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Foreclosed property in Japan

foreclosed property not a cliche

This sounds like a lot of unthinking clichés.
Dogen Z said:
Please be aware of the difference between speculation and investing.
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Actually there is very little difference between those concepts - principally its the term of investment. Its such an unimportant distinction that it hardly need be made because whatever you are doing you are likely to be holding a property in Japan for more than 3 years if only to fix it up, and avoid the excesses of capital gains taxes.
Dogen Z said:
As they say, "If you don't know what you are doing, the real estate market can provide with an expensive lesson."
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Doesn't an awareness of risk go hand in hand with any decision, i.e. investment, driving a car, having a baby. Isn't that advice a little self-evident. If you want to advance in life, does one not have to study and understand those risks. So one wonders why one gets disparaged for writing a book about foreclosed property, and criticised by those who have not read it.
Dogen Z said:
Finally, don't be fooled by anyone who says a recovery is right around the corner. The recovery may be as weak, feeble, and lengthy as the lost decade.
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Who is saying that? But it might not be as far away as you think, though the odds are looking worse. The coming elections open the prospect of the DPJ controlling both houses of parliament. IF it happens, it will unleash a wave of reform. It's looking less likely, but regardless, there is good reasons for beliefing Japan will adopt reform soon. Why? Its running out of cheap capital, so it will have to resort to printing money, which is stimulus, reforming the economy to boost incomes, or increasing taxation; which at the best of times is not popular.
Irrespective of all that, yields are actually pretty good in Japan for a Western nation, and better for certain types of investment.
 
Lots of good information here! Thanks to all contributors..

I plan to buy foreclosed property in japan soon, and as this thread was first started a couple of years ago, I was wondering if somebody could tell me if the market is better or worse than it was 2 years ago. I know that the GFC has meant that property prices fell, but how are things now?

I plan to invest about 15million yen in several properties in and around the outskirts of Tokyo. Perhaps a ski lodge in Nagano or hakuba aswell. Do you think this is enough to get started in the business? I plan to research all properties properly, and I am skilled in all construction/maintenance work.

I have not yet purchased the ebook, but I plan to in the near future. Anybody willing to give a book review?

Thanks for any replies in advance..
 
Good for you. I think you will find the general property market is inclined recover from here because of inflationary pressures, i.e. In nominal terms, so that does not necessarily make it is a good investment. The yields do remain very attractive, so it makes sense to buy a place if you are living there a few years to avoid paying the high yield as rent. It does depend on where you buy. More important than location is the availability of property. I did not waste any time to buy because I was worried about the courts running out of stock. Its been 20 years since the property bubble broke, so I'd want to buy as soon as possible. You do have to ask yourself whether buyers 10-15yo who paid too much however are losing their jobs, will also be in financial trouble if the lose their job. From this point I think however banks are likely to recognise that the property market is going sideways, so they are less likely to rein in non-performing loans. Japan households are not over-leveraged, they are cashed up.
The Japanese govt is still weak, so still no sign of a reform agenda. The prospect of a 2-house majority was just missed, so unless we see LDP MPs crossing the floor, we are probably not going to see change. I do not think you will see higher interest rates in Japan because of high public debt. More likely:
1. Inflation from printing money
2. Increase in GST - looks likely
3. Tax on property - my expectation
Disclosure: I wrote the report to which you are referring. My info on my blog - but to answer your question....any review of my book might be outdated as I keep adding new sections. Reviews are little good anyway because they presume certain reader knowledge. Property is the most important asset you will buy in your life, so its not a good idea to be cheap on advise. It only takes one idea to save you heaps. In this last 3rd edition, I added a section on where to buy to avoid earthquakes, discussion of land leases, more on risk management, and I updated the economics section, as per usual. A few nagging grammatical/spelling mistakes too
Sorry if this this strikes anyone as an advert, but this guy asked, and to be sure at $20 I will not make any money on this book. So strictly speaking its a non-commercial endeavour. Most people who buy are Westerners with money, partner, investment bankers, investors and of course Westerners working in Japan, +/- Japanese partner. Some know Japanese, some don't. So pretty small market.
 
