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.

Monday, January 24, 2011

Renovating a foreclosed home in Kyoto, Japan

It seems there are a few buyers of the Japan Foreclosed Report who are prepared to come out and describe how they are doing it. Understandably not everyone wants to speak. Having said that, the market is huge. We need to remember that Japan did not have an unemployment problem until fairly recently, so unemployment is a potential source of 'fairly new' foreclosures. I think asset deflation would have been a bigger concern for the banks years ago as they sought to clean up their balance sheets. I see in the latest employment statistics that only 65% of new university graduates secured jobs last year - the lowest uptake in decades. We need also to remember the depopulation of rural Japan has resulted in the vacating of properties in those areas. With no tenants, they lie vacant, and are the first assets to be sold off by stressed buyers, who might have ‘over-encumbered’ themselves buying a more expensive 2nd home. i.e. Westerners are accustomed to renovating homes. Japanese people simply tend to build new ones. I don't know why. The old ones are probably not as structural sound, but they work ok by my estimate. It is not the land of financial literacy, so don't expect any of that.

The latest person to give us a description of his experiences buying foreclosed property is a New Zealander married to a Japanese national. He bought a foreclosed house & lot in Kyoto at auction last year. He spent 5 weeks renovating it, presumably whilst holidaying in Japan, since he lives in Auckland. He has placed the property up for auction. He has offered to provide more information, so I look forward to that. Meanwhile, some of his feedback on the Japan Foreclosed Guide ebook:
“The information you supplied was a good indicator of what to expect”.
“I plan to repeat this process this year and purchase a second property”.
"I agree with your opinion that there is great potential in this market which is more than I can say for NZ".
If you are interested in John’s experiences renovating his property, I suggest going to his Japan blog. I also describe my renovation insights in the book, but his were more extensive.

Tuesday, January 18, 2011

Strategy for profiting from leased property

In my last post I described the experiences of a Japanese and foreign national who bought a property on the southern edge of Tokyo. This was a particularly interesting transaction for several reasons:
1. It was a very cheap inner city property
2. It involved the purchase of a 2-storey home on land leasehold

There are a number of reasons why you ought to consider such a proposition. Normally, I would not be particularly interested in leasing land, but this is different...the terms are very good. There are a number of appealing elements:
1. If you are buying a new apartment, you are buying alot of building value, which is destined to depreciate a great deal over coming years. In the case of these buyers, they were paying a nominal Y500,000 (USD5,000) for the 3br house, which if they spent a little money might rent for Y125,000 a month, given its proximity to Tokyo City.
2. They are not paying a huge about for land. Now, owning land in Tokyo might be considered an appealing idea because whilst Japan's population is falling, Tokyo's is increasing, and some areas more than others. The problem as I see it is that those new residences are moving into new high rise apartments, and there is plenty of room for more. Future buildings might even be cheaper to build due to the development of new high strength TiV-based steels. This could greatly reduce the materials needed to construct a home. The old homes will not have the features of the new homes, however given the steep discount in the price of the older homes, its worth considering the 'low-cost' property option. Its a different issue of course if money is no object. You can expect those new 'high priced' homes to depreciate significantly in value.
3. Saving money on capital allows you to place the bulk of your capital in better performing asset classes like gold stocks - and if you are an Australian or New Zealander, than there are few better places than my recommended explorers. ASX gold stocks with upside. Canada, the USA and Britain of course have similar opportunities. Some years ago I projected a gold price of $2400/oz. We are still some way off based on a DowJones/gold ratio of 5.

One of course has to remember that its good to use others money...but remember that does not always hold. Its been good for the last 15 years because of low interest rates. A pertinent issue is your capacity to access those low-interest loans in Japan. This might not be as easy for foreigners. Nevertheless, I would caution against the appeal of these loans because Japan will need to finance its deficits in future, so they are looking at a higher interest rate environment as their savings rate falls and their debts rise.

Today Japan has a public debt of 200% of GDP, requiring a combination of taxation, national income growth (immigration???) and monetary debasement to repay it. That is going to cause a rush into tangible assets like property or a shift of money offshore. I would suggest Japanese accustomed to foreign markets will buy assets in places like Australia, NZ, Thailand and the Philippines. I am surrounded by Japanese retirees as I speak in this apartment complex in Queenstown, NZ.
For most people however, they will more realistically stay in Japan to be close to family. Most will buy property given the high yields. But they have to buy the right property. Apartments are not going to appreciate in value....least of all the over-priced premium property off-the-plan. You are buying a box in the sky. If you are getting a box, better an old box on ground floor, and 30minutes from the city centre. Why?
You might pay as little as Y3,000 for a land lease, having paid just Y6mil for the house. Even if you have to pay Y5,000 per month under a new lease, its a far better deal than sinking money into a high priced modern apartment which can only depreciate. Given the prospects of inflation in coming years, and I think Japan will be as bad, if not worse than the USA and Europe, you will want to hold property. The reason is that Japanese property is not over-valued. It is very cheap, so higher interest rates are not going to compel people to sell. In fact cash savings will be rush into property. What are they waiting for? I have no idea.
The problem is Japanese are buying the wrong type of property. They ought to be buying fringe properties in lifestyle locations, or leaseholds in the inner city. There are issues to consider:
1. The lease term - you want to negotiate with the owner before you buy at foreclosed property tender. Nice to do before....but in fact buyers have rights. Since there is leasehold owing, and the property rights of leasees is solid, there is a good chance to extend the lease....albeit at higher rates. Short of a revolution, this situation is unlikely to be resolved by legislation I think. In any case, the terms are pretty sound.
2. The cheapness of the lease payments - it is staggering that they are as little as Y5,000 and fixed for 20 years. After 20 years of inflation without adjustment (remember they might not expect inflation after 15 years with none), that is quite a financial benefit
3. Your use of the property - What do you do with a leased property if you decide to move to the USA? You have several options: (a) You can sell the land, which might be difficult as people like to own the underlying land in Japan (b) You can rent it out, but that might be more difficult if the house is 46-55 years old. (c) You can negotiate to sell back the lease...the owner might ask you to pay reparations, i.e. money for cancelling the agreement, or more likely to demolish the old house that no one wants to live in. (d) You can turn the place into a 'gaijin house' for people who care little about the quality of the place where they live. This at least requires a strategic long term plan.

