Buying property in the USA

Comment by Bring the pain:

"There are plenty of countries offering 8% - do some research. Rest of the world in a bear market - obviously you are a Sepo and think the whole world (America) is in a bear market. American property is in a bear market because you have a retarded financial and banking system flow on effects include high unemployment, low GDP and unsustainable housing market due to dodgy loans. Bear markets are the best time to buy in a business cycle you moron. Having an asset depreciate in value means you lose money benny boy; get a grip on your economics. Again, the quality of housing in Japan is shocking. Who wants to live in a rabbit cage made out of plasterboard. Good luck getting 12% for a 1dk piece of rubish, good luck keeping the piece of rubish standing for more than 2 years. Rather buy a house in Swedan, houses made out of brick, stable banking system, and no earthquakes. If you want to lose money in Japan buy an investment property".

This is not a response to anything I wrote - but its worth answering. It is true that there are countries offering more than 8% yield. Unfortunately, they are outside of my area of interest because it does not make sense as an individual to have property in too many countries because I'd need to employ staff to manage them.

It is a gross generalisation to say that the US market is 'over-priced', as there are many areas in the USA where the affordability index is 2-3, compared to cities where it can be as high as 10x annual income. The trick then is to find those areas which offer a reasonable balance between lifestyle values and affordability, or reliable rental income and adequate yield, if that is important. Good online marketing can make the difference as well.

It is true that Japanese properties do depreciate rapidly; but that's why you buy property which is old, say 10-12 years old, thus 60% depreciated, and its more than offset by a 12-13% yield. This is most particularly the case in Japan where you can get a local loan and the ability to leverage your investment. The reality is that many people want to live in Japan, and for good reason. Personally, I did not by there for the yield, I bought for the lifestyle. But I was happy to help my ex-Japanese GF get a property from which she gets a 13% yield - its paid off now.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Why buy property in Japan?

Comment by The real expert:

Why would I invest in something that has no capital appreciation? Instead of property investing with an unrealistic target of a 12% yield (never heard of a 5 million unit in north Tokyo), why wouldn't I put that cash into a fixed 8% term deposit? No risk and a guaranteed 8% return on investment, no maintenance headaches, no government red tape headaches, no flood headaches, no housing bubble headaches etc etc. Investing in the Tokyo real estate market would have to be the worst investment decision ever. If you buy a house in Western countries you will get appreciation on your investment, i.e the value of your house will go up unlike Japan where prices go down. Erik your article is total rubish and people should never buy houses in Japan for investment purposes.

The reason is because capital appreciate is just one issue - rent expense substitution or rental yield, depending on your perspective is the other issue. There is typically an inverse relationship between the two, i.e High capital appreciation or high yield. That is why Japanese yields are high. If you can find some structural distortion being corrected then you can get both, i.e. Say the Philippines today because it has 8% yield and good capital appreciation. i.e. There is the realisation that Asian labour is rising in cost, so even low-productivity Filipinos start looking appealing as a source of labour; most particularly because they make satisfactory call centre agents. This market does not rely upon the low-productivity ports in the Philippines. These issues will gradually be resolved, and the Philippines will be more broadly an appealing property market.

Japan only makes sense if you are buying a rural lifestyle property, an inner city land rental purchase of house, or suburban house for rent substitution; and even this might only make sense if you are earning Japanese income and planning to live there over 4 years. Since people love Japan, and 'hope' to live there, this can make a lot of sense.

The other issue is inflation and currency depreciation, which I have alluded to above. Bonds paying 8% in Japan? Unlikely - more likely 1% and paid is debased Japanese yen. The USD is also being debased, so need an bond indexed to inflation.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Living and working abroad

There are obstacles to living abroad. But you know, its not as hard as you might think to live and work abroad if you are able to develop relationships in these countries or find forms of work that suit you. In my 'wonderings' I have come across people who find work abroad by doing different things. Consider the following:

1. Selling: I write books about buying property. Such book publishing allow me to live anywhere in the world because my store front is online.

