New to the forum, just wondering if anyone is investing in Japan? I'm local and looking to see if anyone is nearby and wondering some things like how well BRRRR might work in our market (my feeling is not as well as others).
Rental Property Investor · Member since 2021 · 4 posts · 4 votes
5y
Hi Benjamin, I’m in japan and doing real estate investing here for about 8 years in different styles besides my full time job. Happy to get connected and exchange info.
Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes
5y
I'm barely competent managing rentals in my backyard in NC. I could probably contact the president of North Korea sooner than I could find a good plumber in Japan. Certainly sounds exciting though. No guts, no glory. Good luck to you!
Rental Property Investor · Member since 2021 · 4 posts · 4 votes
5y
Hi Benjamin, I’m in japan and doing real estate investing here for about 8 years in different styles besides my full time job. Happy to get connected and exchange info.
Curious, what sort of cap rates do you see in Japan?
Alexander,
It depends and varies hugely. Cap rates are smaller in Tokyo. But outside Tokyo you can get 11, 12, 13% if you go for good older properties. My target is 8% plus for properties less than 10 years old as I want to take advantage of depreciation deductions. I'm also looking for stable population and potential appreciation. It's not bad when you can finance for 1-2%.
Rental Property Investor · Member since 2021 · 4 posts · 4 votes
5y
Really depends on what type of property, location etc. For pure residential, ranging 0.5-2mio USD, I’m seeing something like 5-8% outside of central Tokyo vs 2-5% in central Tokyo.
Attorney · Tokyo, Japan · Member since 2016 · 184 posts · 145 votes
5y
Hey @Benjamin Jones - Fellow Japan-based investor here. Sounds like @Tom Wong & @Aaron Ward are doing it, I'd love to connect with all of you. Where are you three located? I'm out West at the moment, but will probably be returning to Tokyo before too much longer.
At the risk of being contrarian, after picking up a couple of investment properties in Japan (one Tokyo, one outskirts), I shifted to a strategy of only investing in the US. So, Benjamin, if you're American I would give that some thought.
Below is a link to a forum thread in which I outlined why, you can read if it'd be helpful. I've written similar posts a handful of times, and there are other threads in these forums that discuss investing in Japan. There are actually quite a few Americans investing in real estate in Japan, but more I think that invest only in the US.
The real threshold questions are: do you have Japanese permanent residency? how well do you speak Japanese? These are the key to getting a loan. Also, banks typically use a valuation process that does not favor the BRRRR strategy. If your house is old, value is low. End of story. You rehabbed the heck out of it?! Great. It's still old. Value is low. (particularly true for single family homes) Tom and Aaron may have different experiences.
One of the larger ex-pat directed real estate investment communities here in Japan targets all-cash buyers. Which is fine, especially for non-American expats who can't get loans in their home countries. BUT...if you're American and can still get loans in the US (the silver lining of having to still file US income taxes while living abroad), then why not use leverage?
I'll wrap this post by pinging two other Japan-based American investors for their thoughts (until they actually tell me to stop doing this): @Steven E. Quasha & @Daniel Mills
Rental Property Investor · Member since 2021 · 4 posts · 4 votes
5y
Hi David, Ive been in Tokyo for a long time and just moved out. I got 8 bldgs in Chiba, Ibaraki and Shizuoka, mortgage from 4 banks, 80-100% financing. I started out buying condos in Tokyo and Honolulu (where I'm from), changed my strategy 3 years ago and has been working well so far. Totally agree with you on the PR and language. If you got those under your belt (which I do fortunately), blue ocean out there esp in the suburb.
I guess no one strategy fits all so will be very nice to hear everyone's story and learn from each other. I've read over 50 books on REI in Japan but haven't done much in the US. Any book recommendations will be very much appreciated. :)
Hi David, Ive been in Tokyo for a long time and just moved out. I got 8 bldgs in Chiba, Ibaraki and Shizuoka, mortgage from 4 banks, 80-100% financing. I started out buying condos in Tokyo and Honolulu (where I'm from), changed my strategy 3 years ago and has been working well so far. Totally agree with you on the PR and language. If you got those under your belt (which I do fortunately), blue ocean out there esp in the suburb.
