Q1. There's a big price difference between Royal Floor/Dong units and non-Royal properties. When investing, shouldn't this be considered?
→ RR is good. It's a good choice from an investment perspective as well. Even during a downturn, they sell first, so liquidity is good and you don't have to lower the price urgently. However, the price difference between RR and less desirable units will likely maintain a constant percentage gap.
The price gap between premium and less desirable areas continues to widen (in percentage terms). If you're at a crossroads between a premium less desirable unit vs a less premium RR unit, you should choose the premium less desirable unit. (Even if it's on the 1st floor, a premium location takes precedence).
Q2. I'm considering Complex A, B, C, and D within my budget. Which complex is the best?
→ Complex A seems to be the best. However, if you're looking for urgent sales, don't limit yourself to just one complex.
Buying Complex A at market price is less advantageous than buying an urgent sale in Complex B, C, or D.
Check out all listings in similar complexes within the same price range. Especially, make a list of urgent sale properties.
No urgent sales? You can create your own urgent sale. Actively negotiate with the sellers of properties you're interested in. (There are hidden prices.)
Q3. How many real estate agents (licensed real estate brokers) should I contact? (+Real estate agent management know-how?)
→ If you've narrowed down your target complexes to A, B, C, and D, contacting just one main real estate agent per complex is sufficient (basic).
However, it's recommended to contact multiple real estate agents for each complex.
Even for an investment involving billions of won, picking up the phone feels daunting and scary. But just making a few calls reveals a lot.
Call the real estate agencies that have listed properties you're interested in on Naver Real Estate.
Through a phone call, assess whether they are skilled, have good property connections, and are the kind of real estate agent who will continue to pay attention to you (1st phone screening).
When you go to visit the complex, visit the real estate agencies that passed the 1st phone screening. You don't need to bring them drinks... (2nd in-person meeting)
They will contact you first when an urgent sale property becomes available. They'll also actively assist with price negotiations.
*The 2nd in-person meeting isn't mandatory. I've also signed many contracts with real estate agents who only passed the 1st phone screening.
Conclusion: 1 main real estate agent per complex + n side real estate agents
Q4. Regarding the most premium areas, isn't it the case that you need to live there for 10 years at some point to receive the 80% long-term capital gains exemption?
After all, you have to sell it eventually.
The gap investment amount is too large, and I don't have the financial capacity to cover the deposit, so I don't think I'll ever be able to live there.
Should I lower my price expectations and buy a property where I can live there in the future?
→ You don't necessarily have to think of the final destination as a cash-out.
You won't leave your one-house slot empty until you die.
In my case, I purchased an apartment in Seocho-dong with a plan to move in after 8 years and live there for 10 years, making it an 18-year long-term plan.
(Even if my financial plan goes awry and I'm unable to move in after 8 years or never move in, it's okay.)
In the 1.2 billion won and above price range, you need to be prepared for such an extremely long-term holding period. Therefore, you should move to the most premium area possible and actively defend against polarization and inflation.
18 years is a very long time. The rent will surpass the purchase price I paid. You can see a similar case with Hyundai Motor Group holding the GBC site in Samseong-dong, securing strong cash flow (low-interest collateral).
It's a meaningless investment to incur a capital gains tax bomb by selling due to a cash need in the middle. Even without selling, you can secure cash flow.
Even if you don't have the ability to live there permanently, planting your flag in the most premium location possible is a defensive investment against polarization.
Q5. Should I buy and live there with a loan? Or should I do a gap investment?
→ It depends on your circumstances.
Generally, due to DSR regulations, it's difficult to obtain a loan that covers up to 50% of the purchase price. (This is why I recommend gap investment).
However, loans such as the Newborn Baby Special Loan (for houses under 900 million won) are not subject to DSR regulations.
If you can get a loan exceeding 50% of the purchase price, there's no need to do a gap investment. (+Cases where the purchase price is low, and even if subject to DSR regulations, the loan exceeds 50% of the purchase price)
Q6. I'm struggling between a 25-pyeong unit in a premium area and a 34-pyeong unit in a less premium area.