Wednesday, January 12, 2011

Experiences of Tokyo foreclosed property with a land lease)

If you happen to buy a property report from us, we are pleased. What we love even more is when customers take the time to send us some feedback on their success or failures. One of my customers bought our Philippines report, so I was pleased to have the opportunity to ask him about his progress buying a foreclosed property in Japan.
They bought an old house near Oota station, in Tokyo-ward. He bought this house 18 months ago (Jun 2009) for Y6 million ($US60,000); Y5.5 million being the nominal value of the land lease and Y0.5 million for the old house. The house is 75m2 in floor area, on two floors, and occupying 40m2 of land. This close to the city residential lots are significantly smaller because land values are far higher. They bought the property with a 20-year land lease due to expire in just 5 years at a fixed lease fee of Y3,000 per month. They were able to extend the lease for a further 20 years at a fixed lease rate of Y4800/month. i.e. Just 5% of the rental cost for such a property. This is a good deal for 2 reasons:
1. The lease rate looks like a significant mark-up but it was fixed for the last 20 years
2. The new lease rate of Y4800/month is fixed for 20 years, which is very attractive when you consider the prospects of inflation in Japan. People are so accustomed to low inflation, they have forgotten how savage inflation can be.
3. Rather than absorb a Y200-300,000 lease renegotiation/contracting fee, they agreed to incorporate the fee in the monthly lease rate.
Buyer: "We would have preferred to own the land, of course, but houses (including land) are rare in this location and expensive in the foreclosed market. The Japanese consider land ownership as very important. So competing for house and land packages in good areas is not an appealing deal".
"The lease rates [for land] are cheap and the rights of the the leasee are very strong. We could destroy and rebuild, and rent the house without asking for permission".
The auction required a minimum bid of Y5.5 million, and they won with a bid of Y6.0mil. They were the only bidder. They believe they would be able to rent the house for Y125,000/month, at a nominal yield of 25%. The place did need some minor improvements, like fixing the drains and repairing wallpaper. Some of the floor boards are not properly leveled, and there is a ventilation problem as a result of a neighbour's extension to their house. These issues would cost Y1.2 million to fix. This would reduce the effective yield to 20.8%, however they are happy to live there in the interim. In the West, properties so close to the city will sell with a yield of 2-5%, and yet in Japan, they were able to buy a place with a yield of 20.8%. This will mean rental income (or 'rent replacement') will pay the house off in 4-5 years. The house is 46 years old, and was valued at just Y0.5 million ($5,000) in the auction documentation. Of course many Japanese are prepared to pay Y30-35 million ($350,000) to build/buy a new home. Such is the premium paid for new homes with land. Of course they offer a nicer, modern ambiance, but many people spend their day outside, so they might question this price premium given its value depreciates. Some would prefer to pay just $5,000 for a house. The issue is whether the house is livable for not just the five years (until to pay off the house cost), but for the lease period, as the owner could require you to destroy the house (Y2mil perhaps in the city) at the end of the lease period. The lease period is therefore very important. These buyers were able to extend for 20 years at the new lease rate. You need to decide whether you are there for the long term. Does the lease term justify building a new house? Or will you be stuck in the short term potentially with a house you don't want to live in, that is too old to rent or which you cannot afford or justify fixing up. The lease period and your capital are the critical issues, however your relationship/visa status and language skills might also be issues. Professional people are much more likely to speak English. I met a Building Project Engineer who spoke English in my local pub.
They are 4.3km from Tamagawa Station, which is a 25 minute train ride from Shinjuku Station in central Tokyo. Their house is just 400m from a smaller train station, as well as a small supermarket, and 100m from a convenience store. They have a large open area along the river several blocks away, suitable for riding a bike or jogging. There are also tennis courts and baseball facilities there. This buyer seems very happy with his purchase and is now looking at the Philippines.
The house does not come with any car space, however they can be leased if required close to home. Many Japanese living in the inner city go without cars for this reason.
Small old houses on small lots offer economy buying. They looked at buying house and land for a nominal price of Y10mil, but after bidding it sold for Y28 million because of the competition. The moral of this story is that in Japan, its sensible to simply do something different from everyone else. There are many Japanese people who are prepared to pay too much because they are not commercially astute.
Buyer: "Japanese people are stuck to what they think is the proper normal lifestyle; graduating university, finding a girl, buying a new home. They don't consider alternatives. So its easy for people who have a different view of things".
And his feedback on the Japan Foreclosed Property report:
"I highly respect and appreciate your [the author's] lifestyle. I am impressed by the amount and accuracy of your research about real estate and foreclosed property".

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