Key Money

Renting an apartment in Korea is a lot different from renting an apartment in America.  I have known of these differences for a long time, but have never actually had to deal with them because I had housing provided by my school.  However, for the first time, I will have to deal with the real-estate market in Korea because my new work does not allow dogs in the housing, so I opted out of housing and will find my own.

Now the first BIG (and I mean BIG!) hurdle to overcome is the deposit for an apartment in Korea.  In America, a deposit on an apartment is usually one months rent, and first month down.  Korea is so very different.  They have a system called key money here.  Key money is where you place a huge deposit on the apartment you are renting and the landlord uses that money and invests it or puts it in savings.  You get this money back but you are essentially paying a years worth of rent on a place in most cases.

There are two different types of key money in Korea, one where you pay almost the entire cost of the house (think tens of thousands of dollars) and practically live rent free, and one where you pay a large sum and the rent goes down with how much you put down at the start.  The first one is extremely hard for foreigners to do because it is such a large amount to put down, but it is an option here.  One I will not be using because those tens of thousands of dollars would pay off my student loans, and ain't nobody got time for that.  Bwhaha.  I will be doing the second form of key money.

The second form of key money, is where you put down a substantial amount of money and the more you put down, the more likely, your landlord is to decrease the rent of the apartment.  Most Koreans pay around 10,000,000 won (about $10,000) for a nice apartment, with some going even higher.  Most people say not to go below 5,000,000 won (about $5,000), because you are getting into bad apartment territory.  Though I have seen apartments with key money deposits of 3,000,000 won (about $3,000) but those apartments are not that nice and usually old.

I know someone who has three different apartments, that he rents out for airbnb, but he is renting them to begin with.  He told me that each deposit was 10,000,000 won and had he put down more the 800,000 won (about $800) rent would have decreased.  However, these apartments are really nice, and in a really popular area in Seoul.  The farther away you get from Seoul the more you get for your money, so the 5,000,000 won deposit can get you a nicer apartment.

Unfortunately for me, I only have a small amount for key money.  I will only be able to come up with 5,000,000 won for my deposit.  However, I am lucky because my school is outside of Seoul enough that this should not be too much of an issue.  It is just such a different process compared to America, and something that I am going to have to deal with.