Besides my day job for beijingkids, I also write a quasi-humorous column for The Beijinger, in which I take a sideways look at the magazine’s topic for the month. In July the topic was house hunting. However this was something I hadn’t yet experienced, since our first apartment in Beijing was provided for us by my wife’s school.

So I canvassed friends and colleagues for their apartment hunting horror stories, to use as material. I was deluged. Unfortunately the stories were variously depressing, shocking and frightening, and all completely lacking in any humorous potential. So I wrote instead a piece of frivolous nonsense about the “Central Baozi District” and a family of migrant workers living under the sink.

All of which is a roundabout way of saying that finding our apartment in Shunyi was our first experience of house hunting in Beijing. And it was awful.

The first batch of apartments we were shown was clearly all the properties which had been literally gathering dust on their books for months. One contained a houseplant which had not only died, but had developed an afterlife in the form of a blossoming crown of mold.

Once we had worked through all of these, we moved onto the places which were just, well… strange. Whether they were so crowded with furniture you could barely move, smelling of fish, seemingly decorated by Dali, or looking like someone’s old granny had just died there and was probably laid out on a table in another room, none of them felt like home.

We thought our search had ended when we found a newly renovated studio apartment which was spacious, clean, and modern. Then we went up the stairs. The upper floor had apparently been planned by a toddler with a lego set. None of the walls connected with any others, so there were hardly any actual rooms, except for one which had a glass roof and wall and in summer could have been used as a slow cooker. There was a bathroom the size of the average living room, with a shower and a toilet at one, distant end, and nothing else in it… we could have wept. We nearly did.

To add insult to injury, everything seemed more expensive than apartments downtown. We found out why when we discovered the Lianjia app, and looked at the listings for the apartments we’d seen. They were all being advertised for substantially lower prices than we’d been quoted. The estate agents, on hearing that my wife is a teacher, had assumed we were on a massive housing allowance and jacked up all their prices. When we told them otherwise, one was so disbelieving he actually rang the school to check.

With the lease on our old apartment rapidly expiring, we finally found a place which was at least livable. The décor and furniture was relatively contemporary, the showers were in cubicles and appeared to have been installed this century, and the kitchen actually had western-style hobs, rather than the usual two huge burners the settings of which are “hot” and “feichang hot.” OK, it was on the fourth floor with no elevator, but you can’t have everything.

Did we all live happily ever after? Next week’s post will reveal the answer. But I think you can guess.

Photo: WhisperToMe via Wikimedia Commons

Foreigners working legally in Beijing may now buy property with an immediate effect, the Beijing Municipal Commission of Housing and Urban-Rural Development announced, in a move anticipated since the summer of 2015.

Previously, non-Chinese citizens were required to be resident in Beijing for a year in order to become eligible to purchase real estate. Now, a legal work permit (and a fair bit of money) is enough to buy the Beijing home of your dreams – or the rental property you’ve always been eyeing.

Beijing’s real estate market was not long ago considered overheating, but has certainly cooled to the point that local officials are keen to encourage buying.

However, foreigners are not usually eligible for the same financing options available to Chinese citizens, which may continue to limit foreign enthusiasm for local property, even among long-term expatriates.

This post first appeared on thebeijinger on February 17, 2016.

Photo: thebeijinger.com

Property is, and always will be, one of the most popular vehicles used by individuals to build capital and receive income. Most people choose to invest in a property for one basic and simple reason; they understand it. For many the modern financial world is a confusing and dangerous place. Every day brings another news story of impending financial doom and understanding complex hedge funds or derivatives is a hard task even for financial professionals. However, when we talk to people about property they always seem to be happy with their investment and see safety in this type of asset.

For me, one of the most appealing advantages with a property investment is that you can rent it out and use this income to pay off the mortgage used to purchase it. Over time this means you will end up owning the property and in the future you can use the rent to provide your family with an income. This is a great system but not without its difficulties. Managing a property can be time consuming, especially when we are already busy working and raising a family.

Usually people focus on buying property in the country where they live. This is all well and good if you are a native to that country, but as expats who plan to return home one day this might not be the best solution. Living in China we hear all the time about property bubbles and the difficulties of foreign ownership, which can make it less attractive to buy a property here. Over the years I have seen many of my clients struggle with the day-to-day hassles of owning a property in China and they also have significant problems removing the profit when they leave.

