Foreclosed property in Japan

[Shouganai]

Its interesting that many people dont seem to be aware of the opportunities to buy foreclosed property in Japan. For many foreigners and Japanese alike, there are great opportunities. I've bought foreclosed properties in Japan & the Philippines. The benefits of Japan are:
1. Great savings - you can buy a house for as little as 10% of the replacement value, or 30% of the market value, with particular savings in rural areas. Why? Depopulation, and 'no long stay holiday' culture. Its more competitive in the city. The amount of property available is amazing.
2. Polite society - Japanese people are 'good sports'. They dont curse and blow your house up when you move into their foreclosed property. The prior owner in our case gave us some advice on how to maintain it.
3. No talk: Japanese people are ashamed to talk about it, so neighbours, who are likely buyers, don't know the property is for sale, so don't tell them.
4. Good yields: You can buy a property offering yields as high as 13% (in our case), and thats before you leverage it, so if 70% bank debt, you can pay the property off in a few years, and buy another in the meantime.
5. Great infrastructure for fixing up a property. I had no experience for fixing up a home. I found the staff at Cainz Home very helpful, but its mostly common sense and building materials are cheap in Japan. Fixing up my place was one of the most gratifying things I have done. I paid Y2.8mil for my place 1hr from Tokyo. Cheaper if you go further into the country, but I wanted access to a large city (Tokyo) for drinking.

Its not all good news. There is no property bubble on the horizon, no govt reform agenda, but it will come eventually, and the lack of population growth means that there is no real growth. But yields are exceptional, and of you are living in Japan, or want to retire here (using Japan Rail pass as well), I can think of few better places. Maybe Philippines, which also has foreclosed property. Anyway you can Google 'foreclosed Japan' for more info.

[Dundas]

Hello shouganai,

I’m interested in buying a foreclosed property in Japan in the future as an investment. I’m thinking about a condo for less than 10million yen. I think a condo would be best since I don’t have to worry about maintenance as much as a house would.

I was wondering how did you buy your property in Japan? Did you make your bid at the court yourself? Since I’ve been checking out some places at foreclosedjapan.com and if I were to buy a property from them they said this would be the fees:

Properties under 10 million yen:
(bid amount + debt, if any) + 6% + 630,000 yen

Properties over JPY10M:
(bid amount + debt, if any) + 12%

The above will cover all closing costs - acquisition/registration taxes
and costs, our fees, and court charges.

I was wondering if there commission is really expensive for the services they provide?

[Shouganai]

Hello shouganai,
I’m interested in buying a foreclosed property in Japan in the future as an investment. I’m thinking about a condo for less than 10million yen. I think a condo would be best since I don’t have to worry about maintenance as much as a house would.
Search Google for a book you can buy on this topic. The big problem with a condo is the management fees on condos in Japan are very high. I'd buy a house.

I was wondering how did you buy your property in Japan? Did you make your bid at the court yourself?

I had the assistance of my Japanese speaking GF. If you dont speak Japanese you would need to find a court office who is prepared to help you speak in English, and help you fill out the documentation.

Since I’ve been checking out some places at foreclosedjapan.com and if I were to buy a property from them they said this would be the fees:
Properties under 10 million yen:
(bid amount + debt, if any) + 6% + 630,000 yen
Properties over JPY10M:
(bid amount + debt, if any) + 12%
The above will cover all closing costs - acquisition/registration taxes
and costs, our fees, and court charges.
I was wondering if there commission is really expensive for the services they provide?
We bid directly through the courts. I don't know from memory how ForeclosedJapan.com structure their costs, but based on your info YES. These costs are rather high. I guess you mean 'x 6%'. Particularly high given you don't pay any agent fees (2 agents x 3%) buying foreclosed properties. They do however need to cover the cost of failed bids, so I would also be worried about the conflict of interest they have in that respect if they don't charge for a non-successful purchase, and of course its expensive if you have a succession of failed bids. Its nice to think we would win the bid every time. Frankly all agents are expensive given what they do, which is another reason to buy foreclosed property. :)

[Dogen Z]

I hope you don't mind but I have some stupid questions to ask. How can yields be excellent when demand is drying up due to the decreasing population? Isn't this what caused the foreclosures in the 1st place? If it's a buyer's market for property owners, isn't it also a wide open market for renters? In that case, where does the income come from? When will the gov't adopt reforms to spur growth in outlying areas when even Tokyo has problems with declining property values?

I've read that a lot of real estate companies in Japan have gone belly up because of their investing in developments during the tiny bubble over the past couple of years. This bubble collapsed when foreign investors started to pull out at the end of last year. Even large real estate companies like Mitsui and Mitsubishi are having problems selling their new developments in Tokyo. As you said, it's a good market to buy property to live on but otherwise, especially with the strong yen, I think I would look at places like Bangkok or Kuala Lumpur for investment property in Asia. LA and San Francisco also should have some good buys right now.

