NT

The DEAL – Would you buy an extra car parking space?

Posted by

I was emptying the mail at school today, when I picked up a flyer that had a picture of a car on the front. I scanned the Chinese, immediately noting that they were offering parking lots for sale in our building. So I began to wonder if it’s a good way or not to make a little extra cash.

The DEAL

Quite simply: one parking lot is available for approximately NT$550K. That would allow you to park one car there wherever the lot is located in the building.

The Opportunity

Once purchased, you would be able to rent out the lot to whoever you can find. If the lot is located on the B2 floor, you could probably rent it for NT$2000 per month. For the lot located on the B3 floor, you might manage to earn about NT$1700 per month.

The Costs

There are of course costs associated with this kind of purchase: transaction and other one off costs. When the deal goes through, you’ll face the challenge of finding customers, too. On a regular basis, you will need to pay NT$200 per month in building fees that are applicable to all car parks in the building. There aren’t any upfront taxes I’m aware of, other than the requirement to report your income.

How much can you earn?

Over one year, and assuming you cover the building fees, you’d likely earn about NT$18600 or so. This would amount to a gross return on investment of 3.38%. Additionally, you may be able to sell the car park at some future point in time, which might earn additional growth in the value of a carpark. If your client pays the building fees, then you could make an additional NT$2400 pa., earning 3.81%. You may also be able to purchase the lot at a slight discount of 5%, improving your ROV nicely to about 4.01%

What is the highest interest rate?

I’ve been searching for ages, and I’ve found that the highest interest rate you can get at the moment in Taiwan is approsimately 2.65% for a 12-month CD at the post office. There are occasional offers marginally better than this, but since the Post Office is govt. backed it’s likely that this is the best you can get.

So, if you bought it straight up, your gross margin would vary from the minimum of 0.75% to a more respectable 1.36% vs. the post office rate.

There are a number of assumptions in this scenario that would warrant further note.

  • Could you rent the space out for 12 months EVERY month? It’s not likely, there are times the lot would be empty for sure, as you wait for your next client.
  • Rental units in this area of Tamsui are generally undersubscribed and there is a reasonable supply of spaces BUT several of the lots are above ground, and as property prices spiral, it’s likely those lots would be turned into apartment blocks which may or may not have open access parking.
  • The population in Zhuwei is certainly rising, and quickly, so this should also help property values in the medium to long term.
  • There isn’t a big office space market here yet, though, so finding a renter would likely mean that the renter is himself renting an apartment without a space. Many in our community do this already.
  • I’d certainly be happy to have another source of income from a parking lot; perhaps even two lots would help me reach a personal goal.
  • Mortgage such a lot might help improve returns on the purchase, but with mortgage rates nearly at 4%, it’s unlikely that you’d see much benefit. And rates are rising.

A final note: Taiwanese are happy to buy apartments and car parks for rental and rent them out at rates we would find worthwhile doing. For example, people buy a house @ NT$5 million and rent out the house for less than NT$15K per month. The amount wouldn’t even cover the mortgage if it was over 50% of the total. It’s a math that has ALWAYS puzzled me.

Would you do this deal? Let me what you think…

Photo of the Day: On the Walk to Tamsui

Posted by

It’s not often that we see contrasts in Taipei, but in the walk on Saturday, we came across this sharp contrast: traditional setting in the front, modernity rearing its head behind!

In the foreground, there’s a large pond filled with bullfrogs. In the middleground, a family house that’s been there for years – who knows? There are other even older settlements now abandoned in the area, including redbrick farm houses in the traditional Taiwanese style. In the background, three towers from the Shang-Hai Community that was just completed, which is selling for approx. NT$300K per ping. If I remember rightly, this is probably what the farmhouse would have cost when it was first built in the ’70s.

Traditional Family House in Tamsui

Tamsui was, in the words of one friend, just rice fields, trees and farmers when Tim first visited our area in the early ’80s. Since then it’s been transformed at least twice, with electronics factories; and now, residential units. I’m in the search for early photographs of HongShulin and Zhuwei from that period. There’s not much online yet.

Shopping: Are retailers driving you ‘Potty’?

Posted by

1

Retailer’s margins are under pressure these days as prices rise, but incomes stagnate. I know that from my own wallet. Competition is intense and sometimes even the biggest retailers will resort to less than kosher methods to shift their products.

You’ve got “One Chance”

For those of you who like Paul Potts CD, I just bought the CD at a local retailer in Tamsui, one of the biggest in Taiwan. While this retailer is known for its aggressive pricing strategies, its behind the scenes pricing looks (to be polite) disorganized at best.

Beware the sale price gotcha’s

A few months ago, I noted one sign advertising filing boxes for NT$279. I bought one, but didn’t note the actual price until I got home on the receipt. It was over $300. This isn’t a big amount of money. I naturally assumed that I had made the mistake and brought the wrong model.

The next time I went to the store I bought several more of these items for colleagues in our office who thought they would be useful. This time I checked carefully the model number ‘DD105’ and I took them to the counter. I thought I had bought three of them with larger drawers, but turns out that the DD113 models were also on display (undiscounted) right next to them. I had bought the wrong models, and again paid through the nose.

What a potty pricing scheme?

So this time I was shopping in the store, and bought a CD of Paul Potts for my wife who liked the video she saw on YouTube! As you can see from the picture, it was priced NT$348 on the shelf. I tried to scan it myself in the store, but couldn’t because the in-store scanner wouldn’t read the barcode on the item properly. I bought it anyway because it didn’t matter that much, I wasn’t price sensitive on that item.

P1000827

On checkout, I found that I had been charged NT$378 for the CD, despite it being priced on the shelf at NT$348. I also found another display showing NT$358 for the same item. Of course, this time I did complain. You can see the receipt pictured here with the price. I can’t ascertain if that is the result of product substitution or not, because the product numbering schemes were somewhat different.

InvestorBlogger sez…

It doesn’t matter the reason: the store should price each and every accurately to the best of its ability and remove old pricing. Nowadays, most products are not priced at all in Taiwan. The price label is only on the shelf. By the time you get to the checkout with thirty or forty items in your trolley, who will remember what each item cost? Who will take the time to check their receipt? And if you’re dragging children, husbands or wives, and your phone is ringing, who will be able to remember?

Fortunately, the store seems to have a no-quibble refund policy in such cases, and indeed refunded me the NT$30 on the spot. But I’m wondering if the policy of insufficient and/or misleading pricing is somehow discretely approved of, quietly practiced but publicly disavowed by the management of this hypermarket.

Advice to Shoppers

The only thing I can urge: if you are facing a budgetary pressure, scrutinize your checkout receipts for both prices and quantities to make sure that you are being overcharged, wrongly charged or leaving items sitting on the supermarket checkout.

Still I learned how to magnify pictures on my camera from the clerk! He was pretty nice about it all! I’m still not sure what the real price should have been because inside the box were two cds, not one. But there was no other pricing on the CD stand or the CD itself to indicate what the correct price was.