Japan Foreclosed Property 2015-2016 - Buy this 5th edition report!

Over the years, this ebook has been enhanced with additional research to offer a comprehensive appraisal of the Japanese foreclosed property market, as well as offering economic and industry analysis. The author travels to Japan regularly to keep abreast of the local market conditions, and has purchased several foreclosed properties, as well as bidding on others. Japan is one of the few markets offering high-yielding property investment opportunities. Contrary to the 'rural depopulation' scepticism, the urban centres are growing, and they have always been a magnet for expatriates in Asia. Japan is a place where expats, investors (big or small) can make highly profitable real estate investments. Japan is a large market, with a plethora of cheap properties up for tender by the courts. Few other Western nations offer such cheap property so close to major infrastructure. Japan is unique in this respect, and it offers such a different life experience, which also makes it special. There is a plethora of property is depopulating rural areas, however there are fortnightly tenders offering plenty of property in Japan's cities as well. I bought a dormitory 1hr from Tokyo for just $US30,000.
You can view foreclosed properties listed for as little as $US10,000 in Japan thanks to depopulation and a culture that is geared towards working for the state. I bought foreclosed properties in Japan and now I reveal all in our expanded 350+page report. The information you need to know, strategies to apply, where to get help, and the tools to use. We even help you avoid the tsunami and nuclear risks since I was a geologist/mining finance analyst in a past life. Check out the "feedback" in our blog for stories of success by customers of our previous reports.

Download Table of Contents here.

Thursday, December 10, 2009

Would I recommend retiring in Japan?

Someone asked me the other day whether I would recommend retiring in Japan. The person was from the Philippines, so they were already living in Asia, and wondering if Japan would be any better. My response to that depends on the type of life you are after, and your adaptability. Japan does have some very favourable advantages, though given the low cost of property in both countries, I see no reason why some of you could not consider a life in both countries for the reasons mentioned in other posts - such as the Japan Rail Pass, not to mention the cheap flights form the Philippines (Clark, Manila) to Japan (Osaka, Tokyo, Nagoya) - as little as Y4000 ($80) with Cebu Pacific in sale season. Read the Philippines Inquirer for details.

The benefits for retirees in Japan are:
1. Cash card - Its easy to draw on a foreign savings account from any Japan Post Office. All of them have access to the global Mastercard/Visa network (Cirrus-Maestro) now.
2. Safety - Japan is the fastest country in the world. Break-ins are not common, and it is a harmonious place, so little treat violence. Youngsters tend to be respectful of older people, so they also tend to be helpful.
3. Food: The food is very good. Its healthy; there is a lot of variety. It might not be the cheapest place to buy food, but older people eat less anyway, and tend to interact with people in the community. It would help to have a group of friends in your community, particularly to help with utility or getting a tradesperson.
4. Forums: There are very supportive forum communities in Japan where you can obtain really good advice from people in the same situation.
5. Culture: Living in Japan is a chance to experience another culture - a culture far different from any other. The place is unique. I tire of the shopping malls in the Philippines with their generic malls. Japan offers many fresh and interesting experiences.
6. Transport: You will unlikely require a car in Japan. A bicycle and bus is sufficient, though a car makes sense in rural areas. A scooter is a good idea too as Japanese people are very considerate of bipedal mode. The clear benefit is the Japan Rail Pass for non-residents. You can see a lot of Japan on these passes.

I don't see medical facilities as a big obstacle, though clearly before you settle somewhere you should ensure there is a local doctor who speaks English. It would also be helpful to have an English-speaking companion to translate your symptoms into Japanese. I suspect most doctors would know a lot of English because they attend conferences. This is particularly true for city doctors. I think you would only want emergency services if you are old or unhealthy. If you are relatively young, or need some delayed treatment, you can always fly to the Philippines for more expensive medical care. The services there are fantastic.