→ I recommend the 25-pyeong unit in the premium area.
Typically, 25-pyeong and 34-pyeong units in the same area maintain a certain percentage ratio.
However, the gap between premium and less premium areas is continuously widening.
It's the same reason why I recommended a 1st-floor unit in a premium area instead of a less premium RR unit in Q1.
Q7. I'm struggling between a school district area and a convenient location near work/subway (subway accessibility).
→ Choose a convenient location near work/subway (subway accessibility).
School districts are good. I'll raise my own children in a school district area.
- The school-aged population is decreasing,
- The number of medical school slots in regional areas is increasing (regional talent selection),
- Companies are facing labor shortages, leading to lower barriers to entry based on qualifications,
- Seoul universities have little intention of reducing the number of students they admit,
- The days of only being able to access lectures from top tutors through in-person classes are gone,
- The number of DINK families is increasing (+single individuals),
Ultimately, investment is about supply and demand. Let's look at it linearly. There will continue to be demand for school district areas, but it won't be like the 1990s. The demand for school districts won't increase compared to the past, while the demand for convenient locations near work/subway is continuously increasing.
Q8. Wouldn't it be better to invest in a redevelopment complex to benefit from the price increase?
→ You need to quickly move to a premium area, so don't get stuck in redevelopment prospects.
1. Promotion Committee - Establishment of a Consortium - Project Approval - Completion: It's not easy to endure the long process,
2. Overheated Real Estate Speculation Zones (Gangnam 3-gu + Yongsan): If a consortium is established, transfer of membership rights is not possible, reducing liquidity,
3. Consequently, an exit strategy is not readily available...
4. Issues with additional expenses
Based on my experience, where consortium members have worked hard and prepared everything only to see it snatched up by general sales, I can't really recommend redevelopment properties.
*If it's a redevelopment complex in the most premium area, it's okay since you'll be holding it for a long period anyway.
Q9. You don't recommend Area A, which has a subway line development prospect. Is there a reason for that?
→ Currently lacking infrastructure + waiting for the development prospect to be reflected is inefficient from an investment perspective.
For example, the extension of the Shinbundang Line to Hwaseo Station is a tremendous development prospect. Although it takes about 40 minutes to reach Gangnam Station, being able to access the Gangnam-daero line without transfers is a good infrastructure feature.
However, for properties in the 500 million won range, you need to keep in mind that it's a short-term exit opportunity after 2 years of ownership. It's not about future prospects but the infrastructure you can enjoy right now (especially a location that's currently within 1 hour of Gangnam) that matters in this price range.
While you're hesitating and waiting for the development prospect to be realized in 5 years or more (as explained in the advanced section, the price increase due to rising rent occurs only when the line opens), the gap with premium areas widens.
I recommend investing in areas with solid underlying demand for real users that have readily available infrastructure and exiting quickly because the development is still far off.
Q10. Why are you comparing Area A to Area B? It's ridiculous.
→ Why are they not comparable when the prices are similar...?
The actual transaction price is the number that buyers arrive at after comparing various areas and pouring all their assets and loans into it. It's the final price they've decided on after considering development prospects, negative factors, and neighborhood hierarchy.
In the future, prices may diverge and the hierarchy may change due to each area's individual development prospects and changing trends. However, remember that the current price reflects not only the current value but also expectations of future development prospects.
Q11. We're a family of four, and we're frustrated because we can't win the lottery for a new apartment. Is buying an old apartment the answer?
→ If your score is 69 points or higher, it's best to continue trying your luck with the lottery.
69 points is the maximum score for a family of four. (32 points for non-ownership period + 17 points for subscription period + 20 points for dependents)
However, a score of 69 doesn't guarantee a high probability of winning. It's the minimum score for a chance to win.
The recent Die Hich Bangbae project had a generous amount of general sales and was relatively less of a lottery, increasing the chance of winning. However, the minimum score was 69 points, proving that a family of three couldn't win.
Families of three (with a score below 69) should consider buying an older apartment.