Ep709: Vorathep Srikuruwal – Walk That Property Before You Buy It

Andrew Stotz 00:01
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win an investing you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. Join me and go to my worst investment ever.com and sign up for our free weekly become a better investor newsletter where I share how to reduce risk and create grow and protect your wealth. Fellow risk takers this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guest Vorathep Srikuruwal. Vorathep, are you ready to join the mission?

Vorathep Srikuruwal 00:46
Yes, I'm more than ready.

Andrew Stotz 00:49
I'm glad to have you on the show. And let me now introduce you to the audience. One second, I'm having a little trouble with my there it is, as the owner of Apollo assets Company Limited, Vorathep is a prominent figure in the real estate industry of Thailand. He has established a track record and extensive experience as a visionary leader in this field. His business acumen has enabled Apollo assets to reach great heights, placing it among leading players in the Thai real estate industry. Having earned a reputation for excellence, innovation, and integrity, or tap continues to contribute to the growth and development of the Thai real estate market, Vorathep, take a minute and tell us about the unique value that you are bringing to this wonderful world.

Vorathep Srikuruwal 01:39
Okay, I would say that, my good part is that I never give up in anything. Basically, I was raised in, I would say I'm a Thai because I'm the fourth generation in Thailand. But I don't look like one. But I speak in Thai agreement. I talk with my family in Thai. My great great grandparents actually came from India, which used to be part of India, but today is Pakistan in their call in Kujawa, they migrate in the year 1946. And then they came to Thailand to stay here. So I was raised in Indian Thai family, I went to a Thai school and represent Thai, I didn't go to any international school. So basically to be like me, in high school, it's quite tough, because I don't look like anyone in the school back in the 80s, or in the 90s. So I would say that I'm quite tough that I can make through that. And I even went to the Thai soldier for three years, with this turban, keep my head on, put it on the green wrap, and then join the minute soldier for three years, which normally it's a mass in high school, during high school, it was a tough training. Not easy for me to have this. And I met through it. So I would say that. I'm tough. That's great.

Andrew Stotz 03:06
And that's, you know, there's a lot of adverse adversity that we all face, particularly in our youth. I mean, you know, when I look back, there was a kid that I used to that was a gay kid in our high school. And I was just a dumb guy. And I just made fun of him because he was gay. And I just remember, like the cruelty of being young. And later, that guy and I connected on Facebook many years later. And he the first thing he said to me, he said, You were really mean to me when I was young. I just said to him, I said, you know, you're absolutely right. And I am sorry for that. And actually, we got a chance when I made a trip back to the US. I went to LA and we got together. And Jeff and I had a nice meal together. And I sincerely apologize. Because you just you know, when we're young, you know, it's just like, it's awful. And when you face you know, when you're different, or you look different, or you come from a different background, you know, it's it's, it's a whole challenge that you know, that you got to overcome, but you've overcome it to become a very, you know, resilient guy and to be in the type property industry. You've got to be pretty darn resilient because there's a lot of ups and downs. There's a lot of competition. There's a lot of upstarts coming in, there's a lot of really powerful, huge players. I'm just curious, maybe you can just give us some picture of what does the tie tie industry look like to you? How would you describe it for someone, let's say in the US, that only knows the real estate industry, let's say in the US.

Vorathep Srikuruwal 04:41
Okay, so basically we have a law here in Thailand that only a Thai can own lands, houses, something like that foreigner can own only condominiums. So for me as a Thai I can buy a land develop and then sell to the third party weather is a Thai or a foreigner in the condominium law make it very simple to understand in the law in the home. So 100 units, it can be 49 units only another has to be owned by a Thai. So that's the only investment that legal in Thailand right now, if you are a foreigner and you would like to invest in Thailand, condominium is the only option. Otherwise, then you have to have a choice in the leasehold property, which in Thailand, the law is three years leasehold. So it's a quite short period of time in terms of investment. But still, there are so many interesting projects, and they offer you 30 plus three or plus another 30. Also, that's also another option for foreigners to come and invest here.

