“My husband is on the verge of retirement. He is an ordinary office worker, so he has no hope of finding a new job. Excluding the house, I have about 500 million won in cash, and I need to use this to generate income. What about multi-family monthly rent?” “My husband was re-employed, and it is a black company where early morning work and overtime are routine. “I’m worried that I won’t be able to stay for a long time, but people around me are telling me to buy a commercial property.”
As retirement approaches, you begin to think about ways to earn money through real estate. However, if you invest in real estate before retirement, you need to research more thoroughly and make decisions more carefully than when you were active. If you are swayed by businessmen who approach you by saying, ‘Make a stable profit,’ it is easy to lose your entire life’s savings in severance pay.
How should I choose a real estate property that will provide me with support in retirement? We have summarized the real estate investment guidelines that prospective retirees must know based on the advice of Heo Hyuk-jae, senior real estate committee member at Mirae Asset Securities. Senior member Heo Hyuk-jae has been dedicated to managing the real estate portfolios of high-net-worth individuals since 2009. Contains the basic common sense that beginner real estate investors need to know last year. <부동산 공화국 생존 지식>also published.
Illustration = Chosun Design Lab Jeong Daun
✅The ‘three evils of real estate’ that lead to a gray old age
Country houses, local housing associations, sales-type hotels. These are the top three real estate investment destinations that prospective retirees should avoid. This is because there are pitfalls hidden everywhere that can only be discovered through trial and error.
Unlike apartments, country houses are assets whose value cannot be expected to increase. Even if I built a picture-perfect house with great care, if the houses built around it remain like ugly ruins, it is a loss because the complex cannot be revitalized. In addition, most people waiting to buy a country house want to build a house themselves to suit their tastes. This means that houses that are already built do not sell well.
I have a land for a country house, but it is not selling, so when I ask a local real estate agent, they say, ‘You don’t need just the land, you have to build a house to sell it.’ If you believe this and build a house, you will get a kick out of it. A house should not be built for the purpose of selling. Building a house will only cost more, and it is highly likely that the house will not sell. If you really want to live in a country house, you should look for a two-year lease and live there and decide for yourself whether it is a good fit for you.
Graphics = Chosun Design Lab Yeonju Lee
There are many people who want to sell their downtown apartment to buy a country house and add the remaining money to their retirement fund. If you have your own home but are having trouble with cash flow, a housing pension is a better alternative than a country home. The housing pension is a system in which homeowners aged 55 or older receive a monthly pension using a house with a publicly announced price of 1.2 billion won or less as collateral. The announced price of 1.2 billion won is equivalent to about 1.7 billion won in market price.
The monthly pension amount is fixed based on the younger member of the couple’s full age, but if a birthday is imminent, the amount increases slightly if you sign up after the birthday date. For reference, the amount of the housing pension is reduced if it is expected that the increase in house prices will not be significant. Starting in March, the housing pension amount will be reduced by an average of 1.5%. However, the pension amount reduction has nothing to do with existing subscribers and only applies to new applicants.
/News 1
✅ ‘7% guaranteed for 10 years’ If you believe it too quickly, you will be in trouble.
Local housing associations have promotional slogans that say, ‘It is more than 20% cheaper than regular apartments.’ A local housing association is a housing association where residents come together to build apartments together, and it is easy to understand it as a kind of ‘apartment group purchase’.
However, it is not uncommon for local housing associations to be stranded during project implementation. Even if the establishment of a cooperative was approved, only 17% of actual occupancies were completed over the past 18 years (2004-2021). At the business plan approval stage, land ownership must be secured at least 95%, which is not easy. Since this is an investment where there is a high risk of large amounts of money being tied up for a long period of time and refunds are difficult, you must make a careful decision.
‘We guarantee a guaranteed return of 7% for 5 years’ is a common promotional phrase for sale-type hotels. If the promise is kept, it can be the best choice, but there are many cases where it works well for a year or two and then is not kept. The adopters may be upset, but it is not a breach of contract. This is because in the sales contract, there is a clause written in small letters that is not easily visible to the eye: ‘If the hotel management becomes difficult due to sluggish domestic demand, the agreed profits cannot be provided.’
Graphics = Chosun Design Lab Lee Min-kyung
✅For new cities, it is advantageous to secure ‘first sale’
So how should you approach real estate investment after retirement? Areas with large-scale residential land development, such as new cities and new towns, are worth targeting because they are highly competitive in location and price. Among them, particular attention should be paid to the first sale volume. The first batch is advantageous to consumers because the location is good and the price is low. This is because only when the first batch is sold out can the remaining batches, such as the second and third batches, be sold well.
You should also be aware that even if new cities were built around the same time, there will be differences in price over time. This can be clearly seen by comparing the price increase rates of Bundang and Ilsan, the first new towns, over 23 years (from the end of 2000 to the end of 2023).
While apartment prices in Bundang rose 432%, those in Ilsan only rose 275%. Also, at the end of 2000, the price per pyeong in Bundang was about 24% more expensive than in Ilsan, but at the end of last year, it was 75% more expensive, widening the gap. Bundang has excellent accessibility to Gangnam, a key office area, is adjacent to Pangyo Techno Valley, and has good overall infrastructure, so it has gained momentum. Among the 3rd new towns, Goyang and Changneung have excellent transportation convenience with major business districts such as Gangnam.
Graphics = Yang Inseong
If you are buying somewhere other than Seoul, transportation should be considered a top priority. In particular, newly constructed railways (subway, GTX) have a significant impact on prices. Typically, the asking price for railroads increases three times: development announcement, construction start, and opening. However, the GTX recently announced by the government is a golden route and has a small number of stations, so the area around the station (right in front) is likely to rise even after opening. On the other hand, in places where prices have risen excessively despite poor accessibility to GTX stations, saying it is a good thing for GTX, prices may actually decline after opening.
If you want to purchase an apartment for rental and have sufficient funds, 33 pyeong is better than 25 pyeong. As the proportion of 1-2 person households is increasing, it can be said that there is more demand for small households, but the variable called ‘income’ must be taken into consideration. As the income level increases, the area used by one person becomes larger. Also, in the past, the price increase rate for 25 pyeong was higher than that for 33 pyeong, but recently it has become similar.
➡️How much will apartment prices in Seoul rise this year? Is it advantageous to buy your own home when the market is difficult these days? Part 1 of the interview with real estate expert Heo Hyuk-jae provides a quick prescription. Click here on Chosun.com (Little building in Seoul, should I buy it now?”… Why experts are stopping you).
2024-02-08 04:28:55
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