Toying with the idea of buying a place instead of renting. Any laws restricting this? Any special legalities in Taiwan I should be aware of?
I wonder just how many Scots use this board. Great handle!
My dad used to call people glaikit eejits (though not to their faces) from time to time.
well done on spotting the scottism, sandman!
I can attest to being one.
Kenneth
I am doing intensive research on this subject. I will let you know my findings when it is available.
Are you researching the meaning of the scottish term, or on buying property?
Let me try to pull this thread back on track…
Last night I visited a building that is pre-selling units - construction is almost done and it expects to open for operations in July. Nice place on the east side of town, very close to the MRT. The entire building is Taufangs (sp?), “studio apartments”. About 150 of them (15 units per floor x 12 ~ 15 floors? I don’t remember how many floors), with views on the high floors because two sides each front main thoroughfares
It’s a nice story: finance it out for 20 years, monthly payments work out to about 16,000 per unit. Even if you don’t rent the units out for 30,000 per month as they claim you can, you shouldn’t have trouble renting it for 20,000. They suggested to go to any of the neighborhood realtors nearby and check how much rents are going for in the area. Plus, with no more space in this part of town, property values look positive and promising. It gets better: they target young professionals and it’s proximity to the MRT makes it naturally attractive to this group - upwardly mobile, single women who have chosen career over family.
Well, that’s their spiel at least.
I was told that the pre-selling began last September 7th and now there are only 7 units left. Each unit is approximately 10 pings – including efficiency kitchen and small bathroom (shower). Here’s the twist, the ceilings are 4m high (standard height is not quite 3m). What they suggest is that a loft level be built in. The showrooms give you an idea of what the various split-level possibilities are. Bear in mind, the apartments are delivered “raw” – so you have to shell out for the interiors. These are projected to cost about 400,000 (well, if you do it in that quasi-neo-Japanese wood styling that is popular in new apartments in Taipei these days… which is what I would do by the way)
The payment schedule works out like this. Initially, approximately 11% of the property is paid down in cash (approximately 400,000). Then, each month up to July, 60,000 is paid in. This accumulates to 25% of the entire cost. By the time the building is ready to begin operations, the mortgage kicks in (Chinatrust – a reputable bank) financing the rest of the property. This works out to that interest+principal repayment amount of 16,000 per month I mentioned above.
I was interested so asked some friends about it. As expected, they advise caution.
Get them now while supplies last!
Some scoffed when I told them that there were only 7 units left. “Yeah, right, they ALWAYS say that!”
Well my question is, how can I vette this? I suppose someone I know could pay a visit and get the hard sell like I did, then we can fact check and compare stories afterwards.
So, if there turns out to be more units available, then what does that mean: does it cast doubt on the entire opportunity? Isn’t an outright rejection a bit idealistic?
I did try to learn more about the company. They have over 10 projects around northern Taiwan. This is a Taipei-based construction company, not listed on the stock exchange. They have another property already completed in Chingmei that is similarly managed.
15 Taufangs a floor?
That’s an awful lot of people sharing… what… two elevators? Let’s assume the building is a rowsing success and it fills up with young beautiful single stewardesses, assistant managers, budding celebrities and ramp models. It will be crowded and difficult to manage. Of course, I would mind riding up and down crowded elevators with them, but that’s another story.
The high ceilings are illegal
One of my buddies today said that city construction laws prohibit the split level construction advocated by last night’s selling company. We called back - well, my friend did - to ask about this. When asked if this is illegal, the same saleslady whose name card I had piped back, “Yes, it is illegal…” (:shock: the gall!) “… but there are over 100,000 such apartments already biult-in like this in Taipei City. It’s ok”.
What she’s saying is that the relevant law is effectively unenforceable. If the city cracks down on them, they (the city) would have to also consider cracking down on all the other already built properties. This is supposed to be considered a negligible risk. I asked my buddy if he bought this logic, and he said he did (!)
How will you participate?
I am a foreigner. I do not have ROC citizenship. Should I incorporate a foreigner-owned company here, whose sole business is to own and collect rent on the Taufang? Or should I purchase directly, and report my earnings back to my tax authorities of my home country.
Quirky, I would like to know how far along your research has gone. If you have any insight into these questions, please drop me a line.
Lingchen, even 20000 a month for just 10 pings sounds expensive. 10 pings is tiny. I think they’re lying saying that you could rent it out for 30K or 20K easy. I’d say 10K easy, 20K if you’re really lucky and it’s a really nice building.
