By Priti Donnelly

Real estate investing does not necessarily have to be in your backyard. In fact, with volatile markets around the world, many investors are expanding their criteria to more diverse international real estate portfolios.  International properties can be much more rewarding, both in affordability and higher yield. To qualify for the under $50K option you must meet the following requirements:  have an open mind to foreign real estate, an interest in cash flow rather than capital appreciation;  and interested in investing under $50k.

The Prospect

Now that you qualify, let’s take a look at properties in the Japan market. Outside of Tokyo you can easily find properties from $30K to $50K. Even more impressive is the yield of 6% to 12% because prices haven’t risen as sharply as they have in other cities. For example, in the center of big cities, or first tier cities such as Fukuoka and Nagoya you can expect a yield of 6% to 8%. In second tier cities such as metropolitan Sapporo, you will find properties with a yield of 9% to 10%. In the third tier are smaller townships, albeit with good profiles, a yield of 10% to 12%, all net pre-tax. With an occupancy rate of 93% to 94% properties are usually occupied bringing your investment property immediate income of $250 to $400 a month on average. 

Method

To invest in real estate in Japan, investors work with an agent/proxy acting as an extension of themselves for the property purchase and management. This is mainly because of the language barrier. As agents/proxies ourselves, we communicate on investors’ behalf with the property/rent manager, building management company, tax authorities, and insurance company. Since non-residents cannot open local bank accounts, by having a physical address and telephone number in Japan to manage the portfolio, we are able to pay bills, collect rental income, and transfer/accept overseas funds.  In fact, you actually never need to travel to close the purchase, unless of course, you want to take a leisurely trip to take in the culture, historic traditions and breathtaking scenery.

Tenants

Japan is a landlord’s paradise — high, stable and reliable cash flow, very affordable, and because of Japanese ethics, tenants are polite, docile, trouble free, and honest. Living away from your investment property, you will not need to worry about destruction to your property or evictions.  Of course, the same tenant will not last forever but the average turnover is quite stable at 4.5 years for singles’ units, and higher for larger family sized units, sometime up to 15 years.

Earthquake Concerns

While the recent earthquakes have not deterred investors from properties in Japan, we have had concerns about the effect of earthquakes on properties. Under a standard policy, earthquake, tsunami, volcano and flood damages are covered by insurance policies and insurance is surprisingly inexpensive, only a few dollars a month. Since the building itself carries an accumulated funds pool, any remaining losses not covered by insurance are generally covered by the pool. As part of the due diligence process at the time of the purchase, we check the status of the accumulated funds to determine whether 100% coverage is necessary.

Selling Your Property

Since the market moves very quickly in Japan, properties are listed only a few days before they are sold. Therefore, if you decide to sell your property, there is usually a buyer ready to purchase.  Keep in mind the tax implications. A property owner, whether foreign or local, who sells a Japanese property within five years can expect to pay 40% capital gains tax. After five years, the tax drops to 20%.

Generally, our clients invest in properties for cash flow purposes rather than capital gain. If capital appreciation is what you are looking for then your ideal market would be Australia, U.K., U.S. and even Tokyo and at a considerable price.  But, for steady monthly income, where yield is high, cash flow is immediate and properties are incredibly affordable, the real estate market in Japan could be an option to consider to let your cash flow investment journey begin.

Priti Donnelly

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan. She understands the importance of transparency in today’s international market. Through her insight, she focuses on breaking barriers and helping investors feel confident about their overseas property investments.

Website: http://www.nippontradings.com

By Priti Donnelly

Real estate investments in Japan continue to attract foreign buyers from around the world for high yield, affordable prices and cash flowing rental income. But, in a foreigner-shy country that speaks mostly Japanese, conducting due diligence, negotiating and making an offer can be almost impossible. To complicate matters further, properties in the Japanese real estate market are sold within days, sometimes hours, making it more difficult to compete against local buyers. So, how then do foreign buyers successfully manage to invest in the market?

Find a Local Proxy/Agent

The first step is to find a local bilingual (Japanese-English) proxy/agent who will help you familiarize yourself with the property market. Look for someone who is available to you, communicates well and who can provide you with information in a timely fashion. Consider your proxy as an extension of yourself. Expect transparency about their services, keeping you informed at all stages of the purchase process and clearly explaining the management process. Don’t hesitate to ask for client references.