A lot of people are most comfortable focusing on buying properties in their home country. For most people, investing back home is better than choosing a market where they have no knowledge of or any emotional connection with. Unfortunately, understanding and being comfortable with a market does not equate to making a good investment. I understand and, to a certain extent, agree with the knowledge part of this argument. But how many of us, hand on heart, really ‘know’ any property market. If someone was to knock on your door every day and tell you the current value of your house, I think you would be surprised how much the price changes. The emotional connection side is something I definitely do not agree with. No investment should ever be based on emotions. The best stock traders in the world do not care about where they buy shares, they just look for value.

My advice is to invest in a developed, regulated and trustworthy market where there is value to be had. For example, Paris and London are two of the most popular property markets in the world and it is easy to have confidence in both of them. But do they offer value for investors? Sure, it is very likely that any investment in either will provide growth after 20 years, but could you gain more somewhere else? For me the best market in the world at the moment is Berlin as it is a very safe market but significantly undervalued.

Another option that many people who live in the Far East choose is a market in South East Asia like Thailand. There are some excellent opportunities in SE Asia, but political instability and regulations over foreign ownership of land lead me to question how ‘safe’ these markets are.

Buying an investment property is something we will likely all do one day. Whether this is something you are doing now, or will do in the future, here are a few simple guidelines to follow:

1.  Real Ownership – Beware of property funds and joint ownership property projects, often these companies are raising capital to grow their business and liquidity is a major issue.
2. Off-Plan Property – Do not invest in unbuilt off-plan property unless you are an experienced investor and know what you are doing. You want to buy a property not become a developer.
3.  Laws & Regulations – Invest in a country where you trust the government has put in the correct regulation to protect you as an investor.Value – Look for a location where the property market is undervalued and provides potential for growth in price and income.
4. Paperwork & Research – Make sure you read all of the Terms & Conditions and do a full due diligence on all of the relevant parties. An established track record of success is a good first step here.
5. Ask for Help – If you are not sure or confident what you are doing then speak to a professional.

Please note that beijingkids does not necessarily endorse the views presented in this article.

About author
William Frisby originally arrived in Beijing as a finance guy on a bicycle and will probably leave as a finance guy on a bicycle. He works for Premium Finance Group (PFG), a financial consultancy that has been established in China for over ten years. PFG offers clients no-nonsense, personalized advice and serves the whole of China from their Beijing and Shanghai offices. Services include international property, investment, insurance and financial planning. To contact William, email william.frisby@premiumfinance-group.com.

Photos: images of money and markmoz12 (flickr)

 I once wrote an article about a lady who was referred to me by a client of mine. Her husband had just passed away and she was in need of some financial advice. Her family was your typical expat family: husband and wife from different countries, children in international schools, and the last ten years spent working in countries around the world.

The husband had been an investment-savvy person and he was the one who controlled the family’s finances. They had accrued various properties and bank accounts across Asia, and had made many solid investments. However, what the husband did not do was make his wife fully aware of all of their investments and bank accounts. More importantly, the family did not have an up-to-date will or a trust in place.

Each country has its own strict, unique procedures for when a person dies. The issue becomes a whole lot more complicated when you have assets in multiple countries. In this situation, the assets you have in each country are subject to the unique laws of that jurisdiction. This often creates a situation where they are not distributed to your family as you would wish. A will or trust is a simple way to ensure that your estate is divided the way you would like it to and a way to minimize any taxation upon death.

Since sharing this story, I have been inundated with enquiries from families who fear they do not have adequate planning in place and want to know what to do.

What Is a Trust?
Every time I turn on the television, I seem to see “Kardashianesque” families talking about a trust fund they have set up for their beautiful 15-year-old daughter named Madison or Chelsea. These children often seem to have no real understanding of what a trust is, and I guess when I was that age I didn’t really understand them either. I just thought it was a big pile of cash that the son or daughter would receive at the age of 21, and as it turns out I was mostly right. But to understand trusts fully, we need to know a little more about where they came from.

The origins of trusts lie in old British law. Back in the old days, when kings and queens lived in castles, the men would go off to fight in the crusades and they would have to leave their family and home behind. Women were not allowed to own property so the men would have to leave their house with their male friends or family. Thus, you “trusted” someone with your property.

Women can now own property, but the fundamentals of a trust are essentially the same. The most common use of a trust is to create a legal entity or agreement around your property in preparation for your death.

When I was 15 years old, I came home from school one day and saw my parents sitting with their financial advisor. At the time, I didn’t know what a financial advisor was or that my family had one and I definitely didn’t think we had enough money to need one.

He jokingly said to me, “Your parents have now just given you all of their money.” My parents had put their property in trust with my brother and I as the beneficiaries. Under UK tax law, if my parents put their property in trust and stayed alive for the following seven years, then the property would belong to my brother and I free from any inheritance tax. For them, this simple planning has performed its function and my parents can live the rest of their lives confident that their wishes will be carried out.

