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methdxman
Joined: 14 Sep 2010
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 Posted: Tue May 22, 2012 5:44 pm Post subject: Re: What percentage of your salary would you allocate to ren |
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| fustiancorduroy wrote: |
As the subject says, what percentage of your monthly pay would you put toward rent? The general recommendation I've read online is no more than 30 percent of your pay toward rent, but most of those articles have been written for people living and working in the US. Seeing as how our situations in Korea are different from people in America, would you say the same guideline applies?
I ask because I've been looking for new places lately and have found a few that strike my fancy. One place in particular is a nice 20th story apartment in 동부이촌동 that has wood floors, tray ceilings, halogen spotlights, and granite kitchen counter tops, and overlooks the Han River. At 1.8 million a month for rent, it's a bit pricey, but within 30 percent of my monthly income.
Should I go ahead and rent this borderline too expensive apartment where I know I will be happy or should I find somewhere a bit cheaper, maybe costing just 20 percent of my monthly salary, where I will be less happy but able to save more money for the future? |
1.8million with how much deposit? How many pyeong? |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Tue May 22, 2012 5:48 pm Post subject: |
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| I think no more than 30% for all housing related expenses, including utilities and renter's insurance and whatever else. |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Tue May 22, 2012 5:56 pm Post subject: |
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| Weigookin74 wrote: |
| If you're going to buy an old car, try to get a black one with tinted windows. People will think you're an old ajossi when driving. |
Or you could get an import. They'll be more careful around you (except in like, Gangnam) just because they think if they get into an accident with an imported car (esp. German) they'll take it in the ass on repairs.
And there's the fact that gangs drive black grandeurs. Now the people I really feel bad for are the people that drive the long wheelbase Equuses themselves.....you're supposed to ride in the back of that thing. |
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Yaya
Joined: 25 Feb 2003
Location: Seoul
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| Posted: Wed May 23, 2012 4:07 am Post subject: |
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| I think 30 percent is fine but I would get a jeonsae place and not pay rent. You will thank yourself after seeing the money you save. |
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fustiancorduroy
Joined: 12 Jan 2007
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| Posted: Wed May 23, 2012 4:39 am Post subject: |
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| Yaya wrote: |
| I think 30 percent is fine but I would get a jeonsae place and not pay rent. You will thank yourself after seeing the money you save. |
Yes, but by getting jeonsae, you are:
A) tying up a huge amount of money for the duration of your housing contract
B) not earning interest on the money put down for jeonsae, which, if you invest it well, can match or exceed the amount you pay for rent
C) running the risk of losing most/all of your life savings if the owner of the apartment goes bankrupt or if the owner or realtor is a swindler.
Jeonsae can be worth doing, but if you invest your money well, you can actually make more per month than you pay in rent, which, along with the other factors above, make it a proposition of questionable merit. |
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Adam Carolla
Joined: 26 Feb 2010
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| Posted: Wed May 23, 2012 6:15 am Post subject: |
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| fustiancorduroy wrote: |
| Yaya wrote: |
| I think 30 percent is fine but I would get a jeonsae place and not pay rent. You will thank yourself after seeing the money you save. |
Yes, but by getting jeonsae, you are:
A) tying up a huge amount of money for the duration of your housing contract
B) not earning interest on the money put down for jeonsae, which, if you invest it well, can match or exceed the amount you pay for rent
C) running the risk of losing most/all of your life savings if the owner of the apartment goes bankrupt or if the owner or realtor is a swindler.
