Buying small apartment for short stays

This is in a very early stage of planning. I have been to Japan a few times and really it. Realistically speaking, migrating is going to be difficult and a big decision, and is a debate for another time. However, more feasible would be to stay 3 to 6 months a year as a tourist.

However, since I have been going to Japan yearly pre-pandemic and would like to increase the amount of time I can spend there, I am wondering what are other community members' experiences of owning property in Japan.

I would be able to purchase a small apartment in Tokyo outright. This might enable me to have a home base in the country and make longer trips more viable. With a budget of around 10 million yen something like this apartment sounds reasonable, but is it too good to be true?
There are many like it, but one such example is: https://samurailand.com/en/buy/175611

I do have more than 20 million yen in savings and my existing home fully paid off so I would be able to financially support myself for a while. Not rich but can afford to have 10mil yen tied up, just cannot afford to lose all of it.

Questions are:
1-Is buying a cheap apartment in Tokyo a good investment? When I sell it would I be able to recoup my capital, or rent it out?
2-Is that price "real"? 10mil yen for an apartment inside Tokyo seems very much too good to be true, is it likely to be a dump in need of expensive repairs, or Jiko Bukken, Yakuza infested area, or simply going to be a lot of other hidden costs?

Again to clarify this is not something I am going to jump into right now, but I am in the theorycrafting stage with a potentially interested partner. Since I intend to spend 3 to 6 months of the year in Japan for a number of years and we both have always enjoyed spending time in Japan, we were thinking buying a property would make it easier for us to spend longer periods of time in Tokyo. However we do need more info before moving from the phase of pipe dream to making concrete plans.

One unit in it is a small-sized studio (14.52 square meters – look at the layout in the 7th photo. None of the photos shows inside of each unit), the building is moderately old (not necessarily a dump, but just old), and buying it for investment is definitely not going to pay off. In Japan, real estate value drops significantly after they change hands. So that is why it is at this price, but when you try to sell it, it is going to be lower.
Also, youfd be paying the monthly management fee and the repair reserve – which I feel is way too low considering the age of the building, that when it comes to the periodic major repair of the building, youfre likely to be asked to pay a big lumpsum. (Ours is newer than that, and each occupant is paying well over 15,000 yen monthly as repair reserve). Plus, youfd need to be paying the taxes for owning a property. If you ever manage to rent it out when you are away, you'd be liable for any small repairs around the unit.

Personally, I wouldnft do it – if you just need a place to sleep in, then Ifd rent a medium-term rental apartment (gmonthly mansion/apartmenth).

Renting is rather problematic and we would rather own our own place if possible, put a nail whereever we want and customize the place as we see fit. Will mainly be used for storage when we are not there. Don't want to have to deal with a landlord.
This is a semi-permanent solution until I either move to Japan permanently in which case I buy a better house, or decide it is not for me and I sell it hopefully with a small profit (if only for inflation ie buy at 10mil sell 5-10 years later at 11-12mil).
Since most property taxes in Japan seem to be dependent on the value of the property, a cheap apartment would attract little tax.

If I was looking for a place that would be easy to rent out or sell for about the price I paid for it, inflation adjusted, roughly how much am I going to need to fork out? Can it be done for about the 10-20mil yen price point, or how much is a decent studio apartment these days?
https://samurailand.com/en/buy/317486
This one for example looks semi-decent? Again not buying it yet just an example

Money make you a Fool.
Money make you a senseless.
You have right to spend your money in whatever fields you like.

Buying a small apartment: in your wholelife this is a wrong decision to buy in japan.In that case Ak san is absolutely correct.if you have permanent residency in japan ,than go ahead

We thousands of foreigners reside in japan, study in japan for several years.so we rent an apartment and we share with our friends to save monthly cost.my rent cost 20000 yen per month.now it is up to you.

Obviously you didnft read my earlier post fully.

Real estate (the building) loses its value fairly quickly, so I would not expect to be able to sell it at a profit.
Property tax is levied on the value of the building (or a part thereof) AND the value of the land (if you buy it), so even if it is a fraction of the total land value, it might not be that low.

Even if you buy an apartment unit, youfd have to deal with the estate agent, the administrative body (the owners/residents group) who manage the building together, the administrative company, and also bank accounts to pay in those monthly fee and repair reserve, so it would not be just gbuying it and thatfs it.h Please think about it carefully.

Yes, there are many people from my country who had the similar plans then realized things mensioned by above.

Even if you solved these things, I am wondering if letting rooms while you stay as a tourist is legally allowed (in case you buy an apartment unit, let rooms except yours and there are still tenants while you are in Japan as a tourist). It is not illegal to let rooms while you are not in Japan but doesn't being a landlord/landlady in Japan while you are in Japan mean needing an appropriate resident status?