What Is a Will?
A will is something we are all more familiar with; indeed, I think we all secretly hope that we will get a letter one day saying that a long-lost great aunt has passed away and written us into her will for a slice of her country estate.

Like a trust, a will is a legal document that you write up in preparation for your death. It should be updated whenever your family’s financial situation changes, not when you start fearing death. You should own a will in every jurisdiction where you hold assets as to avoid problems associated with retrieving  them if the holder passes away.

Furthermore, it is good advice to arrange your family’s finances in a simple and accessible way. If you leave a country and have no intention of returning, then it makes sense to close all your accounts. If you are using bank accounts to pay debt on a property in this country or a similar arrangement, then use a single centralized international account if possible. If you have left an investment behind with an advisor in the same country, it is usually possible to meet an advisor in your new country who may be happy to take over the asset’s management.

Trusts and wills both offer different benefits and can range from very simple to very complex depending on each person’s situation.

To summarize, the benefits of a will or trust include:

•  Holding assets outside of your estate to reduce tax
•  Ensuring that your wealth is passed on to the right people
•  Speeding up the probate procedure

When in doubt, speak to a professional.

Please note that beijingkids does not necessarily endorse the views presented in this article.

About William Frisby
William originally arrived in Beijing as a finance guy on a bicycle and will probably leave as a finance guy on a bicycle. He works for Premium Finance Group (PFG), a financial consultancy that has been established in China for over ten years. PFG offers clients no-nonsense, personalized advice and serves the whole of China from their Beijing and Shanghai offices. Services include international property, investment, insurance and financial planning. To contact William, email william.frisby@premiumfinance-group.com.

Photos: Laszlo-photo, Ota_photos, Images of Money (Flickr)

After three years of searching and four offers that didn’t pan out, I’m happy to announce that we have finally bought a home of our own. Unfortunately, we have purchased this home in presumably the worst time to buy property in Beijing – a time when CBD apartment prices are at an all-time high, and real estate agents are so desperate, they’re hanging out in droves outside of properties trying to hawk homes to just about any one who passes by.

Despite our bad timing, we’re taking consolation in assuming that real estate prices will continue to rise (even after the Olympics) and feel slightly vindicated that we will no longer deal with unpredictable landlords and broken-down furnishings—we can finally assume full control (more or less) of our living environment.

We’re also relishing the opportunity to fix up our own place – a nicely laid out three-bedroom second-hand apartment – and have begun our home materials hunt in earnest. But a nagging question still looms in the back of our minds: how safe will it be decorate our apartment with a baby in tow?

It isn’t a top-to-bottom project – all we really need to do is re-paint the walls, tear down one wall, install a couple of new sinks, and re-tile the showers in both bathrooms (which are at present tomato red and puke green in color).

From a zhuangxiu company’s perspective, our project is small potatoes and should be done in no time at all. But for us it still seems like a Herculean task given how much we have to prepare and purchase in the interim.

Selecting a safe brand of paint is priority number one. Color coordination aside, we definitely do not want to coat our walls with a paint that could slowly poison us; for the past few weeks, we’ve been searching extensively for a brand and a dealer we can trust.

In theory, any major internationally known brand (i.e. Nippon and Dulux) should suffice – all purport environmentally safe levels of VOC (volatile organic compounds) and quick drying time after application (the paint distributors we’ve checked out have all been particularly keen on claiming that their paint “dries within hours” and how we can “move in the same day!”). We’ve also done some research on brands of solvent-free, organic-based, green paints (i.e. Milk Paint) – but we were unable to find any distributors in Beijing.

Thus our nagging doubts persist. News reports show sketchy zhuangxiu companies switching out the paint their clients supply and replacing it with cheaper varieties so they can resell the more expensive cans. More troubling is the notion that the so-called “imported” varieties (the ones that have “EPA approved” and “guaranteed low VOC” written on the cans) are simply repackaged with low-grade local paint. We can’t help but wonder about the “straight-out-of-the-shipping-container” cans that dealers claim are 100% safe – how easy would it be to slip in a bribe here and there?

Since there is no way for us to be absolutely certain, our final decision was made with a leap of faith – we decided to play it safe and purchase the most expensive variety (a German brand) from one of the most well-known “home décor” centers in town – we even asked the salesperson to show us the import records and chops (which my wife seemed to think was up to snuff) before forking over the cash. We definitely don’t want to find out the hard way about just how safe our selection of paint is, and despite all claims of “insta-drying” and low VOC, our newly furbished place will remain empty for a while as we air it out.