How to talk uncle Bob out of investing in Shenkeng

So, uncle Bob is selling the DC property we stayed in. He had it as “investment”, and it currently is not renting that well. Actually, hasn’t been rented in a long time. So, he’s looking around for a new investment and he sees this ad for a “luxury” apartment in Shenkeng, Taiwan, you know the ones, with all the trappings, hotel style management, fancy decor, amenities galore, etc. A pretty mosquito hall, announced as “10 minutes away from the heart of the city”. :doh: Dunno who got stuck in that bargain by their families and is now dumping the place on some US website but uncle Bob thinks it is the bee’s knees. So nice and cheap! How much can a place like that rent for -2 bedroom, 1 bath in Shenkeng- he asks. I sigh and try to explain to him about the bubble we’re in and all that jazz. He definetively has way too much money and typical anti govenment mentality -hates paying taxes- so many investments are abroad where he tries his best to avoid uncle Sam. We are the ones stuck trying to defend his interests from predators. I had talked to him about investing on a business here -manufacturing actually a niche market item, not that bad earnings, from a reliable partner- but that was at a different time. I really do not want to see myself managing that kind of place and least of all in so far away -yeah, pretty area and all but high earnings?, well, I don’t think so.

What reasonable arguments could I add to the not enough buzz for buck in this investment? I mean, if it was at least Linkou, or even somewhere in Taipei city but gosh, I live here, I wouldn’t buy now, how can I convince him?! :pray:

Shenkeng is only 10 minutes from Taipei 101 for what it’s worth.

Shenkeng is closer to Taipei City than Linkou, and it’s an up-and-coming area. No MRT, but Zoo Station is a short busride away.

Uncle Bob is obviously a wise man. I happen to know of a well-placed official in Nigeria who has sadly passed away and has asked me to manage his affairs. If he would be so kind as to send me $10,000 to cover the transfer fees, I’d be happy to share.

Seriously, can’t you just write out the figures on paper - amortized capital plus costs vs. monthly profit (rent) so he can see for himself? Just the monthly management fees alone should give him a shock. Even if you’ve got someone renting it, tenants typically expect the landlord to cover some or all of the maintenance cost on the (fairly reasonable) basis that he’s paying to maintain something that will still be his when they move out. I agree with your assessment of ‘pretty mosquito halls’ and would hate to see someone chucking their money away on buying one. Being near to 101 doesn’t justify the ridiculous price of what is basically a multi-storey carpark with fancy cladding.

Tell him, “In Shenkeng, even the tofu stinks.”

Seriously guys? Shenkeng as up and coming? What about supermarkets/hospitals/schools/transportation? Isn’t it just a one street burough? 10 minutes by car, right? My pal worked there and even by scooter it was quite a trek… from Xindian. Bus … daybreak trip.

And how “hot” is this property for renting? That is my question. What would be the attraction? For that price, you can’t rent cheap. And cheap rent is all you’ve got. What can you get, 10, maybe 15K? Not even a taofang in most other places. And unless someone works there, what would be the deal? If you work in Taipei 101 area, you probable make more $$$ to rent closer to Taipei 101. If you have to commute from 101 after you get there… fuggetaboutit. That is my problem. Linkou at least you got people that work in the airport area, hotels, factories. Bit more active economically, at least as far as I can see. Remember this is an investment, uncle Bob is not coming to Taiwan to live.

This is what I’m talking about:

Thank you Finley.

Problem with Taiwan’s real-estate and rental market is the Bubble: properties are expensive while rents are low. In the US, rent is about the same as a mortgage payment, so it makes sense to buy. Here in Taiwan it makes more sense to rent.

However, a cheap property in a place like Shenkeng has potential, since that’s the next area of boom beyond booming Mucha. But… do the numbers and remember the Bubble!

And Shenkeng is more than a street… it’s a city (or was, before the merger) that stretches from near the zoo all the way to Hwy 106, straddled by two main roads. Yes, it has schools and even a Holiday Inn.

Oh, forgot that Holiday Inn. Now that is a really good trap. People go and look at the map over Google Maps and say, wow, so close and so cheap to the World Trade Center. They think they’ve got it made… until they realize that there is only one crammed little mini bus once a day to get there and that the taxi fare is not worth to go out and have something else to eat besides the hotel overpriced food. The list of complaints I have… every single electronics or food fair there would be someone stuck there desperate to get out… And irrelevant since Nankang became home for teh biggger fairs.