The obstacles are likely to be:
1. Language: Older people are less inclined to learn new languages, though if you have time, there is nothing stopping you trying. In any respect, Japanese people are surprisingly good at English...at least understanding it. In most cases, they just lack confidence in speaking. I never bothered to learn. I simply use sign language. Language is particularly a big problem setting up your home. When I first moved there is was a 6mth adjustment, and I did have issues with technical issues like routing emails through my cell phone. Foreigners are frowned upon by some telco technicians because we demand a higher level of service because we don't speak technical Japanese.
2. Cost of living: Japan is more expensive than a lot of countries. This is true for food, entertainment, eating out at up-market restaurants. Utilities are very expensive, but then so is the Philippines for many things, and the service is far poorer.

The ease of living in Japan also will depend on your adaptability and your ability to make friends who can help you with any obstacles. This is of course most difficult when you first arrive in Japan, to buy the property, and to finally settle there. After those challenges...all becomes routine. Living abroad is becoming for popular. Retiring abroad is also on the increase since people have decided that life is about experiences - not dying in some familiar place.
Andrew Sheldon www.sheldonthinks.com

Cost of property in Japan

The cost of property in Japan - like anywhere else - varies considerably. Most people would be surprised by just how cheap property can be, as well as how expensive. The most expensive property is of course in the central Tokyo. It is typically those areas with expensive, exclusive homes, or otherwise those areas with exceptionally good subway connections or convenience to sought after districts like Roppongi, Shibuya, Shinjuku, etc. The cost of the most expensive properties is hardly worth mentioning. Any city property is a 'growth asset' so if you are able to find a place with a yield over 8% you are doing well. This is particularly the case in the cities because increasingly Japanese elderly people are retiring in city areas.

At the other end of the spectrum property in rural areas can be as cheap as $10K. Be careful to examine exactly the nature of the type of property. Are you leasing the land, or is it freehold title? I have been able to find some exceptionally cheap property in rural areas. I have even heard of people been given houses to remove the owners of the 'tax burden'. In depopulating Japan these properties are particularly attractive to foreign tourists who want to take regular holidays. What is the appeal? I can think of several benefits:
1. Low cost of property - under $30,00o for a decent place
2. Low government taxes - I pay just Y30,000 (US300) a year
3. Proximity to services - Japan is frowned upon for its population 'crowding' but thats only the east side of the country. The west is not so populated and has wonderful wilderness areas.
4. Japan Rail Pass - One of the reasons I know about Japan so much is because I have made great use of the Japan Rail Pass over the years. Very good value for foreigners (tourists only, not residents). Why would you want to reside in Japan? Just have extended holidays there.
5. Activities - Japan has a great array of activities.
6. Safety - Japan is without question the safest place to live, or to hold property. I don't even bother insuring my place. Mind you the place could burn down and the property would still be worth more than I paid. :) That is the benefit of buying foreclosed property.

If you are looking for a place in Japan, I'd recommend something close to Osaka, Tokyo or Nagoya so you have easy access to international flights. If you are looking for semi-rural property, something in the Mito area, or Saitama prefecture would be fine. If you are looking for something in more wilderness areas, I'd avoid the colder Western side of the country and find something in Wakayama prefecture, or Fukushima area. The colder NW is cheaper, but probably not a desirable place to live. As far as city living goes I like Tokyo for the 'plethora' of choice in facilities and its gaijin culture, and Fukuoka is great because of its relaxed, friendly style. Every time I go to Fukuoka I have a great night.
Andrew Sheldon www.sheldonthinks.com