Thanks for the reply shoganai. And don't worry - I don't think you are just plugging your book at all. You are obviously very clued up on the situation, and I was actually hoping you would reply. I am currently on the move, and once I get home ( in a month or so) I will download your book to my home pc.
I speak Japanese well, but I am very pleases that you have put this information in English. Thanks!

How much have prices been inflated over recent times? Is it a significant increase?

Do you generally buy properties for rental purposes or to re-sell?

I plan to be in japan by the end of the year to start buying..
 

Without researching again I could not tell you how much prices increased, but it was a 'dead cat bounce' to use equity market concepts because of the tight lending practices through the recession, and because Japanese income growth has been negative. Hence national savings have been falling.
I actually don't buy a lot of property in Japan. I left Japan when a relationship ended. With that Japanese partner, who was an agent, we bought two properties, a holiday house for me, and a rental property for her yield 13%. I think yields are around 3% in Australia, though Australia offers better capital growth with 2% population growth and a strong mining sector. Actually, if you consider the glass ceiling in Japan, women have a great deal to contribute to Japan in future. It not so much as Japan needs more population, but people's values have to change.
My next partner was a Filipino, so we bought land in the Philippines in a satellite city outside Manila, and then we moved to NZ and bought another holiday house when the NZ fell to USD0.50. Really, beyond that I don't want to do into the content of the book...after all, its in the book, and I'd just be repeating myself when I should be writing more.
Best of luck with your property search!
 
Thanks again for your reply shouganai.

I will purchase your book once I am home, so I won't bother you with any more questions right now..

Again, thanks...
 
Investors

Ive lived in Japan now for 10 years and I currently work for Century21 Teiwa. We are based in Ikoma City, Nara Prefecture and have over 35 years experience dealing with foreclosed properties.

Shouganai has started a very interesting thread here and what he has written is pretty spot on. There are wonderful bargains to be had and a plethora of investment opportunities via house auctions.
It can seem overwhelming at first and of course there are always some risks invloved but at Teiwa, we pride ourselves on customers satisfaction and work to make our customers happy and wealthy.

To enter into an auction, you must first transfer a small deposit to the local law courts, approximately 5% of the initial listing price. Should you win, the money money will be used as a down payment. If your bid is not successful, the money is returned to you 100% in full.
Our fees are as follows. By going to auction with us we charge 52,500 yen to covers our costs and is non refundable. If you go to auction with us again, we usually waiver this fee as a gesture of good will. Should you bid be successful, we charge 3% of the winning bid plus 60,000 yen.

We offer a fully comprehensive service and will ensure that your property is legally registered in your name and will take care of all the legal aspects of the transaction. We can then assist you in however you would like to use your property, whether it be a quick sale, reform or preparing to rent.

If you would like to know more please contact me at info-at-teiwa.jp
regards.
Lee Walton.
 
Foreclosure is great, until you try to kick someone out who doesn't want to leave. While the change in the laws a few years ago made it possible to actually get the property after you bought it still expect a long drawn out process if they want to fight you, and expect to have to essentially bribe them to get them out.

When you look at the foreclosure pictures if it looks like someone lives there (and someone really messy in a lot of cases) that's because someone does live there. And they're unlikely to be kindly disposed to just moving their stuff out. And even if there are no inside pictures don't assume that there isn't someone living there (and they just wouldn't let anyone inside).

And don't forget, if you're buying an apartment chances are if they didn't pay their mortgage/taxes then they also didn't pay their management fees/utilities and those go with the property (on top of what you pay at auction).

Personally my favorite site is k81.jp

Personally I'd forget any thought of using real estate in Japan as an investment. Unless something drastic changes the market isn't going to recover, in fact most people are underwater on their mortgages. If you want to buy something at foreclosure buy it because you want to move in or to use as a summer/weekend/country place (althought there are often better deals at the inaka sites - try inaka-style.net).
 
