various language schools to take advantage of the more available Education Visas. Being able to stay within reasonable walking distances of these schools would be a definite advantage for your Guests and for your business. The security of your establishment - location - safeguards will likely become an issue too in places like Pattaya and Phuket. One only has to read the various TV posts to see how security is becoming an issue.

And how many residents of Pattaya with education visas are in need either of accommodation or actually attend classes? That would be about zero.