Cathouse. New 'owner' screwed?

[Zorro]

I agree that there are opportunities in Thailand and with a global economy there will always be niches for the enterprising and foreign companies with the right business plans and connections can do very well.

 

But I am talking more about your average Joe investing in Thailand and after all this is what the original topic is about.

 

I suppose the point i am trying to make is that i can make and have made over a period of years over 10% return fully franked on my investments without taking any great risks.

 

Now i do have the advantage of making quite a good salary but nonetheless I have many friends in Australia who have make loads of money out of property and they were on very average salaries but they are now very comfortable indeed.

[Guest]

But I am talking more about your average Joe investing in Thailand and after all this is what the original topic is about.

You are right on both points.

 

On the other hand, if an average guy has skills that are lacking here, he could do well. As Lord Toad said above, too many farangs investing here skip the basic precautions they would take in their own countries when investing here. I was going to say this is "foolhardy", but I will be blunter, it is damn stupid.

 

Thailand is less transparent and the rule of law is much less developed here. (There is law here, but if is a bit vaguer than in more developed countries, and some of those laws place ridiculous restrictions on farangs.) You need to be much more careful than you would when you are investing in your own country. There are plenty of problems, and I will list a few I have seen:

 

- A Farang decides to do things the "Thai way". That is, it is all informal based on a some vauge understanding and nothing is registerd. This is almost a guaranteed recipe for disaster. Farang ends up in jail or deported.

 

- Farang notices that many things in Thailand are cheap, and so he expects everything else to be equally cheap. If a taxi here is one fifth of what it costs where he is from, he expects this to apply across the board. The truth, of course, is more complicated. Low level staff will be cheaper, but if he wants some fancy piece of equipment that he can readily find back in his home country - perhaps his knowledge of how to operate this equipment is his niche market here - it will probably cost much more here than back in his home country. He has to pay shipping and ridiculous customs duty to get the equipment here. And higher level staff (e.g., good engineers) and good professional service providers (e.g., lawyers and accountants - real ones, rather than the street front operations you see around town and in Pattaya that also offer photocopying and foot massages) will cost the same or more than in his home country. This will all seem very counterintuitive, he'll do things on the cheap and end up either losing his investment or spending several times what he would have spent had he done it right the first time round.

 

- Farang decides to venture into a new business he knows nothing about. In the bar scene, I suspect this is the biggest problem. A guy that was, for example, an underwater arc welder or worked on an oil rig and built up a wad of cash, decides he is going to run a bar in Thailand. "How hard could it be?" he thinks. I honestly don't know since I never ran and never intend to run a bar, but I suspect it is not as easy as it looks. Some bars in NEP do seem to make money (they have alot of customers and they are charging 120 Baht a drink). But I also noticed that some thought and planning went into those operations. They didn't just happen on accident.

[Guest]

There are various people at fault here: none the least being the agents who brokered the deal who advised the purchasers.

There were agents that brokered the deal and advised the purchaser?

 

That does cast a different light on things. If the broker was supposed to be advising the purchaser, it sounds as though the broker screwed up big time.

 

This goes back to a problem I see here all the time, particularly on land transactions. When you go to Pattaya, Phuket or Koh Samui you will see countless real estate agencies where they claim to do everything from a to z. They act as the seller's agent, the buyer's agent, the escrow holder, they check title, they represent the buyer and (often unbeknowst by the buyer) the seller too. And to make it more enticing, the basic services appear to be very cheap.

 

The basic services appear to be cheap, because they make their money when the deal gets done. There are obvious conflicts of interests with these sorts of operators. And the broker's (often called a real estate company) real incentive is to get the deal done because that is where they make their money. Although they hold themselves out as agents assisting the buyer, their true loyalties are with the property developer. The developer is local, has other properties to sell where the "agent" can make more money while the transaction with the buyer is a one time deal. All of these things come togother to create tremendous incentives to gloss over or conceal serious problems, and this is exactly what happens all the time.

 

Of course, the farang "buyer" has the assistance of his BG girlfriend with a third grade education to help him understand the transaction. Often title will be in her name, which provides her with her own incentive to participate in the feeding frenzy. And people wonder why farangs are constantly ripped off in transactions here?

 

OK, I have digressed a bit on property deals, but there are obvious parallels. I didn't know the purchasers had someone advising them? How did they miss something this obvious? Was this one of these one-stop shops that does everything from a to z like I described above?

 

Just about everyone on this board picked up on the lease problem, and I suspect most of us here are not brokers (I am not). How could an honest and competent broker screw up on something this obvious?