[Shouganai]

How can yields be excellent when demand is drying up due to the decreasing population? Isn't this what caused the foreclosures in the 1st place? If it's a buyer's market for property owners, isn't it also a wide open market for renters? In that case, where does the income come from?
There is always demand, its just a case of price and which market segment. Young people move to city, so cities are growing, rural areas are experiencing declining population. There is intra-prefectural migration as well, as some regional cities are retaining some population. Normally these is an inverse relationship between growth vs yields, unless there is a paradigm shift. Yes, renters have a choice, so you buy where they will rent. eg. Nice surroundings, close to station, modern property. You have to weigh this up against demand for different properties.

When will the gov't adopt reforms to spur growth in outlying areas when even Tokyo has problems with declining property values?
Lack of reform is just one reason why Japanese property has stalled. Slow credit growth is also a factor. Banks aren't lending.

I've read that a lot of real estate companies in Japan have gone belly up because of their investing in developments during the tiny bubble over the past couple of years. This bubble collapsed when foreign investors started to pull out at the end of last year. Even large real estate companies like Mitsui and Mitsubishi are having problems selling their new developments in Tokyo. As you said, it's a good market to buy property to live on but otherwise, especially with the strong yen, I think I would look at places like Bangkok or Kuala Lumpur for investment property in Asia. LA and San Francisco also should have some good buys right now.
I agree. Well actually there is a report on Philippines (foreclosed) property, and I think that is the best country if you are looking for a growth market scenario. Usually the laggard, the Philippines will be better than most going forward. But Japan is a yield, not a growth proposition really, as long as population growth is subdued (nationally) and reform stagnant.

[Dogen Z]

So in other words, an investor must be as intimately knowledgeable about the prospective market as the property he/she is purchasing. And he/she must also be prepared to take an active interest in managing the property after purchase. This makes sense--sounds like something Trump would approve.

For those who don't want to work so hard, you can invest in real estate investment trusts (REITs). These are the pros who do all the work for you and you just collect the income from their investments. However, they are dying in Japan because of diminishing income and high debt levels.

I would stict to buying property for my own use--like a villa in Kamakura or a summer home in Karuizawa. I don't know anything about the Phillipines, so I can't comment on that, but California might be very interesting. How about beachfront property on the North Shore of Oahu or on Maui--does anyone know about any good deals there?

[Dundas]

I wanted to know how much income tax do you pay on your properties?

I found this website and it says;

RENTAL INCOME TAX

Non-resident individuals earning rental income from Japanese property are taxed at 10%. Taxable income is gross rent less income-generating expenses and depreciation.

Just wondering if it's true.

[Base]

The effective tax rate is lower.

BTW, the keibaiyasan (foreclosure "helpers") charge high because auctioned places are full of properties with easements and other problems. You can get burned easily if you don't know what you're doing, which is why regular Japanese don't participate.

[Shouganai]

The effective tax rate is lower.

BTW, the keibaiyasan (foreclosure "helpers") charge high because auctioned places are full of properties with easements and other problems. You can get burned easily if you don't know what you're doing, which is why regular Japanese don't participate.

Problems, problems, problems. Risks are not avoided, they are managed. There is so much 'scary risk' priced into foreclosed property in Japan, only an absolute idiot would lose money. Now, when I think of risk management, I don't consider the Japanese to be among the most prudent in the world. Why? They are risk evaders rather than risk managers. Of course we can all huddle in our parents home until they die, or we can step out in the real world and build/buy our own home. Its hard to finance a property anywhere in the world. Japan offers the promise of buying a reasonable place for cash, and you can actually profit just on the purchase.

You talked about easements. If you think about the actual risk involved, quantify/qualify it, it really is a small risk, and easily managed. For instance:
1. I would not expect new subdivisions to have land boundary problems. Old farms in rural areas will have.
2. I would only expect easements to be a problem if you are building a new place. If you are happy with the existing home, again, so problem exists.

You will come across farm houses which will have unlicensed buildings, underwater water storage banks, septic systems, etc. Do you need to fear? Japan has only been a highly organised society for the last 30 years. Before that it was the 'Wild West'. Do you think the local govt is going to come in and ask you to change something done 30 years ago. Particularly after the court documents (i.e. the govt) did not say it was there. The answer is no because there are many such instances of illegality in the old days.

Nope, foreclosed properties are one of the best kept secrets in Japan, and thinking people are engaging in the market. There is information on the net about how to buy foreclosed property in Japan for 'safety' people. Japan is full of those, but its full of foreclosed houses too, so its quite an opportunity. You don't have to pay thousands for a broker to guide you through the process, you choose to.

PS: Risk is managed, not avoided. One persons perception of risk is another man's opportunity.

[Dogen Z]

....
PS: Risk is managed, not avoided. One persons perception of risk is another man's opportunity.

Scam artist Greg Maddux would be proud of you.

[Base]

you would need to find a court office who is prepared to help you speak in English (sic), and help you fill out the documentation...Risk is managed, not avoided.

Huh? How is this possibly managing risk?
This is really your advice?

On one end, you can do that, just blindly fill out the forms.
On the other end of the spectrum, you can pay a professional and minimize risk.