Type of foreclosed property to buy

Many buyers will be unsure what type of property to buy in Japan. I have several suggestions which will make you reflect more on your decision. The most important factors are:
1. Neighbours: Foreigners in Japan are subjected to discrimination in Japan. The nature of discrimination I don’t find terribly intrusive or threatening. Its more of a quiet detachment which makes them more scared of you. When you do something wrong you will probably never redeem yourself, and being in a strange country you will probably make an error. If you have a Japanese partner, then of course it makes a great deal of difference, particularly with the women. Since you are buying foreclosed property you want to avoid the possibility of angst from the previous owner. You therefore want to avoid properties with a legacy of family ties, like neighbouring brothers and sisters, etc. You are safe from a family legacy if you buy in a subdivision. You are not buying in non-urban land. A reader made a good point. Being in a rural area means you become the focus of attention. 
2. Charges: Charges on property in Japan are relatively low compared to other countries. Insurance costs are low, small lots mean that land taxes low, though there is also a tax on land improvements, so it is variable. Apartments or ‘mansions’ carry a very high charge to cover future improvements, as well as on-going maintenance. This charge is excessive and is justification for avoiding such strata-type property.
3. Depreciation: Japanese buildings depreciate significantly after 12 years as a result of the aging style and finish of the building. This ‘aging’ is because Japanese property is built for ‘function’ rather than lifestyle or aesthetic. For this reason I would caution against buying property which is going to deteriorate in value faster rate than your return on investment grows. The implication is that you want to buy a property with a high percentage of land value. This is likely to occur closer to the city centres. Mind you, modern buildings are better designed, so will likely keep their age better in future. The alternative is buying land with an old building on it and giving it a face-lift when required. If taking this approach I would tend to opt for one-story houses to avoid stress on the wooden frame and potential risks of poor design or workmanship.
4. Land area: Attempt to get as much land area as possible. Westerners are not accustomed to living on top of each other. If you are placed in the position of having neighbour problems, better to have some space between them and yourself.
5. Improvements: I would caution against buying property in rural areas which is outside a subdivision. There are several reasons:
             a. Short cuts: There is the possibility of short cuts being taken with respect to property approvals. i.e. Unlicensed water tank.
            b. Shared infrastructure: The old way of building was not regulated. For instance, if you buy a farm house, the septic or water might be connected through a neighbour’s property (i.e. a relative of the previous owner). The property was thus designed as part of a community. It is preferable to avoid this style of property if there is any uncertainty about the existence of such ‘shared’ infrastructure.
            c. Property boundaries: The property boundaries in the case of rural property are not so clearly established, so I would suggest avoiding rural property if the land area is small, or any improvements are close to the property boundary. There will not be any property disputes if you buy in a subdivision.
6. Geological risks: I would be inclined to avoid some of the subdivisions one finds perched on the sides of mountains on the fringes of cities. Japan is a geologically unstable area, so any building on or near step structures poses risks. The risk of land slide arises due to unstable slopes, but also because of rising hydrostatic head as water builds-up behind retaining walls. There are drainage holes to avoid this risk, but some structures are better designed than others.

For these reasons I consider properties in the 12-18yo age range as the best buys in semi-rural settings. Certainly I would be looking at the younger end of the market for rental properties, though ultimately it’s a question of how well the property has been maintained. One of the properties we purchased was 12yo old, however internally it looked brand new after we painted the wallpaper. The cost of building in Japan is very high so I would be looking at 'liveable' structures which can be renovated by recladding than building a completely new structure.

Refer to our Japan foreclosed property report for more details.

What is foreclosed property?

A foreclosed property is a property which is subject to forced seizure and sale by a lending institution because the borrower/homeowner has fallen into arrears on the interest repayment, triggering a debt recovery action. In Japan, debt recovery proceedings are undertaken by the Prefectural Court Offices.
Foreclosed property is a feature of many developed countries and some developing countries (like the Philippines) which have established formal proceedings for the liquidation and recovery of unpaid debts.
Insofar as the lender is concerned, the prospect of being foreclosed might not be a bad thing. Given that some property buyers bought their properties at excessively high prices, it might make more sense for some home owners to abandon the property rather than pay the debt. Why pay a debt if the property value is less than the outstanding loan amount? This is possible because property prices were falling at an average rate of 9% per annum until 2006, whilst any property over 12 years old will also experience a stronger rate of depreciation. For this reason, why hold onto such property. If the Japanese home buyer does not need a credit rating, they are better off abandoning the property and buying a new property in a relative’s name.
You can understand also that a lot of home owners will continuing making payments on home loans even though asset value < loan amount outstanding. The reason they will retain the loan is the fact that at the current low interest rates in Japan, it is likely to make more sense to make those payments rather than sell. The implication however is that Japanese banks are likely to face an anomalously high rate of defaults as interest rates rise. I would however suggest this dynamic is only likely to operate among the lower income Japanese households.