Now we apply this to the investment: guys, it is not the same to buy, keep a few years and sell if you live here. It is hard enough that way. But uncle Bob makes his dough from rental. The rent doesn’t begin to cover the trouble. And he does not live here.

Taiwan has among the worst rental yields in the world, Tokyo is the place for rental yield seemingly.

Actually about 8 years ago I was looking at maybe buying in Shenkeng as it did look like an up and coming area much like Neihu and Mucha. But I am glad I didn’t as it never panned out. Still a little too inconveniently located though there is some new infrastructure in there, road widening, tree planting, etc, and the old street just finished a 2 year restoration. Looks great, smells stinky.

In any case, yes, I kid you not it is 10 minutes by car to Taipei 101. You just cross the highway and take the Xinhai Tunnel to 101. It is exceptionally fast. By scooter no. And yes going from Xindian to Shenkeng takes at least twice as long. Just look at the map and you can see.

As Chris says, lots of schools and families out there. My ex-wife teaches high school students in the area. Lots of work.

I would like a 1920s mansion facing the river and mountains, but otherwise, nah.

Shenkeng is a shithole :slight_smile:. But it may suit some people who don’t mind driving into Xinyi or the city. Any investment needs to be judged on yield or chance for price appreciation, but also against the background of a price bubble which will knock out even supposedly good investments. Never understand people who would invest in something they know nothing about!

I used to cycle through Shenkeng often. As fast as possible, on my way to better places, like Pingxi and Pinglin. I couldn’t imagine living there!

and yes, rental return in Taipei is abysmal. Invest only for a property return, not a rental return. And you won’t get either in Shenkeng in the short to medium term.

You should tell Uncle Bob to buy a commercial space rather than a residential one, coz rent and returns are way higher on commercial properties than any house or flat. Maybe that’ll be a deterrent.

Things to Talk to Uncle Bob about

1)Problems collecting Rent
2) costs of Property Management
3) Problems with holding Foreign Title
4) Costs of upkeep…
5) If he’s paying all cash he’s definitely in for a negative return… If he’s dead set on investment, start as small as possible, I’m sure very soon he’ll see the error of his ways. Hopefully you can minimize the loss.

It would be a much better idea for him to rent and start manufacturing and export.

Short Sale

Yeah, maintenance fees can run up … I know of places you pay double of what we pay in monthly rent … and than all the trouble you could face with people that rent from you … losing job, not able to pay rent … destroying your place, possible lawsuites.

Actually, I know of an investment that could give hime a 50% return in about 8-10 months … just send over the money, guarenteed, no scam.

Yeah but does is have a view of Shenkeng, where the mountains meet the forest and the air brings delightful aromas wafting on the breeze.

I really do not know what to do with this man. Now he’s headed for the ol country and wants to resurrect his old car… which he’s kept parked outside of one of his properties there because the thing has not had taxes paid in 10 years. It is an 80’s model, taxes worth like 10 times its street value. I told him to sell it for spare parts, in pieces. He agreed… like 6 months ago. Now that he’s going and sees how expensive it is to rent a car in a tourist trap, he wants to set the car on wheels again… Explained the situation again to him… Like talking to a brick wall… ayayayayayayayayaya… Please Lord, get that idea of Shenkeng out of his head…

Is he wealthier than you? If so, he must be doing things right most of the time, more than you do. It is his money!

Yep, but he’s older, he’s got more time at it. :wink: And I also blame my aunt for his wealth. :sunglasses: Yep, he must get more rights than wrong -though his business ahd been in dire straits for quite a while- and these expensive mistakes do not help…

This doesn’t necessarily follow. The father-in-law is pretty well off because he inherited it, or gets bailed out now and then by older relatives. Yet he just signed up for a Ponzi scam and got 20 relatives involved. Some of these relatives at the bottom are getting irate because they’re (obviously) not making the promised profits. I gently explained to him how a Ponzi scheme works, and that basically he’s lost his money and he should just cut his losses and walk away. He nodded and smiled and told me it’s a “good business idea”. :idunno:

In my experience, the vast majority of Taiwanese people have the financial sense of a dead hedgehog. The reason some of them appear to do well at business is because it’s so damn easy to convince the rest of them to part with their money. But that’s a bit OT.