Nobody likes real estate agents, but they would be necessary evils if you are actually talking about "managing risk." Just like lawyers, you can represent yourself against a criminal suit or lawsuit, you have the right and you will save a lot of money on legal fees, and there is how-to information on the internet too. Doesn't make it a wise move, and it is not "managing risk."

You are talking about taking risk, not managing it.

I am not talking about "evading risk" either, there are lots of good cheap foreclosures and some are excellent investments. But it is not as happy as you try to make it sound and there are many, many bad ones where you WILL lose money if you buy one and be an "absolute idiot." I don't think you're a scam artist, you are just trying to flog your ebook.

[Shouganai]

Scam artist Greg Maddux would be proud of you.
Enlighten me. What's the scam?
Might I suggest your cynicism is a reflection of the fact that:
1. You fear to tread where others take steps
2. You fear the responsibility to make judgements where others recognise the value of doing so.

[Shouganai]

Huh? How is this possibly managing risk?
This is really your advice?
On one end, you can do that, just blindly fill out the forms.
On the other end of the spectrum, you can pay a professional and minimize risk.
I'm not suggesting that people act blindly. Yes, you can get a professional to help you, though I would suggest unless you find a good deal it will look less attractive after agents take their cut, since they will require 10%+minimum fees rather than 6% for standard agent sales. If you can find an agent who offers a good deal then yeh, go for it. Just I didn't find one.
Nobody likes real estate agents, but they would be necessary evils if you are actually talking about "managing risk."
I like some agents. But really you miss the point. What is the role of an agent? To introduce you to properties, and to offer some advice, if they are so inclined, in order to make money. Do you expect good service (as a foreigner) from them? You are more at risk with them if you don't speak Japanese, as you are signing a contract with a commercial interest. Very risky? Of course you could have a friend, but many Japanese have poor financial literacy, and lack critical thinking skills, or personal involvement.
I would prefer to act through the court system. The Japanese real estate industry was famous 'scams' in the 1980s, and there is still some of that behaviour around. A foreigner who doesn't read Japanese is a ******, so if I was managing risk, I would say the foreclosed property route is safer for that reason. That is not to say all foreclosed properties are great, there are some dogs, but remember the reason they are in foreclosure is because:
1. They were credible enough to get a loan
2. They lost their job or went into net negative equity for often no fault of their own (given the financial manipulation)
3. Their homes were likely built around mid-late 1980s (so 20 years old only)
4. They were foreclosed because their home was not repaid, not because it had engineering flaws.
Just like lawyers, you can represent yourself against a criminal suit or lawsuit, you have the right and you will save a lot of money on legal fees, and there is how-to information on the internet too. Doesn't make it a wise move, and it is not "managing risk."
You have lived a sheltered or unthinking existence because you really have not thought this through or acted. If you had, you would know that yeh, you can employ a lawyer, but you don't renounce judgement upon contracting them. You still carry a risk, and they are less invested than you, so there is a risk if you substitute their thinking for your own.
You are talking about taking risk, not managing it.
You need to act like a critical thinker ALWAYS when employing others to act on your behalf or advise you. That is the risk management tool I am suggesting you use. To understand rather than accept. All you need is resources to judge the situation, so search the internet for resources by people that have bought foreclosed property. There is a lot of info out there for free. Personally I don't mind paying people for information/expertise, but I don't shrug from thinking.
I am not talking about "evading risk" either, there are lots of good cheap foreclosures and some are excellent investments. But it is not as happy as you try to make it sound and there are many, many bad ones where you WILL lose money if you buy one and be an "absolute idiot.
Actually by suggesting going to a lawyer for safety, as if that is going to protect you might suggest some underlying false sense of security. Evasive? Maybe. The well-trodden route I think is more risky than you think.
I don't step back from what I said. An 'absolute idiot' does not think. Never said there was not bad foreclosed properties. But people who think they are protecting themselves by going through the real estate industry are misguided. The Japanese real estate industry will look after its own, it has a collectivist reputation to protect, and as a foreigner, you don't matter. The court system is far less risky because it has:
1. Solid record on procedures
2. Its not ambitiously trying to screw you to make money
3. It has a good track record on disclosure - not perfect but good.
Paying $'000s to a broker to buy a property is a risk. Its the risk of having less savings if some tangible risk arises. Afterall no one is perfect. Everyone has to think.

[Dogen Z]

True scam artists like Maddux can hide their scam until the very end when it's too late for those suckered in.

It would be remiss of me not to warn forum readers of extravagant claims about real estate investment and the considerable risk involved when even pros regularly fail. Downplaying those risks is a clear sign that someone is trying to scam someone, especially if that someone goes to great length in trying to do it.

[jferrina]

Sirs, I don't see a real issue in your debate. Leave facts as they are.
There are risks involved in buying property anywhere in the world. It's up to the serious investor to research on the risks, benefits and strategies. There are resources available everywhere, online and in paper. It's up to the investor to filter through the resources. There are resources from credible authors and resources from those just trying to make money. It's very very easy to tell if a person is just blabbering, trying to say something to convey they are smart. There are many people who try to talk without thinking. These are people who make judgements without proper information. However, there are sources of good and reliable information. And yes, these sources of credible information are also advertised. So my suggestion to readers is, before they would make judgments, they need to "think" better. If they aren't very smart, then perhaps they should read more then before speaking.

