purchasing a home in China

[GZBILL]

My "guan li fei" was strictly only the management fee, nothing more. I paid the electricity bill directly to the electric company. I paid the gas bill directly to the gas company. I paid water directly to the water company. I paid telephone bill directly to Shanghai Telecom. The management fee was only for the maintenance of the building, the security guards, and the landscaping, nothing more.

 

In both apartments, they were billed every 6 months. I just passed the bill notice onto the landlords. Interestingly enough, both actual owners were living abroad (one in Australia and another in the US) and had their respective relatives in SH collect the rent. Actually for one landlord, I simply deposited the monthly rent into his bank account each month.

 

Each property management company may handle it differently it seems.

 

All the management companies I deal with put the bill directly in the apartment's mailbox each two months.

 

Strange though is how would the management company in your complex collect the electricity charges associated with water pump and elevator usage? Those charges cannot be directly assessed by the electric company to each subscriber since they are not individualy metered to. The same with the municipal levy for street lighting. Or perhaps they lumped that all into the management fee.

 

For residential, the lighting etc for common areas are lumped into management fee generally. I know the maintenance fund is being collected at 2% cause that is what we budget for the properties we are the developer (we have three development projects, one in Guangzhou and two in Jiangsu province). The amount is budgeted into the sales price though when it comes to calculating profits, it is not treated as sales proceeds.

Never heard of residential properties with 60 years, may be older properties. Now by law, it is 70.

The only rental properties that we have are serviced apartments and one small hotel under construction and the serviced apartment is run like a hotel. The residents don't have to do a thing.

 

I'm not so sure the law says it must be 70 years. I think 70 years is the maximum length according to the old and the new property law.

 

Serviced apartments are run a lot like hotels and the management company is usually a subsidiary of the property owner / developer. Residential properties, on the other hand, are hired or fired by the management committee made up of homeowners.

 

I checked each of my 7 maintenance fund accounts and I never paid 2%. The most ever paid was 1% on two properties and all the others are at 0.5%. Five different developers -- guess others do it differently, but at least five of the top 10 in China do not:

 

Hopson

BJ Capital

COLI

SOHO China

China Merchants

 

Of each of the 7 management companies I have, none lump electricity for water pump & elevator, municipal street lighting surcharges and public area utilities into the management fee. In fact, it is impossible because there are no individual meters for electricity for the elevator or water pump -- only one common meter for the entire building -- and it is common practice for higher floors to pay more for elevator and water pump electricity. In serviced apartments this would not be an issue since no tenant owns their unit, but in residential properties it would cause a lot of tenants to get upset if people on the 2nd floor were paying the same for elevator usage as those on the 36th floor.

 

The one house I bought second hand doesn't have these issues at all because there is no elevator or water pump. The tenants just give the 2-person management committee a fixed amount every month for public lighting and building upkeep.

[chilton747]

Thanks guys for this lively discussion I woke up to. Lots of good info from experienced people. One thing my wife and I have decided is not to get a place where there are elevators. We are looking at the 2nd or 3rd floor. My wife does not want a 1st floor as it is prone to water backups. Also we are looking at a moderately priced and sized apartment house. Approx 2800 RMB m2 X approx 90-110 m2. The fees you guys are discussing sound very reasonable. Thanks again fellows and keep it up. One can't learn too much

[GZBILL]

Thanks guys for this lively discussion I woke up to. Lots of good info from experienced people. One thing my wife and I have decided is not to get a place where there are elevators. We are looking at the 2nd or 3rd floor. My wife does not want a 1st floor as it is prone to water backups. Also we are looking at a moderately priced and sized apartment house. Approx 2800 RMB m2 X approx 90-110 m2. The fees you guys are discussing sound very reasonable. Thanks again fellows and keep it up. One can't learn too much

 

Nothing wrong with buying a unit in a building with no elevator. However, not only is the first floor prone to water stoppages, but also burglaries. Second and third floors are also prone to burglaries, but more the 2nd than the 3rd. Top floors are also likely to get burgled.

 

And in Guangdong, try to get a unit facing south or southeast.

 

Take into account that the number of m2 that you pay for is never the actual size of the house. Subtract approximately 15% or more from the size quoted to reach the actual livable space. Developers always include common areas like hallways, elevators, lobbbies and common grounds as part of the m2 of a unit. They passed a law a couple of years ago saying they couldn't do it, but they still do. I think they get around the law by putting a little paragraph in the actual purchase contract.