Andrew Stotz 05:50
And how do you view the Thai real estate industry nowadays? I mean, I came to Thailand in 1992. And the real estate industry was all pretty much landed houses. That was it. And then that was the big company that everybody wants. And then companies like Asian property came up and LPN came up and other ones started coming up. I'm just curious, like, how would you describe what's the competitive landscape of the industry right now in Thailand,

Vorathep Srikuruwal 06:18
I do believe that we are quite popular with other Asian country. I would say, from India, and China, China, the both countries they play a major role in the tourism in our country. So by all means, if there is no COVID situation, we would expect it may be 40 to 50 million travelers per year. That's why their estate is in a very city of Bangkok, the price has been increasing dramatically for the last past couple of years. It was stand during the COVID time three years something ago. But I think right now the land price has been increasing a lot. And to develop a project in a very immersive video of Bangkok, it's very hard to find these in land price that you can still develop something that's still viable that I would say that. So I think right now, many developers would turn into London property to do housing, a bit of Bangkok, maybe near to the BTS, new line, something like that. And right now, the area towards so when a boom in Bangla area has become very popular, very, very popular, the price of the land in that area has been increasing a lot. Because the international school in the area, the International hospital in the area, it's an airport, of course. And it's just 20 minutes from that area to CBD of Bangkok by expressway if no traffic. I will say that, how a bit COVID thing people would keen more on single houses rather than sharing in large building. That's what I saw. large buildings still make quite good selling because of course, many people still would like to be in the city. But more would consider to buy land and property because you get a house you get a land you can have a dog or a cat, maybe both, maybe a lot of them. And many people start working from home. They're working through YouTube channel, they're selling stuff online, they can live on the second floor on the ground floor can be the old office, the studio, something like that. So we see new entrepreneur become more independent. So that's why the housing development and housing sales last year and this year has been increasing, maybe 20 30%. Yeah.

Andrew Stotz 08:50
And what is the interest rate nowadays, if a person is getting a loan, let's say a Thai person goes to a Thai bank to get a loan for a house that's, you know, a moderate priced house in a suburb, let's say, What do you think that they're paying for their interest for that?

Vorathep Srikuruwal 09:08
Okay, maybe the listener in the US might be shocked because our interest is quite on the high side. So if you're a good client, you have a decent bank statement, you have a solid job to get paid maybe 40 50,000 or 60,000 a month, you might be able to achieve about three to 4% per annum for the first three years. And then after that, it depends on the promotion of each bank. If your bank statement wasn't that healthy, the loan would be somewhere between six to 8%. And if your statement is very not healthy, sorry, very not healthy. You can go to the non bank which will be from 10 to 12%. People still people still take the loan, not really. Even the interest is very high.

Andrew Stotz 10:00
One of the things that Thailand doesn't have, just like most countries around the world doesn't have a secondary market for mortgages. Unlike in the US where any bank can sell its mortgages to Fannie Mae or Freddie Mac, then they don't have to worry as much about the quality of it, they can just sell it. And whereas a Thai bank, when they put that loan on the books, it's not going to go off the books until something's done with that particular, you know, borrower. So it's fascinating. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thing, here will be tell us a bit about the circumstances leading up to then tell us your story.