[Base]

"You have lived a sheltered or unthinking existence because you really have not thought this through or acted"

You're funny

[22yrsInJapGaijin]

Possibly could have left this line out...
"You have lived a sheltered or unthinking existence because you really have not thought this through or acted"...
...but apart from that everything you have said is accurate.
Court system (saiban) foreclosures (keibai) are an incredible way to make money. I usually buy large residential blocks. If you are lucky you can get an ugly one really cheaply, then just drop the rent and get people in. You still need estate agents to get people in, but if the price is right and the property is not a complete dump then you can do it.
The best profit I have made is when I buy a property WITHOUT buying the land.
Sometimes they are offered at such cheap prices that you can get a 40% return...although I only have one of those...the others always seem to be "Torisagi" or taken off the market before auction because some agent has done a deal...

[anpan]

i know that when you bid only house without land, you may have get high yield rate.Because bidder can buy real estate which has no property right for land very cheaply.Whey they can buy cheaply ? Cuz,in order to retain house on rental land(shakuchi),you have to contract with owner of land.You have to contract of rent or Chijouken .And you have to negotiate with them before you bid it.Because when you make successful bid ,and you find that land owner refuse to contract with you,you can not use your house on it.You have to remove the house by yourself.You have to be careful when you bid such real estate.But this is why you have a chance to buy real estate very cheaply.If you can not have enough knowledge about japanese law,you had better hire professinal agent.Agent who can negotiate with land owner on behalf of you.And i know that Mizushima corporation is only agent who can be available for foreigners.please search in Google with "foreclose , japan, akiyama" .
you can find "japan foreclosed properties ".this is their blog site.You can see it via your cell phone.

[22yrsInJapGaijin]

Hi Anpan,
No that is not correct. You don't have to remove your building. You have a right to use the land by precedent. The contract with the land owner is a formality to which he can not refuse. The worst that happens is it has to go through the court system in order to enforce it.
I am talking about a court appointed liquidation sale by "Keibai" the court will give you free legal assistance for 6 months after purchase of a property. My wife doesn't want to pay our lawyer so she submits all relevant documents by herself. So you do need the help of a Japanese person when you run into difficulties. (Mizushima may be good I don't know.)
The main problem usually faced is when some low level wannabe Yakuza or a right winger either rents or occupies one of the apartments and you have to kick them out through the court system. I have had to do this several times. However that was not because I bought a dodgy property, it was because the agent who let the unit didn't check carefully who they were putting in, the right-winger for instance used his sister's name as a front when moving in. Now we use "Mag" which is a debt collection/ rental insurance group that covers us if someone doesn't pay the rent.

[Dogen Z]

If you're going to sink a lot of your money in Japanese property, you should deal with people with an established reputation. Here are 2 firms that can be recommended.

Century 21
http://www.century21japan.com/

Coldwell Bankers
http://www.coldwellbankerpreviews.com/servlet/ResourceGuide?action=showArticle&articleId=53768

If you're looking for commercial property, contact this firm, CB Richard Ellis, first.
http://www.cbre.co.jp/Pages/Default.aspx

Please be aware of the difference between speculation and investing. As they say, "If you don't know what you are doing, the real estate market can provide with an expensive lesson."

You should also be aware that new fair market accounting rules for real estate will take effect in Japan in April next year, and many firms are trying to unload property that cannot produce revenue.

Finally, don't be fooled by anyone who says a recovery is right around the corner. The recovery may be as weak, feeble, and lengthy as the lost decade.

[22yrsInJapGaijin]

Thanks for those contacts Dogen. I will contact them.
... and thanks for that good advice, I wasn't aware of the changes to the accounting rules.
I think there will be more bargains coming out slowly.
I am primarily looking at property in the kanto regions outside of Tokyo.

[anpan]

[COLOR="Red"][B][SIZE="5"]Thank you for your swift reply.And I am sorry for my late reply.
No that is not correct. You don't have to remove your building. You have a right to use the land by precedent. The contract with the land owner is a formality to which he can not refuse. The worst that happens is it has to go through the court system in order to enforce it.
As for this your kind reply, it is not always correct.As you mentioned,when fomer owner have right (for example, rent or chijouken),the contract will succeed to next onwer.If land owner refuse to finish contract , reasonable reason to refuse is necessary.
But in auction by court office, there are cases that house owner have not right for land.
In japanese civil code, we call it "shiyou taishaku".let's say, house owner is Mr,MIzuhima and land owner is his father.in such case, there will not be contract between Mizushima and his father.And in this situation, if the house is seized by lender and begin to auciton, the bidder of house have no right to use lot.
And in other case, rent contract is" teiki shakuchi ken".this is not renewed automatically .And when certain period finished, land owner can refuse to renew contract without reason.
So, in order to participate in japanese foreclosure auction, you need to know several kind of law.So, if you are not professional about law in japan, you have to be careful before participate in auction.Even japanese people may make terrible mistake in auciton.:bluush::souka::wave::okashii:
""I am talking about a court appointed liquidation sale by "Keibai" the court will give you free legal assistance for 6 months after purchase of a property. ""
This is not correct,sorry. it is absolutely not free.It cost very high money.when you pay your balance money to court office, you can use "hudousan hikiwatashi meirei" whithin 6 months.But it cost sometime 1000000 yen .Because, bidder have to pay fee for execution officer and transporter of garbage (which former owner leave)and rent warehouse to keep the garbage.What you bid is real estate ,but belongings.so , you can not dispose of belongings by yourself.
So, professional keibai agent will not use such method.And we negotiate with former owner and ask them to dispose their belongings by themselves.And in this time, we need skill of negotiation.Do you have such experice ?
If you do not have such experience, please command us.

