Thailand runs on relationships, prestige, loyalty, money and the law – in that order, which often makes Thai property investment scams successful.Unless you’re a member of the Thai ‘club’ it’s wise to have a prestigious friend who is, because Thai Property Investment Scams are common.  The (current) experience of farang friend who owns a restaurant shows why: his restaurant has been a great success in its first year and, last month, the landlord announced he was doubling the rent. “But we have a 5-year lease agreement,” stammered my friend, caught off guard. The socially prominent owner made it clear that the increase was non-negotiable, and my friend realized that he was vulnerable to extra-legal actions (like cutting off the electricity) and recourse to the courts was hopeless since the case would take months to reach a magistrate and the landlord’s prestige would make it difficult to win a judgement.

My friend had fallen in love with the restaurant property – it was an abandoned karaoke bar when he found it – that he had brushed aside my suggestion of involving a third party to oversee the deal. After all, wha could go wrong? The owner is one of the most socially prominent women in northern Thailand, after all (and my friend is an upper-class Brit). He and his wife signed a standard lease agreement and proceeded to invest their life savings fitting out the building and grounds. Realizing that the landlord could redouble their rent whenever she chooses they’re now raising money from friends and relations to move the restaurant into town.

My friend’s mistake was imagining that (a) the law protected him and (b) his social status would make him the landlord’s peer. He was wrong on both counts. If you’re not a member of the Thai ‘club’ and you’re involved in a Thai transaction, third parties can save the day.

Thai society is intensely nationalistic and clannish (so are most: American society’s acceptance of foreigners is an outlier). It’s a club that you’re born into and your birth determines your status within it. So if you’re going to do any serious business – even a long-term lease – in Thailand it’s wise to have a third party present and on your side. That way, if the other party to your agreement attempts to abrogate it, your friend can approach them as a peer or, better still, a social superior and straighten things out for you. In reality, their presence at the consummation of the agreement will prevent such shenanigans – and that’s what you really want. Third parties’ participation is preventive.

How do you find such people? In Thailand it’s usually accomplished through gift-giving. Forced to give up driving after a heart attack, a friend recently donated his new BMW motorbike to the local Chief of Police, who bestowed it on an outstanding young officer. The officer, thrilled to own such a prestigious thing, showed it off to his fellows and praised his chief’s generosity. His chief repaid my client by handing him his business card: “Just show this to anyone who bothers you and tell them to call my personal number at the bottom”.  The friend was subsequently in a fender bender  and the other driver, who was drunk, demanded to be compensated despite being clearly in the wrong. Following the Chief’s instructions my friend flashed the card and the angry man vanished.

Property Law in Thailand isn’t what we’re used to at home so, instead of complaining, I recommend always using a third party when you’re transacting business. Sounds funny, I know, but that’s how Thailand works.

We can’t all give pistols to police chiefs, of course. But we can be on the lookout for opportunities to prove our good heart (jai ren) to influential members of Thai society. And we’ve now started issuing such get-out-of-jail cards to all our clients, just as a precaution.

Thai property investment scams are like property investment scams in Australia, China, or the USA. The thing to remember is that they exist and you can take precautions to prevent being ripped off.

Property investment is supposed to be a safe investment but, in Thailand today, pensioners are being cheated out of their life savings through investing in real estate. These unfortunate individuals are used to there being a substantial amount of rules and laws under which financial advisors and the like must operate, along with a substantial amount of education being required to become such a professional. Outside Europe, these laws are far from being a given, and (if they exist) they are frequently “overlooked” without there being real consequence. Companies in Thailand, for example, can operate without proper registration with the Thai authorities, and seldom do they face real persecution for doing so, despite this quite obviously being completely illegal.

The Harlequin company, for example, which has operated in both Thailand and the Caribbean, took in a huge amount of cash for several developments which were never built. Under the direction of Richard Haughton (President of the Pattaya – Jomtien Rotary Club) the land meant for development was put into a company called Headland Holdings. Thereafter, the already-sold properties were mortgaged to the Kasikorn Bank.

Subsequent involvement by lawyers from an embassy-recommended legal firm saw a plan created that would require the buyers to also buy out the debt with the Kasikorn Bank, or else risk losing their entire investment.  Fearful, many paid. Only now are Thai courts finally ruling that the condos actually belong to the buyers, and that they should not be held accountable for a massive debt that is not theirs.