Familiarize Yourself with the Market

There is no need to travel to Japan to scout the area, unless you want to. Your experienced and trusted proxy will work with you to familiarize yourself with the market. They should have strong knowledge of locations, in particular, areas with population growth to ensure tenant demand. Ask about properties close to shopping districts, schools and hospitals where tenant demand would be higher. Another factor to consider is the age of buildings. In 1981, the building standards act changed their policies to ensure earthquake resistant construction methods. This is the turning point that some buyers look to when purchasing an apartment, although many older buildings built prior to 1981, have been retrofitted to bring them up to code.  Next, you may have a certain size and features in mind – one room with a living room, kitchen and dining room, close to a train station is ideal for a student, single or elderly person. Two or more rooms could suit a family. Of course, your budget and yield are naturally of significance.  

Analyze the Numbers

Once you have a good idea of the features you have in mind, your proxy will send you analyses of properties to suit your criteria and break down the numbers (price, costs, yield, etc.) For example, with the exception of Tokyo, investment properties across Japan range from $40K to $60K at 6% to 12% yield. In the center of big cities, or first tier cities such as Fukuoka and Nagoya you can expect a yield of 6% to 8%. In second tier cities such as metropolitan Sapporo, you will find properties with a yield of 9% to 10%. In the third tier are smaller townships, albeit with good profiles, 10% to 12%, all net pre-tax. With an occupancy rate of 93% to 94% in these areas, you will generate immediate income of $250 to $400 a month, on average. 

Submit an Offer

It’s easy to see why properties are sold within hours or days at the most in this market. As soon as you see something you like, notify your proxy to submit an offer on your behalf. It’s a good idea to have your agreements with your proxy signed in advance to save valuable time. Because properties are sold so quickly, you won’t likely have time to perform thorough due diligence on any particular deal before submitting your offer, but you should have enough information on your deal analysis to determine whether or not you want to submit your offer.

Conduct Due Diligence

If your offer is accepted, you will receive due diligence information from the real estate agent. One of the key items to look for is the accumulated fund, also known in some countries as a sinking fund. This fund goes toward a renovation/repair pool. Due diligence should be able to determine if the size of the funds pool is sufficient for building repairs. If lacking in funds, then the building report should show substantial renovations to the building to justify the shortage. If not, an experienced proxy will advise you to forego this deal. If you do submit an offer and then discover that you are not satisfied with the due diligence including tenancy history, building renovations or accumulated funds, you should be able to pull back your offer.

Seal the Deal

Once you are satisfied with the due diligence, your proxy is there to help you with the contract and deposit, required documents, deposit and settlement. On the day of settlement, your proxy will pay the rest of the funds on your behalf and the scrivener will perform the ownership transfer from the seller to your name. Within a month you will receive the equivalent of a Title Deed. Congratulations! You just purchased property in Japan from around the globe.

Manage Your Property

You have successfully invested in Japanese property. Now it needs to be managed. Most foreigners do not have a local bank account, physical address or local phone number and therefore, the two challenges are communication and banking. Do not worry. On your behalf, your experienced proxy communicates with the property/rent manager, building management company, tax authorities, and insurance company. The right proxy can also act as your bank account to pay the bills, receive rental income, and provide you with a monthly balance sheet and remittance/acceptance of any funds from overseas.  

Finally, what you may not know is that unlike many other countries, there are currently no laws or regulations in Japan prohibiting the purchase of real estate by foreigners. This allows 100% ownership of deeded, freehold property, registered to a foreign address. Currently Japan is the second largest real estate investment market in the world, only behind the U.S. 

Priti Donnelly, Sales and Marketing Manager, Nippon Tradings International

Priti Donnelly – Manager, Sales and Marketing

Nippon Tradings International (NTI)

http://www.nippontradings.com

By Matt Malouf

When it comes to investing in real estate, people tend to be vigilant about their investments options. What they seem to ignore is how the profit and growth ratio investing in real estate abroad can provide them with great success.

The world is a global village now and so it makes sense that people have started investing in international real estate. There’s a certain charm to this move but more than charm, this smart move can help strengthen your capital flows. We understand the importance of global investment strategy and it’s time that you too understand what this option can offer to you.

Most people hesitate to invest in international real estate because of geography. Real estate is generally a long-hold investment strategy and it’s the long distance that generally makes people uncomfortable while investing in international real estate. But there are certain benefits for global diversification on a real estate portfolio. Let’s look at a few.