I've been reading this thread and others and thought it about time to contribute.
I have not purchased property yet, but I have been monitoring (and translating) foreclosed board listings, also reading as much as I can and talking to people that are involved for income and investment.
Shouganai's book on foreclosed property is worth it if you are new to the scene and don't know anything. He has done a lot of the preliminary work for you, and it is one of the only places you will find so much information on the subject in English.
That being said, take it all with a heavy shake of salt. I apologize for being rude, but he is not as smart as he consistently purports himself to be. On this board for example, I believe several of us have found him to be transparent in the different identities he is posting with. It goes without saying that underhanded sell tactics like this don't carry a golden moral compass, either.
Furthermore and more importantly, he has confessed to not really having that much hands-on experience with property in Japan. He will sometimes talk, whether on a forum or in his book, as if he is a property mogul, but from his own typing hand he has mentioned that he only purchased two properties. Or perhaps only one property, as he stated that one of the two was his girlfriend's - her being a real estate agent and likely his primary teacher.
Finally, I have a friend here in Japan that I talk to regularly about buying property. She owns several homes that she rents, and her husband used to work with foreclosed homes with a real estate company. She watches the foreclosed listings, and occasionally bids, but carefully as she believes it to be "dangerous".
We know that there are many real estate companies competing for these properties, which can make it difficult. But again this is something known and expected, which we have to work with.
Regarding the "dangerous" comment, a couple examples are:
1) Previous tenant left materials in the home. New owner absolutely could not touch the materials without permission from the court. This took many months to obtain.
2) New home got a new tenant in the form of a Yakuza member, who helped himself in and started sleeping there. This was because the previous owner, who filed bankruptcy, owed the Yakuza money. The man stayed until he was paid hyaku man yen.
Regarding Yakuza tales, Shouganai says in his book that he has never heard not a one, and suggests it is all superstition perhaps to scare away individual buyers like ourselves.
I guess we could assume that my friend is not my friend, and is trying to isolate the market to herself?
Anyway, as always, do your research but be wary of tricks and misinformation.
 
SleepWell Data: Analyse Foreclosed Data

G'day fellas, interesting discussion. Purely pushing my own barrow here but very relevant to assist anyone serious about buying foreclosures.

You should check out:

1. sleepwellhomes.jp.
Here you can analyse past foreclosure data to the nth degree and really handle how much you should bid to win.

For example:

Scenario: You are looking to buy an apartment around 45m2 in floor area in either Minato Ku or Shinagawa Ku and within 12 minutes walk of a station.

Question: How popular are they, and how much should you bid to win the property?

Answer: In the last 4 weeks, there have been 9 properties fitting this description, receiving an average of 10.6 bids per property. The Average Sales price was 150.7% of the Appraisal Value.

Also, click on the "Demo" tab to see the power of this analysis platform.
To give u an idea: While testing this software(before uploading it to our server), we estimated 128% of the appraisal should win a house we were bidding on. We really wanted this house, so we bid 133% to be sure. Guess who won?! Absolutely! We did!! early days to tell if that was a fluke, but the first live application worked wonderfully. (I think our experience in foreclosures also helped a little.)

2. SleepWell also have foreclosure consulting services. We become your agents to purchase the property. Just tell us the Case no. of the property you are considering buying, and we will take a look at it and give you our opinion. Do a thorough check of the property as if we were buying it, give you a report, and if you'd like to go ahead, we will bid for you. When you win, we will also clear the property for you. The best part, our fees are nowhere in the realm you see up the top for the other company.
 
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i just like the scenery of japan, i wanted to know can a nonjapanese citizen, i mean someone who doesn't have japanese nationality or visa buy and keep proper tie/house in japan for himself?? you know i like the rural areas and they are very beautiful, i think about it for ages and i think one day they will be in high demand by japanese too. but anyway i want to have a place for myself, to make a few weeks a year holiday, i find the scene in japan very stimulating for drinking tea
 
Foreigners, without visa or anything, Buying Property in Japan

Yes. To answer your question simply. No problems.
and infact many do:
a) as a get-away like you are looking for (and sometimes rent out to Tourists)
or
b) as an investment. (good positive cashflow properties here.)

For
a) popular with foreigners are the Ski Resorts in Hokkaido or Nagano. (beautiful in both summer and winter)

b) the main cities. especially Tokyo since despite the decreasing and aging population of Japan it seems that the big cities are either remaining static or actually growing in numbers as people move here to find jobs.

