REASON FOR INVESTING IN PROPERTY: Despite the diverse profile of property investors, by far and away the most common reason for investing (66%) was to provide a secure long-term investment, with investment income being the next reason.

Purchasing property ("bricks and mortar") has always been a sound investment strategy, and with the current rate of Exchange for the Thai Baht, and the resurgent Thai economy and tourist markets, buying a property in Thailand is certainly an option worth considering. Good quality rental properties are currently enjoying 10% to 12% returns.

Statistics indicate that over the long term, both share markets and property markets tend to show substantial increases in value and both can be excellent investments. Individual stocks and properties can significantly out (or under) perform market averages. Selection of the right stock or property (in the right place at the right time) is therefore the key to successful investment. Good information and sound advice is fundamental to this investment decision- so it is always wise to speak to your Real Estate Agent before proceeding.

Investment in a property (without debt) is an investment in real assets ("bricks & mortar") that will always exist in a substantially unchanged form and be able to be put to very much the same use as originally intended (or even an entirely new one) irrespective of it's market value. As someone once said; "buy land, it's the only thing they aren't making any more of". Stocks on the other hand, are very much intangible interests (even where the underlying company has real assets) in a business that can potentially fail and become bankrupt and completely valueless.

PLANING TO INVEST IN PROPERTY:

Buying real estate, whether you are buying the family home or an investment, is one of life's most important financial decisions. However, in buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart but from the head. You are buying the property because you expect it to appreciate in value. Common mistakes made in investing are that people look for the same things they would want in a home or buy in their local area so they can 'keep an eye on it'.

In searching for a residential investment property it is important to consider three things:

Look for a consistent streetscape. A mixture of conflicting building styles lowers the desirability of the street.

The property should be located within easy walking distance of all amenities.

The street should have potential.

As a business and financial investment decision, it is important to make your purchase in a methodical way:

Assess your financial position,

Decide on your strategy,

Assess the financial viability of the investment,

Negotiate effectively,

Obtain legal advice, and

Obtain professional property management services.  

ASSESS YOUR FINANCIAL POSTION:

When investing it is important to assess your current financial position. What are your cash reserves and what equity do you have in your present home? Look at your long term objectives, for example, will the property be part of your retirement financial plan?

Potential changes to your current situation should also be factored in such as the birth of a child or the loss of one income. It is wise to seek advice from an investment adviser or qualified financial planner to help determine goals and strategies.

DECIDE ON YOUR STRATEGY:

Some properties provide good rental returns but have little potential for capital growth; for some the converse is true. It is more difficult to find the ideal of high yield and high appreciation potential.

It is important decide on your strategy before you start you search.

ASSESS THE VIABILITY OF THR INVESTMENT: You should try to assess the soundness of your investment. Study the capital growth history and the potential rental income. If you are familiar with computer spreadsheets, try to analyse the impact of an interest rate change or a potential vacancy period.

NEGOTIATE EFFECTIVELY: Professional negotiation can help ensure that you do not pay too much for a desirable property. Negotiation can also include structuring a contract to allow items favourable to the purchaser such as access or installation of tenants.

OBTAIN LEGAL ADVICE: Sound legal advice will ensure that the contract is fully examined and approved and that any changes are allowable. A good lawyer should be an integral part of your investment strategy.

PROPERTY MANAGEMENT SERVICE: Professional property management frees you from dealing with tenant issues and gives you more time to concentrate on your portfolio. Your property manager is better suited to negotiate on your behalf should the need arise. He is also in a position to obtain credit checks on potential tenants and has access to trades people. If you prefer not to meet your tenants then a managing real estate agent is definitely recommended.

Buying an Existing Business:

If you think that starting your own business is too difficult or costly, you could consider buying an existing business. The main advantage of buying an existing business is that you are dealing with a known entity. You are purchasing stock, equipment, a location and more importantly, customers and reputation.

However, this has advantages and disadvantages.

Some of the advantages are:

Immediate business: Operations can start immediately.

Quick cash flow: Sales of existing stock and collection of receivables can produce quick cash flow.

Existing customers: Customers and suppliers are already in there.

Existing goodwill: If you buy the goodwill as well, you already have customers and suppliers.

Eliminate competition: Buy the competitor 

Some of the disadvantages of buying an existing business are:

Cost: Buying an existing business can be more costly than starting your own business.

Problems: You may also be buying the inherent problems in the business.

Obsolete goods: Some of the goods may be obsolete.

Personality conflicts: Your personality may clash with existing staff.

Bad debts: You may be buying bills owed to the business (receivables) that will never be collected. 

The steps involved in purchasing a business are similar to those you need to take whenever you make any major purchase, such as:

Locate a good business to buy: Try the Internet, newspapers, Real estate Agents or even approach a current owner.