More Thai Property Investment Scams: Many of the supposed “financial advisors” who get unsuspecting elderly to invest in such fraudulent schemes, such as the the British founder of the Chiang Mai Expats Club, simply flee back to Britain (or elsewhere) themselves, after having conned many people out of their pension.

Other elderly persons have been victimized by the failed Australian LM Managed Performance Fund, their funds deposited there by the same sort of “Independent Financial Advisors” mentioned above. These IFA invariable work on very high commission, and are not always registered with anyone at all. The Australian Securities and Investment Commission has been ineffective in rectifying the damage done by this scheme.

Asia Pacific Pensions claimed that LM’s debt instruments were secured against Australian properties, but this turned out to be an almost complete falsehood. The only property the LM Managed Performance Fund had was a worthless property on the Gold Coast, for which LM had already taken out mortgages.

Finally, here are some tips for avoiding property investment scams in Thailand…or anywhere:

The post Thai Property Investment Scams appeared first on Thai Retirement Helpers: Retiring in Thailand Made Easy.

What is the biggest obstacle to your retiring overseas?

At the moment it is creating a passive or online income. I’m currently employed as an electrical engineer in Australia. My wife is a stay at home Mum but our youngest boy will be starting kindergarten next year and she will be offering Photoshop services and custom phone/stubby holders online then. I am starting work on how to create websites and generating income through them. Thanks for the link to Building a Niche Site Empire. I’m currently working my way through that. I will also do the TEFL training in Thailand and teach English when we first arrive. I’m also keen to do the Thai language course so that we can become part of the community.

Our children are currently three and four years old and we were pleasantly surprised to find that the school they are going to here has a school in Chiang Mai too (Grace International). This looks like it will be our biggest expense at $4000/year/child.

So the biggest obstacle is making a living. We are planning to build up our joint income to $60 000/year before we move. This includes $2000/month living in Thailand (two adults, two children), $8000/year for school fees, personal insurance (which I should be able to reduce from its current level) and renting out our house which will cover most of the mortgage. I need to make our budget more accurate but this is approximately what we need.

What is the strongest attraction for you to retire abroad?

Even though I have been earning a good income, I value more the experiences I have had in my life, especially travel. I’m not a consumer type looking to shackle myself to a big house and car/boat loans. I’m looking to simplify my life. And because I did not get in on the real estate boom in Australia in recent years, my retirement date is a distant dream of another 30 years of work (I’m 36 now) with no guarantee of a reasonably comfortable life.

The cost of everything has gone up so much in Australia (I live in Western Australia where the benefits of the mining boom have made housing and day to day cost of living extremely high). I also don’t like the attitudes of the average Australian, they are very selfish and consumer driven. The generation Y attitude of me me me and no discipline or respect for others really concerns me. There is a lot of violence in pubs now – being attacked by a large group or being stabbed with a bottle are commonplace and did not happen when I was around 20 years old. I don’t want my children growing up in this culture and I can see great benefits for them growing up in Thailand where they will be exposed to more opportunities for their futures in the Asian Century. We were looking at moving to Brasil (my wife is Brasilian) but the economic boom there has caused real estate and other prices to be inflated – so it is no longer a cheap place to retire. Crime, pollution and the crumbling infrastructure are also major problems in Brasil. The last time we went back (Christmas and New Year just gone) my wife was looking forward to coming back to Australia, which I never thought I would hear her say!

From what you have described in your books, a lot of how Thai’s are, really resonates with me. Some of their ways will take time to adjust to but like you explain in your books, if you are aware of it and accept it, then you won’t get upset.

What is your first goal towards retiring overseas?

To make $2500/month from online sources.

What’s your pet peeve when it comes to your retirement planning?

That I can’t see how I can retire even with another 30 years of work!

What made you decide to buy the book?

I went to a seminar that my financial advisor put on recently and I met another of his clients there who has retired to Thailand and comes back to Australia every three years for about six months or so. I thought, what an amazing life and that is what I want! So I started researching on the net and came across your books via a Google search.

