I love Japan. The reason I love Japan is because for a Westerner there is no place in the world which is as civilised, but equally safe and interesting. Being Japan is stimulus on so many levels. The appeals are wide-ranging, but comprise:
1. Modern living that encapsulates the ‘village life’ and ‘modern metropolis’
2. The technology, the food, the architecture, the entertainment and bar life
3. The people are hospitable and unique
4. The nature is beautiful and readily accessible
I first went to Japan on a business trip. When I returned a friend of mine told me how his brother had a Japanese girlfriend and how he spoke well of them. My curiosity got the better of me, and I took the opportunity to talk to a young 21yo Japanese tourist in Sydney. It was initially fun, however there were some obvious confusion over vowel soundings. ‘Work’ sounded like ‘rock’. I eventually ended my life as an mining analyst that took me to Japan and other Asian countries. I however found that I still wanted more ‘foreign experiences’, and Japan ranked highly. The only way that I could see to live in Japan was to apply for a working visa, and to seek sponsorship to teach English. I was initially apprehensive about doing this because of the possible impact on my later career options. I did not however regret the choice, given that I would over the next 9 months be exposed to hundreds of Japanese people who would openly express themselves to me. Many of them would express personal thoughts they felt reluctant to express to fellow Japanese people.
It was in the last week of my stay there that I met a girl. We would continue our conversation for months after my return back to Sydney, Australia. In the end she decided to come to Sydney and study. It was apparent that she wanted to travel as well. We lived in Australian for a 2 years before we returned to Japan and rented an apartment in Nerima, Tokyo. This was a rather idyllic place given that it was close to Tokyo with good subway connections, whilst also having a considerable amount of local restaurants and cafes, as well as places to ride a bike. Eventually we moved further out of town to an apartment closer to her family place. It was at this time she was telling me how a NZ friend of her was buying up a lot of foreclosed apartments in Japan. In fact he was buying entire buildings. I was surprised, as I’d not expected that foreigners would be able to buy property in Japan. All of my wealth was invested in stocks, however at the time I liked the idea of divesting some to invest in what appeared to be the cheapest property in the world. Most people have the perception that Japanese property is expensive. This is of course true for central Tokyo. But if you go to the countryside, it’s actually becomes the cheapest property in the world for several reasons:
1. Rural depopulation – The Japanese rural sector is ‘jobless’. The farm sector is ‘family based’ and wages in the rural areas cannot compete with the city.
2. Youths see no future in farming and they are moving to the city.
3. The elderly raised in the country are dying, or having moved to the city and grown fond of friends and conveniences, are prone to stay there.
4. Japanese property does not face the same restrictions on subdivision as in the West. In Japan, properties are as small as 60m2, so population densities are cramped and extended along railway and road corridors.
I encouraged my Japanese partner to buy a property since she had a regular income, and the prices we were seeing were so cheap. I was apprehensive about buying myself because I was a stranger in the country and spoke little Japanese. One property however was so cheap that it caught my attention. It was in a rural area of West Tokyo, in the foothills, however within reasonable travel time to the major regional centre of Hanno, Saitama. The property was a 5 bedroom dormitory, 19 years old. My GF was apprehensive about buying it, so I told her that if she was not happy that I would buy it from her. In fact there were two dorms for sale, so we bid only on the first. The bid required a 20% deposit, and we paid the rest after another month. Upon winning, I could not believe that I had secured a house land in Japan for just Y2.8 million (or $US30,000). Yes, that’s the complete price we paid to the Japanese court. My GF did not like the property, so as agreed, I bought it from her. I’m not sorry because I bought it as a bachelor pad to store stuff and I wanted to be close to the nearby rivers for canoeing, the city for entertainment, and the foothills for mountain biking. As it turns out, this region has since become a thriving rural ‘fringe city’ community because people from more distant rural prefectures seem to prefer these fringe areas than migration to the city.
Having secured my place, we went looking for a place for her. I suggested a rental property close to her family near Ranzen-Machi, Saitaima. It was further from Tokyo than my place, being 1.5 hours away, but it was only several kilometres from a train station, was close to a supermarket and Home Centre, and it was on the edge of a tourist centre. The place we found was a 100m2 two-storey home on 100m2 of land. It was just 1 metre away from a neighbouring house, but Japanese people are so quiet that it was not a concern. In addition, it had sweeping views of the rice terraces down the valley.
We were amazed at the condition of the home. The wallpaper had been discoloured by cigarette smoke and there was some discolouration from water flooding into the house from torrential rains. Home owners often fail to remove pine needles from the gutters. I was amazed how easily I could fix the place up. A little painting and replacement of the stove were the only repairs, and this was her place for just Y4.5 million. We were surprised how quickly this place rented, and Japanese tenants seem to remain for years. The previous ‘distressed’ owner forced to sell even gave us helpful information. It seemed his interest payments were greater than the cost of rent, and since his house value had collapsed after the property bubble, he simply walked away from the debt. My GF was making a 13% ROI on a property which she could have made even more lucrative if she borrowed money. She, like many Japanese, is very conservative. This conservatism was the issue that inevitably drove me away, however we remain friends. She still has the property.
Over the years I have availed of this great opportunity to own property. Being a writer I typically escape the NZ winter and go to Japan for 1-3 months on a tourist visa (90 days). I have a mountain bike there. I organise the electricity connection before I arrive. My typical routine sees me riding my bike to town, working at McDonalds or Starbucks, maybe a period at the library or mall. Often I eat cheap bento boxes at the mall, or Hotto Motto take-away meals, or steamed vegetables at home. Sometimes I go to several bars in town, and occasionally to Tokyo centre. I’m amazingly productive in this routine, and it seems like a perfect balance. This place costs me just $300 per year in rates, with no other costs. I’ve not insured the property since I feel I bought the property for less than land value.
I have since written a book about how I came to buy this property and since I’m a market analyst, I’ve gone to considerable detail about Japan, and the strategies and factors that I think are important. One of the reasons why I think my insights will help is because my partner was a property manager, so I learned a lot from her. Not everyone wants to live in Japan, but those who lived there, will probably be lured.
http://foreclosedjapan.sheldonthinks.com/
