Level 4

Investors from all over the world invest in Japanese real estate for a myriad of reasons. The most common ones are its high cap rates and low risk. Average returns on investment (ROIs) include 5.5% (downtown Tokyo) and 7% or more in Niseko, Hokkaidō and elsewhere. Higher-return properties also exist (usually with higher risk, of [...]

Japan has always fascinated James. In his bedroom, he has a giant reproduction of Hokusai’s “The Great Wave Off Kanagawa” on his wall. He spends his free time reading about the great daimyō (feudal lords) and samurai of the Japanese feudal era. On weekends, he practices kendō (traditional Japanese swordsmanship). One day, while procrastinating prior [...]

Of course, the owner of a piece of real estate wants to protect his property, and the possessions inside. However, there is more to housing insurance than just what he or she owns. One must also consider other parties, as well. For instance, what about liability the owner might have towards others if his/her property [...]

One morning, James is sitting on a floor chair in his tatami room, sipping green tea and reading Yomiuri Shimbun while intermittently gazing out the window at Mt. Fuji, when suddenly, the whole building starts to sway: gura gura, gura gura. Then the shaking gets stronger: GURA GURA. James runs outside. This is a big [...]

On November 27, 2019, the government announced huge changes that affect thousands of international real estate investors living in Japan. The changes regard a tax loophole that has previously allowed many individuals to reduce their income taxes payable in Japan. This would further reduce other taxes payable such as Resident Tax, National Health Insurance tax, [...]

First, two famous quotes: “I hate paying taxes. But I love the civilization they give me” —Oliver Wendell Holmes Jr. (jurist, former Associate Justice of the Supreme Court of the United States of America) “I like to pay taxes. With them, I buy civilization.” —Also Oliver Wendell Holmes Jr. Seems like he couldn’t seem to [...]

A stigmatised property (事故物件, jikobukken) is real estate in which something very bad or controversial happened in the recent past. Stigmatised properties have special financial and legal implications. There are several different reasons a property can become stigmatized: Perhaps there was an unnatural death there: a murder, a suicide, or a “lonely death” (孤独死, kodokushi). [...]

No one likes to be in debt. In a perfect world, we would pay off all our liabilities and own all of our possessions free and clear. Unfortunately, in the real world, many of us have debts, and a finite amount of money that cannot pay all of them off immediately. We must make choices [...]

A "sublease" is a situation in which the tenant who is leasing from the landlord signs a rental contract for the same property with a third party- another tenant. This third party, who will live or do business in the unit, is called the subtenant. In this situation, the original tenant now functions as more [...]

DSCR stands for “Debt-Service Coverage Ratio.” It is a measure of the ratio of income (specifically, Net Operating Income) to debt (Total Debt Service). Investors will use this to work out what the margin of safety is between the expense of paying back the bank and the total rent they receive. What is DSCR used [...]

Real estate investing is only as profitable as the length of time that you have paying tenants. One unit that rents for ¥100,000 a month but is vacant 50% of the time generates the same income as an always-occupied ¥50,000 unit. It probably cost more to buy the ¥100,000-a-month unit than the ¥50,000 unit, so [...]

Recently, various reforms in Japan’s gift tax rules have been a major topic of discussion in newspapers and among expats who are more in-the-know. “Gift tax” (贈与税, zōyozei) is levied when one person gives money or goods to another person. It can cover many types of giving, for example one friend to another or sibling-to-sibling. [...]

There are a lot of misconceptions surrounding "holding companies". Fundamentally, a holding company is just the same as any other type of company, however instead of being an active commercial business that generates revenue from its commercial activities (e.g import & export, online marketing, software sales or selling organic coffee beans), a holding company derives [...]

As a real estate investor investing for yield or passive income, the biggest risk to your investments is vacancy- the periods in between tenants whereby the property is not producing monthly income. For people who own their real estate outright with no mortgage, this will mean that during that period they are paying their annual [...]

As you know, there are no shortage of rules in Japan. This is especially so with highly regulated industries like real estate. Coverage ratios are a small but significant part of Japanese construction and building regulation. During your search for real estate assets in Japan you may have come across the following ratios: 建蔽率 - Kenpeiritsu [...]