Vorathep Srikuruwal 10:37
Okay, I started my real estate business in the year 2007. As a family family business, we were in a textile business for over 30 years. I have my passion with real estate since I was 14. So I was running around the construction site that my dad built high rise office building in the year 1994. So I only have my How can I say my vision that one day I'm going to be arrested development since a kid apart from that I want to be adopted, but it didn't go through. So where is the developer? I see in the year 2000. And about 2016 2017, about 10 years later, after I already built about seven projects. Three, condominiums are together about 400 units. One high rise Hotel on Main Street row 255 keys, about a 16,000 square meter size on the main road. I thought that I have quite good knowledge, because I've been through big projects, billions of baths and all. I thought that I'm cool that if any property came to me, I just, I'm gonna be sure that it's the right one. Definitely. I saw an opportunity in Chiang Mai on the northern part of Thailand. Chiang Mai has play a big role with Chinese tourism because it's very nice for them to come. And a lot of them came to Chiang Mai to invest buying a farm buying land during the combinatory situation with the Thai partner to buy the land and develop houses, develop condominiums, something like that. I have an opportunity to buy two commercial shophouses on the main road, just two minutes away from nimmanhaemin. Area nimmanhaemin. Area is one of the CBD in Chiangmai. Yeah. Okay. It was a bank property. The bank that I know they offer me, I saw the valuation price. I saw the location, I use Google map to see everything nearby. I use my knowledge about Chiang Mai, I have a friend in Chiang Mai. I did a lot of homework, even though it's not a huge amount of money. But it's an investment. So for me, every investment has to I did all the checklists, everything. market valuation for that shophouses was 400,000 US dollar to shop houses about roughly 800 square meter size, the building four storey with a rooftop nicely can be converted into a nice boutique hotel, or maybe a nice office or a nice restaurant. The bank offer me at 300,000 US dollar. So it's 100,000 US dollar cheaper than market value market valuation in that time. So I told the bank that if I can get a 200,000 Maybe I'm interested because it's a non performing asset. So I just throw my number there, okay with 200,000 alkyne. Provide me the loan to Okay, so and they were laughing and then about two, three months later, maybe they want to just get rid of this property. They call me up they say that karate we would like to offer you the property at 200,000 US dollar. You just pay us 1% at 2000. US dollar and we'll provide you the loan for the property for another eight years. It seems too good to be true. The deal. Just 2000. US dollar on day one. Then I paid for them I think about 2500 US dollar with principal and interest command monthly throughout the contract. Wow. It's a good deal. I can just maybe put the sign on the building. And they can get maybe 1500 US dollar per month as an advertisement board. Yeah. On the building itself. I can rent out to anyone getting maybe 2500 US dollar per month. So my cash flow would be somewhere between 4000 US dollar per month pay to the bank 2005 I have 1500 US dollar every month. So it's a very good deal. I did all the calculation I did everything. Then I proceed in Eco I'm in the property with paying only 2000. US dollar. Okay. So in the year 2000, since the year 2017, for six months, I put assign for rent for sale for advertisement for anything, maybe about two people per month, something like that. So it surprised me because I'm on a very decent location on how can I say, nearby me is also a bank, there are shops is hotels and all University is the right location. Something must be wrong with a building. This is the only property in my life that I bought. And I didn't even go to see. I asked my team to do the power of authorities to do the transfer that it did for me. So I didn't even go to see the property. Because the revaluation with 1000 and I bought it 50% off. So I don't think much. And with the 2000 Only that pay on the first day and then the rest 2005 Monthly, I thought I can at least the worst, the worst side will be 2005 monthly from the rent. Also, why would that 2017 pass by 2018 2019 is two years already have been paying about three How much 30,000 per year US dollar. Now that so two years already, then something must be wrong with the building. Definitely. People calls, maybe the second year about maybe five, six calls a week, a lot of people keep calling asking the price this and that. Then I decided in the year 2020 That I have to do something. If it was about COVID hit us, we will close the airport in March I think 2020 If I don't miss remembering when to Shema in Jan 2020. Then I went to the building. And now I understand why we will own the intersection on the intersection of red light, green light in the section, very fast car drive by the building. Nobody gonna see the building whatever sign I put on the building, nobody would see the person who sees the one across the road. That's all. Nobody sees me. I don't have any car parked in front of my building, because they don't allow to park the car in front buildings all. It's okay, I know that they want because they saw that picture inside. But when I walk inside the building, it's 100 times worse than the picture I saw from the bank. I didn't know that the bank would use the picture maybe 20 years ago or something like that. I don't know. But to me, I didn't look much because I know how to do the renovation anyway. But it was worse than that. We don't even have the floor inside the building is a full story. One side has a floor the other side doesn't have even a floor. Everything broke down. It was a nightmare the building. Okay, now I understand why that is still here. People came to have a look, I left the key with the person nearby to show them and everybody ran away from the building. Now and standby, okay. So I have to decide what I'm going to do. I have to do a renovation to do something with it or I have to cut and then lose it because I have a bad feeling that it will be here with me in a long time. Then march came COVID came, it hit us in the real estate market badly if we think that Hudson perform. Rental is a very bad situation. Everything that perform rental, not paying rental also, people used to pay rent at maybe let's say 100 they would pay maybe 20 3040 because they lost their job. They lose anything they have to continue live, they cannot do anything cannot go out to work. So in the year 2021 I have decided to get loose of this thing. I don't want to pay 2005 To the man anymore. So I flew there. I went to the building next door. The owner, I went to talk to them both mother and son told him that look. I bought the building at this price. It's been with me since 2017. You saw it. You call me to cut some trees to call me when there's noise cracking whatever it is. I really don't know what to do with the building. I mean Bangkok I don't have I don't know what to do that. So would you like to buy it? Is it okay? Of course they own about 10 buildings nearby. They don't mind acquiring this one. They pay me 150,000 US dollar for the building. So I told them that you know, my buying price, I'm here to ask for 250,000 US dollar, you know, the market value. I know, you know my buying price, but I have to get something, you know, and I've been paying interest I've been carrying whatever it is. Anyhow, they said that look, I'll give you the price you bought at 200,000. I said, Look, I need another 20,000 US dollar. They asked me why I said, at least I have a feeling that I didn't lose. So I cut loss, if they lose whether I sold it at 200,000, or 2020 is a loss, big loss anyway. Because that money, I could have done something else I could have put on any other investment, it could have get something. But it's MBA degree for me with my experience that to buy something, if you didn't walk through it, you didn't touch it, you didn't do a lot of homework. I did, I thought I did a lot of homework already. But I didn't go inside the building, I didn't stand there and see the car pass by then. It's a big loss in, in, in my business, whether it's not a big amount comparing to other laws or anything, but it's something that it rings a bell to me that if anyone hear that story that I'm sharing, if you're thinking about buying anything, whether it's cheap, or expensive or anything, please go there, stand there and have a look. Don't judge the book by the cover. That's what I learned. Yep.

