Understanding Korean Gap (Jeonse) Investing
Jeonse is a uniquely Korean housing arrangement where a tenant pays a large lump-sum deposit — often 50–90% of the property value — to the landlord and receives it back in full when they move out. Gap investing means buying a property with only the difference between the purchase price and the jeonse deposit as your initial outlay.
Key Risk Scenarios
| Risk | When It Occurs | Mitigation |
|---|---|---|
| Deposit shortfall | Jeonse prices fall | Maintain cash reserves |
| Reverse jeonse | Jeonse ratio ≥ 100% | Avoid high-ratio properties |
| Vacancy risk | New tenant not found | Bridge financing plan |
Safety Guidelines
Keep the jeonse ratio below 70% and hold emergency cash equal to at least 30% of the gap. Jeonse deposit insurance (Korea Housing Finance Corporation) protects tenants but does not eliminate the landlord's repayment obligation.
FAQ
When the current tenant leaves, you must return their full deposit. If the new market jeonse is lower, the new tenant pays less — and you must fund the gap from your own pocket. Extra cash = original jeonse × drop percentage.
Yes — jeonse is a uniquely Korean arrangement. This calculator is most useful for investors in or studying the Korean real estate market.
※ Consult a real estate professional before making investment decisions.