Research the business thoroughly: Obtain the assistance of a Real Estate Agent, Lawyer, and Accountant.

Decide whether to buy: Use your head as well as your heart. Discuss the purchase with others. 

Making a Business Work:

As the old business adage goes "people who fail to plan - plan to fail". A business plan is a document that lists all the factors that may have an impact on the operation, management and success of your business. It might appear to you that you have a good idea of what is involved, but it isn't until you sit down and list the possible ramifications of changes in market conditions, that you will appreciate this extra level of planning.

A business plan can be a document that puts down your ideas and converts them into reality. It may also help establish your business' credentials for obtaining finance or investment partners.

When writing a business plan you should consider:

Benefits of a written business plan, and

Need for a written business plan.

  Benefits of a written business plan:

Everyone who opens a business has a plan no matter how informal. Hopefully, you will at least have worked out whether you can make a living from the business, as you will probably be giving up a regular income for one that is not so regular.

At some point you will need to communicate your plan to others, such as suppliers, professional advisors, and perhaps a financier from whom you wish to obtain funding. Having a written plan is an essential communication tool, since it's not practical to explain your operations in person each time someone needs to know who you are and what you are doing. Creating a written business plan can help ensure you haven't missed any significant factors that may have a detrimental effect on your new business.

A written plan serves as:

a reality check - forcing you to consider all pertinent factors

your business resumé - important when applying for finance or attracting partners

a business timetable - for all the activities of your company

a means of tracking progress - on whether your goals and ambitions are met

Need for a written business plan:

Making a business plan is quite a significant exercise. If you're just starting out in business, the time it takes to create the first plan will be more than repaid by the insight you gain. If you're in business already but have never created a business plan, you'll be in a much better position to assess the opportunities and risks that accompany any new directions you may be considering.

A business plan is worthwhile if you are:

Starting a new business

Expanding your business

Launching a new product

Expanding into a new market

Acquiring a new business

arting a new business

Assuming that you have what it takes to start a business from scratch and you're certain you want to proceed, then a business plan will demonstrate whether your idea is feasible or not. It is better to find out before you start, rather than after you've signed the lease and printed the stationery.

If you are starting a new business from scratch your plan will be based on assumptions regarding costs, labour, the number of potential customers, pricing, and many other factors. This process will help you work logically through all eventualities and provide you with more insight into your proposed business.xpanding your business

If your business is growing, a plan will help you work out where the opportunities and pitfalls lie. There might be economies of scale or outsourcing opportunities to explore.aunching a new product

Launching a new product is definitely a time when you'll want to create a business plan. Acquiring resources and the product roll out timetable may have to be incorporated into the overall plan.xpanding into a new market

To successfully handle expansion into a new market, it is essential that you plan for it. In order to reach most new markets, you will have to face many of the same issues that you addressed when you first went into business but you'll have more to do and only the same number of hours in the day to do it.quiring a new business

A business plan is the perfect tool to use when you assess whether you should buy a business. In fact, many sellers will have created a business profile to fully acquaint you with their business (but probably not its shortcomings). You can use this as a starting point for creating your own plan for the future.

If you are thinking of buying a franchise or incorporating your existing business into a franchise group, you should consider whether the benefits outweigh the associated costs and restrictions. A plan is an excellent tool for creating these comparisons.

Selling your business:

If you have worked hard over the years to build up your business you may find it hard to give up. It has probably become a big part of your life, dominating your thinking and your free time.

On the other hand, you might be sick and tired of the work and the hours and the whole thing has become a burden.

Whatever your reasons for selling, it is important to plan for it (just as you planned for its operation) to maximise the returns. You should plan for the orderly exit of a planned sale and for a sudden exit (death). It may sound morbid but you don't want your creditors or the government getting all that you've worked so hard to achieve.

Selling your business will be one of the most important things you will do in your business life. The price you get for your business may determine your retirement income or the level of debt you are left with after the sale.

You need to develop a marketing plan including an in-depth profile of your business. A business profile should include:

history and nature of the business

five year financial overview

business operations

business management and employees

competitive situation

industry and market expectations

business strategy and projections

See the Complete Business Checklist for a step-by-step list of the process of buying and selling a business.

In a similar way as if you were selling your house, you should attend to the housekeeping details of your business so that it is presented in the best possible light to potential buyers. First impressions are important.

The major points to consider when selling your business are:

finding a buyer,

structuring the transaction, and

negotiating - mistakes to avoid.

Finding a buyer:

Prospective buyers may include competitors, investors, employees, suppliers, customers, or people who have previously shown interest. They may be individuals, local firms, regional or national firms, or foreign-based corporations seeking to build an Thailand base. You should seek professional help for this phase of selling your business.

