International Real Estate

[Geoff Bailey]

I'm currently in Seoul and wondering if there are others as well, if so let's connect

Even for other US citizens traveling abroad, I'm curious to hear stories of your experiences you found to be new, exciting, interesting and how they are different from the US

For example, I stumbled across a term here called 전세 ( Jeonse) that is unique to S. Korea. It refers to the way apartments are leased. Rather than a monthly payment, the tenant will make a lump sum payment equal to 60-90% of the market value, depending on where you are. Overall, now that interest rates are low, they trend more on the high side

The tenant then get's to live there where their monthly expense is usually just the utilities (or monthly payment to the bank for borrowing the money for the large "deposit" or a portion of it). The landlord gets to invest the deposit money and keep all the interest earned from it. The tenant is protected by having a "lien" on the property

During these times of lower interest rate, 월세 (Wolse) is also used because the owner makes a higher return than other investments, which is like the traditional monthly rent with the deposit around 10% of market value. Then there are hybrids in between with a larger "deposit" and lower monthly payment (which for the tenant could mean a lower overall monthly payments even with a bank loan taken out for the deposit)

When asked around about why they don't just buy the apartment, people just said it was the Korean way. Others have said there's some tax implications when you own multiple properties. There was a sense that the younger generation is fearing a housing bubble as real estate prices keep rising so fast

I guess will will see as household debt here keeps rising and when interest rates start to go up. Something to think about for you speculative and cash flow investors out there. What are your thoughts?

Any interesting stories from other places around the world?

[Jacob Michaels]

@Eric Gabriel@Alex Franks @Kevin Yoo @Daniel Ryu @Geoff Bailey @John Van Uytven

Thanks for giving me a heads up on this forum Dan & John. 

I love the jeonse ("junsay") system here in Korea. My wife and I are active investors in the Korean market leveraging jeonse, investing both in Seoul and in Sokcho, which is on the East Coast of Korea surrounded by Korea's most beautiful mountain range. Over the past few years we've been able to acquire quite a number of properties, and participated in dozens of real estate transactions. We're also active in the Seoul Real Estate Investing Meetup, the #1 REI club in Korea (in English anyway!).

To comment on Eric's system, I think it's a brilliant way to invest here, for the reasons he mentioned. The thought of doing it his way had crossed my mind before, and it's an excellent one, but I hadn't done it and it's interesting to hear it's paying off for him.