patrick.net

Yeah, I noticed these guys (Google Maps Link) have a lot of rental listings in my old stomping grounds.

Probably can't go wrong buying good Tokyo land. Some day half of Japan will live in the 23-ku . . .

The above property is listed for rent at Y140,000/mo, $1700/mo at current rates.

http://www.kencorp.co.jp/housing/lease/2008090470.html

Too high for most Japanese these days, that's for sure.

@Troy

Thanks for the link. I have a few anecdotal stories too.
One Australian acquaintance of mine (with a Japanese wife) bought a condominium in the Nakameguro area of Tokyo.
Apparently they are paying ¥1,350 on the monthly mortgage payments (with those ultra low rates Japan offers on yen mortgages). They have since moved to Australia and are renting it out for about $2,300/ month gross. Two points to note here (1) I am not sure if the mortgage was for 80% or 90% of the value of the condo (I may find out later). (2) They were able to get a tenant who is a foreigner in Japan, but through an online advertising sytem that reduces middleman costs.

I don't know if anyone besides Troy would know where Nakameguro is, but it is a better area of Tokyo and is conveniently near a subway/ train station.

I've got ties to Saitama Japan, and would love to see some more info on investing there. From the little research I did, the profit yields were higher on small rental complexes far away from Tokyo.

btw, this book looks interesting:

http://www.amazon.com/Landed-guide-buying-property-Japan/dp/9881714737

dunno how good it is tho.

I believe the reason is that the Japanese expect the rent will not increase in the future.

In China, it is the opposite, the rent only covers 1/5 of the mortgage, because Chinese are dreaming that their wages will go up 5 times in the near future.

Troy, I met that guy (Christopher Dillon) at a seminar he was hosting; this was after I'd already bought my own condo, but it was still worth going to and listening to. He got started in (IIRC) Hong Kong before moving to Japan.

I've been to Nakameguro; it's a nice-enough area but I prefer Bunkyo-ku (near Tokyo University) myself. Eastern Shinjuku and northern Chiyoda aren't too bad either.

It amazes me that there are residences within a few minutes' walk of the central financial district (in Chiyoda-ku) yet the premium to buy and even rent them is so small. I suspect one factor is that Japanese wives aren't too keen on living in the center of town and tend to want fewer neighbors, bigger supermarkets, and playgrounds -- their husbands can suffer on those packed trains! I'm happy to live right in the middle of the city (and have a partner who also likes it).

Xenogear2 (loved that game BTW), Japan was once like China is now. Until about 1989 property prices were insane. Apartments in the building I live in now cost over $400k 20 years ago but rented for about the same as now. Some of that is from the building getting older -- homes are a disposable good here -- but the rest is the long slow seep of air from that massive bubble.

And that's in central Tokyo. Out in the countryside (which means, to Tokyoites, the entire remainder of the country, including other major cities like Kyoto and Sapporo) there's property that you practically have to give away, and there are apartments that can barely rent for enough to cover maintenance costs. The government made their bed when they decided to centralize everything in Tokyo, and then again when they set up financial strategies that blatantly take advantage of the young in favor of retirees, and now they have to lie in it.

Here is a site listing some apt properties. You can search by yield.

http://www.renga-international.com/realestates/?page=1&article_type_building=9&article_type_using=2&registed_area_group=3&location=&sort_by_item=3&sort_by_direction=1&search=Search

Anyone have any other good listings sites for Japan? I've heard it can be incredibly difficult for small investing foreigners to own, and run property here. Japanese property management co's will steer clients away from gaijin owned properties :)

If I had the capital I'd love to run a gaijin apartment building.

Things have apparently gotten a lot better since the 90s (no reikin/guarantor) when I was there but there's plenty of gaijin who need an affordable and low-BS place so there's still an unmet market need.

I had a lot of respect for my apartment landlord. I wanted to live within walking distance of the National Azabu and thanks to him redeveloping his land into a 5-unit building I could (he lived on the first floor and his son lived in a unit on the 2nd).

http://www.hiroo-chintai.com/detail/domicile-takamura/

Apparently the place was built in 1985 so he bought before the big run-up at least.

I'd like to do what he did. I don't think it'd be hard to get renters via advertisements and word-of-mouth. Screw the retnal agents, what a parasitical pox they are, though knowing how Japan works I guess LLs have to actually work through them and can't rent direct.