Jeonsae can be worth doing, but if you invest your money well, you can actually make more per month than you pay in rent, which, along with the other factors above, make it a proposition of questionable merit. |
Quiet you! People around here are in love with the illusion that cheonsae=free housing. |
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fustiancorduroy
Joined: 12 Jan 2007
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| Posted: Wed May 23, 2012 7:57 am Post subject: Re: What percentage of your salary would you allocate to ren |
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| methdxman wrote: |
| 1.8million with how much deposit? How many pyeong? |
20 million deposit and 25 pyeong. The apartment is reasonably new and the neighborhood, 이촌동, is quite nice. |
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Stan Rogers
Joined: 20 Aug 2010
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| Posted: Wed May 23, 2012 8:21 am Post subject: |
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| I pay way too much. |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Wed May 23, 2012 4:13 pm Post subject: |
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| Yaya wrote: |
| I think 30 percent is fine but I would get a jeonsae place and not pay rent. You will thank yourself after seeing the money you save. |
Not if you have to borrow money to put down jeonse. Your interest payments will sometimes exceed your rent. |
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Nismo
Joined: 31 Aug 2005
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| Posted: Wed May 23, 2012 5:02 pm Post subject: |
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| motiontodismiss wrote: |
| Yaya wrote: |
| I think 30 percent is fine but I would get a jeonsae place and not pay rent. You will thank yourself after seeing the money you save. |
Not if you have to borrow money to put down jeonse. Your interest payments will sometimes exceed your rent. |
Who would be that dense? And besides, you can start to pay off your loan and reduce your interest payments, which you couldn't do with monthly rent. |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Wed May 23, 2012 5:52 pm Post subject: |
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| Nismo wrote: |
| motiontodismiss wrote: |
| Yaya wrote: |
| I think 30 percent is fine but I would get a jeonsae place and not pay rent. You will thank yourself after seeing the money you save. |
Not if you have to borrow money to put down jeonse. Your interest payments will sometimes exceed your rent. |
Who would be that dense? And besides, you can start to pay off your loan and reduce your interest payments, which you couldn't do with monthly rent. |
A LOT of Koreans I know. Something about "saving money" in a jeonse when in fact you're spending just as much to service the debt.
And you might be able to reduce your interest payments, but that would require enormous cash outflows to pay off a loan whose principal you might not recover.
Jeonse's basically a ponzi scheme. |
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Lazio
Joined: 15 Dec 2010
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| Posted: Wed May 23, 2012 6:45 pm Post subject: |
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We have 50 million Jeonse loan and pay 148,000 Krw interest a month. We don't need to pay back the principal! so after a year or so into my contract I won't really pay any interest since the money I save meantime gets a higher interest at a bank.
Good or bad thing the Jeonse? I'm sure it's good for me. 100 mil Jeonse gives me 800,000/month return (that is how much my place would cost otherwise, at least) Moreover, even with weolse I would need at least 10 million deposit so basically 90 million gets me 800,000/month. Even when taking out the interest I pay, it comes to around 9% return on my "investment" During the second year into my contract it will be 10% or more since I keep "reducing" my interest payments by the month. |
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motiontodismiss
Joined: 18 Dec 2011
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| Posted: Wed May 23, 2012 6:59 pm Post subject: |
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There's a risk premium that comes with jeonse over renting. Now if property prices go back down to sustainable levels (Seoul's PIR is higher than NYC, and NO Seoul is NOT more desirable than NYC) the jeonse tenants are going to end up taking it in the ass basically.
And the principal has to be paid back SOMEHOW. The bank's just letting you defer those payments.
Personally, being debt free>>>>>>>>>>>living in jeonse. |
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edwardcatflap
Joined: 22 Mar 2009
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| Posted: Wed May 23, 2012 7:02 pm Post subject: |
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[quote]Good or bad thing the Jeonse? I'm sure it's good for me. 100 mil Jeonse gives me 800,000/month return (that is how much my place would cost otherwise, at least) Moreover, even with weolse I would need at least 10 million deposit so basically 90 million gets me 800,000/month. Even when taking out the interest I pay, it comes to around 9% return on my "investment" During the second year into my contract it will be 10% or more since I keep "reducing" my interest payments by the month.[quote]
I've never really understood jeonse myself. If it's good for you then how can it also be as good for your landlord? Surely one of you has to come off worse? i mean if you get a 9% return your land lord must get more to make it worth his while. So why don't you put your money where your landlord puts it? etc... |
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radcon
Joined: 23 May 2011
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| Posted: Wed May 23, 2012 7:36 pm Post subject: |
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[quote="edwardcatflap"][quote]Good or bad thing the Jeonse? I'm sure it's good for me. 100 mil Jeonse gives me 800,000/month return (that is how much my place would cost otherwise, at least) Moreover, even with weolse I would need at least 10 million deposit so basically 90 million gets me 800,000/month. Even when taking out the interest I pay, it comes to around 9% return on my "investment" During the second year into my contract it will be 10% or more since I keep "reducing" my interest payments by the month.
| Quote: |
I've never really understood jeonse myself. If it's good for you then how can it also be as good for your landlord? Surely one of you has to come off worse? i mean if you get a 9% return your land lord must get more to make it worth his while. So why don't you put your money where your landlord puts it? etc... |
Because many landlords are not putting the jeonse into conservative investments. Some are investing in highly speculative ventures and many others are spending and living off that money and when the contract is up they will only be able to pay back the jeonse after they find a new tenant willing to put down fresh cash. |
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