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Kenny202

Renting / Sub letting a selling space in Thailand

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My wife has a small restaurant. Reasonably successful been at it 2 years and she's really put in. She started renting a new area 6 months ago, an open area with a small Enclosure / room, and the space is covered, not huge. Basically a cement pad out the front of a block of apartments in a reasonably busy area, albeit very little parking. Anyway, she is sub letting the area off another lady who rents the area directly off the owners of the apartments at the back. How they can rent a footpath area which may not even be theirs I don't know but seems to be the norm in Thailand. Rent is very cheap so no problem there.

 

So their are three parties. The actual owner, the person who is renting the area off the apartment owners, who sublets it to us at a small profit. The apartment owner is aware of everything and all good. The person who is renting it to us has asked my wife a few times if she wants to buy her out. She wants 30,000 baht for my wife to take over as the principle tenant directly with the owners. The area was vacant when she started, ie no customers, there is no good will, the structure is ok.... but essentially if we ever vacated we couldn't disassemble it and resell. A covered roof area  and a small lockable box / room which is ok but not one of the nice transportable ones. The lady who rents it to us said it cost her about 8k baht to build.

 

So....My wife would essentially be paying 30k for the right to rent directly off the apartment owner.  If my wife took over and rented directly off the apartment owners, she would only get a lease same as any tenant / landlord.

 

So my wife pay's 30k to the current tenant, and do a new lease arrangement with the owners, there is nothing to say they couldn't chuck her out in 12 months when the rent lease expires. I don't think it would happen but what I mean is there is no guarantee of continuancy from the owners apart from the period of the lease. I just can't get my head around it? You would think the lady who sublets to us would be desperate to get any cash atm with covid etc but just wont see reason or budge an inch. She is actually a nice enough person, and has been upfront about wanting to sell it and get her money back from the start. She even reduced Missus rent substantially the first three months because of covid without my wife even asking so she's not trying to squeeze us. According to her she paid the previous tenant 30k for the area plus money to build the cover and shed so she thinks shes already giving my wife a discount and that seems to be firmly fixed in her head. I doubt anyone would be stupid enough to give her 30k for essentially nothing, and also something that isn't even hers, without any guarantees etc but this is Thailand and logic doesn't apply. We could tell her to go jump of course but Mrs been there 6 months and most of that has been building up the business without  getting a lot out of it so if we leave now not only this area hard to find another site but would basically be starting again. Other thing is we just hope for the best and gamble she can't sell it, or if she does sell it the new landlord wants to continue renting to us. I would assume anyone buying it would want to also sell there. We're not in a strong negotiating position unfortunately.

 

Now I know none of this make sense, and I don't need a whole bunch of comments of how to negotiate with her or tell her to go get #$$ etc. Have tried all angles and she wont budge. I asked my wife to go check close by if anything else is for rent to give us an option / improve our negotiating position but I am not hopeful. The women keeps telling my wife this sort of thing is normal in Thailand and I could understand if we were getting anything for our money, even good will or ongoing business, or a guarantee we can stay there for 5 years etc but as far as I can see, the current tenant was stupid to give the last tenants 30k to take over the area, and she in turn wants us to be stupid. My wife of course could go directly to the apartment owners and try and do a deal with them, I believe the current tenant (our landlord) lease is about to expire when ours does, but that could backfire. Maybe a last resort? You never know here, maybe the owners and our landlord related or something.

 

SO... what I am really trying to ascertain is if anyone has had the same experience and knows if this sort of thing is normal or not? I have heard the expression "key money" used. Not sure if that is what this is. There is some benefit to us being that if we rent directly off the owner our rent will be cheaper long term and we will recoup the 30k back in about a year. Also she has to consider the possible loss of business she will have if she moves, temporary or otherwise. Any advice welcome

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Haven't even seriously considered if we will accept the 30k. Maybe wont have a choice offsetting the negs against the positives but if there were any other additions or obstacles no. Even if we do buy her out and do a lease with the owner, owner may want to up the rent (although it is unlikely). Mind you whatever you think in Thailand from a Western point of view opposite seems to apply here. My missus offered her 20k then 25k, tried to explain things to her re our position and whilst the lady is nice and reasonable, has it firmly fixed in her head she wants the 30k, because that is what she paid. As I explained to my missus just because she was stupid doesn't mean we have to pay for it.... and because she paid 30k for something worth 10k, doesn't mean that is its value. If we wont accept it she will try and find someone who will, but in a nice way. She has been very upfront in every respect from the start and my wife has met with the owner and she is fully aware of the arrangement. The lady renting to us only makes a small amount of profit (1500 bht) on what she has to pay the owner. That is all very above board, my wife has even seen the lease between the owner and the lady we sublet off. And you are right about these sort of deals in Thailand. Nothing is ever clear or guaranteed and even if you did have a rock solid lease and the owner wanted to terminate before the lease was finished in reality what could you do? Wouldn't be worth going to court over, not in our case anyway. 