@Michinaga

I don't know if you are in Japan now, but you appear to know a great deal about this country. I am living in Shinjuku Ward (but there is no setting for it on Patrick's zip code!)

cheers.

What happened to investing in cream properties in CA?

My parents have had a horrible nightmare with their rental property in japan. Dealing with the Japanese when you don't speak the language is insane in that country.

@ ih8alameda

Do they live in Japan? Anyway...

I found this article. Depreciation is brutal in Japan.

http://www.japantoday.com/category/features/view/how-to-make-money-on-property-in-tokyo

Hey American, I'm here in Tokyo right now in Shibuya. Not sure about property prices but everything else here is damn expensive.

One funny thing I've heard is that Japanese consider US the place where they can get nice things for cheap.

Based on my short time here I would definitely want to live in the central Tokyo if I stayed. So I can see why property prices are lower out in the burbs. It could be that rents are expected to fall, but who knows. It's really hard to navigate this culture when you dont speak the language.

I speak Japanese so that is little problem (once in awhile).

Are you visiting? Check out Odaiba. What are you interested in seeing?

yep im just visiting for a couple weeks. Shopping has been good. Arcades are fun. Also the cars here are pretty neat. I will check out Odaiba Thanks.

Meiji Jingu Shrine & Yoyogi Park (especially on Sundays).
The Oriental Bazaar Store on Omote Sando...
Senso Temple and Kaminari Gate
Roppongi Hills (the better part of Roppongi)

and don't miss Yokohama (actually a better city in my opinion)....

AIJ, I've met Mr. Oskamp, the host of that web conference, at the same place where the author of "Landed" was selling his book. If I decide to move into a bigger condo and have to borrow money, I'd look into dealing with him as supposedly he can arrange loans for Japanese property through banks in Australia. You have to pay Australian interest rates, but you get to have a mortgage, something that the typical immigrant can't get.

Where in Shinjuku are you? If Patrick ever allows three-digit postal codes, mine is 162.

Toothfairy, rent in central Tokyo can actually be cheaper than it is in big US cities if you don't mind lower-quality buildings and lower ceilings Rent per square foot is more in Manhattan, but rent per cubic foot is cheaper!

Property tax on a fully-depreciated house or apartment can be literally pennies a day -- mine is Y24,000 per year, or about 75c per day. That and maintenance are my only RE-related expenses. I'd be paying over $1000 per month if I were renting this place from a landlord!

161

The best part of Odaiba is taking the train out of Shinagawa Station and sitting in the front row where the train driver would be (it's an automated train). Last did that in 2002 when they were operating out of the temporary station so dunno if you can still doe that . . .

The Hakuhinkan toy store in Ginza is a pretty decent place to go, though the Ito-ya stationery store in Ginza is also good.

Man, I do anything for a bbq pork sandwich from Subway, though I doubt they still make them.

I also like a freshly-baked "batardo" from Pompadour bakery (there's stores throughout Tokyo) combined with a 1L of Koiwai Lact Coffee from am/pm. Usually the bread's ready around 9:30-10:00AM. Sooo good when it's still warm.

Man I miss Tokyo, I even miss the rent I was paying Y110,000 which was $900 to $1300 depending on the exchange rate ($1300 now, since the yen is back to where it was briefly in 1995).

I`m selling my place in Shibuya, 143 sqm. Yes rent will cover mortgage but barely if you include property tax and maintenance fees. and there is no shortage of foreign tenants that will appreciate a foreign landlord but I wouldnt invest here unless you live here. My place is now under contract and am waiting for the closing date. It tool two years to find a qualified and interested buyer.
Prices are falling, rents are not increasing as wages are stagant. Deflation is in the air.

Hi
I have owned rental property in Japan (all in the Kansai area, mostly Kobe) for the past 8 years. Net yields can run as high as 30%. So, paying off an older home can be done in as little as 4 years. I've had a lot of success with the properties that I own now (4 houses and a small 10 unit building), but the resale difficult. They are not for appreciation, but cash flow. But, it is a lot easier than the property business I had in Buffalo (NY) before I came here.

Holy cow there are more people around than I thought!

@srini.gypsy

Thanks for the info. . .Best of luck with it!

