Real Estate is My Co-Breadwinner

The book is now out of print. Only available in the library. The books in the library worn out. I believe best translation of the book 'Real Estate is My Co-Breadwinner' The author of the book opens up education company named 'The wealthy employee' to share his knowledge and experience to other employees. By the way, name of the author is Nirvana. It is a name of a band, but it also means a state where person was released from the suffering and understood the truth.

Nirvana himself was an employee but later became successful investor in the real estate as an employee. He was initially negative about real estate and investment, but it didn't take long for him to understand how poor his finantical state is. Eventually, he decided to follow the steps of the rich, not like normal employees around him. After he achieved his goal, he started teaching people about investment. Students gathered more and more, and he started education company 'the wealthy employee' to help normal employees to achieve wealth in the capitalism.

https://weolbu.com/

당신이 부자가 되는 곳! 월급쟁이부자들

 

I also take class from the wealthy employee. In Korean, employee is Weol-geup-jaeng-yi, and the rich is Boo-ja. Weol-Bu is short for the name in Korean. In the book, he introduced his investment in the past. He invested for property making cashflow first as his cashflow was very low. Later he changed his investment to apartment for capital gains. In South Korea, special type of rent system exists. It's called Jeon-sae. Sae means rent, but it is different from normal housing rental system in other country.

The Jeon-Sae system allows tenants to:

• Pay a large lump-sum deposit (typically 50-80% of the property's value. It changes according to the market condition.)
• Live in the property for a fixed term (usually 2 years) without paying monthly rent. (The period can be extended. The legal system in South Korea is on the tenant side. Tenant can live up to 4 years with minimal increase of down payment in the second extension, but this extended period is different from the first one since tenant can leave the appartment at any time when he wants. Obligation to stay in the appartment is only valid for the first 2 years.)
• Receive the full deposit back at the end of the contract period

What makes Jeon-Sae unique is that landlords use this large deposit as investment capital during the rental period, earning interest that effectively serves as their rental income, rather than collecting monthly payments. But it requires large sum of money; thus, the author of the book first focus on increasing cashflow, and later, change to real estate for capital gains since the capital gains from the apartment is normally much greater than the other property making cash flow.

Many people have the biased opinion on the real estate, and the author of the book clearly showed that these are not true.

1) The price of the house should be much lower.

2) The price of appartment will increase in Seoul, but not other cities. 

3) Real estate investment requires huge sum of money.

Many people who are trying to invest look for property in Seoul regardless where they are. However, the author of the book started investment in his city, and later he found good properties in other small cities. People frustrated that they can't buy apartment in Seoul because of their small income. However, 'Investment is not buying good-looking roosters, but buying hens that lay eggs.' Opportunity is everywhere.

When people invest to get monthly rent, they forget one really important thing. Capital gain of the property is also important. If the property can't be sold, then monthly rental income is not really earning. It's just part of your money buried under the property. Thus, capital gain and cashflow both should be carefully calculated before making a decision. Some of investment introduced in the book was a good property, but now 10 years passed from the book was published, and the author in the class said that he just still has them because no one wants to buy them. Population decrease made an effect, and people don't want to get room in his buildings. Nirvana doesn't really care since he already recovered his money, but he stressed out that liquidity of the property must be checked first before making a contract.

His investment principles are simple:

1) Low price (compared to the value of the property)

2) Liquidity

3) Target profit

4) Do not lose the principal amount

5) Hedge the risk

But as a beginner, it is impossible to keep all of them. So he made it much simpler with three questions.

Is it low priced? Can I sell it when I want to sell? What is the bottom if the price decreases?

If answers to these questions are clear, it is good to go. Nirvana also introduces a way to invest real estate even though he didn't have enough cash. There is always a way to prepare money for investment. The author share all his experiences wholeheartedly in his book. The book is quite similar to the books from Rich Dad company mostly.