1. ‘THE FUTURE GENERATION CHINESE BUYERS’
These are Chinese families investing abroad for long term success of the whole family and in every sense of the word success: In the finest education, best connections, for bi-lingual & bicultural children and in the best cities.
They are found all over the world for this this example I’ll use Los Angeles as an example. These families are found in near Sheng Gaibo Gu or San Gabriel Valley. So the cities of Alhambra, Arcadia, Rosemead, San Marino, San Gabriel, South Pasadena, and Temple City and then eastward to Diamond Bar, Hacienda Heights, Rowland Heights, and Walnut.
These families want to be in the best school districts, have fine Chinese dining nearby and tend to have a largely Chinese ethnic make up. They have a fantastic network of schools, tutors, restaurants and in some areas, you won’t know you aren’t in a city in China. What’s odd is that they can be within striking distance of cities with almost no Chinese. Drive too fast or down the wrong road and you can miss them.
It can be mystifying to real estate agents trying to understand why one area is so hot and prices so high and nearby a very low Chinese ethnic makeup in both residences and schools. Do not try to sell properties that are not hot to your prospective buyers. This is a classic case where you need to “give the people what they want”. And what they want is to be part of this Chinese network.
It helps to understand one key thing: Investment for the “Chinese Future Generations Investors” CFGI is all about school districts. Look for listings in the finest school districts in your city but keep in mind that some school districts are more popular with Chinese real estate buyers than others regardless of local preference.
The easiest way to find the right school districts to find listings is to read the annual US News & World Reports annual ‘National Rankings Best High Schools’ and the ‘Best College Rankings’. Both are online and free.
Keep in mind that many mothers reading these guides are not so familiar with schools in your city so they are much more likely to take them verbatim. So #4 is preferable to #5. Literally. They go down the list to get their children into the highest possible ranked school on that guide. Again, don’t try to change their minds or influence them. Get a listing in the school district they want and you very likely will get the sale. Try to change them and they disappear in a flash.
Keep in mind that if you were looking at schools in Shanghai, you very well might do the same thing. Be there if they ask questions but if not, get the one they want. And also, before you judge, remember that many of these kids will go back to China at some point and a ‘branded school’ is very important for overseas employment. Even if the parents are very sophisticated and realize that each department is different and schools can’t be judged simple by a 1, 2 3 ranking. So their children’s needs could be quite different from your own. This is a very common mistake. Lecturing, cajoling, even looking down upon a tremendous mistakes and also extremely counter productive for you as a top selling agent.
2. ‘THE 10 YEAR OWNERSHIP WITH FREE EDUCATION BUYER’
There is a subset of education buyers who are either not as wealthy as the first or the parents prefer to stay in China and send their children abroad for school and their first job and then bring them back to run the family business. I’ve never heard this group accurately described so here’s my best attempt to shed light on this type of buyer.
Basically, they want to buy a house or apartment, sublet rooms to other Chinese students, get free rent for the duration of their time in the US and then sell the property an average of 10 years later with capital gains minus taxes covering the total costs of education. Get it? So it’s all free.
I love these guys. It’s a very clever plan and it usually works for them. Best school, ten years free rent, free education and priceless international experience. Simply understanding that this 10 year free education type of buyer exists will open your eyes when you deal with one.
Don’t be shy! Make a spreadsheet, plan it out. With a cold eye. Be on board with the buyer. Show them you understand. Believe me, you’ll be the only one. And you’ll know what to present. This type of buyer is not so picky about types of houses. They don’t care about feng shui. They don’t care if it’s that convenient for their kid or if they have to take a bus etc. It’s all about the 10 year plan. And the kids back home, running the family business.
3. ‘THE (HANDS OFF) RETURN ON INVESTMENT CHINESE INVESTOR’
This type of Chinese investors is looking for a $200,000-300,000 USD property for cash flow and capital appreciation. These buyers often buy sight unseen and usually cash. Although they can be quite difficult to deal with in the beginning, long term they can be one of the best type. They will break your back for the first property. Asking endless questions and running you around. And they will almost always buy only on $200,000 property to start with. So you are losing money right left and center on these guys…. for the first year. But, if you make them money, after a year has passed and they start to trust you, it can be very good times indeed.
They won’t tell you but, naturally, they prefer multiple properties in close proximity. But that’s only after:
1. They make money
2. They trust you
And that process can be painful. They can sometimes feel like frenemies. But once you get used to their style, these investors (true investors as they either have already immigrated or don’t want to immigrate) can be fantastic.
In my experience, after they trust you, they won’t demand much paperwork or other busy work. They will rely on you to manage the property and make almost all the decisions. For these types, it’s all about knowing what they want. (cheap properties, high return) They aren’t looking for capital appreciation as much. It’s all about short term cash flow. They believe prices will rise over time so aren’t the worried about it. But monthly cash flow is very important. You need to help them get a great monthly return.
I’ve had clients like this end up buying 8 properties after the first year closed. And it was no hassle at all. They wanted me to pick them, manage them and send the cash. So if this is your thing, you really should consider looking for this type of Chinese investor. They tend to be wealthy and, long term, you could very well end up selling them hundreds of properties.
Beware the common mistaken belief that these investors want luxury properties. They want cheap. And they want many. They want an empire of these houses.
4. ‘THE CHINESE ENTREPRENEUR EXPANDING ABROAD BUYER’
This is a successful entrepreneur who already sells in your country. They might have an import export business and need a warehouse. They might want to buy commercial properties. They might want to develop properties. But one thing they all have in common is that their investment has something to do with their current business. They are expanding to your country.
Maybe they are paying rent that they feel is too high and prefer to own. Maybe they want more control. Could be any number of reasons.
These buyers are not easy to decipher. They might originally come to you at an open house looking at a residential property. And you might sell them a house. And then find out they bought a $15 million dollar warehouse nearby: A warehouse you would have loved to sell.
The key with Chinese entrepreneurs is they aren’t great communicators in my experience. You need to drag it out of them. So dinners, lunches, beers, whatever to loosen their lips. Try to figure out everything they are doing in your city/country. How many times have they been? What’s their business? And the key question for all types of Chinese investors, “how old are your children?”
Asking about their children often is a key question. Pay careful attention to what they say afterwards. Ask about the ages of the kids. What grade in school. Where they are. What they want to do. Most new brokers miss this part and misunderstand Chinese buyers totally. It’s often all about the kids. Even if they don’t have any yet! They ‘have a plan to have kids’ and those planned kids will be 18 on such and such a date and they will go to Harvard dammit!
Well they won’t use that word but you might be shocked to hear the specific plans Chinese have for their children. Once they tell you and you listen, probing deeply of course, write it down so you don’t forget. Because often that’s the real plan. Regardless of what they just told you for the last 30 minutes.
I hope this has raised awareness of some issues you have never considered. Of course, not all buyers nicely fit into these categories but after selling real estate to Chinese for a very long time, I’ve seen these more often than not. Even if they don’t exactly fit the pattern, the fact that you know these patterns will give them confidence that you have worked with and understand Chinese buyers. And that is always a good thing.
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