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

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

House for rent in Shimomaruko, Ota-ku, Tokyo

This place is currently not available....currently rented.

I am doing a favour for a guy who purchased my Japan Foreclosed Property report. He has purchased a foreclosed property and wants to rent it out for Y115,000 per month. It is a 2-storey, 2br house in Shimomaruko, Ota-ku, Tokyo. It is partly furnished, with a living room, kitchen, laundry space, bathroom, 2 restrooms and a big balcony facing south. There is a white leather couch, a bed, chairs, chests, a high-end fridge, washing mashine and dryer. The house is located between Shimomaruko Station and the Tamagawa river. Along the nearby rivers, you can engage readily in relaxation and exercise, i.e. running, cycling or play tennis.

The house is close to various stations:

1. Five minutes walk to Shimomaruko Station

2. Sibuya Sta. in 21 minutes

3. Shinagawa Sta. in 21 minutes

4. Tokyo Sta. in 31 minutes

The house is currently under a minor reform, but will surely will be ready by May 2011.

Pets are OK. If you are interested in renting this house in Tokyo you can contact me through my website and I will refer you to the landlord. Anyone interested in buying foreclosed property in Tokyo might be particularly interested in this opportunity for two reasons:

1. This is a foreclosed property so you can get a sense of the commercial returns on renting foreclosed property

2. This landlord would probably be happy to give you advice (aside from the book I am selling) on how to buy foreclosed property in Japan...since he is the embodiment of the opportunities available.

3. Some buyers who have not lived in Japan might want to avail of this opportunity to rent before you buy. The house is well-located close to central Tokyo.

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NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

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