Should I buy property to start a Buxiban?

I’m tired of working for other people and I have a few years teaching under my belt. I just got married to a Taiwanese citizen and she wants to help me start a school. I have looked at 591 and didn’t find any buildings that would be a good fit for a new school. At this point I am weighing my options and considering buying a 3 or 4 story building to start a buxiban. I have never owned a house let alone a business so I don’t know anything about zoning, permits or anything. Is there something I need to consider before I make a huge mistake?

FYI: I am aware of some of the rules concerning opening a buxiban but feel free to bring up anything you feel would put an end to this pipe dream.

Renting is lower risk. Why buy?

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The cost of commercial property in Taiwan is so high it’s hard to imagine a buxiban business plan that would be profitable enough to carry the cost of the property alone. It’s also hard to find suitable space even to rent at a reasonable price. There is one possible avenue for what you’re trying to do though. Years ago my wife was approached by the church we attended at the time and asked to teach English to the aboriginal/low income/orphaned kids in the parish. The church, as most do, had classroom facilities available but couldn’t find a teacher. They offered to pay her but she taught several classes in the evening free of charge. I helped out regularly even though I have no experience in or talent for teaching language. After we moved to another part of town the school fell apart because the church couldn’t find even a paid replacement teacher who was willing to single-handedly take on the task of teaching disadvantaged children.

I think it would be entirely possible to approach a church with classroom facilities and offer to set up a school in which a certain number of slots would be set aside for low income/orphaned kids in exchange for commercial use of its classroom facilities.

The facilities for a buxiban for teaching English MUST be a commercial property… it must be zoned as such otherwise it will not be possible to get a license. Other types of facilities are less strict, however. You also need to have a suitable fire exit, … While renting makes better use of your capital, if you buy you have additional security.

I suggest that you check out the regs for opening in your area, check your budget for purchasing a property, and prepare a basic business plan to figure out if you can make it work, financially.

I would suggest that if you are serious, start private classes to assess the market, build your reputation, and see if there is any potential in your area for another buxiban.

How well do you know them? I suggest sitting down with your wife and going through the rules (the local version written by the education department in the city/county where you want to do business) without skipping over anything.

Buying has the advantage of if it doesn’t work out, you can rent that out as a landlord.

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Buying a 3 or 4 story commercial property is going to cost over a million USD in any major urban area in Taiwan though. Can any Buxiban business support the mortgage on that?

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I don’t know where you are but if you are in the north, it’s probably pretty different from the south where I am. I own a school in Hengchun. I have a couple of comments. First, in Pingtung County, a buxiban can be in a residential property. In Hengchun, most are in converted “toutian” townhouses. Second, before you get a license to operate, the fire department makes an inspection and they compare the actual layout of a building with the blueprint that the appropriate government agencies were provided with during construction. If they don’t match, you have to restore the building to its original condition before they will issue you a permit. This is a real problem because of how the local construction industry operates. They file blueprints that meet code, they build to the blueprint and pass inspection and then they add on all the illegal stuff that’s not in the blueprint. So when you are looking at buildings to purchase or to rent for your school, you need to know exactly how it is illegal and what it will cost you to make it comply enough to pass all inspections.
There are plenty of bureaucratic traps to get bogged down in if you’re starting from scratch. Much better to buy an existing business that has already dealt with all this stuff. If you’re in Taipei, I can’t imagine it’s too hard to find one for sale.


The cram school market is extremely competitive–Michael Turton calls it “saturated”:

It is difficult to be anything but pessimistic in view of the low birth rate, combined with Taiwan’s economic stagnation.

I’m set up in New Taipei City, where the property prices are extremely high. I don’t know how anyone pays for their mortgage here. The property that I see for rent runs about $40,000 a month but a 30 year mortgage on a 30 million nt building would be around 80-90,000 a month. It would be a rough first year for sure but I think I could eventually make around 300,000nt a month. This doesn’t factor in costs like Chinese teachers and office workers. Does anyone know a good website for selling a house or business? I’ve searched 591 but its hard to navigate and I didn’t find much in the way of property for sale.

Why not rent for 40,000 a month first year and see if the business pans out? That buildings probably already 30 plus years old and won’t last another 30. Also you’d be paying a hefty chunk to the realtor. If business doesnt work out you’ll be up the creek for 50,000 a month to the bank that owns it since you can only rent it out for 40k. I doubt housing price in New Taipei City is going to skyrocket if anything it will slowly go down.

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In discussing competition, Turton doesn’t even mention the effects of illegal competition. Here in Hengchun, prices and salaries are kept down by unlicensed schools that don’t pay for inspections, insurance, taxes or any of the other stuff legal businesses do. There is zero enforcement. If Hengchun didn’t have a growing population (lots of northerners trying to capitalize on the tourist trade), we probably would have closed down years ago.


I would add that even licensed buxibans in the Taipei area are frequently in violation of labor law and probably also tax, fire safety etc. Enforcement, shall we say, lacks enthusiasm. :whistle:

As for the blog post, I found this part interesting:

The reason the bushiban market boomed in the 2003-2008 period, then fell off, is probably related to money returning from China via legal and gray/black channels. Cram schools are ideal ways to launder money and gangster investment in cram schools and in legal private schools is common, and of course, many a legal dollar was seeking business opportunities at home. That 2003-2008 period that AmCham refers to was the peak of the Chen Shui-bian era boom in Taiwanese investment and profit in China. Many people invested in cram schools because they had always been a steady earner, and because entry and exit were easy, and there was a widespread perception that they were cash cows (many of my relatives were urging me to open a cram school with them, easy money!), even though all the numbers said otherwise.

We’ve reached peak cram school now.

@Pinoco Did you buy property or start a buxiban yet?

I looked into it. The down payment would need to be 20% so that kind of killed the idea for now. Its a shame to pay a lot of money for rent each month but I don’t have that kind of capital or credit here in Taiwan. When I have enough money I might look at buying again.

What is your rent a month? How many classes do you have?

My rent is 50,000 NT a month and we have 3 classes. Two of my Classes are 3 hours and one is a 2 hour class.

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I suggest you look at it another way: what is the return on your capital?

So you have $NT1 million to start a business. Buying versus renting? Well, I’d say renting wins out any day, because you wouldn’t have to spend as much to get your business off the ground. Buying the property means you would need to borrow to the hilt to get started… and then you have to find money to run the business potentially for 12 months before you start to make any money. It took us 2 years to break into profit, albeit from a low-base on our school. But we knew we could fund the business for at least the first year, so we knew we’d have as good a start as possible.

Of course, your returns will be much higher % in the initial period of running your business, because your initial investment will be that much smaller. It also means that cash will be available for expansion, renovation, development or profits - however you decide.

But… and it’s a big but… if you buy the real estate, there is the potential for a property price windfall at some point in the indeterminate future, which we don’t have currently. When we started, there was good pricing in the local real estate market for property in our area… but we had bought a house first, so we didn’t have extra $$$ to go buying commercial property. In fact, when we bought the house, we didn’t even know we would start a business!