Expats’ Experience Abroad

The Best Places in the World to Retire just polled 389 expats from the United States and Canada and asked why they wanted to retire abroad and what it’s been like. Here’s a summary:

• The striking number of expats who left home for quality-of-life issues, such as a more meaningful and less stressful life.
• Many expats said they were seeking to live a life like they remembered, or believed it to be, growing up in the ‘50s and ‘60s.
• Most thought that by moving abroad they’d achieve a
  • lower cost of living (87%),
  • a simpler, less stressful life (82%) and
  • better weather (74%).
• 84% said they achieved a lower cost of living and 74% got better weather.
• Only 71% are living a simpler, less stressful life, compared to the 82% who were hoping for it.
• While 56% thought they’d achieve “a less materialistic, or more meaningful life” (their #4 reason for retiring abroad), an impressive 61% say they’ve found more meaning.
• Two thirds of women said they achieved a less materialistic, or more meaningful life, but only 56% of men did.
• 85% are happier living abroad than they were before.
• 56% said they’re much happier and 28% said they’re somewhat happier. Only 5% are less happy now and 11% said they’re about as happy as before they moved.
• 64% said they enjoy life abroad much more than their former lives.
• 42% of the expats never plan to go back to the U.S. and
  • 37% aren’t sure;
  • 16% expect to return to America when they’re old or sick,
  • 4% said “as soon as possible” and
  • 3% anticipate moving back within five years.
• If they had to do it all over again, 79% said ‘yes’ and another 12% said they ‘probably’; 3% either wouldn’t or probably wouldn’t.

The post A Moving to Thailand Letter appeared first on Thai Retirement Helpers: Retiring in Thailand Made Easy.

A British friend who’s making money in Thailand by managing Chiang Mai’s swankest private hotel told me he’s “a slave to TripAdvisor”: as soon as he wakes he checks TripAdvisor. A bad review can wreck months of hard work. You, too, can be such a slave…

May 10, 2016: Several of you have emailed to say you’re interested in local businesses so we’ve been looking been looking for modestly-priced business opportunities around Chiang Mai. Here’s the first: a guesthouse. I haven’t vetted this place, don’t know the owner and receive no reward for bringing it to your attention (the same goes for real estate listings). For this job you would need some hospitality experience and trustworthy local help to audit the books and instruct you about the unique pitfalls of doing business in Thailand.

The financial requirements of this deal are: Deposit 500,000 baht and 120,000 baht monthly. In US dollars, that’s $14,000 and $3,500 monthly. Doesn’t look so bad when you convert it to familiar currency, does it? Term of the lease? Long-term. Sounds like it’s up to you and the landlord to negotiate the term. Location? Soi Rachamanka 3, right in the beating heart of the Old Town. Could hardly be  better. You can contact the owner at +66-(0)83-515-9988 or (0)87-972-9988. But read the rest of this post before you invest a penny…

