Korean Job Discussion Forums

[philinkorea]

Ok

A bit naive on the subject but always told its a wicked money maker. Im about to finish my second year in Korea, still not too old i guess well 24 almost 25. Thinking i could stay longer and if i get the setup i want i should be saving a lot. Was thinking of putting a deposit on a house in england. Heard you can do it through a company whereas its looked after while your not around, then its rented and paying for itself.

I mean whats the deal? i havnt paid off any student loan yet, although guess i could get in the folks name maybe. how hard is it to get a mortgage? is it just the case of coming up with the money. england is usually around 10 000 for a cheap house deposit.

just thinking of it as a possibility so i could continue my korean lifestyle. i dont necessarily see my future in england and im enjoying studying koream and developing some counselling skills here to i hope so would like to stay around at least another year.

if anyone could give me any advice info etc it would be cool

[FUBAR]

If you own property in Canada, you have to pay tax on your income earned in Korea. Not sure if the same rules apply in England, but it's something to look into. Unless you want to buy something in your parents name, which I don't know many parents who would willingly do that.

[Wangja]

I used to rent out a property in England, but sold it a year or so ago as I felt that prices had peaked or were about to peak.

In principle, the idea is very good one, but if I were you, I would wait a few years. The property market in UK is very overheated right now and debt is starting to catch people out.

Fior the average price to average earnings ratio to revert to its long term trend of 3.5 or so (as it will) then either earnings have to all but double or prices have to drop by up to 40%.

Which do you think is more likely?

Yield on residential property is barely 5% at present and you can do better in the Building Society, with no risk.

But, keep stashing the cash (I have said elswhere that cash is king) and in a couple of years you will have enough for two deposits to buy property reposessed by the banks.

There are two key points in renting:-

1. Location: the smallest house in the best area is better than the biggest house in a poor area.

2. Avoid "voids" (a period when the property is empty for a month or more). Better to rent at 5% below the market than to have it sit empty, even for one month.

Lastly, smaller property is generally easier to rent than larger. Do not refuse DHSS tenants - the government's cheque does not bounce and the fair rental values they assess are indeed fair rental values.

[Wangja]

On the tax issue, under UK rules, if you are non-resident, your offshore pay is not taxed.

Any income arising in UK is taxed.

In the case of rental, you oay tax at the standard rate on the gross rent less allowable expenses, reduced of course by the basic tax-free allowances for a single person. This usually means that for a single "typical" property, with high loan and hence interest, the net profit at the end of the year is usually less than the tax threshold.

From the UK tax point of view, it is attractive.

[matthews_world]

I guess the big thing is managing your property while you are away from it.

Are your going to be able to keep an eye on your tenants? Are they gonna trash the place? Can you trust them?

I'd have someone I trust either live in the property and pay rent and look after the place.

Homeowner's insurance only covers you in certain types of losses. Find a good all-inclusive policy.

[Wangja]

That is true, there is the risk of the house being trashed. You do have the deposit of course, but that might not cover the cost. If the tenant is a DHS tenant, DHSS pays the repair cost.

As to student loans: I am not expert here, but don't you have to be earing over 15,000 GBP to start to repay? A teacher's pay in Korea is probably below that threshold. Whether or not that would affect a buy-to-let (BTL) mortgage application, I am not sure. BTL mortgages are normally considered on a stand-alone, commercial basis.

[the saint]

There is a catch 22 here you have to watch out for. If to avoid tax you go non-resident for tax purposes (fill in a form to do this - don't just presume you are if you live here), the vast majority of BTL mortgages are out of your grasp. Those that are, and there are some, require a deposit of 15-20% up front. Ifyou are still paying back your student loan, I bet you don't have that kind of money - especially with house prices the way they are now.

We've had our property rented for almost 8 years now. Best thing we ever did financially. House prices are mad at the moment. If we sold now, we would make 300% profit on it. We're keeping it for the long haul because we will very soon be getting a nice cash income int he UK when we finish off the mortgage. We'll use that to save a deposit for a non-resident BTL mortgage for house number two.

Re tenants, one piece of advice. Unless you are seriously into hassle never rent to friends or family. Just don't go there. We got burned badly twice. It is much better to have a total stranger trash the place than someone you actually know. Re your fear of them trashing the place, remember, it is not your place i.e. not your home. It is just a building. Providing you have the property rented through an agency, even if every tenant you had trashed the place, you would still find that, long term you will still be making a good investment. Truth be told, tenants trashing the place are actually fairly few and far between.

If I were you, to get yourself rolling, I would get myself a copy of the Which Guide to Renting and Letting which is excellent and then start scouting for property in an area you know well back home. It might take you a few years to actually find a property and get the finance together but renting is definitely a good long term investment - if not one of the best.

BTW, all the above is for the UK.

[Tiger Beer]

I was thinking about this too.

Just online (never been to these properties). But I saw a 1-bedroom apartment in Waikiki (Honolulu) for $50,000 as well as condos in Manila (also 1-bedroom for $50,000).

Either one, particularly Manila, I was thinking it would technically be possible to attempt a down payment on them and rent them out.

[TJ]

My wife and I have rented out a house twice and on both occasions the damage to house and gardens exceded the amount of the bond. On both occasions we had an agent supposedly looking after the property and collecting a fee for that service.

It is our experience that not only do you need good tenants but you also need good agents.

Now, we have left our house empty rather than go through all the worry of a tenant.

Our recommendation is DONT !!!!!

[chronicpride]

Don't forget about the use of property management firms. If you have some profit margin room on your rent, it may be wise to use the extra $100-150/mnth to have a property management firm oversee tenancy issues, advertising, and maintenance.

[the saint]

[TJ]

[the saint]

sad story... especially when it happens twice to you. You're right about taking tenants to court. Any lessons we can learn from you re selecting an agent? What should we look for in a reputable agent?

[Butterfly]

[TJ]

[quote="Butterfly"]