[SingaporeSteve]

Gadfly1 said:

OK, I have digressed a bit on property deals, but there are obvious parallels. I didn't know the purchasers had someone advising them? How did they miss something this obvious? Was this one of these one-stop shops that does everything from a to z like I described above?

 

Just about everyone on this board picked up on the lease problem, and I suspect most of us here are not brokers (I am not). How could an honest and competent broker screw up on something this obvious?

 

You answered your own question - the broker's fee is paid entirely by the seller - that is where there loyalty will be, regardless of what they tell you. Unless you hire your own competent people those buyers frankly deserve to get burnt.

[chuckwoww]

So what is the current situation at Cathouse? Does anybody know? With TC and BH out of the country is anybody making a big deal out of this lease issue?

 

How about some anonymous input from the new owners? Come on guys.....could be good for business.

[Guest]

You answered your own question - the broker's fee is paid entirely by the seller - that is where there loyalty will be, regardless of what they tell you. Unless you hire your own competent people those buyers frankly deserve to get burnt.

You are right that the broker's loyalties will be with the seller if the seller is paying the broker's fees. But Lord Toad's post says: "the agents who brokered the deal who advised the purchasers.

 

This sounds like the broker was acting for the purchaser or at least created the impression that it was looking after the purchaser's interests. I agree 100% that you are likely to get burnt if you don't hire you own competent people, and I went on for some length about buyers in land deals in resort areas who get burnt when they don't do this. But I am also troubled by brokers who also "advise the purchasers" and mislead purchasers into thinking the broker is protecting their interests.

 

The buyers are naïve in these matters, and I guess we shouldn't be all that surprised when they get burnt. But a broker who negilgently creates a false impression about, or worse, intentionally misleads a buyer about whom he truely represents...well, that begins to sounds like fraud to me. I don't know what happended here, but I do know that plenty of "brokers" here who are quite vague, to the point of being misleading, about whose interests they really represent. All the more reason for any purchaser to have someone separately represent their interests.

[Neo]

Based on what little and possibly inaccurate data is available, it seems the consensus is the buyers were somehow screwed meaning their money didn?t get them what it appeared it would. No real surprise there; buying bars is notoriously dangerous and with millions of visitors it is just a matter of time before someone gullible enough falls into the trap. But it seems there is a split on whether they deserved it which I think is crap. No one deserves to be screwed. Just because the buyer was not careful enough to cover themselves in this instance is no excuse for it to be ok to screw them over. All of us get screwed sometime or another because it is impossible to detect and thwart every single scam every single time. So if you think the buyers deserve whatever is being imposed on them you must also think:

 

any guy who falls for the airport taxi mafia deserves to be screwed

any guy who falls for the taxi with the broken meter deserves to be screwed

any guy who got bill padded at the bar deserves to be screwed

any guy who gets pick pocketed by a katoey deserves to be screwed

any guy who sends money to a bg deserves to be screwed

any guy who follows a tout deserves to be screwed

any guy who completes a survey deserves to be screwed

and so on?

 

Nobody deserves any of this crap but countless smiling farangs will fall into these carefully laid traps again today. This is all complete BS by unscrupulous people ripping people off by preying on people?s good nature which results in a colder, stressed world like big cities in farangland where everyone is conditioned not to look up and ignores everyone else. I am glad to see the buyers keep their mouths shut and put the owners on the stand to defend their practices. The fact that there is not just a single buyer I think lessens the chance of them being in mortal danger sticking their necks out (it?s hard for a double homicide not to lead to the obvious source). In fact, seeing as one owner has allegedly pulled a runner seems like they have the owners on the back foot. It?s got to be the most interesting case since the Swiss guy who took the Thai embassy to court for denying his visa application.

[..]

I will submit that "one owner" did NOT "pull a runner", but is persuing a business venture in a neighbouring country which is *exactly* the reason he sold the place: no time to do all he wants to do. Not at all hard to contact should one require it.

 

I was speaking to a couple of guys (farangs) who do biz with BH on a regular basis last night. The were incredulous that people were defending him. Regardless if you think BH is a decent bloke(???), as one guy yesterday put it "When it comes to biz, BH would dig up your dead mother and skull fuck her on your bed if it made him a dollar!" Given that rep, I certainly have my doubts about who is at fault.

 

Regards,

SD

[Guest]

Well I'm going to speak out as their seems to be lot of speculation and some of it is correct and some is it is wrong.