2. Consulting is another activity that allows you to work anywhere in the world if you deal with your clients online.

3. Strategic career opportunities: There are certain jobs like doctors, nurses and teachers who are in strong demand around the world if you have decent qualifications.

4. Service jobs like teaching English, builders, trades jobs and tattoo artistry are also jobs that you can find if you travel. Generally though in these cases you need to tap into the informal economy, but consider this: In a large city like Tokyo, you can be sure there is a need for computer support services for all the English expatriates living there, because there are thousands there looking for a good deal who are getting ripped off because they don't speak Japanese, or have support. In such cases, forums offer support for most, but forums only offer limited support.

Different countries have different rules for staying in the country. i.e. Consider that the Philippines probably has the most liberal immigration laws. You can stay there 18 months before having to leave the country, but you pay around $30/month to extend your visa. Other than that, they care less what you do. In Japan, its a 90-day tourist visa, and hard otherwise to get a business or working visa unless you are sponsored. Having said that, you can fly to China or Korea every 90 days (3mths) if that suits you, or you can commute from another place and just stay the 90 days in gaijin houses (i.e. Short stay accommodation).

The intention of this strategy is to buy accommodation in different countries at the low-end of the market so that I can live a flexible and interesting life as a tourist. This is why a $28,000 dormitory in Japan appeals, with a $300/year rates bill, a $US55,000 house in a depopulating NZ regional city, rates a little pricey at $1700/year, or you can go a house in much of the USA for $80-120K. We also have a place and land in the Philippines.

This is truly a period of great flexibility thanks to technology. I would not equate this however with freedom. No country recognises your personal sovereignty, and no government functions on the basis of rationality as the standard of value. Under democratic tyranny of the 'populist' majority, we spread our assets widely. This is why grasslands are so prevalent. Their spores are basically blowing around the world. We like to travel light in a world of arbitrary government. Yes, that might sound a little tragic, but living a life of slavery to some over-priced, statutorily or artificially priced house is crazy. I don't own a house in Australia, my home country because with the average house costing 11.6x the average income in Sydney, I think I should be living in Japan, NZ or USA, where I can live in a decent place for 2-3 times earnings. Personally, I wish people would think so we can end this tyranny, but since we have a system of wealth extortion based on 'universal ignorance and passivity', I prefer to travel. If you are wondering where this ends up, it is either:

1. A life of repression - Japan is the model we are drifting towards - where you are all zombies entertained by mindless concrete, frivolities like alcohol, sex, etc.

2. A intellectual life - A form of meritocracy which does not yet exist, where economies grow at 16% per annum because they are not constrained by centralised government; which are not overtly materialistic because the people's intellectual sovereignty has been oppressed. In a world where ideas matter because there is a free market for them, as opposed to the statutorily regulated 'parliament' which has political parties act as gatekeepers. But you go on pretending you live in free countries because you are given some pretense of it. More on this matter at our politics blog.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Japan - why rent property when you could buy?

Just a recommendation for anyone who thinks they will be living a long time in Japan; whether because:

1. They have a good job

2. They love the place

3. They are married to, or intend to marry a Japanese partner

You might want to consider saving yourself a great deal of rent expense by buying a home. Google 'buying foreclosed property in Japan" for more info, but some basic advice:

1. The Japanese prefectural law courts are tendering the sale of discounted properties way below market prices

2. The yields on Japanese property can be so high that renting is crazy. For instance, I paid just Y2.8mil for a 5br dormitory on 400m2 of land at Hanno, west of Tokyo. Its just 1hour from Ikebukuro, and I always get a seat on the train (Y420). There are better properties for less in depopulated rural areas.

3. Buy a house & land in suburbs to avoid apartment management fees, which are usually a rip-off.

4. Buy an old house with land lease if you insist upon living in the central city areas because the land rent can be extraordinarily low.

5. If you intend to stay more than 4 years in Japan, it would make more sense to buy there; particularly if you are earning yen, as all the major currencies are being debased.

The appeal of foreclosed property is that its a huge market; the Japanese investor is generally ignorant and risk-averse. The educated elite in Japan are more interested in office and residential complexes, not in managing houses, so you are really competing against real estate agents and home handymen who have limited resources.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com