 

My missus will talk directly to the owners after she has a clear position of what our landlord wants and the landlord has actually asked us to do that so we can make sure if we buy her out we can continue the rent arrangement with the owner at the same rent etc. Yes my missus could offer the owner a sum or something to sign a lease with us directly and cut the middle man out but that will be a last resort. Like I said not sure if the landlord and the owner are related or friends or maybe the owner doesn't want to shaft the current landlord, who knows. Why she wants to sell when she gets money per month? You know Thais. A bird in the hand. They don't look at the long term picture. I read somewhere there was a survey offered Thai people 10,000 today or 100000 baht in a years time what would they prefer. Apparently 90% chose 10000 baht today. Maybe an urban legend but in my experience an accurate depiction. I assume this lady needs a lump sum for something or other. The 1500 per month is chicken feed really and I don't think she is exactly desperate for pocket money. 

 

As far as she knows something I assume you mean roadworks or something like that. I really don't think so, and how much worse could things get with the economy / covid etc. Like I said you would think anyone would be keen to get whatever they could but TIT. It seems many business putting prices UP, not discounting to retain or attract customers. I don't know if any of you blokes have worked Thais or Thailand out but I certainly haven't

Edited by Kenny202

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Maybe nice to know but im not read book's!

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2 hours ago, Kenny202 said:

The women keeps telling my wife this sort of thing is normal in Thailand and I could understand if we were getting anything for our money, even good will or ongoing business, or a guarantee we can stay there for 5 years etc but as far as I can see, the current tenant was stupid to give the last tenants 30k to take over the area, and she in turn wants us to be stupid.

That´s the thing. She is telling the truth. It is totally normal to get ripped off on a lot of money for nothing. Here you can consider yourself lucky. You are only talking about 30k baht. That´s pocket change, dude!

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9 minutes ago, 2 is 1 said:

Maybe nice to know but im not read book's!

Maybe you should? 🤔 your grammar and comprehension may improve. I'm not read books lol

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Key money is the proper term and it is not unusual in USA... or at least in NYC...

 

The important factor is whether or not the landlord knows of the situation and is willing to proceed on the same basis... I have been involved in instances where the landlord feels like they are being shorted as the seller really has nothing to sell - at least nothing that the landlord doesn't have - and the landlord might feel that money should rightfully go to them... which might be correct... 

 

I would talk with the landlord... get a new lease written in your name.

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On 9/1/2020 at 7:10 PM, bwpage3 said:

The first question is are you prepared to lose 30k without it hurting you?

 

You know, these types of deals in Thailand, there is no guarantee.

 

Why, the lady leasing from the apartment owner, is selling if she is making money each month?

 

How much per month does she make sub-leasing to your wife per month?

 

The second issue, is you and your wife should have a talk DIRECTLY with the owners.

 

The middle lady might be trying to sell you something she has no legal right to.

 

Get a long term agreement worked out in writing from the owners so that they cannot pull the business out from you in the event it becomes successful.

 

Never trust the middle man/woman.

 

She might know something will change soon and wants to profit 30k off your loss.

 

 

This is all correct advice... if the middle lady does not want you to talk w/the owner - there is something wrong... 

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do the apartment blok "owners" even entitled to anything in the first place ?  someone getting money to agree for something that does not belong to them

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No its all above board in that respect. Landlord took us to meet the owner initially. I don't think the owner cares too much to be honest but is aware of the sub letting etc. And that is exactly right, not necesarily trying to sell us something illegally...just trying to sell,,,well I don't really know what. I could understand if we were inheriting a business, customers, ongoing trade or something. I would even be happy to throw her 10k just to save my missus the inconvenience but 35k no. Oh it was 30k by the way. We reminded her she needed to give our 5000 baht deposit back....open mouthed confused face. Oh, yes....30k plus 5k deposit she already has lol. She paid 35k for the right to use the area 5 years ago (when things were booming) and wants to recoup that money. Its ridiculous really. There are other areas similar to hers, same street same rent and only 2 months rent deposit start in the same street to rent directly from the owner. Why she thinks someone is going to give her 35k + deposit + rent I have no idea. Anyway, no amount of logic will make her see reason. Wife is going to discuss it with owners directly today. Under the guise of if we pay this woman the money and rent from owner direct what guarantee we have we can stay there in the future or have rights to sell to someone else. I am fully expecting no guarantees except for a verbal Thai guarantee and we know what that is worth lol. The wife is also going to feel the owner out re renting direct from her. I believe the woman who is sub letting to us lease about to expire. Maybe our landlord has been slack with her rent payments or whatever and owner may be keen to run her off?