please serach for our website with "japan,foreclosed properties , akiyama".

[22yrsInJapGaijin]

Yes Anpan, I understand what you are saying. That's right there are many difficult points to deal with. But I don't think you need to be a professional if you have a strong will, you can deal with those problems. Although I always research the property and try not to bid on a property that may have problems. But Japanese people shouldn't be fearful about investing in property. This seems to be a scare tactic used to keep people away from the money making investments. I know very highly educated people who seem to be clever and yet they have no confidence to invest money. Why?
Just fear?
Maybe you are right, it might be better to use Akiyama agent. How much commission does Akiyama Keibai bukken charge? I think it would be safer for most people to use Akiyama.

But I think that the court will give a detailed summary of the property and it will be written who is living there and whether they have a contract and so on.

Yes negotiation is the best way and sometimes I had to pay money to the previous owner.

I thought it was free but, yes, it seems that you do have to pay for the court appointed marshal or the garbage removal etc....

[anpan]

thank you for your reply.I want to admire your cleverness.
I think you are the person who is knowledgeable and clever and can make profit from investment.If all of foregners who live in japan are clever as much as you, our business will belly up.But fortunately, even most japanese people do not know how to bid foreclosed properties and what point shoud they consider.
our company charge about 5 percent of successful bidding price.
Do you think it is expensive ?
But in ordinal realtors also charge u 3 percent of sales price .
And you have a chance to buy real estate much cheaper than market price.
Especially, in case of foreclosed property which may cause trouble.
As you wrote, we do not want to meet with trouble.But, if we can solve the trouble, you have a chance to get real estate at very lot price.
there is stereotype saying about foreclosure."in auction of real estate, we do not buy real estate ,but case."競売では、私たちは、不動産を買っているのではない。事件を買っているのだ。
So, it is important that we should know whether we can solve the trouble or not.
if you are confident that you can solve the trouble ,it is nice of you to bid it .:bluush::bluush::bluush:

[gaijinalways]

I agree with anpan, it can be very difficult to buy foreclosed properties, but if you're used to doing it,and ahve the free cash (or can borrow) to do it, then it can be very lucrative. I'm afraid most of my money will be tied up with renovating the house that we have, so I think that more Japanese real estate is probably off limits for now.

One thing I was wondering, beyond the stated renter types problems, is it difficult to get the proper financing for these deals? Some of the property owners don't like to sell to foreigners, at least from what I've heard from other wannabe foreign buyers.

Also, the zoning in some cases can be complex, as my mother-in-law is finding out to her detriment for some larger tracts of land that she owns in a rural area.

And finally, is there any problem with getting out? Generally on property in Japan where you don't own the land, the value of the building itself only declines, leaving the buyer with no exit strategy. Can be fine if you plan to hold the property for a longer period of time or plan to sell it after a short period, but in Japan, it is usually the value of the land that drives the prices in real estate (unlike in many other Western countries where renovated properties can bring a much larger increased value on a property).

[Iluvjapan]

Enlighten me. What's the scam?
Might I suggest your cynicism is a reflection of the fact that:
1. You fear to tread where others take steps
2. You fear the responsibility to make judgements where others recognise the value of doing so.
Mate it is so obvious that you're just trying to sell your book Japan Foreclosed Property.
One question for you, If there is so much money in Foreclosed property in Japan (which there isn't) why are you trying to sell ebooks for $US19.95? You are a scam artist. Go back to selling 2nd hand cars mate.

[gaijinalways]

Yes, he has gone awful quiet since I posted my last question. Oh well, when it appears to be too good to be true, sometimes it is.:relief::wave:

[Base]

Not quite.

Tens of thousand of properties sell by foreclosure every month, mostly bought and resold by the same companies. It is closed (in effect) to most regular buyers, but VERY lucrative and a very good chance to make a LOT of money. Shouganai is questionable, but the numbers are not. It is a specialty, but Shouganai just does not have a grip at how to make money enough money at it, and needs to resort to flogging his ebook. Everyone else seems to do well for themselves, myself included (no Shouganai, I do buy foreclosures already, I just took issue with you telling people to buy blindly because you can get royally screwed if you don't what you are doing -- use foreclosedjapan or the anpanman guy or someone else)

But, in your defense, it is cute how one guy says if he defends himself he is full of it, and then others pick at him for not answering.