Starting a Business in Thailand Can be Tricky

One factor that complicates starting a business in Thailand is that, under current law, foreigners and foreign businesses may only own a 49% stake in local companies. The current law forbids foreign majority ownership in sectors where Thai businesses are deemed not ready to compete with foreign companies. Businesses have circumvented restrictions by issuing preferred and common stock options, with preferred shares enjoying more voting rights. Now a draft law put forward by the Ministry of Commerce would restrict foreign firms from using preferred stock to retain control.
“This proposed change would have far-reaching ramifications that would affect thousands of existing firms here, big and small, and would certainly deter future foreign investment,” said Marcus Burtenshaw, executive director of real estate consultancy Knight Frank Thailand.
“My business is one that you can run from literally anywhere. We registered in Thailand because we like the lifestyle here,” said Chris Roberts, who did not provide his real name out of fear of a possible backlash. Roberts runs a small IT firm that specializes in software engineering. His company employs only four foreigners but has over 20 Thai staff. He says that while he has Thai partners who own the majority of the company, they do not have executive authority on the direction of the company. “If they’re going to make it difficult for me to run my business, then I have no problems about packing up and moving somewhere else.”
Resistance from foreign officials and businesses has prompted internal reviews and assurances from the Ministry of Commerce that any changes to the law would be made after consultations with all parties. A source from the ministry said that any changes are still preliminary and that all changes would have to go through both the legislative assembly and the cabinet – adding that compromises with foreign businesses could be made, as a reworked Foreign Business Act could allow foreigners to own a majority share in certain sectors including accountancy, legal services, architecture, engineering, brokerages, advertising, hotel operations, food and beverages and “other service businesses.” The ministry said some restrictions may be relaxed as a compromise for limiting the use of preferred stock options. Yet foreign companies say that is not enough.
“Imposing tighter restrictions would be seen and felt as a step backwards at a time when foreign direct investment levels are low and Thailand’s neighbours are becoming increasingly open for business,” said Burtenshaw.
The various chambers of commerce agree with such sentiments. When rumours circulated about the proposed changes, the American Chamber of Commerce quickly pointed out that the last time such restrictions were discussed in 2007, the stock market dropped 15 per cent in one day as a result.
Stanley Kang, chairman of the Joint Foreign Chambers of Commerce, said erecting more protectionist barriers would be going against the tide of increasingly freer trade.
“With the ASEAN Economic Community due to be implemented next year, there is going to be more competition in the region, so we want to see more liberalization of the economy.”
Sources within the Ministry of Commerce said the committee overseeing the draft law is resolute in the belief that it is vital to protect Thai interests.
“To them, this is not about chasing away foreign businesses but protecting Thai ones. More transparency and fewer loopholes can only be a good thing,” one official said on condition of anonymity.
For others, however, the proposed changes come at a bad time. As Thailand’s economy slowly recovers from a decade of political instability and the world comes to grips with the country’s new military government, any changes that rock the boat could only worsen the situation.
“Thailand faces a choice,” British Ambassador Mark Kent wrote in a blog post circulated by the British Chamber of Commerce.
“It can choose to seize the initiative again and make itself the most attractive destination for foreign investment … or it can choose a different path.”

A Thai Startup: Richard’s Cosmetic Business

Richard Berry is launching a new cosmetics business in Chiang Rai, Thailand, about 3 hours north of Chiang Mai, near the Myanmar border. I’ll be following the progress of Richard and his partner, Uwie, over the coming months a posting videos of each stage of their adventure. Here’s some of what he had to say, based on his progress to date:

Me: so, if you’re thinking of doing business here, what are some of the things to do before you commit?

Richard: Okay. Buy Thailand Fever, the book. And by the way, it’ll give you a little bit of insight into how the Thais think differently. You have to understand that their thought process is their actual mentation is based on the five precepts, and an animus society is very, very different from the way we think in the west. The language, okay, we think if you speak the same language. It’s very different. So the key factors that have helped me, and while our business isn’t open yet, we’ve got the product produced, is to find a farang who’s successful in business, who doesn’t moan about the Thais, also, somebody who accepts the culture is very important. Someone who’s not got a business who battles with the Thais. So find someone who accepts the Thai way of life, who’s successful, and go and talk to them. And they’ll always be happy to impart their information to you. So that’s the key factor. You will not learn it from books. You will not learn it on YouTube or any videos. You need to talk to somebody who’s set up businesses out here, and that’s what’s helped me. That’s the key factor.

What about language?

I can get by with basic Thai, and every single new word I’ve learned has made it easier, and you’ll get more respect from the Thais you deal with. So I would say, if you’ve got a predisposition towards learning, and I haven’t really, and even if you haven’t learned the language, go to school. Learn from books. The best book ever is by James Higbie, called Essential Thai Grammar, I think, or the Fundamentals of Thai Grammar, big thick book like this. No one’s ever come near learning from a book, but you need to go to learn lessons, to get the pronunciation right. If you can learn the script, it’s a phonetic language, so if you learn the script, you cannot pronounce it incorrectly. So that would help a lot, and of course you won’t have the wool pulled over your eyes. You’ll get to understand a little bit, and you’ll get so much respect from your Thai business partners and the Thais you deal with in the street. They love it.

Further Reading

How can you do better than to read the classic, Making Money in Thailand?  It describes 22 ways that Westerners who retire in Thailand can (and DO) make extra income. From legal employment to buying a business to starting one. Covers budgets, profit margins, on-line and off-line businesses, visas, legalities, business culture, import and export, and a range of stories and videos by and about Thai expats making extra money,  and more.

The post Making Money In Thailand appeared first on Thai Retirement Helpers: Retiring in Thailand Made Easy.