I am newbie. I am from Canada. I am currently living and working in China. I want to buy real estate in order to get rental income. I was thinking to invest in my first property in China. I have some questions.
Q1: What is your opinion of foreigners investing in real estate in China? Do you recommend foreigners invest in real estate in China?
Q2: What is the bad or good experience of doing so? What sources do you use to know about real estate investing in China for foreigners?
Q3: How is the property rights for foreigners in China? Are the property laws generous for foreigners?
Q4: How to get a loan? What kind of loan can I get as a foreigner? Which loan do you recommend?
Q5: How to build up a credit score as a foreigner in China? I know credit score is important if you want to get a loan.
Thank you so much.
I'm also in China and I can answer some of your questions.
1. I think foreigners investing in RE in China is a big mistake. Property values have gone through the roof for many years. We are just now seeing prices start to fall, especially in the big cities. Besides this, China makes it extremely difficult for foreigners to buy. I mean, I am sure you've had experience at a Chinese bank for simple tasks such as transferring money or opening a bank account. In my experience, even these simple tasks are quite complicated. Can you imagine trying to get a loan for an apartment?
2. I don't have many sources for this, but this leads to another problem. China is not transparent about their RE market. Compare that to the US market and its information overload.
3. There are no property rights for foreigners OR Chinese citizens. You technically lease the home from the government for up to 75 years-ish. You can sell it and do with it what you want, but this reason alone would forever keep me away from investing in Chinese RE.
4. Not sure about how to get a loan, but you'll need a large down payment at minimum. Chinese pay 30% I'm fairly certain, so I am assuming it would be at least this amount for a foreigner and probably much higher.
5. I cannot answer this one.
Another point to mention is that the rent rarely (if ever) covers you mortgage. You will typically just be relying on appreciation. China has the largest home vacancy rate in the world at over 25%. With the stress of the trade war and a bad economy in China, and I think there will be a bubble busting in the next few years.