You will need to understand the advantages and disadvantages of selling to a buyer from each of these groups, identify current trends in the acquisition marketplace, and together with your legal representative, address any important questions about the prospective buyers and the sale.

Typically, a prospective buyer will want to know about your business' past performance - its revenue and income, consistency and growth, work-force stability, and return on investment. But the future will be of equal, if not greater, interest. A buyer will want to know the prospects for your industry and, more specifically will want to see projections of your business' growth potential, risk profile, working capital needs, and return on sales, equity and assets.

Financial buyers. These types of buyers are primarily interested in your company's cash flow. They are typically individuals or companies with money to invest, and are willing to look at many different types of businesses or industries. They may be holding companies that are simply looking for good returns on their investments, and who would like your current management to stay in place.

Strategic buyers. Strategic buyers are those who are looking for a business that will mesh with their own long-range business plans. They may be one of your competitors, or a similar company from another region that wants to expand into your local area. A typical strategic buyer would be a larger company which does what you do. However, another possibility is a company in a related business, whose management can see that a "marriage" with your company will be of benefit.

Company insiders. A third group of potential buyers for your company are your key employees. These people know your business from the inside, and may already have a personal stake in seeing that it survives and prospers. They may be willing to pay more for your company than an outside financial buyer would, because their inside knowledge lowers their risk.

Structuring the transaction:

Once a serious and qualified buyer has been found, your negotiations begin. You will want to know what the buyer can and will do for your business, your managers and employees, your customers, and most importantly, your long term plans.

You and the purchaser must agree not only on a price but also on a payment structure that specifies the form and timing of your compensation. There are no hard-and-fast rules, but generally, the seller of a stable, profitable, and easily run business is likely to receive a larger part of the total price in cash. If your business is less stable, or is difficult to run, be prepared to be flexible. You may decide to receive part of the sale price over time and you may agree to adjustments in the price based on future results.

The sales contract should be designed to protect the rights of both parties. The key sections may include assets or stock to be sold, purchase price and allocations, financing arrangements, non-competition and/consulting arrangements, and arbitration provisions.

Finally, your future role in the business should be clearly stated in the contract. This can range from immediate severance, to transitional involvement, to a continuing position as manager consultant. Non-compete and other arrangements should also be clearly stated.

It is important that your legal representative handles the transaction as it is often difficult to remain objective in negotiating the deal and arranging the transaction.

Negotiating – mistakes to avoid:

Here are 12 of the common mistakes to avoid:

1. Don't concentrate on disagreements. It's tempting to put the emphasis on the problems. This creates a deadlock, and no reason to continue. Start with, and emphasize, the points of agreement, no matter how small. This gives a more positive air to the negotiations.

2. Don't hide the flaws. A seller should make sure serious flaws are disclosed before the first offer. Disclosing serious flaws after an offer is made is not only unethical, but it is poor negotiating strategy.

3. Don't ignore the marketplace. Everyone wants to buy low and sell high. The fact is, almost all buyers who insist on paying less than market for a business never buy a business. And, sellers who overprice their business end up owning it forever.

4. Don't take unreasonable positions. Unreasonable positions create distrust and distrust ruins deals. Overpricing on the seller's part and underpricing in the buyer's offer create bad fellings and distrust about each other's motives.

5. Don't set unrealistic objectives (buyers). Many buyers want the perfect business: no risk, high profits, no competition, and of course a bargain price. A more realistic objective is to find an interesting business with prospects for growth, with disclosure of important facts from the seller, and a fair price - with all the cards on the table!.

6. Don't set unrealistic objectives (sellers). Many sellers want to retire or buy another business with the proceeds of a sale. They need all cash, a quick sale, no income taxes and the highest possible price. In actual fact, the choice is between selling for market value, or over pricing the business and not selling at all.

7. Don't fail to recognise a good thing! Dragging out the negotiations with multiple counteroffers decreases the chance of ever reaching an amicable agreement.

8. Don't fail to listen. Learn to listen to the other side as it often helps you solve problems at very low cost to you.

9. Don't negotiate against yourself. Good negotiators will ask you to do better before they respond to your last position. Don't fall for it!

10. Don't delay. Time is the enemy of every deal. We all have second thoughts about committing ourselves. As time goes by, the more likely we are to change our mind.

11. Do make friends. People want to do business with people they like. Cultivating the other side and listening to their needs will often get you a better price and certainly an easier deal.

12. Do put it in writing. This is the most avoidable, yet most frequent negotiating mistake made. Whether through honest misunderstanding or worse, the deal you thought you had will change if it's not in writing (and signed).