Thanks for the above replies, I have had time to re-read everything and some questions remain.
It is clear from what you have posted above that due to taxes, maintainance fees and how property depreciates the older it gets and how many hands it has gone through, investment is difficult to make a profit to say the least.
This is quite a surprise as where I live if I could have invested 20mil yen in property 10 years ago I would have more than doubled or tripled my money.

Is it just not very feasible to make money investing in real estate in Japan, or am I just looking at the wrong kinds of houses?
What if I bought a new house for example https://samurailand.com/en/buy/363160
Is it just not worth it buying property in tokyo hoping the price will go up, or are we talking about cheap apartments only not being a good investment? Unfortunately my upper limit is about 20 mil yen as that is as much as I can raise without needing to take out a loan. And I don't want to lose my life savings if the price tanks.

Again, I am only asking so I can continue to theorycraft, not actually going to ring up an agent and buy one so soon.

If you don't want to lose your life savings then buying a holiday home with the hope that it will also double as an investment and you will get some return on it later on in life is a bad idea. There is a reason why buying properties and then selling the same year is so popular and lucrative. Housing markets crash, there are recessions and depressions, there are pandemics where people lose their jobs. You don't know what is going to happen in the long run. If it being a sound long term financial investment is a non-negotiable condition to you buying property in Japan then forget about it.

Simply buying a holiday home in a country you visit often can be a great idea, if you can afford it. Whether or not you can afford it seems highly questionable.

Based on the *years* I've spent in monthly mansions in and around Tokyo, renting is honestly pretty painless. I would say that dealing with landlords basically amounts to paying your rent on time. They tend to just leave you be as long as you're not causing any trouble. It's true that you don't get storage space for when you're not in the country, but a couple of big suitcases seems like a lot less hassle than buying a place.

Not sure this is any use to you :-

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The next installment in Real Estate Japan's popular series of webinars is on how to buy your dream home (not investment property) in Japan.

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https://japantoday.com/category/features/events/webinar-how-to-buy-a-h...

I'm pretty sure that new "house" is just the land. You can't get a new house that cheap in Tokyo, even in Adachi.

Everyone I know who bought and sold a house in Japan has lost money. My colleague sold his house before the pandemic for about 70% of what he paid for it brand new. It was about 8 years old.

Sometimes you get lucky and the value goes up. I know someone who bought an old mansion for very cheap. Now it's worth double the purchase price according to the real estate agency. Why? When it was purchased there was nothing in the neighborhood. Now it has new mansions and a mega shopping mall. It was just luck.

1-Is buying a cheap apartment in Tokyo a good investment? When I sell it would I be able to recoup my capital,
NO.
It is tiny (14 sqm).
It is old.
It has no facilities other than a toilet/bath.

And, for 10 million yen, it looks expensive for the location/size/age.

Why buy an apartment? Youfre not allowed to enter Japan.

I was sort of taking about when I am allowed to enter Japan again.
Basically I was looking at places to buy an investment property, and for diversification I thought it may be best to buy my investment property outside of my home country, which while returns have been good, is not the most stable politically.
However from all the responses so far, it would seem that buying a property of any kind, new or old, is far from guaranteed to generate a profit in 10 years time, which seems to be quite unique to Japan since almost everywhere I am familiar with, real estate has only gone up over the years, whether in other south east asian cities or in the western metropolises.
So nevertheless, let me ask a more broad/general question this time, is Japan just generally not a good place to buy an investment property?
I thought since I would be using it as a holiday home and hopefully eventually migrating to Japan (pipe dream at this stage but who knows) it would help to own a piece of land there, may even help with my visa application. But I certainly don't want to lose my life savings chasing this dream. It would be hard to earn another 20mil yen when I was hoping to double it in 15 years lol.

Forgot to mention, was meaning to ask, so take for example this property:
https://samurailand.com/en/buy/13099
(Example only, not actually planning to buy)
It says Gross yield 5.93%, I take it that is excluding the management/service fees, which don't look bad anyway. But since everyone here is saying it is a lose-money proposition rather than make money, I am wondering where they get the 5.93% annual profit estimate from? Just a lie, or is there a more complex calculation here that I am not aware of?
I mean to my untrained eyes as someone who lives modestly and does not have an investment property yet, I thought it was a good deal to invest 16mil yen and sell it later at 5.93% profit for each year I hold it.
That is clearly not the case, based on the responses to this thread.

Back in the 1980s, during the so-called "bubble economy", yuppies in Tokyo often bought real estate for investment and made a lot of money by selling them. But ever since that "bubble" burst circa 1990, real estate investment has never been a good idea. Also, subleasing is generally not welcomed as it has caused a lot of problems, and taking care of a property that isn't used for months is quite a difficult task.