Srini, your place is so large that I imagine it was too expensive for the typical buyer, right? I can't imagine many people needing 143 m^2 even if they've got four or five kids. How much will you get for it, if you don't mind me asking?

I'm not looking for appreciation either; Tokyo RE is basically a defense against inflation, and a discount for prepaying future rent.

I bought my place at the end of 2008 for Y14m and put Y2.6m into renovations. I just saw two units in the same building go on sale, renovated, for Y15.8m. If mine were to sell at that price (and it might be more; my room is on the sunnier side and higher up), it would have declined by Y600k over two years.

So costs for the two years are Y600k + Y48k in property tax + Y600k in maintenance, for a total of Y1.25m. For comparison, I would have had to pay about Y2.8m to rent over that period. That's a Y1,550,000 (about $18,000) gain!

srini.gypsy says

I`m selling my place in Shibuya, 143 sqm. Yes rent will cover mortgage but barely if you include property tax and maintenance fees. and there is no shortage of foreign tenants that will appreciate a foreign landlord but I wouldnt invest here unless you live here. My place is now under contract and am waiting for the closing date. It tool two years to find a qualified and interested buyer.

Prices are falling, rents are not increasing as wages are stagant. Deflation is in the air.

Really! 2 years to find a buyer? That's where Japan is now after even two decades of fun time? But this is America, no Japan. Our home prices will shoot through the roof next year an investors will take all the troubled properties off the banks books. :)

American in Japan: thanks :-)

Michinaga says

Srini, your place is so large that I imagine it was too expensive for the typical buyer, right? I can’t imagine many people needing 143 m^2 even if they’ve got four or five kids. How much will you get for it, if you don’t mind me asking?

60M yen, it was a way to hedge out of the dollar as when i bought the place it was 110yen.
The building is commercial/residential, so home/office, or for extended families, aging parents etc.

Yeah it`s not a typical place. There were quite a few people that looked at it as I took the price down every few months, but most people were more interested in having a fancy entrance to the building, which mine does not have.

I’m not looking for appreciation either; Tokyo RE is basically a defense against inflation, and a discount for prepaying future rent.

In normal times in the past that has been true, but i don`t think we are in inflationary times.
Atleast not yet.

I bought my place at the end of 2008 for Y14m and put Y2.6m into renovations. I just saw two units in the same building go on sale, renovated, for Y15.8m. If mine were to sell at that price (and it might be more; my room is on the sunnier side and higher up), it would have declined by Y600k over two years.
So costs for the two years are Y600k + Y48k in property tax + Y600k in maintenance, for a total of Y1.25m. For comparison, I would have had to pay about Y2.8m to rent over that period. That’s a Y1,550,000 (about $18,000) gain!

That`s not a bad deal. I took the same chance as i bought the place rather cheap, with a worst case scenario that I will have cheap rent if i need to sell at a certain discount to what i paid. In that sense it has worked out great, especially with the yen appreciation. assuming ofcourse that the current party closes. So far so good.

Bubblesitter: I like that name.
Yes 2 years, but I probably priced too high in the beginning also. Some interested buyers could not get financing as the bank appraisal was low, banks were being very cautious understandably. Some had another place to sell, incidentally in Naka Meguro, so that was holding them up.
Some buyers were very old, and wanted a place to share with their adult children & grand children but this required several people to like the place.

8 Min walk from shibuya station, lots of sun and 4 balconies, it`s a fantastic party place for Tokyo.
But I`m happy to move on though Tokyo is definitely a convenient city.
Here are some pics, if someone wants to start a bidding war :-)

Stay safe people.

oh the pics
http://www.yoru.com/tokyo_house_for_rent_shibuya/

ssri, thanks for nice pics. Laundry wire FTW. :)
What is that tube like thing sticked out on the ceiling?

Michinaga, how big is typical japanese condo in the city?
143 sqm is about 1300 sqft and that's typical 3 bed condo in US, you know.

^ nice enough . . . interest cost would be Y115,000 or so, can't rent that for that!

one would think Tokyo RE just might start inflating again. There certainly seems to be lots of noise in that direction.

Tokyo is like the hidden gem of Asia. No other city I'd want to live in, that's for sho'.

Looking at the new imaging of the city in Google Street View, I'm rather shocked at all the redevelopment that has been done in the 10+ years I've been gone. New buildings just everywhere.