Major cities of Japan

資料:各都市の推計人口(ホームページ) Japan's major cities:
札幌市 Sapporo 仙台市 Sendai さいたま市 Saitama 千葉市 Chiba
東京都区部 Tokyo-23 横浜市 Yokohama 川崎市 Kawasaki 新潟市 Niigata 静岡市 Shizuoka 浜松市 Hamamatsu 名古屋市 Nagoya 京都市 Kyoto 大阪市 Osaka 堺市 Sakai 神戸市 Kobe 広島市 Hiroshima 北九州市 Kitakyushu 福岡市 Fukuoka

Cities and towns of Tokyo

競売物件購入 keibai buttsuken kounyu 千代田区 Chiyoda-ku 八王子市 Hachioji-shi 羽村市 Hamura-shi 中央区 Chuo-ku 立川市 Tachikawa-shi あきる野市 Akiruno-shi 港区 Minato-ku 武蔵野市 Musashino-shi 西東京市 Nishitokyo-shi 新宿区 Shinjuku-ku 三鷹市 Mitaka-shi 文京区 Bunkyo-ku 青梅市 Ome-shi 郡部 Towns and villages 台東区 Taito-ku 府中市 Fuchu-shi 瑞穂町 Mizuho-machi
墨田区 Sumida-ku 昭島市 Akishima-shi 日の出町 Hinode-machi 江東区 Koto-ku 調布市 Chofu-shi 檜原村 Hinohara-mura 品川区 Shinagawa-ku 町田市 Machida-shi 奥多摩町 Okutama-machi 目黒区 Meguro-ku 小金井市 Koganei-shi 大田区 Ota-ku 小平市 Kodaira-shi 島部 Islands 世田谷区 Setagaya-ku 日野市 Hino-shi 大島町 Oshima-machi 渋谷区 Shibuya-ku 東村山市 Higashimurayama-shi 利島村 Toshima-mura
中野区 Nakano-ku 国分寺市 Kokubunji-shi 新島村 Niijima-mura 杉並区 Suginami-ku 国立市 Kunitachi-shi 神津島村 Kouzushima-mura 豊島区 Toshima-ku 福生市 Fussa-shi 三宅村 Miyake-mura 北区 Kita-ku 狛江市 Komae-shi 御蔵島村 Mikurajima-mura 荒川区 Arakawa-ku 東大和市 Higashiyamato-shi 八丈町 Hachijo-machi 板橋区 Itabashi-ku 清瀬市 Kiyose-shi 青ケ島村 Aogashima-mura 練馬区 Nerima-ku 東久留米市 Higashikurume-shi 小笠原村 Ogasawara-mura 足立区 Adachi-ku 武蔵村山市 Musashimurayama-shi 葛飾区 Katsushika-ku 多摩市 Tama-shi 江戸川区 Edogawa-ku 稲城市 Inagi-shi