Investment Diversity

Being a secure and hard asset, real estate has always been a preferred investment choice for people all over the world. With many fast-growing international real estate markets, this investment opportunity is too good to miss. Investors can enjoy low interest rates and avail a variety of lending options. And with a professional team to back you up, these investment opportunities can be the perfect addition to your diversified portfolio.

With this new financial step, you can have another stream of income. That’s the best part about this investment. It can generate income and even appreciate in value over time. The exchange rate can help you make a hefty promise every time. If you are investing in countries with a higher currency rate than the USA, your investment portfolio is surely going to enjoy the benefits. The change in interest rate also has a significant impact on making international real estate investments a lucrative financial move. Since each property has an intrinsic value, your investment would never go to waste. This is just one of the properties that set international real estate apart from other investment options such as stocks.

Risk Management

So what makes investing in international real estate such a glorious option? The best part of this move is the diversification of risk. When you put all your eggs in one basket, there’s a higher risk of losing it all at once. By spreading your investment over several international real estate properties, you can significantly reduce the risk. The real estate market is dynamic and always in transition. Even the slightest economic change can have a drastic effect on your investment choices. These effects can either be extremely beneficial for you or leave you at the brink of bankruptcy.

By investing in international real estate, you can easily diversify your portfolio and give it a global edge. Since the international housing market tends to operate differently, a decline in one market can cause a significant increase in the other one. With this contrasting nature of the international real estate market, you are bound to gain great benefits.         

Ancestral Roots

When you are looking for some international real estate investment opportunities, why not try and connect to your roots? For many of our clients, the first option for investment is mostly their ancestral country. Their way of paying tribute to their heritage is by investing in their ancestral country. This way, they can always have a place to go back to when they want to experience the life that their ancestors lived.

For many people, this is a lucrative option because it gives their children a chance to know their heritage. People whose ancestors immigrated to the USA often go for international real estate investments in their home country. This is a great reason for choosing the right international real estate. As long as the real estate market in your home country isn’t in a steady decline and is showing great potential, including it in your investment portfolio would be a good call.     

Recreational Value

Investing in international real estate doesn’t just create new income streams but also provides you with the perfect vacation home. So when you are looking for opportunities to diversify your portfolio, make sure you go for an option that can serve well as a vacation spot. Even though the main reason behind this investment is purely financial, buying the right property can also add a recreational value to your investment.   

If you love the great scenery of ice-capped mountains of a vacation spot, you can turn this passion into a great investment opportunity. There are some countries that allow foreigners to own property and you must be prepared to take full advantage of this prospect. Contact MyLifeWorldWide.com and let our professionals help you get a diversified portfolio for international real estate.   

Cultural Diversity

This is a great opportunity to experience other cultures. Become a local at the place and you’d be able to explore the region to your heart’s content. Your overseas property can provide you with new experiences, enabling you to explore some other parts of the world. If you have the desire to experience cultural diversity, your international real estate portfolio can help you with that.

Residency Eligibility

Owning a property in a country can often make you eligible for residency and/or assist you in a naturalization application. With this change of status, many doors in the country also open up for you. You can get access to the country’s banking and financial services industry. You can use this opportunity to divide up your fortune and taking advantage of the profitable banking prospects.

Investment Security

Unfortunately, retirement funds in the USA are subject to some strict laws and many people have already bore the cost of these policies. Your retirement fund can come under the threat of lawsuits and creditors, hence leaving you vulnerable at the later stage of life. For availing the ultimate retirement fun with security, it’s imperative that you invest abroad. Your diversified portfolio of international real estate can’t be subjected to the laws of USA and even the IRA can’t attack them in any way.

Your properties in the USA might be at risk of lawsuits but your international real estate is insulated from this risk. This is one of the best reasons for you to consider investing in international real estate.        

Your international real estate investment would never go to waste if you work with a professional. With their expertise in the industry and years of experience, MyLifeWorldWide.com can help you make some sound financial moves. With a diversified international real estate portfolio, you can yield great profits, without the usual risk that other investment options pose.

So make the best of this opportunity and make some sound investments overseas. Contact us at MyLifeWorldWide.com for more information and custom solutions tailored to your unique situation.

Matt Malouf, International Real Estate Consultant

MyLifeWorldWide.com

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