I guess no one strategy fits all so will be very nice to hear everyone's story and learn from each other. I've read over 50 books on REI in Japan but haven't done much in the US. Any book recommendations will be very much appreciated. :)
Agree with the comments PR and language are barriers to entry. You can get around the by partnering with someone with PR and language skills. And there are agents out there will to help with the language. But it is a challenge, particularly when transparency is hard to come by at best of times anyway. Upside though this also creates opportunities I guess.
BRRRR could work here I think but would really need to focus on younger stressed properties to get around bank valuation process. Probably good to have a flip as exit strategy in case banks don't come to the party.
Tokyo, Japan · Member since 2019 · 12 posts · 8 votes
5y
Hi guys. Nice to e-meet you all. Like @Tom Wong I'm originally from Honolulu, and have been in Japan since '97. I'm only getting into real estate now, with one property in Tokyo (single family home) and one condo in Waikiki.
I had largely dismissed investing in Japan for the reasons @David Gotsill mentioned -- figuring that BRRRR wouldn't really work here unless you have a property in prime location right next to a popular train or subway station. But with the recent change to depreciation rules on overseas properties, perhaps Japan is worth exploring again.
Sorry I don't have much to add, but I've been following this conversation for the past couple of days and figured I'd say "Hello!" or rather, "Konnichi wa!"
Attorney · Tokyo, Japan · Member since 2016 · 184 posts · 145 votes
5y
@Tom Wong & @Kevin Ing - my real estate partner is in and from Hawaii. I can connect you guys, if you're interested in real estate shop-talk. He's lived in Japan a few years as well (Fukuoka, I believe).
Investor · Shizuoka Japan · Member since 2019 · 8 posts · 4 votes
5y
Hello! Haley here.
I used to work on a US Base, and my father still does. I plan on purchasing a home WITH the help of my Japanese boyfriend. He will be taking out the loan, and I will be financing it. (Creating a contract to protect the both of us if things go south) Nippon Real Estate does a lot of podcasts and provides value for foreigners wanting to invest in Japan.
Properties newer than 2000 are structurally sound to last a level 6 earthquake. However, much older, and you'll be looking at many structural renovations in the future.
Wow, sorry! I didn't get any notifications and just assumed I'd had no replies. I'll try to get in touch with everyone individually (though I'm not used to how the forums work yet).
I'm also not sure how to make the at replies work, so that's a bit of a bummer.
Anyway, as for location I'm in Kumamoto and investing mostly locally. I have 6 condos here and will likely be buying some more property soon. Looking to get into some smaller apartment buildings in the near future.
As far as the difficulties of investing in Japan, I of course agree with everything said, but in my case I'm at near-native fluency and own and manage my own business separate from anything real estate related so even without permanent residency I've never had trouble getting a loan (except of course I can't get some govt backed ones like a primary residence mortgage) for business or investing.
I'll try to get in touch with everyone local to よろしくお願いします。
Attorney · Tokyo, Japan · Member since 2016 · 184 posts · 145 votes
5y
Hey @Dennis Maynard - in my experience, prices can vary wildly in Tokyo. There are many factors, as with any real estate market:
(1) Location. Tokyo is huge, and the difference between a SFH in central Tokyo vs any of the various outskirts can be shocking. For example, first link below is a 2 yr old home, approx 1900 sf, in central Tokyo's Minato Ward. Asking price is roughly $2.4M. Second link is a similar size, albeit 10 year older home, in Setagaya Ward (a very desirable neighborhood), but still "only $1.2M.
(2) Age. Many home buyers will want a new home, and older homes depreciate to zero (sounds crazy, right?). So, valuation of property is split between land and structure. Land generally retains value, and structures generally depreciate to zero. So, if you buy an older home it's typically much cheaper, since you're not paying much for the structure. In many cases, vacant land is cheaper than land with an older home.