Cities & Towns of Saitama

競売物件購入 keibai buttsuken kounyu 西区 Nishi-ku 北区 Kita-ku 大宮区 Omiya-ku 見沼区 Minuma-ku 中央区 Chuo-ku 桜区 Sakura-ku 浦和区 Urawa-ku 南区 Minami-ku 緑区 Midori-ku Cities (-shi) さいたま市 Saitama-shi 川越市 Kawagoe-shi 熊谷市 Kumagaya-shi 川口市 Kawaguchi-shi 行田市 Gyoda-shi 秩父市 Chichibu-shi 所沢市 Tokorozawa-shi 飯能市 Hanno-shi 加須市 Kazo-shi 本庄市 Honjo-shi 東松山市 Higashi-Matsuyama-shi 岩槻市 Iwatski-shi 春日部市 Kasukabe-shi 狭山市 Sayama-shi 羽生市 Hanyu-shi 鴻巣市 Kounosu-shi 深谷市 Fukaya-shi 上尾市 Ageo-shi 草加市 Souka-shi 越谷市 Koshigaya-shi 蕨 市 Warabi-shi 戸田市 Toda-shi 入間市 Iruma-shi 鳩ケ谷市 Hatogaya-shi 朝霞市 Asaka-shi 志木市 Shiki-shi 和光市 Wako-shi 新座市 Niiza-shi 桶川市 Okegawa-shi 久喜市 Kuki-shi 北本市 Kitamoto-shi 八潮市 Yasio-shi 富士見市 Fujimi-shi 上福岡市 Kami-fukuoka-shi 三郷市 Misato-shi 蓮田市 Hasuda-shi 坂戸市 Sakado-shi 幸手市 Satte-shi 鶴ケ島市 Tsurogashima-shi 日高市 Hidaka-shi 吉川市 Yoshikawa-shi 北足立郡 Districts (-gun) 伊奈町 Ina-machi or ko 吹上町 Fukiage-machi 大井町 Oi-machi 三芳町 Miyoshi-machi 毛呂山町 Moroyama-machi 越生町 Ogose-machi 名栗村 Naguri-mura

Cities &Towns of Kanagawa

競売物件購入 keibai buttsuken kounyu 県計 市部計 郡部計 横浜市 鶴見区 神奈川区 西区 中区 南区 港南区 保土ヶ谷区 旭区 磯子区 金沢区 港北区 緑区 青葉区 都筑区 戸塚区 栄区 泉区 瀬谷区 川崎市 川崎区 幸区 中原区 高津区 宮前区 多摩区 麻生区 横須賀市 平塚市 鎌倉市 藤沢市 小田原市 茅ヶ崎市 逗子市 相模原市 三浦市 秦野市 厚木市 大和市 伊勢原市 海老名市 座間市 南足柄市 綾瀬市 三浦郡葉山町 高座郡寒川町 中郡 大磯町 二宮町 足柄上郡 中井町 大井町 松田町 山北町 開成町 足柄下郡 箱根町 真鶴町 湯河原町 愛甲郡 愛川町 清川村

Cities & Towns of Chiba

競売物件購入 keibai buttsuken kounyu 県計 市計 郡計 千葉市 中央区 花見川区 稲毛区 若葉区 緑区 美浜区 銚子市 市川市 船橋市 館山市 木更津市 松戸市 野田市 佐原市 茂原市 成田市 佐倉市 東金市 八日市場市 旭市 習志野市 柏市 勝浦市 市原市 流山市 八千代市 我孫子市 鴨川市 鎌ヶ谷市 君津市 富津市 浦安市 四街道市 袖ケ浦市 八街市 印西市 白井市 富里市

Cities & Towns of Osaka

競売物件購入 keibai buttsuken kounyu 総 数 府 保 健 所 計 池 田 池田市 豊能町  箕面市  能勢町  豊中豊中市  吹 田 吹田市 茨木摂津市  茨木市 島本町 枚方枚方市  寝屋川 寝屋川市 守口 守口市  門真市 四條畷 四條畷市 交野市  大東市 八 尾 八尾市  柏原市  藤井寺 松原市  羽曳野市 藤井寺市 富田林 大阪狭山市 富田林市 河内長野市 河南町  太子町  千早赤阪村 和泉和泉市  泉大津市 高石市  忠岡町  岸和田 岸和田市 貝塚市  泉佐野 泉佐野市 熊取町 田尻町  泉南市  阪南市  岬町 大 阪 市 堺市 高槻市 東大阪市  

Cities & Towns of Hiroshima

競売物件購入 keibai buttsuken kounyu 県計 広島市 広島市中区 広島市東区 広島市南区 広島市西区 広島市安佐南区 広島市安佐北区 広島市安芸区 広島市佐伯区 呉市 竹原市 三原市 尾道市 福山市 府中市 三次市 庄原市 大竹市 東広島市 廿日市市 安芸高田市 江田島市 府中町 海田町 熊野町 坂町 安芸太田町 北広島町 大崎上島町 世羅町 神石高原町