I think by 2050 Japan will be just a) Tokyo and b) everywhere else.

40 sqm is like the baseline, though condos range from 25m2 for a simple 1K to 2LDK at 60-75m2. 3LDKs go up to 90m2, with deluxe up to 100m2. This is new construction.

In the 3 "cool" ku -- Shinjuku, Shibuya, and Minato-ku -- there are 5375 non-new mansions on the market according to yahoo

-40: 1800
40-60: 1500
60-80: 1050
80-100: 500
100-120: 250
120-150: 200
150+: 150

seaside: thats a light shade i made with construction paper.
143sqm is about 1530sqf.

troy: They changed the rules about building height and so lots of very high towers going up all over the place. There is a ton of apts and office space thats coming on the market.
I`m not sure who they are aiming for. and im not sure who or how they are financing all this.

I can see another commercial market meltdown happening and if they do manage to sell some apts, those people will be moving from other apts, and this will keep the rents from going up.
Might even make rents go down, as is happening in suburbs.

Any of you renting in Japan, this is the time to ask your landlord for rent reduction.
In Omotesando, my friends landlord offered it herself, just as i was advising my friend to do so.
I think she came down about 10%. I guess the landlord was not taking any chances on a vacancy.

@Troy

>In the 3 “cool” ku — Shinjuku, Shibuya, and Minato-ku

Many also add Setagaya ward to those 3.

@ssri

>They changed the rules about building height and so lots of very high towers going up all over the place. There is a ton of apts and office space thats coming on the market.
I`m not sure who they are aiming for. and im not sure who or how they are financing all this.

Agreed.

@seaside

140m Sq. is closer to 1540 sq ft. (sorry to nitpick)

American in Japan says

Many also add Setagaya ward to those 3.

gotta be inside the yamanote to be cool : )

there's nothing wrong with Jiyugaoka, Kichijoji, etc but one of my more fun times living in central tokyo was taking my bike out late at night on hot summer nights -- like midnight on a saturday -- and just cruise around the eastern part of Shinjuku-ku (NOT sanchome LOL but out by Ichigaya). So quiet for being right in the middle of the busiest city on the planet.

If you take a look at the listing on this page, makes my large shibuya place look cheap.
Even still it took 2 years to sell.
I just dont think there are many buyers in the market, and on top of that the banks are asking for large down payments 20% while low balling the appraisals. money is not moving and i bet that there is still a lot of bad loans on the books from 20 years ago.

Only thing thats keeping people above water is the ultra low int. rate and adustable rate mortgages. If interests spike up, then we could see a lot more defaults and prices tumble.
There is probably a political banking scandal lurking in the shadows thats holding things together for the time being.

i need to get some sleep :-) , i keep forgetting to post the links
http://www.realestate-tokyo.com/sale/hot/

I'm not sure how you people manage living on the outskirts of the city. What do you do if you miss the last train? I missed it last night plus it was raining and I ended up paying nearly $70 for a taxi cab just to the other side of downtown.

toothfairy says

What do you do if you miss the last train?

yeah, don't do that : )

Last trains start leaving around midnight, so yeah, don't plan on staying out all night drinking.

That's also why they stop Japanese baseball games, and also why concerts have to end by 11:00.

Troy, you were biking through my neighborhood!

I'd add Bunkyo-ku to the list of "cool" parts of Tokyo also. The university is there and there are good schools all the way down to kindergarten. RE ads invariably mention whatever good elementary school is nearby so as to attract parents. If I stay in Tokyo long-term and have children, we want to go live there again (or back to Kyoto, where RE is *really* cheap considering that it's in the historical/cultural center of the nation, though jobs are few).

I agree on the square meterage. My place is only 38 (just over 400 sqft) and feels small for two occupants; my old place (rented) was 45 and felt just right. Much more than that and I think you're overpaying, at least until you have a kid. (Then again, my neighbors are raising a baby in their 38 m^2, and the folks across the hall have a teenager.)

My next place is 12 sqm!, but its on the beach in Kohpangan :-)

I am back in Japan (from Central Europe). I am hoping the worst is over for now (knock on wood)...

American in Japan says

I am back in Japan (from Central Europe). I am hoping the worst is over for now (knock on wood)…

Stay safe. Isn't Michinaga somewhere there?