[chilton747]

Thanks guys for this lively discussion I woke up to. Lots of good info from experienced people. One thing my wife and I have decided is not to get a place where there are elevators. We are looking at the 2nd or 3rd floor. My wife does not want a 1st floor as it is prone to water backups. Also we are looking at a moderately priced and sized apartment house. Approx 2800 RMB m2 X approx 90-110 m2. The fees you guys are discussing sound very reasonable. Thanks again fellows and keep it up. One can't learn too much

 

Nothing wrong with buying a unit in a building with no elevator. However, not only is the first floor prone to water stoppages, but also burglaries. Second and third floors are also prone to burglaries, but more the 2nd than the 3rd. Top floors are also likely to get burgled.

 

And in Guangdong, try to get a unit facing south or southeast.

 

Take into account that the number of m2 that you pay for is never the actual size of the house. Subtract approximately 15% or more from the size quoted to reach the actual livable space. Developers always include common areas like hallways, elevators, lobbbies and common grounds as part of the m2 of a unit. They passed a law a couple of years ago saying they couldn't do it, but they still do. I think they get around the law by putting a little paragraph in the actual purchase contract.

 

Last time I was in China I saw on the news where people were climbing the tallest of apartment buildings and going through unlocked windows and looking for money. I think any floor is not safe so it is best to batten down the hatches at all times.

My wife is a propponent for the window side of the house to face the south as hers is this way now. She says a house should never face the west. Guess this is a feng shui thing?????

As far as an accurate measure of the house, do you think I should measure it for myself?

[GZBILL]

Last time I was in China I saw on the news where people were climbing the tallest of apartment buildings and going through unlocked windows and looking for money. I think any floor is not safe so it is best to batten down the hatches at all times.

My wife is a propponent for the window side of the house to face the south as hers is this way now. She says a house should never face the west. Guess this is a feng shui thing?????

As far as an accurate measure of the house, do you think I should measure it for myself?

 

Right, they do burgle just about evefywhere, but the lowest units are almost certain to get hit followed by the ones on the top floors. I guess if you get an apartment in an 8-floor building (no elevator), all floors are at risk.

 

Facing south is not really feng shui but just taking advantage of the climate. Cold winds come from the north and warm winds from the south to southeast. Also, and I don't know why, but the sun is hotter when setting in the west so people avoid the west ... and the north.

 

Even if you measure the apartment yourself, they will charge you for the m2 they calculate using all the common areas and stuff included.

[chilton747]

My wife is now telling me that I need to bring my "work paper" for the bank to see. She says that the bank wants to see that we have been putting money in a bank for the previous 3 months prior to the loan. I am under the assumption that a China bank will not take in consideration a non Chinese resident USC's finiancial documents as a basis for a loan. My wife does not work. The info that my wife is giving me comes from the ICBC. Will they indeed use my financial documents as a basis for a loan?

[GZBILL]

My wife is now telling me that I need to bring my "work paper" for the bank to see. She says that the bank wants to see that we have been putting money in a bank for the previous 3 months prior to the loan. I am under the assumption that a China bank will not take in consideration a non Chinese resident USC's finiancial documents as a basis for a loan. My wife does not work. The info that my wife is giving me comes from the ICBC. Will they indeed use my financial documents as a basis for a loan?

 

If your name is on the mortgage, they will ask you to show ability to repay.

 

If your name is not on the mortgage, they should not ask unless your wife's "income" doesn't meet their minimum to qualify for the mortgage.

 

Income statements are easy enough to come by.

[Tony_onrock]

Not sure how PRC bank do their mortage. For me I plan on using a offshore bank, like HSBC or Standard Chartered. Other than the fact that it will be easier for me to use an offshore bank to qualify ( my salary is rather low, but an offshore bank is more familiar with profit interest/carried interest concept. In addition, if I can get HK or U.S. dollar loan, I am effectively also betting on the exchage rate change gain. In addition, heard that it would be harder to get an home equity loan from PRC banks any way. I paid cash, but need a loan to get some money out to invest.

[chilton747]

My wife is now telling me that I need to bring my "work paper" for the bank to see. She says that the bank wants to see that we have been putting money in a bank for the previous 3 months prior to the loan. I am under the assumption that a China bank will not take in consideration a non Chinese resident USC's finiancial documents as a basis for a loan. My wife does not work. The info that my wife is giving me comes from the ICBC. Will they indeed use my financial documents as a basis for a loan?

 

If your name is on the mortgage, they will ask you to show ability to repay.

 

If your name is not on the mortgage, they should not ask unless your wife's "income" doesn't meet their minimum to qualify for the mortgage.