(but he seems to run off to his blog to defend himself anyway when this happens)

[gaijinalways]

Do you have a link to his blog? I don't see it on his profile.


But, in your defense, it is cute how one guy says if he defends himself he is full of it, and then others pick at him for not answering.

No in my case, I asked questions related to the process and what the exit strategy is. Since you have admitted that you also buy foreclosure properties in Japan (and I will assume that you also buy buildings without title to the land underneath for the same reasons the OP stated), then perhaps you can explain to me about your exit strategy from this kind of investment?

[Dogen Z]

An exit strategy in this economy is the greater fool theory. That is, find someone more foolish to take it off your hands. In the meantime, you will be responsible for taxes, maintenance costs, and agent fees.

R.E. taxes are explained at this site: http://www.realestate-tokyo.com/sale/guide/

[gaijinalways]

An exit strategy in this economy is the greater fool theory.

In other words, you don't have one:okashii:. I didn't say you had to sell now:p!

So again, what is your exit strategy:??

[22yrsInJapGaijin]

Yeah exit strategy doesn't look so good. Actually not only Japan but any country with falling property values. Although I think in a couple of years we might see inflation in which case I hope property goes up.
I made my capital gains on my properties in Sydney (I sold most of them in 2003) I have been investing and developing in Sydney since 1988. I made lots of money 'cause it was a rising market, but who knew? I mean hindsight is a wonderful thing.

Anyway I brought my cash over to Japan and now I have about 114 apartments, (in Kanto area 1-2hrs from Tokyo)

Japan Foreclosed Property is really, really lucrative if you buy well. lol. That is the same everywhere with everything, buy low....(sell high?) I have sold some properties here (didn't gain/lose much) but they were ones that I bought through a normal sale. The estate agents made sure they were full at the time and then, after 3 years I was having problems letting them and the rents had come down too...so I was sucked in because on paper they looked good on paper, and the buildings themselves were high quality. But I paid too much..(about 1.8 million US. For 44 one beds)

Forclosed property is much cheaper. One Tekotsu 20 x 1 bedrooms only cost 23,000,000 Although as DogenZ said, maintanence costs can be high. I do all the painting myself and I employ another worker. I have been here long enough to speak Japanese fluently (although not write those damn kanji) so the risks can be managed. I have just bought shouganai's e-book and will start it today. But from what he has posted on this site it just confirms what I have already experienced. The reason I bought his book is because it is in English, and I tend to rely on my wife too much when it comes to many tax issues or rules etc. so the more knowledge I can get in English the better.

But I have to comment on Iluvjapan's comment up the top.
It makes me F_king angry.
Mate it is so obvious that you're just trying to sell your book Japan Foreclosed Property.
One question for you, If there is so much money in Foreclosed property in Japan (which there isn't) why are you trying to sell ebooks for $US19.95? You are a scam artist. Go back to selling 2nd hand cars mate.
Shouganai is not a scam artist. He wrote a book because that is what intelligent people do. There IS so much money in foreclosed property. And next time mate, instead of knocking others, THINK before you post. You are OBVIOUSLY an unintelligent Dope. So F off.
Your comment makes me sick. (Everyone, not all Australians are dumb.)
Iluvjapan why don't YOU go back to selling second hand cars you f-king ignoramus.

At the very least Shouganai is writing something that will help people to become self-reliant.

If people took responsibility over their own lives and pension funds they wouldn't be whining when they don't have enough money..(read "Rich Dad Poor Dad")
I don't have to work anymore because I have always invested in property.
I am not as clever as some engineers and professionals in Japan, but I am a lot f_king richer. (I have just bought a new Lexus IS-F) Many people work hard and deserve to have a nest egg. For me that has been mainly foreclosed apartment blocks. I gained wealth even though my salary is nothing special.

Both in parts of Sydney and parts of Japan there are opportunities but you do need to research carefully.
Find out if the population growth is declining in that area. Find out the rentals, ASK around what other people are getting, how many vacancies in the area...have a look at numerous foreclosed properties and do the math before blindly putting in a bid. Try for a low bid and miss out several times, but, my point is, if you don't try, you will never succeed...and it is not Rocket science people. If I can do it, anyone with half a brain has a chance. Just spend the time researching it. It is a great hobby, once you get into it you become enthralled.....


P.S. Iluvjapan...don't bother replying to this post. I don't want to hear any more of your dumbass comments.

[Dogen Z]

In other words, you don't have one:okashii:. I didn't say you had to sell now:p!
So again, what is your exit strategy:??

You guys who keep bumping up this thread are proposing a very unsophisticated "investing" proposal. You seem to want suckers to believe another real estate bubble is on the horizon so its time to buy now. Just because it was successful in the past does not translate to success in the future. Such a claim is called survivor bias in the investing world. Just because it happened in the past does not mean it is going to happen again, especially with a shrinking population and a financial crises that showed how imperfect market fundamentalism is, so don't expect any structural reform in the neaf future.

