American living in Taipei for 2 years, Taiwanese wife, 2 young kids. Plan to stay here for maybe 10 more years.
Am happy to rent but my wife found a good deal on a place in Nangang (reduced from 15mil to 12mil). Big, nice place, extra upstairs apartment we can rent out, nice neighborhood, etc.
Basically the down payment will be my savings, and I will have very little left over. But my salary (plus the extra income from renting) will be more than enough to cover the mortgage. Plus my wife will start working next year, so we will be able to use that to build back our savings.
Again, I am happy to rent, but my wife is very Taiwanese in the sense that you need to own something, that rent is throwing your money away, etc. Not unreasonable beliefs, but there is obviously a huge discrepancy between renting and owning here, and while it’s great to own something (and to potentially make a nice profit when we sell), the amount of rent we’ll be paying is relatively small.
Plus, the money I was planning on investing for the future (retirement, college, etc.) will all go to the down payment, so I will have practically no investments. And also, what if I lost my job? I work in marketing, and right now things are fine, but you never know.
Any advice? Anyone been in a similar situation and made a decision one way or the other? Thanks in advance!
My wife and I wanted to buy an apartment/house for a very long time. We lived in Taichung for a while but prices were a bit high. Then we moved to Yilan and spent around 18 months on rent while trying to figure out if we wanted to live here, which area etc etc. I had to insist a bit regarding the budget because I wanted to buy something that we can easily afford no matter what may happen in the near future, and we settled for a two floors apartment of around 80 square meters + 2 balconies for 2 millions. We still had savings after the down payment and the mortgage will be covered in a very short time. My wife would have preferred to use most of our savings in the down payment for something bigger, while I prefer to own a reasonably sized apartment as soon as possible, and then we can start saving good amounts of money for kids, retirement, house v2.0 etc
Also, our mortgage/month is lower than any apartment of similar size/conditions, so it felt like a bargain.
Most mortgages that have a healthy down payment end up being the same monthly payment as rent.
I bought my place for 12 million. Put 4 million down. My monthly payment is 28K. Remodeling and customizing the house + new furniture wiped my savings out. But, now I own my own home. I am able to put 30K aside each month for savings to build that back up.
You have to make the jump some time in your life. Sounds like you have a good deal. Just be meticulous about inspecting the home before you buy. Plumbing, electrical, neighbors, wall cancer that may have been painted over (in older building), etc. All of that can surprise you in a bad way after moving in.
Renting for life has its benefits if you are single or married without kids.
Rent too high? Just move.
Landlords suck? Just move.
Building falling apart? Just move.
Tired of living in the city? Just move.
Easy, right?
Sure.
But if you have kids and don’t want to move. Owning is better.
Also, there is always the chance the landlord will want to sell.
Then you are forced to move at the end of your lease.
Not cool.
Thank you for the advice everyone. SuiGeneris your situation sounds very similar to mine actually. Do you mind if I ask when you bought and where you live?
As to Go Curry Cracker, I read his blog regularly. He’s incredibly smart and has a very radical way of living. He’s currently living in Taipei actually, and I’m going to have coffee with him next week to discuss my situation.
In Taipei area, you can rent much more for much less than buy, but you can make more money if you buy and hold for at least 5 years.
Renting is always wasting money. There is absolutely no return on the money. Unless you take the difference and invest it well, which most people do not do, and the return is rarely as much and property returns. Buying almost always ensures return on your investment.
Market in Taipei area will continue the trend upwards for the foreseeable future.
In Taipei Its definitely a Renters market vs a Buyers market still. The prices have been steadily declining and will continue to, why not rent for 2-3 more years and save a bigger down payment?
By then the price will be better.
BTW what is the 30 year Fixed rate in Taipei now for 20% down?
In regards to paying out every month to a renter we’ll you need to balance that POV with the 30 Year Fixed loan you’d likely take… Honestly most home loans are Front end loaded. That means on a 3.5% APR loan lets say your mortgage is 70,000 NTD monthly. Well your first year each month 45,000NTD per month goes to Interest and 25,000NTD Principal.