 

Income statements are easy enough to come by.

 

 

Wow I would have never thought that I could get a mortgage in China. My financial situation will be more than enough to satisfy the ICBC. Given that, will my wife have to show her having any income? I am very familiar with the ways of the Chinese to get so called fake work records but I would like to avoid this if at all possible.

[chilton747]

My wife is now telling me that I need to bring my "work paper" for the bank to see. She says that the bank wants to see that we have been putting money in a bank for the previous 3 months prior to the loan. I am under the assumption that a China bank will not take in consideration a non Chinese resident USC's finiancial documents as a basis for a loan. My wife does not work. The info that my wife is giving me comes from the ICBC. Will they indeed use my financial documents as a basis for a loan?

 

If your name is on the mortgage, they will ask you to show ability to repay.

 

If your name is not on the mortgage, they should not ask unless your wife's "income" doesn't meet their minimum to qualify for the mortgage.

 

Income statements are easy enough to come by.

 

 

Wow I would have never thought that I could get a mortgage in China. My financial situation will be more than enough to satisfy the ICBC. Given that, will my wife have to show her having any income? I am very familiar with the ways of the Chinese to get so called fake work records but I would like to avoid this if at all possible.

In another thread there is a discussion about haveing our wifes put on a joint bank account here in the US. Would this be a plus when it comes to a joint mortage in China?

[GZBILL]

My wife is now telling me that I need to bring my "work paper" for the bank to see. She says that the bank wants to see that we have been putting money in a bank for the previous 3 months prior to the loan. I am under the assumption that a China bank will not take in consideration a non Chinese resident USC's finiancial documents as a basis for a loan. My wife does not work. The info that my wife is giving me comes from the ICBC. Will they indeed use my financial documents as a basis for a loan?

 

If your name is on the mortgage, they will ask you to show ability to repay.

 

If your name is not on the mortgage, they should not ask unless your wife's "income" doesn't meet their minimum to qualify for the mortgage.

 

Income statements are easy enough to come by.

 

 

Wow I would have never thought that I could get a mortgage in China. My financial situation will be more than enough to satisfy the ICBC. Given that, will my wife have to show her having any income? I am very familiar with the ways of the Chinese to get so called fake work records but I would like to avoid this if at all possible.

 

To answer your question in another post first, I doubt putting your wife's name on an account in the US is necessary. Don't worry. You overestimate the mortgage system here.

 

I've had 8 mortgages here and the first one was a piece of cake; light years easier than any mortgage in the States. The subsequent 7 were even easier. Don't sweat it. If push comes to shove, I can give you a direct hand by calling in some favors owed me by folks in the banking sector.

 

I don't think your wife will have to show any income. Basically the underwriting requirements on a mortgage for residential property work like this:

 

The bank needs to see that your combined income level is approximately 5 times higher than what your mortgage payment will be. The most common way is with an employer issued earnings statement, but evidence of another source of steady income will also do. If your wife shows now income, you will have to show mortgage payment x 5. If her income is equal to mortgage payment x 2, you'll need to show mortgage payment x 3.

 

You know, on my first mortgage I went through the whole process and the bank's lawyer even told me exactly how much to tell my company to put on the income statement. I told him that my income is actually 10 times higher than what he wants me to write and he freaked ... not because he thought my income was great, but because he said not to put much more than what he told me because everybody understates their income. I still don't know WTF he was talking about.

[GZBILL]

Not sure how PRC bank do their mortage. For me I plan on using a offshore bank, like HSBC or Standard Chartered. Other than the fact that it will be easier for me to use an offshore bank to qualify ( my salary is rather low, but an offshore bank is more familiar with profit interest/carried interest concept. In addition, if I can get HK or U.S. dollar loan, I am effectively also betting on the exchage rate change gain. In addition, heard that it would be harder to get an home equity loan from PRC banks any way. I paid cash, but need a loan to get some money out to invest.

 

Unless the offshore bank has a physical presence in China, they will not be able to be a lienholder on a residential property.

 

It's easy to get a HK$ or US$ mortgage from HSBC or similar overseas banks that have recently incorporated locally as long as you have a foreign passport and a work visa (residence permit). I don't have any first-hand experience with foreign currency mortgages in China because when I was thinking about getting one (the exchange rate hedge is nice), I found that you cannot make your mothly payments in RMB and unless you are a Chinese citizen or permanent resident you cannot buy forex so easily ... and even then the amount per year is limited.

