Korea's leading real estate expert, Sangwook Chae
A chilling investment strategy book

“When buying or selling an apartment, don’t just look at the timing; evaluate the price!”

***The absolute law of apartment valuation revealed***

Even now, countless real estate market participants are struggling with the volatile market prices, wondering whether they should sell or buy their apartments.
The price in front of you may seem expensive, but you cannot tell how expensive it is. Conversely, you cannot tell how cheap an apartment that looks cheap is.
Even if I diligently search for expert forecasts on broadcast news or YouTube, most of them are evaluations of the overall market, and it's unclear whether they can be used as a reference for the individual apartment purchases I'm interested in.

Pricing strategies in apartment transactions have been ignored by the public for a very long time.
People only cared about getting the timing right.
In apartment transactions that require a large sum of money, investing only in timing without evaluating the value is too risky.
Just as the author has worked as an analyst for over ten years and calculated the fair stock price of a company, he has also been researching the fair price of apartments and finding a method to derive it.
This book is the result of a long period of research.
The goal of this book is to make it simple for anyone to calculate the fair price of an individual apartment they are considering buying or selling.
Although complex concepts and pricing models underlie the calculations, the resulting fair value formula is so simple that anyone can calculate it in a short amount of time.
The author has tested it in the field for a long time, and acquaintances who received the formula from the author were amazed and said that the more they used it, the more they got goosebumps because it was so miraculous.
This is also the reason why the author gave this formula a somewhat childish name, the 'Creepy Formula' for deriving the fair price of an apartment.

Compared to the stock market, there are virtually no proper pricing strategies in our country's real estate market.
The reality is that even active discussions are not taking place.
Here, we have made public the absolute law of apartment valuation, the 'Creepy Formula', which surprisingly accurately determines the appropriate price.
I hope that this book will spark active discussion about the "price" of apartments as an asset, and that many readers will find success in apartment investment by effectively utilizing the "Surreum Formula."

In just two short years, a roller coaster of changes has come.
Investors who mistimed or misjudged the price during this process would have either suffered significant losses or had to accept them with tears in their eyes.
Even if you were lucky enough to avoid the price bubble of the past two years, there's no guarantee you won't face another crisis like this in the future.
The real estate market is also an asset market and cannot escape the influence of interest rates and inflation, making it increasingly difficult to time it correctly.
Seeing the phenomenon of apartment prices dropping by 50% in a short period of time, pricing strategy is also not an easy task.
--- p.9~10

There is one aspect we must not miss in our location value analysis.
It is important to understand that location value is determined by four key factors:
Knowing this fact is fundamental to location analysis.
If individual elements change, the location value will naturally change as well.
In other words, location value is not a fixed, unchanging concept, but rather a changing one.
For example, Wirye New Town is somewhat lacking in transportation and education, among the four major factors of location value, compared to other areas of Seoul.
But if public transportation improves later, life will become more convenient than it is now.
And these changes help increase the value of the location.
Conversely, if a trend develops in which people prefer to live in a natural environment rather than in densely populated urban areas, the location value may change as people's preferences change even if there is no change in locational factors.

Keep these four factors in mind as they can be very useful when analyzing why a particular location is preferred over another.
--- p.75~76

A company's value is primarily assessed based on its profits.
However, the stock price, which is the price of a company, does not simply consider profits, but also fluctuates according to various macroeconomic variables (such as interest rates and economic growth rates).
That is, although the stock price, which is the price of a company, fluctuates depending on profits and other variables, the value of a company is still evaluated based on profits.
If interest rates fall, stock prices may temporarily rise (think tech stocks during the COVID-19 pandemic), but ultimately, earnings growth is needed to sustain those prices.
However, people are more influenced by price than value.
Because price is visible and value is invisible.
Housing is similar.
Housing prices also change depending on changes in various factors.
This is influenced by factors such as the balance of supply and demand, liquidity conditions such as lending and interest rates, and macroeconomic variables such as the economy.
These variables play a significant role in determining housing price fluctuations.
However, the value of a home is actually determined based on its rent.

--- p.116~117

To effectively identify hidden opportunities, you need to constantly monitor trends in sale prices, lease prices, and monthly rent prices.
In addition, we should utilize a simple valuation method based on the monthly rent conversion rate of each apartment complex, the monthly rent conversion rate of each city and province, the monthly rent or monthly rent trends, sales trends, and multiples thereof, and use it well as a compass to find direction in the real estate market going forward.
--- p.217

By simply comparing the regional rental rates and specific complexes, you can easily check whether the complex is overvalued or undervalued.
Going forward, if we adopt the standard of overvaluation, undervaluation, and fair value as 2.0 times in Seoul and 1.7 times nationwide, and develop the habit of monitoring and filtering, we can successfully respond to the housing market with a value assessment strategy rather than a price-chasing strategy.
--- p.247

In fact, this book started with a simple idea.
The question was, 'What would happen if we looked at it based on the lease price rather than the sale price?'
It's a change of perspective.
Mathematician Jordan Ellenberg said in his book How to Not Be Wrong, “Dividing one number by another is just an operation; figuring out what to divide by what is the math.”
When your standards change, you see a different world.
From now on, instead of looking at the lease rate based on the sale price, please evaluate the sale price based on the lease price.
--- p.251

In fact, rather than creating a massive model or using a supercomputer to achieve 99.9% accuracy, it is better to quickly calculate the value at 90% accuracy and use it immediately.
If a valuation method requires a supercomputer, it's as if the public doesn't have one.
Just as stock analysts don't run supercomputers to calculate target stock prices, overly complex valuation methods should be avoided.

--- p.270