Gross yield is rental terminology. It refers to annual income before expenses (in other words, rent) as a percentage of your initial investment (the price of the property). So in very simple terms, you buy a theoretical property for 100,000, make back 10,000 per year renting, that is 10% gross yield.

I must point out for you because you don't seem to understand, that gross yield is not profit. Profit is when you make back more than your investment. How many years will it take for your gross yield to add up to 100%? It will take at least that many years for you to start thinking about a profit. Also it is "gross" not "net" yield, so you need to account for the many expenses incurred as the owner of a rental property.

Basically assuming that number never goes up or down (and it will, but for the sake of argument let's pretend it won't), assuming that you are renting it constantly and it is never empty (this won't be the case), and assuming your expenses are very small (not likely), a gross yield of 5.93% means that you will start to see a profit on your rental property after about 20 years.

Gross yield is also definitely not an indicator of how much a property will rise in value year on year. Nobody can tell you that with any kind of certainty.

What I found interesting in the link shared above was a listing about property prices in different prefectures in Japan.

https://resources.realestate.co.jp/buy/average-price-of-an-apartment-i...

While I totally agree that investing all or even 50% of your savings into just one property is NEVER a good idea (property is hard to convert back into cash and you have all the costs of maintaining it and your ROI is just not very predictable because bubbles happen)c I do get the idea that you want a stable place in Japan if you plan to go to Japan regularly over extended periods. But does it need to be the most expensive city in Japan?

What about looking into Nara. Even Nara city center is pretty affordable. Yes, you canNOT expect that your investment will pay off financially but you get your own place , can keep your stuff there and feel at home.

Buying a vacation home in Japan for foreigners isnft that uncommon. I know quite a lot of Taiwanese who did that.

But donft buy it for investment. Not in Japan.

I am saying that as someone who actually owns 2 small apartments in Europe. One purely as vacation home. I donft expect any financial benefit from it. I just enjoy going there, looking at the beach and be happy. And the other one is rented out.

I looked at house prices in Japan recently and for me Tokyo just seems to be way too expensive. I havenft made detailed calculations but it seemed that renting is safer in Tokyo even though rents are high. But unless you really have a lot of gunused capitalh if you want to buy a half decent place you rack up 30 - 50 million Yen for a 50 - 70 m2 apartment. Or 100 - 250 k Yen in rent.

While In Nara city for something in similar size you are speaking about 5 - 15 million yen to buy, 40 - 100 k Yen to rent.

At that price I feel that buying can pay off. Not as an investment but for a stable place to have in Japan. It is not going to bind too much capital and even with a mortgage (which I really wouldnft take for a holiday home) itfs not going to be too much.

https://www.homes.co.jp/smp/list/

This said I am still 80% sure that I will go back to Tokyo to live there. Currently thinking about it seriously as my new company offers me the choice of Tokyo or Osaka. And hell, even Osaka is SOOO much cheaper. About half of Tokyo! And I like Kansai, I just donft like Osaka. And I do like Tokyo. Plus the company office in Otemachi just look gorgeous. (While in Osaka it is in Honmachi) okay location, but nothing as juicy as Otemachi. But you do pay for the luxury of living the Tokyo dream.

So my current thought process is probably to live in Tokyo but maybe to get a weekend apartment either in Nara or in Karuizawa.

Maybe dreaming herec

So yes, my first advice to you would be:
- donft buy a property in Japan
- but if you are dead set for it, DONT consider Tokyo. Look at other options. Nara, Shiga, Aichic itfs cheaper everywhere. And you donft even need to go to very remote locations to get much more out of your hard earned money.


One other thing to consider is how to maintain an EMPTY house. If you can go pretty regularly itfs not a problem. But leave a house empty for months in end and youfll get damage. Mold, c

No, Japan is not a good country to buy an investment property based on what I know of the local approach. The first place you linked I was surprised that they had not demolished the building yet. Anything over 30 years old has an extremely limited market for resale and demolition is high on the priority for owners.
The second place you linked is at least a bit newer, but in ten years time it will be 20 years old and anyone looking at it will consider it will be coming to the end of its life soon.
This isn't like a lot of other countries/cities where places stay up for years and years. It is quite normal for people to rip down and rebuild regularly, not just stand alone houses, but commercial and apartment buildings.
As for your use of the place, if you live in it part of the year, you cannot then rent it out. Many standard leases start at two years.
A further caution - the difference between gross and net income is a very real issue. A lot of people got suckered into investing into buildings based on projected gross yields and found that when the buildings were not filled with tenants they lost millions of yen in savings and even selling to exit the financial disaster they had got into, lost even more. If you are trying to rent out somewhere, don't underestimate the cost of having it empty and the cost of a property manager.

Japan is really different in this aspect (which is somewhat surprising). Check this article in The Economist about housing:

https://www.economist.com/finance-and-economics/2018/03/15/why-japanes...