Why don’t you get a friend to call them and say that he wants to buy an entire floor? Is there a whole floor available and what sort fo price would they be looking at for a whole floor. That way you’ll see if there’s really only 7 apartments left.
Brian
Article is almost done. Your story would be a great sidebar! Can I interview you? Please private message me with a phone number and your name so I can call you back. I’ll sell the article and ask if the buyer would like a 500 word side bar. I hope I get it sold. I put a lot of work into it.
I’m looking forward to reading your article also Quirky. Our landlady is threatening to sell our place, so we’ve started looking into buying it. Some questions on our list include:
What is the smallest percent down one can generally get away with paying in Taiwan?
Does the lender determine the value of the property in order to make that decision? On what basis do they value the property?
I understand that for some purchasers in Taiwan the mortgage loan actually comes from several different lenders at different rates. Is that common? Approximately what mortgage rate might be considered average presently?
Does Taiwan have something comparable to the Multiple Listing Service that we have in the states, so that all realtors have access to info on all available properties, or do they each know only about their own listings for the most part?
In probably every town in the US one can pick up thick pamphlets with many pages of photos and descriptions of properties for sale by all different realtors. I haven’t seen anything like that here – just 1-page flyers. Do they publish such pamphlets in Taiwan? Where are they available? Or is there an Internet equivalent?
Is there a (government?) source where I can find out the average sales prices of properties in various neighborhoods in Taipei over the past 10 years or so?
Thanks for your, or anyone else’s, help. 
MT, you cna get a first-homeowners mortgage rate which is a ridiculously low 3% or so. Most people pay highish deposits here. We paid 35%.
Brian
I’m told that for brand new buildings, you can expect to put down only 10%. For old (existing) properties, 30% downpayments are expected.
In the building that I visited, it seemed to follow this formula. First, we put down 11%. But the monthly payments in advance of this before the opening of the building totalled 25%! I am trying to verify if it’s true that for new properties, one can put down as little as 10%
Brian, I haven’t tried out your excellent suggestion to haev someone else inquire on the availability of an entire floor. However, some friends did drop by for me later in the week and spoke to a different sales person. They got the same pitch – only those five apartments available.
Others still warn me about the old scarcity sales strategy. I am told that if I showed real interest in, say, flats that were apparently unavailable (and the price was right), I would probably be told that such-and-such person wants to sell out… magically and conveniently making my target property available for me at so-and-so price.
I am hoping to see other foreigners who have invested in real estate here.
[quote=“Bu Lai En”]MT, you cna get a first-homeowners mortgage rate which is a ridiculously low 3% or so. Most people pay highish deposits here. We paid 35%.
Brian[/quote]
First-time homeowners in Taipei city can look forward to rates as low as 2.3% now. Here’s what I’ve been told recently – and this will vary from bank to bank, so use this only as a reference. If your experience varies widely, please let me know here.
In Taipei City, mortgages seem to be broken down into 2.5 million chunks. So the first 2.5 million may be a priced at 2.3%, but for only 2 or 3 years. After then, it will rise to, say, 2.5% for the rest of the term.
For you ballpark calculators, this chuck would translate into approximately NT$ 14,000 per month thru the term of your mortgage. I’m being liberal with the figures here, but the important takeaway is that you should expect to shell out approximately 14 G’s (NT$ 14,000) for every 2.5 million that you plan to borrow.
Following this rule of thumb, if you plan to finance 5 million bucks, then you should plan to lay out NT$ 28,000. Et cetera, etc.
What I describe above is for a typical Principal+Interest mortgage. You can ask your bank about an Upfront Interest type mortgage, where you only payoff the interest component for the first few years, and then the Principal payments kick in. This is popular with home buyers who simply do not have the cashflow to finance a home in the beginning. But be very careful if you are considering this, since those ‘backed up’ principal payments are consequently bigger. So when time comes to include them in your payments, your monthlies are going to rise high.
Terms are typically 15- or 20-year mortgages. 25-year mortgages are not unheard of, but they would be rare or at least dependent heavily on how well the loan officer knows you.
Talk to your mortgage officer about Offset accounts, especially if you will be getting your mortgage from the bank that holds your salary. With an offset arrangements, you forgo interest income in your savings account, and in exchange get a break on your interest payments off the mortgage. It seems like an accounting trick, because if you earned interest in savings and then turned around and shelled it out to the same bank the loan interest, they - ta-da! - offset each other. Well not completely. Offset arrangements were very popular back home, but are less so now. Still, its something that makes getting that house a wee bit easier to swallow when the interest at least ‘looks’ smaller.
