The following are the experiences of four foreigners who have ventured into property purchase in Japan.
Jim (American; 45 years old; 17 years in Japan) House for a family of two in Yokohama purchased in September 2008 for ¥65 million. “I thought it would be difficult to find a rental where I could park a car and a couple of motorcycles, as well as keep a couple of pets. Also, I thought it would be better to invest in property rather than rent. I’m not sure how long I’ll stay in Japan — but I’ve been saying that all along!
“The house is very well constructed, it looks like a ‘house’ (there are some strange designs here), and there is a decent amount of space between it and the surrounding properties.
“I bought it together with my wife. We split a 35-year loan we took out through a bank that the real-estate company introduced. We plan to pay it off sooner.
“The process went very smoothly, no doubt helped by the fact that I’m a permanent resident and we qualified financially. Of course, decreasing property values are a concern, but when you rent you’re spending money that will never return. To help ensure the property value remains high, I chose a location that’s quiet as well as convenient for commuters going to Tokyo or Yokohama. I also think the garage will make the property attractive as it’s a rare feature and will be a big sales point.
“At the end of the day, even if I never turn a profit I’ll be doing quite well if I can live in a nice place for a number of years and get most of my investment back.”
Rab (Scottish; 41 years old; 8.5 years in Japan) Land in Saitama Prefecture purchased for ¥14.5 million, and a log house for a family of six being built for ¥30 million. “We realized that paying money every month in rent would leave us owning nothing when we retired, yet the mortgage payments every month (about the same as the rent) would result in us owning a house and land.
“It had to be a house and land, as we have two kids and wanted space for them to play in and also to fully incorporate some eco concepts into the residence. Having been out to the start of the Japan Alps near Chichibu, we liked that area (countryside, forests, mountains rivers, etc.) and the commute to my work in Tokyo was not too bad.
“The biggest challenge was qualifying for the mortgage. The borrower needs to be in a full-time job and have been in it for at least two or three years. Also, any outstanding loans reduce the amount that can be borrowed.
“I am aware that house prices fall in Japan over time — basicaly for quality reasons. But this is not a factor with log houses as they maintain their structural integrity. Whether the Japanese housing market is aware of this is irrelevant as we don’t plan to sell, but to set up home there for good as we can have low bills, grow food, have access to water, space, beautiful scenery and an eco-friendly lifestyle.
Marc (Canadian; 39 years old; 16 years in Japan) Condominium for a family of three in Itabashi Ward, Tokyo, purchased in August 2004 for ¥36 million. “We were planning on having children, and wanted the stability and lower monthly costs of ownership. We also wanted to keep pets.
“In our area, transit improvements and its gradual conversion from a warehouse district into a residential area have been causing property values to rise since we moved in. We’re getting daily beseechments from realtors to consider flipping our home for a fast profit.”
Advice? “We were purchasing a condominium that hadn’t yet been constructed. Scope things out for about a kilometer in each direction to see what amenities there are. Stop in at the shops and see how the shopkeepers react to new faces. Hit the Web and find a few other buildings from the same developer and go have a look. The building superintendents at the ones I checked were all happy to take a few minutes and show me around.
“Review the purchase agreement and look for clauses prohibiting legal action over noise from nearby businesses — such as a karaoke bar. Before signing off on the purchase, bring a spirit level to check framing, and slowly run your hands over every wooden surface looking for nails or screws that haven’t been driven flush. After signing off, you will have a number of inspection opportunities written into the contract. Keep a list of any issues, right down to the tiniest piece of peeling wallpaper. The construction company will fix these things.
“One thing I wasn’t expecting was all the scam artists that plague a new condo! We had men ringing up daily claiming to be from the building-management company and needing to do an inspection — then trying to hardsell various items. Lesson learned: If there is going to be an inspection, the building-management company will give you a written notification ahead of time.”
Ivan (English; 38 years old; 15 years in Japan) Condominium for a family of three in Shinjuku Ward, Tokyo, purchased in 2001 for ¥39 million. “I bought a condo because it’s cheaper than renting, and chose the particular property because of its size and location. I bought it by myself and the biggest challenge was the Japanese paperwork.
“I’m selling my property at this time and can’t sell it at a profit (selling price now is ¥32.8 million). I wish I’d purchased a house with land as they tend to retain their value, and you have your own space.
Advice? “Buy land with a house. The place I purchased is in a great location (Yotsuya) on the 10th floor, with a great view and it’s a good size. I was told by the real-estate firm that the people who live there are very nice.
“Maybe it was just me, or maybe it’s because I’m non-Japanese, but it’s the worst place I have ever lived in in Japan. I get lots of complaints from the people living below. On the first day after we moved they came and said we were too loud, on the second day they came and said that if we had flooring we would have to put carpets down. I was told by the caretaker that the person who lived in my apartment before me moved for out for the same reason that we are now moving.”