Andrew Stotz 21:36
That's great, great advice, you know, at the end, and it makes me think of two things. One thing that my mother said to me and used to say a lot. And one thing that my sister said to me, my mother always used to say, and she still does, he doesn't say it that much anymore. But she says, just because it's cheap, doesn't mean you have to buy it. And that was really helpful throughout my life to realize that there are a lot of cheap things around and there gonna be a lot of deals, but that doesn't mean you have to buy it. So that's the first thing. Also, you're familiar with Sukhumvit Soi 10, the soy that goes down into the park and into the can walk over to Lumpini Park from there. Now many years ago, I was walking from my apartment, which is on soy 12. And I was walking down that soil every day to go to the park to exercise and I saw a condo being built. And I thought I liked that that's a nice condo, it was by a property developed that I knew. And I thought they're pretty good. And it's on the soy that goes right into this park. And I just thought that's valuable. So I decided to buy it even though it hadn't been built yet. But it was in the process. So I bought a unit. And I didn't see it because it wasn't built. But what happened to me is that when I got it, I realized that first of all, it was half the size of the apartment that I live in now that I've been living in. And I realized, like I don't want to live in a smaller place. And then it just wasn't I wasn't interested in it. And my sister said to me, you know, the rule of thumb with real estate is that you've got to walk into a place now I couldn't walk in because it wasn't constructed. But he said you got to walk into a place and say, I want to live here. I want to work here. That's what you need. And that's part of the importance of walking into something to be able to say, no, no, this is wrong, or this is right. And this is not me. Yeah. And so I can imagine that in Bangkok, you probably do that with everything. But you know, when you go outside, and you know all that. And also, the last thing is that, you know, I think you always have to be very careful with banks, I bought a piece of property from a bank, but only because I just went to that particular town. And I had one of my Thai staff go and talk to a bunch of the banks to find out if they had any available property, the type that I was looking for. And by chance it worked out really well. They didn't own it yet. They were trying to get the prior owner to pay them back. And so they said if they can arrange this deal, they'll get money that they can then pay us back. So but generally, the banks can be pretty savvy when it comes to anything you would add to to my observations there.

Vorathep Srikuruwal 24:16
I think it's not bank's business, if you ask me, the bank's business is to make money out of interest. So it comes to the time that the bank has to forfeit the property. If they have to go according to the plan, they have to go to the legal department. It will take maybe two years, three years for the auction. It takes a bit of time. So if like you say that if there's a deal that it's about to be in an issue or in a problem, if you can go to the bank, negotiate out. Maybe you can get something good about that. But like advice like you also know that You have to be there. Fairly speaking, if you don't have a team, the proper team to run to do something with that, I think you should be, it's more Cepheus, because you are the one who decided whether it's going to be good is going to be bad. So you don't blame yourself at the end of the day.

