The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: makane on October 22, 2017, 09:33:22 AM
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hi all,
i've been living as a foreigner in china for over 3 years and am fluent in chinese (29 yr old).
i'm considering buying a house, but i've been anti-house-ownership for a long time so it's hard to consider this to be a good choice or not.
- lately we've found an apartment which is right on top of the trainstation in chengdu (major city in china, 15 million population), maybe 2 minutes walk from main train station. high speed rail all from this station to other major cities, subway to old airport and high speed rail to new airport. best position possible in this city logistically.
- two floors apartment, each are 35 square meter, so 70 square meter total, would net out at 90k USD, plus needs 15k USD in furnishing inside. it's small, but enough for 2 people, and should be great if we design it for 2 mustachians.
- if paid at 50% down, the other 50% in mortgage would add a total of another 15k USD in interest over a 10 year period
total cost mortgage 60,000 USD (500 USD * 12 months * 10 years)
down payment 45,000 USD
refurbishing 15,000 USD
total cost of house 120,000 USD
i'm torn whether i should buy this apartment.
i've been anti-house-ownership and have most of my assets in the world index stocks, some shares in a startup and some shares in a company.
but perhaps i've been irrationally anti-house-owning and this house rationally seems worth it considering:
- if i don't buy it then i would keep renting and also pend 500 USD per month in this period, but after 10 years, i will own nothing.
- if i do buy it, we'll spend 90k USD on the house, spend 15k USD on the interior, spend 15k USD on the 10 year mortgage, total cost of house 120k
- just assuming for simplicity's sake that i'll use the house for 20 years and then it evaporates this brings you to $500 per month in cost over 20 years. Other costs should be 181 USD annually in property maintenance and some negligible garbage service fees.
so i am tempted to buy this house because:
- i would otherwise spend $500 on housing each month anyway, but this way at least i get equity exposure
- the house might double or triple in price in 10 years, nice to have, if it doesn't happen, doesn't matter too much to me
- it does give more room to customize your life, and, spending pattern, you don't simply have to abide by what landlords provide in furniture and stuff
- my annual salary is around 70.000-80.000 USD, if this matters to you replying my question in this post
since i would buy it with my girlfriend at 50%-50%, i'm asking my lawyer tomorrow whether i can be sure that 50% of equity does go my way in case of death/divorce/split-up. splitting the 120.000 USD between two people that will come down to 60.000 USD per person.
1. is this, rationally, a good choice?
2. am i missing something here?
thank you so much for your input
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Are tou planning to live there for more than a few years? Buying a house for just a few years gives a relative high cost of selling and moving.
Have you checked whether your mortgage is deductible?
Do you need to pay property taxes?
Is there a home ownership association that you need to pay a monthly sum to and that can suddenly order repairs that increase the monthly sum?
Can the Chinese goverment get it into their mind to move the whole city to build a new water power reservoir? Probably very far fetched if we are talking about a major city.
How is pollution and do you want to live there? Are there shops and entertainment on walking distance or easy to reach with public transport? Any recreational green areas available?
About the house going up in value... Aren't they talking about a housing bubble in China? I know housing bubbles are hard to predict. But read yourself up to where these talks are based on. I don't know more about them.
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I wouldn't touch property in China. Check out this video (and others like it).
https://www.youtube.com/watch?v=_lAoTBVTTO8
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You need lhamo's advice. She and her DH owned an apartment in Beijing and sold it not too long ago. There are restrictions in terms of mortgages available for foreigners in China. When my parents purchased their condo in Guangzhou, they had to pay all cash as they didn't qualify for mortgages in China, and banks in the home country would not give them a mortgage for a property that was not in the home country.
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The mainlanders I know also refuse to buy property in China. It’s never really yours if they don’t want it to be.
Sent from my iPhone using Tapatalk
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I know nothing about real estate in China, but here are a few issues you should consider regardless of location:
What are the upfront costs of acquiring property? (In the US, there are realtor commissions, transfer taxes, mortgage fees, etc.)
What will be the maintenance costs, property taxes, condo fees, repairs, utilities, and any other expenses that you have to bear as an owner but not as a tenant?
If you and your girlfriend split up, what are the possibilities? Could you be liable for the whole mortgage? Could she force you to sell when you don't want to? Could you force her to sell if you want to?
Will this apartment actually be a place you want to live for 20 years? What if you have kids?
Good luck with your decision!