 

1. Why could a criminal complaint be filed and the police accepted it? Because TC was selling something that was not his. He did not own the furniture, fixtures and equipment or even the alcohol license. TC was simply a tenant leasing the premises that were fitted out. Just like you can?t sell the furniture out of a furnished apartment that you rent neither can you with a business. He could of sold the goodwill, inventory and the trade name but that?s it

 

To top it off, the purported fraud was committed when the buyers asked by e-mail to meet personally with the Landlord and look over the lease. They have an e-mail response from TC that states that TC was now the Landlord as BH had been arrested and deported.

 

2. TC in the signed lease with the new buyers claimed that he was the Landlord and owner of the premises. He also in another document sold furniture, equipment and fixtures to them. His lease with BH, stated clearly he could not assign or sublease his lease or furniture.

 

3. The broker was clearly wrong.

 

A)He knew that the landlord was BH and not TC.

 

If you ever what to see the biggest mess of closing documents. You need to see these. A complete joke! Previous prospective Buyers name was hand crossed out and the buyers name added. I counted 7 different dates that were

wrong. I could go on and on. You don't know if you should cry or shake your head when looking at the doc's. They are that terrible. They never would of stood up in court.

 

C)The broker has given his fee back to the buyer that he collected from TC. He?s lucky the buyer didn?t sue him. He had a signed indemnification but this does not protect the broker when he is involved with fraud.

 

 

D)Another case of fraud this broker was involved with. The buyers were sitting at a bar on a Saturday lamenting that they really liked Cat House and wanted to buy it and that Sunbelt had some concerns with this business. The bar owner said ?I?ll ring another broker who will sell it to you if you really want it.? The broker met the buyers and they were told by the buyer that they had been introduced by Sunbelt and given a profile on the business the day before. Even though, Sunbelt had reservations on this business( which had recently found out such as a drainage problem which was flowing on top of Big Dogs and that TC wanted to keep the rent deposit from a buyer unless BH gave it to him first); still they the buyers really wanted to buy it. The broker rang TC and explain what was happening. TC said no problem the exclusive listing expires that midnight with Sunbelt and that this broker could handle it. The only problem was the buyers were flying back early in the morning the next day. It was agreed to postdated the offer to purchase for 48 hours afterwards( when the buyer was already back in his home country.) Ironically it was still an exclusive listing with Sunbelt for another two weeks. So this postdating the offer to purchase and collusion against Sunbelt was all for naught.

 

On a side note, when Sunbelt took this listing. They rung BH, he stated ?Don?t waste your time as that?s my lease and FF and E. Later in the conversation he said? Just make sure I meet the potential new buyer first and I?ll get the key money from TC as indirectly that?s my furniture and license bar he is selling. It was reported that BH had given the blessing to the sale when it was listed with Sunbelt. He had done so but only that the new lease would be with him and the buyer and that he got rewarded from the sale as well from TC. That is why a simple introduction was not made to BH by TC. Because a portion of the sale had to go to BH.

 

The morale of the story? Greed.

 

Greed had TC claiming to be the owner of the furniture fixtures and equipment. Greed had TC claiming to be the Landlord as well. Greed had TC telling the broker the listing expired that evening and so he could sell it thru a less ethical broker that was concerned only about his wallet. Greed is why no VAT was ever paid to the government for Cat House.

 

Greed had the buyer thinking of how they could own this bar the easiest way and make money. They wanted no obstacles. Their dream was to move here and own a bar. Thats why they agreed to the offer to purchase being changed so this broker could sell them the bar they wanted with no worries.

 

Greed had the brokerage that agreed to sell them the business to be not worried about the lease issues at all. They also was only thinking of how to cheat and getting a commission themselves by postdating the offer to purchase.

 

As for BH most claimed that he was being greedy as well. I do not feel this was the case. He is the landlord; he can decide who the tenant is. If someone is selling his furniture fixtures and equipment then by all means he?s entitle to part of the proceeds. He could have evicted the buyers and taken back the bar but he has not. He has been more than fair in my opinion. He has a very hard reputation but he has been fair with me as well.

 

The good news the first month the buyers took over they had a banner month. They are nice guys. They have work permits and are paying VAT. Stop in and see them sometime. They have a story to tell about " Greed" ::

[BelgianBoy]

Showtime said:

Well I'm going to speak out as their seems to be lot of speculation and some of it is correct and some is it is wrong.

Thanks for this eye-opener post ! And its good to see that there are always more than one side to a story.....

 

BB