Death of Korea's 'apartment king' leaves 100s in property purgatory
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Death of Korea's 'apartment king' leaves 100s in property purgatory
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Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#2Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#3Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
I had the same question. Why can't they simply buy the property if the deposit is the same price as the property itself?
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#4Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
Recent explanation I read is here: https://mobile.twitter.com/AnthonyLeeZhang/status/1613977673...
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#5Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
[deleted]
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#6Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
I had the same question. Why can't they simply buy the property if the deposit is the same price as the property itself?
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#7Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
I can give a little context just from my experience renting an apartment there. The large Jeonse where it is the price of the property is not necessarily required. Usually it is still usually rather large, and the higher the jeonse the less the rent is. So you are correct that a jeonse the cost of the house itself would usually mean $0 rent, whereas a more "normal" 1 years worth of rent jeonse would yield you a "normal" rent.
The huge deposits are not held in escrow (though they should be), but as I found out after having to sue to get my Jeonse back, there are ways to protect it if you act in advance:
1) You can register a lean on the property when you first move in in the amount of your jeonse. 2) Do NOT vacate the property until the Jeonse is returned.
That being said, people are mostly just trusting and I don't know of anyone that actually follows those steps. As a foreigner you are especially vulnerable since they know you likely have a flight to catch on your move out week and won't hold the property hostage. That being said, the legal system for these kinds of debts was swift and we got paid quite quickly once a lawyer was involved.
The whole state of Jeonse is quite extraordinary. It has a huge effect on people being able to move away from home, and I would guess a large effect on homelessness overall. It is wild that you have to pay $30,000 USD to just move into a 1 bedroom apartment. I had a small studio near a university and it was $12,000 USD just to move in.
If I do it again I will definitely be prepared for filing a lien and for a fight at move out.
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#8Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
https://en.m.wikipedia.org/wiki/Jeonse
I don’t know the system at all, but it sounds like the money is intended for the landlord to invest. There is mention that a lien is created on the property.
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#9Can someone explain how this 'Jeonse' system works? The article is vague -- it states that a large deposit is required equal to around the price of the entire property, but why? Do they still have to pay rent? Why won't they get their deposit back if the state takes ownership? Shouldn't huge deposits be in escrow? None of this makes any sense to me.
Recent explanation I read is here: https://mobile.twitter.com/AnthonyLeeZhang/status/1613977673...
So basically it is yet another scheme that only works well when the market moves monotonically upward, and when there is a downturn it's a crisis? Everybody is a genius is a bull market. The fact the landlord passing unexpectedly is also a crisis suggests this is not a well structured system.
What is extra weird is that the renters are paying the landlord considerably more than they would need for a downpayment on a mortagage to buy into this scheme. Is it just impossible to actually buy property or get a traditional mortgage? This system seems like the worst of all words. It is hard to see how you come out ahead in this system vs. just regular renting and dumping that money into the market.
Re: Death of Korea's 'apartment king' leaves 100s in property purgatory
#10Earlier quoted context omitted.
Recent explanation I read is here: https://mobile.twitter.com/AnthonyLeeZhang/status/1613977673...
So basically it is yet another scheme that only works well when the market moves monotonically upward, and when there is a downturn it's a crisis? Everybody is a genius is a bull market. The fact the landlord passing unexpectedly is also a crisis suggests this is not a well structured system. What is extra weird is that the renters are paying the landlord considerably more than they would need for a downpayment on a…
> Is it just impossible to actually buy property or get a traditional mortgage?
Ta latter comment says something like you could, until recently, only get max 30% LTV on a traditional mortgage, but through this system, you can effectively get 50-70%
https://mobile.twitter.com/AnthonyLeeZhang/status/1614107630...