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A comment on Death of Korea's 'apartment king' leaves 100s in property purgatory. Parent comment

Re:Death of Korea's 'apartment king' leaves 100s in property... by jandrese on Saturday January 14, 2023 @09:25PM (#34386197)
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.

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Re:Death of Korea's 'apartment king' leaves 100s in property... by Scoundreller on Saturday January 14, 2023 @09:29PM (#34386219)
> 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...

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Re:Death of Korea's 'apartment king' leaves 100s in property... by kijin on Saturday January 14, 2023 @11:49PM (#34386804)
The trick is that you can get a loan to pay the jeonse deposit. The interest rate for jeonse loans is considerably lower than for a regular mortgage, and until recently even lower than paying rent, because these loans are effectively guaranteed by the landlord who is contractually obligated to return the money.

So if you simply wanted to live in a certain area for a while and not get tied down by the legal burden of ownership, getting a jeonse loan would have been a steal compared to a regular mortgage or even renting.

My first jeonse deposit was $90K, $60K of which I borrowed from a bank. Interest on that loan was less than $150/mo. Rent on a comparable apartment would have been upwards of $500/mo at the time. Of course you can't get this kind of deal nowadays, but the scheme made a lot of sense when it worked.

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