If Tokyo wins its Olympic bid, there might be a temporary increase in value in some properties, but Goldman Sachs has already scooped up the most promising properties. Other investors should be very careful.

[22yrsInJapGaijin]

Oookay...so don't speculate...but what are you going to do with your spare cash?
It's either the stock market or property. If you can leverage by getting a loan and you can find a block of apartments at a low enough price, then it can be very good return and cashflow. I am in a rural area and can find some real bargains, and my only other competition is from Real Estate agents who bid low.
I don't know your area or whether the rent market is decreasing in that area etc. But it's worth a look.

[Dogen Z]

I wonder why REITs are having such a hard time staying afloat when you are having such an easy time. :okashii:

Maybe you could start your own REIT. With a good track record, you'll have an easier time attracting a following, especially since investors wouldn't have to risk so much of his/her savings in a single property. :-)

In the meantime, I think I'll try to preserve my cash rather than risk it on anonymous tips from the Internet.

[gaijinalways]

Originally Posted by gaijinalways
In other words, you don't have one. I didn't say you had to sell now!
So again, what is your exit strategy?


Dogen Z posted You guys who keep bumping up this thread are proposing a very unsophisticated "investing" proposal. You seem to want suckers to believe another real estate bubble is on the horizon so its time to buy now. Just because it was successful in the past does not translate to success in the future. Such a claim is called survivor bias in the investing world. Just because it happened in the past does not mean it is going to happen again, especially with a shrinking population and a financial crises that showed how imperfect market fundamentalism is, so don't expect any structural reform in the neaf future.

If Tokyo wins its Olympic bid, there might be a temporary increase in value in some properties, but Goldman Sachs has already scooped up the most promising properties. Other investors should be very careful.

Again, please answer the question? If you need to exit this investment at some point in time, how will you do it? Will you lose money when you sell the rental units, or do you have some other alternative (conversion to other use, then sell, etc..)?


22yrsInJapGaijin posted Yeah exit strategy doesn't look so good.

Thank you for confirming what I feel is true.

If people took responsibility over their own lives and pension funds they wouldn't be whining when they don't have enough money..(read "Rich Dad Poor Dad")

Actually, if you read carefuly about the author, you'll find that his initial money came in from selling his books, which don't really give a lot of advice except to recommend to try and get income where the tax rates are more favorable and you can leverage your time better. And of course, try and put your money into things that will increase your passive income, and not just eat a hole in your wallet.

It's not easy for many people to do that (forvarious reasons), otherwise everyone would. But certainly his general advice is not wrong, just not that valuable.

Both in parts of Sydney and parts of Japan there are opportunities but you do need to research carefully.

I agree, and then even then, luck plays a part. That and having available money to make the intiial investements or an income to support a loan to get seed capital. I only recently have had more available cash, but now with a housing loan on top of that, it's not likely I can qualify for another loan. My wife and I have wanted to try and do it, but it's not always that easy.

But, hats off to you, you have been successful with it. I wish you continuing success.

PS When you say 1-2 hours from Tokyo, can you be more specific (if you're afraid of giving away your investment 'secrets', don't worry, I understand if you don't wish to say where)? Just wondering. I have in mind another area, but it much closer to Tokyo, but I don't think the number of foreclosures in that area are very numerous.

[Base]

i) i am sorry for the bump. it is not meant to bump, but it happens if people talk about things on forums. live with it

ii) i guess there are not 3 people talking about foreclosures. 22 years and shouganai look to me like the same person

iii) there is very good money in foreclosures. spend the 20 dollars on the ebook so you can understand what not to do. from what i have gathered by his posts on other forums, shouganai advocates buying a crappy property in a crappy neighborhood. you can make money doing this, they come so cheap, but this is not the best strategy and you might need to flog ebooks to make up for losses.

The attackers here don't seem to know much either.
Leased land is not very common and i am a traditional westerner, i like my land.
Nobody has actually looked or uses numbers anywhere. But for the sake of argument, even though I am not arguing:

I did bid on one leased land house. Normally I do not bother, but I will use this as an example because this is what everyone seems to be talking about.

The land rent was very expensive, 30,000 yen per month. There was 22 years left on the land lease contract.
The house was 12 years old (I think, I don't remember now exactly but about that). Location was kind of crappy but could get about 120,000 yen a month. I had someone before bidding that was going to pay 95,00 per month to rent, a big discount for friends and because it could be rented right away and I knew they would stay for many years. It was near my house, which anyone prefers of course, but I buy everywhere anyway.

I bid 800,000 yen. Closing costs and agent fees would have totalled in at 1,478,000 (I use and pay for professionals only if something I am not completely comfortable with, like leased land and negotiations).

I do not understand the exit strategy either. I know some people seem to think it is a zero-sum game "greater fool". If I sell then the buyer is ripped off. Or, if the buyer puts up a new office building and makes a killing, I am screwed because I didn't make any of that money.
Whatever, I am in for about 1.5 million cost, costs me 2 million to pull it down at the end, brings me to 3.5 million. On the other hand, I get 57,000 a month (after property management) for 22 years. Yes, there is maintenance, yes there are property taxes, yes there might be a time with no renters and I have to fork out for renovations. My exit strategy was to give back the land at the end after having pocketed a decent profit. Get your calculator.