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On 9/1/2020 at 7:50 PM, Kenny202 said:

Haven't even seriously considered if we will accept the 30k. Maybe wont have a choice offsetting the negs against the positives but if there were any other additions or obstacles no. Even if we do buy her out and do a lease with the owner,an make sure if we buy her out we can continue the rent arrangement with the owner at the same rent etc.... to get whatever they could but TIT. It seems many business putting prices UP, not discounting to retain or attract customers. I don't know if any of you blokes have worked Thais or Thailand out but I certainly haven't

You think too much lol

i mean normally this sort of thing should not be a concern for you

it's your wife business, and it's a deal beetwen Thai people, you are not really concerned

except if you are asking to pay the 30 000. In this case if i was you the answer should be ''NO''

if the business is successfull enough to pay the 30 000 on the business founds, i don't see 

where is the problem. If it's not, then the business doesn't worth the ''30 000'' cost without

any guarantee in exchange. And as you say TIT so don't expect any guarantee in exchange.

Good luck

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26 minutes ago, Bender Rodriguez said:

do the apartment blok "owners" even entitled to anything in the first place ?  someone getting money to agree for something that does not belong to them

Well my understanding is 1m next to the road is government land. behind that is the landowners. It wouldn't matter anyway really. Way things are done here. In the city people rent the foot path in front of their shop, and I am sure its not theirs to rent  but they do. Market stall people. Absolute PITA, you can not get past without walking on the road. They block parking spaces in front of their shop as if they own the road as well. People cooking with huge woks of boiling oil. 

 

Anyway, that's the way it is here. My missus had at least 4 rental agreements here and they are all loose. No guarantees for the renter, but deposit guarantees etc for everything for the landlord, and they will never budge. Like it or lump it. And we're not talking huge rents here. Its not like you would take them to court if for eg they kicked you out before your lease finished. Up to them

 

Edited by Kenny202

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4 minutes ago, Kenny202 said:

Well my understanding is 1m next to the road is government land. behind that is the landowners. It wouldn't matter anyway really. Way things are done here. In the city people rent the foot path in front of their shop, and I am sure its not theirs to rent  but they do. Market stall people. Absolute PITA, you can not get past without walking on the road. They block parking spaces in front of their shop as if they own the road as well. People cooking with huge woks of boiling oil. 

 

Anyway, that's the way it is here. My missus had at least 4 rental agreements here and they are all loose. No guarantees for the renter, but deposit guarantees etc for everything for the landlord, and they will never budge. Like it or lump it. And we're not talking huge rents here. Its not like you would take them to court if for eg they kicked you out before your lease finished. Up to them

 

What's happen if your wife stop to pay the 1500 to the middle lady?

i mean if she has 0 legal rights on it, can she come with the police?

If i was your wife i should try to deal directly with the 'real'' owner

the middle lady seems to be an useless scrounger (There is an infinite stock of them here)

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2 minutes ago, kingofthemountain said:

You think too much lol

i mean normally this sort of thing should not be a concern for you

it's your wife business, and it's a deal beetwen Thai people, you are not really concerned

except if you are asking to pay the 30 000. In this case if i was you the answer should be ''NO''

if the business is successfull enough to pay the 30 000 on the business founds, i don't see 

where is the problem. If it's not, then the business doesn't worth the ''30 000'' cost without

any guarantee in exchange. And as you say TIT so don't expect any guarantee in exchange.

Good luck

Who do you think will be paying the 35k? lol, with little chance of recovering it. So it is a concern for me. 35k isn't chump change, not for me anyway.

 

I know a lot of things here don't make sense to us and sometimes you have to bite the bullet but this isn't one of those times. The economy here shagged and not looking like it will improve. Covid everything uncertain. No Thai person would pay 35k for the privelege of nothing more than to be able to rent, when there are similar areas down the road where they can't find a tenant to rent with NO cost. If it was a busy market area, hard to get into yes. It would be slightly inconvenient for her to move but not really that big a deal. Its about value. For maybe 10k I would do it just to avoid the inconvenience and possible slight loss of trade. But 20k + doesn't make sense

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On 9/1/2020 at 7:10 PM, bwpage3 said:

Never trust the middle man/woman

NEVER TRUST ANYONE ,PERIOD

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