(3) Construction. I grew up in the Western US, where homes are generally constructed the same (broadly speaking). That's not the case in Japan, where there is so much variation. Some homes are 2 x 4 construction, like you'd see in Colorado or California. Other's are steel beams, and others still are entirely concrete. When building my home, I could easily have added $1M to the price tag by just using concrete and steel. What's more, there's a lot of variation in the fixtures and other bells and whistles (like you might see in the luxury market in the US), so prices are all over.
For S's and G's, below is the most expensive SFH on the market in Tokyo right now, followed by one of the least expense:
Real Estate Broker · Los Angeles, CA · Member since 2018 · 300 posts · 146 votes
5y
@David Gotsill. I stayed with a buddy in Roppongi Minato when I was there. Great neighborhood... It just amazes me how much prices are. I always assumed that the buildings in that area were condos and flats mostly. Surprised about the construction especially since the earthquakes are frequent and can be bad. Thanks for sharing!
Tokyo, Japan · Member since 2019 · 12 posts · 8 votes
5y
@Dennis Maynard . I agree with @David Gotsill -- location makes a huge difference. Being in the right area, especially near a popular train/subway station, makes a huge difference in the value of a property. The area you stayed in, Roppongi, is a popular hub in Tokyo for work and after-hours activities so prices will reflect that. Land is also scarce, so a SFH in such a dense and popular spot will be rare and expensive.
Also as David mentioned, land retains its value but structures are generally thought to depreciate to zero over 25 years. A big part of that is what you mentioned -- earthquakes. We have small earthquakes pretty much daily (many are imperceptible to us) but they take their toll on structures. Newer construction code requires better earthquake-proofing, but it's still aimed at preventing a building collapse rather than holding the value of the structure.
About 15 years ago there was all the talk about "100 year homes" but I haven't seen much come of that. Perhaps the only homes that will last that long are the reinforced concrete structures that David mentioned. Modern well-constructed condos will probably last a long time. A SFH made in that way will probably last. But the mindset remains that the structure just loses its value over time.
That's not to say I think property investing in Japan cannot work -- it's just the parameters are quite different from places like the US (like many things in Japan!).
Real Estate Agent · Honolulu, HI · Member since 2019 · 60 posts · 40 votes
5y
I live in Honolulu currently but used to live in Tokyo (mother is Japanese) and still travel there on a regular basis (pre-Covid). I sometimes think about investing there given my affinity with the location...but realistically it just makes more sense to put my money in rentals in Indianapolis where I invest currently and the returns are still solid. I've done some flips in Hawaii at much larger price points but the Midwest in my opinion is still one of the best markets for cash flow.
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
5y
I believe Paula Pant had a recent podcast episode on Afford Anything that featured a couple who lives in Japan and invests in the US. They go into the sad state of the economy and particularly real estate valuations (properties depreciate, not appreciate like we're used to) which is what drives a lot of Japanese investors to the states. Check it out.
Rental Property Investor · Member since 2021 · 4 posts · 4 votes
2y
I’m active in japan and happy to connect. The USDJPY is indeed very compelling with a lot of inflows which is supporting the metro areas. It’s getting close to other major metros in the rest of the world where it’s getting difficult for the locals to buy a home. However there are still more opportunities outside of the metros which is my focus.
I’m active in japan and happy to connect. The USDJPY is indeed very compelling with a lot of inflows which is supporting the metro areas. It’s getting close to other major metros in the rest of the world where it’s getting difficult for the locals to buy a home. However there are still more opportunities outside of the metros which is my focus.
Hi All, I am new to this forum. I have the great luck of being married to a Japanese citizen and both spouse and I have incomes in Tokyo over $20M. We want to pull the trigger and start investing in Japan. We've previously been pre-approved by Tokyo Banks for own use purchase. We are targeting a 'house hack' situation where 50% of the units would be rentals, and above 50% would be our own 3LDK for family home... We are also considering a full building investment in Kanagawa (Musashi-Kosugi) or even Sapporo. Looking for some advice and possibly network opportunities. If you're in this space, please give a shout!
I am interested in where you have invested in Japan. I'm interested and will be traveling to Japan in February. Do you have real estate agents you would like to recommend?