Andrew Stotz 25:17
So let me ask you what's, what's a resource that you'd recommend or an activity or whatever that you'd recommend for our listeners?

Vorathep Srikuruwal 25:25
In terms of looking at the distressed asset?

Andrew Stotz 25:27
Well, I think in this case, I'm thinking about something you and I talked before about your daily habit of exercise? I think that's okay.

Vorathep Srikuruwal 25:36
Sorry. Yeah, yeah, I would say that the most important investment that I, it's not according to the podcast today, but I would add in a resource that I believe that my most investment that I'm very happy with, is to invest in myself. In terms of that, I exercise daily, every day, if you don't have time, I would just say, Fine, maybe 3040 minutes, 20 minutes before going to bed, doing some exercise on the YouTube or something like that. But mainly, if I have time, I walk and run every day, not running every day, maybe running three to four times per week, five, to K to 10k, something like that. And I walked in. So I do believe that if you have a habit in taking care of yourself, in a good way, maybe you like to ride a bike, or you like to do yoga, or you like to do Pilates, or anything, when you my mom told me when it was young that the sweats or something bad inside of you. So if you can get it out, you have a better, better mood, you have happier and you're being happier. And I think I got a lot of work done at the park, I would say that, because when I was walking, and I was running, it just slipped into my head. Until today, I also carry this mini recorder in my pocket. Every time I have any, any idea, I would just scrap it and then record it. Because if I grab my phone and the Phone rings, and then I cannot record it. So that's why I use the mini recorder. Yeah,

Andrew Stotz 27:09
That's interesting. I used to use a software called up rec, where I just press a button and I speak into my phone and then it puts it into an audio file on my computer. But it's uh, you know, I got the idea of this podcast walking in the park. Or I have a park, the Benja kitty park right near me here in Thailand in Bangkok. And the thing is, it's amazing. I mean, I've been an equity analyst all my life. And a lot of young people that I've taught over the years, they want to learn Excel, and they want to sit at a desk and I just like your best ideas are never going to come from your desk, they're going to come from talking to other people or thinking things through, or sometimes sleeping. I have many, many times that I've written research where I get stuck at a point. And I just go to bed. And it's amazing. You have a good night's sleep, and you wake up the next morning. And it's like I can either have a new idea, or I can have the energy to restructure this particular research. I have some research I've just recently written about a 200 page paper on global asset allocation and investment, global politics and what's happening. And it's been about two or three weeks of writing every day. But yeah, there's plenty of times that you know, going to the park exercising, I have some good equipment at my apartment because I have my mom, she exercises she lives with me. And so the other day, I was on the elliptical machine in the living room, and she was on the bicycle paddling and I thought okay, that's good. That's good. So, for everybody out there exercise, it's such a great thing. Now, let me ask you. Last question, what's your number one goal for the next 12 months?

Vorathep Srikuruwal 29:01
My number one goal, I would say I want to run a half marathon 21k. So it's not being about the word nothing about it, because I do have my list of the goal yet. Every three months, I note down about 13 to 15 goals every three months. If I cannot be any close to that one, I'll just cross it find a new goal. That's how I've been doing since 2017. Actually from the in the year, the same year, I did the bank investment anyhow, I would say that my number one goal is taking more care of myself and then be able to run half marathon because my most fathers that have tried it's about 15k and it consume a bit of time and I don't like waking up at four or 5am to go for a run and very happy to wake up at maybe six or seven or maybe even eight to go for a run. If I have to drop my kids. I will drop my kids at school at 730 Been a go for a run from eight and it'll be back home about 10 Some something like that, then I go to work, but the weather is quite hot, then the hardware is racing when it's sunny day. Yeah. So if you want to run maybe 20k You have to wake up at 330 for some some something like that I'm doing. So I'm not ready to do like that yet. But I hope that my number one goal this year that I will complete a 21k half marathon.

Andrew Stotz 30:28
That's fantastic. Well, listeners there you have it another story of laws to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude war a tip I want to thank you again for joining our mission. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience? Thank you so much. Appreciate it. Well, that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast. Oh Is Andrew Stotz saying I'll see you on the upside.