The best foreclosed properties are those from which you can derive a rental income. Its worth paying a little more for something you can rent. So the last property posted was Y1.4mil for an older place away from the city of Nagano, here we have a younger 2-storey house for Y2.13mil, but the reserve price for tender offers is Y1.704mil (around $US20,000). The deposit required is Y0.43mil. The house is 14 years old, it has a floor area of 82m2 and over 200m2 of land area. It is between 2.5-4km from three different railway stations. Seems like a well located place for tenants. Because its in the city, you might expect more bidders. But you really want to look at previous sales to gauge the prices being paid. Some of the rooms are not so clean so that should discourage alot of home buyers. Agents though will still be interested. I am guessing you would need to pay up to Y2.8mil for this property, but it will rent for Y55-60,000 per month, giving a return of around 13-15% per annum ungeared, thats 35% geared, which means a 3-year payback. I remember when my father tending me that in Australia, the bottom of the market is when the average house price reaches 3x annual income. Well in Japan its better than that, its 3x annual interest payments. Basically thats 1 years income. You might wonder why Japanese are not snapping these properties up....they are so risk averse, but also they dont get any holidays. Surely there must be some unemployed son Dad could teach a lesson on the weekend. Maybe so? You will need to go along on bidding day.-----------------------------------------
Andrew Sheldon www.sheldonthinks.com
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