Actual case of real estate investor in Japan
When a person thinks of starting a real estate investment in Japan, she wants to know about actual status of other investors.
So in this page I will introduce a real estate investor in Japan.
He ( hereinafter Mr. Yama ) has purchased old detached houses in Japan and remodeled it at low cost and rented out for several years.
Now, the number of such investors is increasing.
Mr. Yama purchases cheap houses of 1.8 million yen or 2. 4 million yen at the location of city where renter can go to Tokyo within several minutes.
And sometimes his yield on investment is very high like 43 %.
He has experience of real estate investment for over 20 years. He mainly purchases wooden house which was built over 20 years ago and remodels it.
He sometimes purchases real estate through public auction.
But, when you purchase old houses, you need to expect necessary cost to repair it.
So, in this page I will let you know about these matters with examples.
He has bought already 8 detached houses and remodeled it and rented out. He also 3 terrace houses and 4 apartments.
He bought a detached house at Saitama prefecture ( 埼玉県 ) at 1.8 million yen. Saitama prefecture is neighboring prefecture of Tokyo.
Many people are commuting to Tokyo from Saitama every day.
Mr Yama gets profit of yield on investment of 43 % from this property.
location : Fujimi city in Saitama prefecuture.
（ You can go to Tokyo station from this area within 1 hour by train. ）
Age of this house : 36 years.
Room area : 50 square meters. ＝538.1955ft²
10 minutes walk from the nearest station.
He bought this property via public auction.
In the case of public auction, you cannot look at inside of house until you pay balance money. So, there are possibilities that there are serious defects inside a house.
That is why he could purchase this house at very low price. Because other person worried about these risks too much.
Moreover, lavatory is vault toilet. In the case he rents out, he need to remodel this toilet to flush toilet.
But thanks to this weak point, he could purchase this house at very low price.
Even if there is a weak point, as far as it decrease selling price excessively, you should purchase it.
Though this house is not located in Tokyo, weak point relating to location has excessively decrease selling price.
Renter can go to Tokyo within one hour. So, he thought he could find a renter.
And selling price of 1.8 million yen is very cheap when he considers lot area of 45 ㎡ , room area of 50 ㎡.
You can compare other house below.
Actually, there were a lot of weak points in his house.
There were a lot of mold on the wall.
Inside the house, dozens of mice and birds were living.
He needed to replace all wall papers.
A part of floor was rotten.
He had to repair window frame.
But, other people cared about these problems excessively and he made a successful bid at very low price.
In the case of this detached house, he had to ask carpenter a large scale repair.
Then, it cost as below.
① Remodel vault toilet into flush toilet : 400,000 yen.
② Replacement of window frame, repair of floor : 600,000 yen.
③ Painting of wall : 400,000 yen.
④ other １００，０００ yen.
In total 1.5 million yen.
Some of people try to find properties that do not have any problems and that have already stable renter.
But, they can not purchase it at low price.
If you want to purchase a property at low price and success in your investment, you need to find properties that have some problems that you ( and a person who can assist you ) can solve.
In this way, you can get high yield on investment and may be able to get capital gain in the future.
He did not ask a realtor to repair it, but asked local carpenter directly to repair his house.
In this way, he dodged middle margin.
Then, he made necessary repairs and found a renter soon.
The amount of monthly rental fee was 66,000 yen.
So, yield on investment was
66,000 yen × 12 months / ( 1.8 million yen ＋ 1.5 million yen ) = 0.24%.
So, it was 24 %.