 

The concept of home equity loans in China is extremely new. Only one local bank that I know of, Bank of China, offers them but only if you negotiate that facility as an express condition when applying for the initial mortgage and only then on high end properties. I got a home equity line of credit on my last mortgage through BOC and I used it to earn a good chunk of change in mutual funds.

[chilton747]

My wife is now telling me that I need to bring my "work paper" for the bank to see. She says that the bank wants to see that we have been putting money in a bank for the previous 3 months prior to the loan. I am under the assumption that a China bank will not take in consideration a non Chinese resident USC's finiancial documents as a basis for a loan. My wife does not work. The info that my wife is giving me comes from the ICBC. Will they indeed use my financial documents as a basis for a loan?

 

If your name is on the mortgage, they will ask you to show ability to repay.

 

If your name is not on the mortgage, they should not ask unless your wife's "income" doesn't meet their minimum to qualify for the mortgage.

 

Income statements are easy enough to come by.

 

 

Wow I would have never thought that I could get a mortgage in China. My financial situation will be more than enough to satisfy the ICBC. Given that, will my wife have to show her having any income? I am very familiar with the ways of the Chinese to get so called fake work records but I would like to avoid this if at all possible.

 

To answer your question in another post first, I doubt putting your wife's name on an account in the US is necessary. Don't worry. You overestimate the mortgage system here.

 

I've had 8 mortgages here and the first one was a piece of cake; light years easier than any mortgage in the States. The subsequent 7 were even easier. Don't sweat it. If push comes to shove, I can give you a direct hand by calling in some favors owed me by folks in the banking sector.

 

I don't think your wife will have to show any income. Basically the underwriting requirements on a mortgage for residential property work like this:

 

The bank needs to see that your combined income level is approximately 5 times higher than what your mortgage payment will be. The most common way is with an employer issued earnings statement, but evidence of another source of steady income will also do. If your wife shows now income, you will have to show mortgage payment x 5. If her income is equal to mortgage payment x 2, you'll need to show mortgage payment x 3.

 

You know, on my first mortgage I went through the whole process and the bank's lawyer even told me exactly how much to tell my company to put on the income statement. I told him that my income is actually 10 times higher than what he wants me to write and he freaked ... not because he thought my income was great, but because he said not to put much more than what he told me because everybody understates their income. I still don't know WTF he was talking about.

You have a way of explaining things that I can really understand and appreciate. My wife was really concerned but she is more calm now My income will be plenty.

As far as understating income on the statement, do you think that the higher the income you put on the statement will cause the bank to want to charge more money? I know how the Chinese are when it comes to money

Just so I can be prepared ahead of time, exactly what kind of income statement do I need to have? A letter from my company,pay stubs (how many for how long a period of time), or other?

Bill thank you very much for your willingness to help. With all of your advice I believe there will not be much trouble. I owe you dinner Bill. I will be there the last week of October so if you get a free evening I would enjoy meeting you and buying your dinner.

[GZBILL]

You have a way of explaining things that I can really understand and appreciate. My wife was really concerned but she is more calm now My income will be plenty.

As far as understating income on the statement, do you think that the higher the income you put on the statement will cause the bank to want to charge more money? I know how the Chinese are when it comes to money

Just so I can be prepared ahead of time, exactly what kind of income statement do I need to have? A letter from my company,pay stubs (how many for how long a period of time), or other?

Bill thank you very much for your willingness to help. With all of your advice I believe there will not be much trouble. I owe you dinner Bill. I will be there the last week of October so if you get a free evening I would enjoy meeting you and buying your dinner.

 

Yeah, I still can't imagine why they always wanted me to put a lower amount that what I actually earned. I don't think the bank would have charged me any differently, though. But who knows?

 

Generally the income statement most used when applying for amortgage is from your company stating Mr. Chilton has worked here for X years and his currently monthly salary is $XX. Then it has the typical red Chinese seal that all companies here have. Being that you are overseas, though, they might require some variation such as having your letter authenticated / notarized and then passed through the Chinese consulate. Maybe.

 

I wouldn't prepare ahead anything that takes to much effort. The reason being is that once you get to the meeting with the bank's lawyers they will be the one's to tell you what kind of income proof they need and how much income to show. What they tell you may be different from what you prepared ahead of time.

[jemmyell]

Hi,

 

We are proceeding with the purchase of the apartment in Jilin province. We are waiting for the owner to pay off a mortgage taken by his wife before she died. My question is, does the fact that this property was mortgaged by a bank for a loan imply that there is indeed a true and clear title?

 

-James