One more tidbit - fees.
As a buyer, I expect to pay a real estate agent 1% of the purchase price. This is in addition to whatever final purchase price I can land.
Sellers shell out 4% of the purchase – so real estate brokers expect to earch 5% total commission
as a buyer, don’t forget that there are a few more fees that you must pay. These rae all one time costs: scribe expenses, and other documentary fees. Your paying for registration and other admin stuff at the government level. Today, you should budget NT$ 50,000 for these one-time charges that are standard for closing on a house
[quote]For you ballpark calculators, this chuck would translate into approximately NT$ 14,000 per month through the term of your mortgage. I’m being liberal with the figures here, but the important takeaway is that you should expect to shell out approximately 14 G’s (NT$ 14,000) for every 2.5 million that you plan to borrow.
Following this rule of thumb, if you plan to finance 5 million bucks, then you should plan to lay out NT$ 28,000. Et cetera, etc. [/quote]
Let me get this straight. You’re talkign about paying 14K a month principal AND interest for 20 years on 2.5Mil right? That sounds very reasonable. Just for the amount that you borrow?
I’m beginning to regret wasting our ‘first-time’ rate on our little 1Mil place. How do they check? Can foreigners get the rate? What if I put a 2nd place in my name?
Brian
1. First rule of investment:
If it appreciates, buy it. If it depreciates, lease it.
2. First rule of building houses:
[i]"No man builds a house unless he first counts the cost."[/i]
As some have noted, When you buy a house/apartment, there are costs besides the mortgage, including, but not limited to: taxes, maintenance fees, legal fees, and (esp. if you plan to rent it out) agent’s fees.
Oh, and insurance, which brings us to the next item…
3. Ancient wisdom about building in a flood zone.
The wise man who built his house on the rock. The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock.
The foolish man built his house on sand. The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash."
4. Did you feel that?
Earthquakes happen every day in Taiwan. The last “big one”, September 21, 1999, was a magnitude 7.3.
The strongest aftershock, three days later, was 6.8. That’s like calling Nagasaki an aftershock of Hiroshima.
And you know what… seismologist say that the 921 Earthquake WASN’T “the big one.”
Oh, and most of the buildings that were destroyed were new buildings.
5. Steve Zodiac’s rule of thumb for would-be home owners
Never buy a house/apartment in an earthquake zone.
6. Ancient wisdom from 60s British television
“Anything can happen in the next half-hour!”
The Last word in edgewise
If you want an investment, buy mutual funds, RSPs or life insurance.
If you want a place to live, rent a house or apartment.
Why real estate is such a good investment: (vs stocks, bonds, business etc)
1, Banks are more then happy to loan you money…and with low interest rate vs business loan and etc…real estate is pretty low rate, you can’t borrow money from bank if you want to buy stocks or bonds.
2, You can rent out houses and you will have monthly passive income, plus house value is going up every year, compared to stocks real estate’s curve is much steadier.
3, with a house you add a garage or re paint it/decorate it…it adds the value of the house instantly…maybe $20k, 30k depends…with stocks you can’t do anything to improve it…jsut have to sit back and hope it will go up.
4, Leverage, jsut make a 10 to 20% downpayment then mortgage the rest…stocks you need cash up front. so more money in your pocket you can do more things or just put it somewhere safe.
5, tax benefits…well at least that’s how it in the states…not sure about here in Taiwan…
probably many other pros as well…just not sure if they apply here in Taiwan…welcome any comments
With regard to the pros…
- leverage also magnifies losses as well as gains… you can open a margin account (meaning a leveraged acct) for stocks/bonds/futures if you want to juice your returns… or losses
- RE is not liquid like most stocks/bonds… which may not be all bad in a market downturn (can prevent prices dropping fast), but doesn’t help if you want to get out in a hurry
- RE requires maintenance costs (upkeep, not improvements), taxes, etc
- RE values do NOT increase every year… people do lose $ in RE contrary to what some may think; historically RE produces a positive return, but if you are unlucky enough to buy at the wrong price then you may have to wait a long time (i.e. Tokyo, LA, Houston, etc)
I’m wondering about this too.
Is it possible to get zero-cash down property here in Taiwan?
Anyone done it?
We got a 15% downpayment on our mortgage in late 2006. People said we were lucky, but all we did was ask.
I’m wondering about this too.
Is it possible to get zero-cash down property here in Taiwan?
Anyone done it?[/quote]
Why not take a loan out against to cover the downpayment or partially cover the downpayment? is this possible here