Just to reiterate, I like buys with land better, but I did still bid on the above.
I got topped with a 2,200,000 bid and lost so never thought about it again until this conversation.
I did not want to bid higher because I did not like the 30,000 yen a month cost and if the house was not rented this still gets charged. It was in a major city and demand was there, so it would not stay empty too long. It is easy to see more clearly and have 20-20 hindsight after an auction, but you do not know the winning bid amount going in.

[Dogen Z]

Why are you guys (or maybe all of you guys are just one guy) are so adamant about promoting real investing in Japan? I would laud you for trying to support the flagging real estate industry in Japan, but I feel you have more self-interested motives. You rave about upside potential and gloss over any difficulties. Actually, anyone who really knew anything about the market and were honest, would warn people of the problems first, then talk about possible upside potential.

BTW, you haven't mentioned the difficulties in finding renters in this depressed market. Have you seen the number of "tenant boshuu" signs around? Landowners are desparate for renters. Many places remain empty for months, which is the reason so many REITs have gone down the drain.

So you have to including marketing expense to you numbers. And you forgot to mention insurance costs. And you forgot to mention renters rights, which are probably more numerous than in your country back home. You also need to include agent costs because most foreigners can't communicate very well with Japanese renters. Etc, etc, etc.

[gaijinalways]

Base posted Leased land is not very common and i am a traditional westerner, i like my land.

I disagree, if you were looking at what the same or two other posters were talking about, they were talking about buying apartments (not houses, which is the example you gave), which generally in Japan don't come with their own land. Even when you buy buildings in Japan, for example an apartment building, you may not get the land underneath it. You do normally have an indefinate lease (where the lease amount can go up sometimes), but it is usually not a case of being forced off the property at some time in the future.

The example you gave is interesting, with a possible net income of some 12 million yen (of course, as you mentioned, there are taxes too and some other costs, as well as missed rents, but you may be able to raise the rent at some point too, by putting on a few coats of paint:D). Of course that is assuming you don't need any of the money you put in for 22 years, which to me is a fairly long time frame to make 12 million. Then again, if you were able to do the same thing with several properties like this, and set aside enough money to 'pull everything down', you'd be sitting pretty good at the end of that 20 or so year period, and probably wouldn't need to sell ebooks:p.

[Base]

Why are you guys (or maybe all of you guys are just one guy) are so adamant about promoting real investing in Japan?
It's a discussion board.
You are the one adamantly against investing in real estate. You misunderstand, I can respect that, a lot of people have lost a lot of money at real estate.
But no, you may not have the last word ("I spoke, now stop bumping"). People will continue to discuss it.

I would laud you for trying to support the flagging real estate industry in Japan, but I feel you have more self-interested motives.
No argument here.

You rave about upside potential and gloss over any difficulties. Actually, anyone who really knew anything about the market and were honest, would warn people of the problems first, then talk about possible upside potential.
The problem is I was looking for a more advanced discussion. Warning people of the problems first? Guess what, I am not here to sell anything and if others do not want to buy, good for them. Their choice and your choice. To add, I think the majority of people here need more help with answering "How can I go to Japan after I graduate high school."

I was listening to your opinion because it was negative. I was hoping actual numbers I put up would be met with actual numbers of a very pessimistic nature. This I might learn from.

[Base]

I disagree, if you were looking at what the same or two other posters were talking about, they were talking about buying apartments (not houses, which is the example you gave), which generally in Japan don't come with their own land.

Yes they do. The land is usually shoyuken freehold, but you get only a small portion depending on the number of apartments in the building. Leasing happens, more often than the west which is why everyone seems to think this is how it is here.

The example you gave is interesting, with a possible net income of some 12 million yen (of course, as you mentioned, there are taxes too and some other costs, as well as missed rents, but you may be able to raise the rent at some point too, by putting on a few coats of paint:D).
12 million? No way, it would turn out much less after expenses.

Of course that is assuming you don't need any of the money you put in for 22 years,
The idea was to be cash-flow positive from the get-go with friends ready to move in, not put money in.

which to me is a fairly long time frame to make 12 million.I'd agree that 22 years is a long time, but the buy in is only 1.5 million and can always sell during that time if a good price is offered, redevelop, etc.

wouldn't need to sell ebooks:p.
Better than schizophrenia. The other end of the spectrum, where we are all one.

Okay, look man, you got me, I'll give you a discount on the/my/our ebook, okay? You just help me push it here to the kiddies and I'll give it to you for the everyday low price of $9.95 :D

[Rollin_j's]

Well I hope the guys/gals at this site can help > foreclosedjapan.com/openrealty/search.html[/url] .. My wife and I found several condos and detached homes we are interested in. I am still awaiting word back from them. I E-Mailed them yesterday.
Has anyone dealt with this agency in the past?