If you compare Taipei prices to Tokyo (The actual inner city, not Yokohama) or London or Los Angeles. Taipei is still way over priced. If you are an American maybe you should consider buying in the states. I bought a house in L.A. and for about 530k USD(16 Million NTD) and I get 2400 a month on rentals(72,500 Monthly). Theres no way you can rent a 16million NTD house for 72,500 NTD in Taipei.
I say there is still a big bubble here still. Also you own no land in Taipei, if an Earthquake hits you lose the house. Also note the decline of population in Taiwan. There are a lot of empty houses all over Taipei and Taiwan already. This generation of kids cant really afford them, the next generation will decline in population the price of the houses in Taiwan can only go down, at which time you can buy when its low.
In a Normalized market your wife would be right. Rent is throwing money away. But the current Taipei market its so skewed towards the renter vs buyer its no longer a good rule to follow.
If you lose your job can you rent the house and have the rent cover your mortgage?
12 million sounds very very cheap for Nangang, guess it depends how big it is.
Would love to own my own place here but same as OP it will suck up huge amount of my savings for the downpayment. Paying for the mortgage would be just a bit more than rent.
The thing is I feel scared that it will lock me down for another ten years or forever… Been here a longtime already.
The main thing that holds me back is that I will sink all this money in and significant capital appreciation is quite unlikely give the existing very high price to income and the cratering population.
How can you buy an apartment anywhere in Taiwan for 2 million ntd?
Even in MIaoli it’s around 5 million ntd.
The cheapest three beds i found on rent591were around 3 to 4 million ntd in Yilan, not the best places but incredibly cheap compared to Taipei and Taoyuan.
I keep hearing different things. Prices will continue to rise, prices will drop. No one way to know for sure. Certainly they won’t go up as much as they have in the past (my friend bought a place for 6mil 10 years ago, now worth 20mil), but even if they go up a bit or stay the same, because of our deal we should be okay. I’m mainly worried about taking the money for the down payment and not investing it for the future. Even if we break even on the house, I’ll have lost out on saving for retirement.
The money we will get for rent will definitely not cover the mortgage. I think we can get around 20k/month, mortgage will be around 35k I believe. If I lose my job I’m f*cked.
Nangang has a redevelopment plan in the works, although it’s not like it’s a cheap area now but it could be a good choice. Its certainly a good area in Taipei.
The interest rate is very cheap must be backed by another property in Taiwan?
Prices are dropping according to the local news which tracks real estate daily, they are definitely not rising, this is the reason lots of people are getting similar deals that you got from 15m to 12m. I see this on the tw local news every week. Some people lost their houses cause they bought high and lost their jobs.
On the other hand 1.8% is extremely low. I also follow gocurrycracker goo blog. I agree that A house is not a retirement plan which many locals here think it is, that money can go into a Roth IRA etf or index funds and give good returns. Maybe listen to some Dave Ramsey …Why not wait 1-2 years and save up a 6 month emergency fund in which time prices will drop or at least stay the same. Once you put that down payment you have no liquidity… its playing financial Russian roulette you’ll feel too much pressure without a backup if your job goes south.
I am so confused now haha. Everyone has told me 12 mil is a great deal for the place. In fact, during negotiations I insisted on this price and wouldn’t budge, and at one point said: Take it or leave it, expecting them to leave it, but they accepted.
And according to what I’ve been told, with the Roth I can realistically expect to get 7% increases YOY. If I let it sit for years and years, and keep adding to it, I can expect a nice profit. But if housing prices do go up (even by simple inflation), and I sell, I can make just as much in a shorter time.
However, the major issues I have NOW are:
Without my knowledge my wife signed something after our offer was accepted, saying we will agree to pay 3% of the total house price if we back out now. The only way for this to be void is if we are unable to qualify for the loan. So either we have to go through with it or I need to figure out a way to make getting a loan impossible.
They need 10% right away, and I still use a US bank account, and you are apparently unable to wire money internationally online or over the phone. The only way is to do it is from the branch itself. And I can’t give them a check. The only way to get the money is to get a temporary daily increase in the amount I can take out from an atm (5k US), and do this every day until I have enough, then hand over a wad of cash. I don’t know why but I really don’t want to do this either.