This means also that places in the country side are also becoming cheaper. Some small cities, example Choshi on the east coast 100km odd out from Tokyo, every 2nd shop is boarded up!!
As a foreigner you will not get a loan for a property however here. But country places are cheap and getting cheaper, so buying in cash may pose no problem for u.

WHAT YOU'LL NEED:
You'll need to be able to write your name in Katakana (or have someone do it for you.) and possibly a hanko (Japanese stamp) (20Euro). But saying that i bought my first house here with a signiture!

IF A FORECLOSURE:
If you wanna buy a foreclosure to save upto 30,40% on ur buying price and costs, you will also need to have an official Japanese translation of your current living address in the country you live. This document must be less than 3 months old at the time of bidding.

IF I COULD!! : )
If i had a place in the Japanese countryside i would love to do a timeshare with you actually!! You come to Japan, i go to Germany!! Was recently there on holiday (April 2012) and absolutely loved it. We stayed with friends and they had a beautiful forest 100m up the road of their village. We walked around there there every day we were at home. Other places like near Fussen, and the whole country side, beautiful and simply magnificent. Even the English Gardens in Munich were spectacular. (including the river surfing!!)


Hope the above answers your question.

 
thank you very much. its weird that you like german forest i like the nature in japan more
 
I would be interested to hear what others think about our situation and how best to approach it.

Firstly I am a registered farmer working land attached to the property I rent and additional land from a retired farmer.

We moved into the property prior to drawing up the rental contract on the house, the local authority arranged the agricultural land contracts first and then worked on the house contract, which was signed one year after we had moved into the house.

However the signing of the house contract was not witnessed and it was not signed in each others presence, this means that additions were made to the contract by myself that stated we wanted to buy at some point and the owner adding that trees should not be cut, however the trees had already been cut before the contract was drawn up.

I should add that the trees cut down were on land that is registered as agricultural land, so as agricultural land comes under the direction of new farmland policy which promotes utilization over ownership I cannot see any problems, however the owner still mentions that one tree in front of the house was trimmed too much, but that was five years ago and has now recovered and looks better than it had previously, as it has grown the way the owner had intended to form an arch., though he had given permission for this tree to be trimmed.

Our issue is that the (Perceived owner) has since the signing of the contract tried various methods to get us out, from refusing to give us permission to make improvements and or complaining about improvements made, in general everything we had wanted to do he either complains about it or refuses, which I feel is done because he does not want us to buy the property.

Now over the past two years we have found that the father is still the registered owner of the land, though the documents show that he also had two loans secured against the land and I doubt the son (Perceived owner ) has paid this if he actually claimed his inheritance as the land is in a mountainous forested area where land values are very low, in fact the rent I pay for the agricultural land is based on double the tax payable, which is only 0.5円 per square meter, this results in us paying just 1円 per square meter per year.

We feel the son ( Perceived Owner ) wants to keep the land the house stands on in his fathers name and may have no intentions of claiming inheritance and or forfeiting the inheritance, though at some point the bank may want its loan repaid and I feel this is another reason why he wants us out.

For reference the loan is above 500万円 and may also include interest built up over 32 years and there may also be unpaid property taxes.

We are considering talking with the bank to see how they can assist us in enabling us to stay in the house.
 
You've got a lot of information in here, but I think some crucial points are missing.

You mentioned inheritance, but you didn't mention whether or not the registered owner is still alive. If not, did he have a wife, other children, brothers or sisters? The question of who inherits the land will depend on how many potential heirs he has/had. If he is not alive, and the son is the only heir, and if that son abandoned his right to inheritance, the land would eventually become subject to claims of creditors. This is a long and tedious process though, and the son is obligated to manage the affairs of the land as long as the process of abandonment drags on through the courts. The son has three months from his father's death to declare (or abandon) the inheritance.

Your contract not being signed in the presence of witnesses is probably neither advantageous nor disadvantageous to you at this time. I wouldn't assume it is a loophole through which you can gain an advantageous legal position against your landlord. Likewise the improvements and modifications and complaints, etc...are probably only white noise as far as your wishes are concerned. I think you would be better off speaking with a lawyer, rather than the bank. Your rent and your negotiations with your landlord really aren't the bank's problem, and I doubt any approach to them will be successful. For example, even if they are owed money by the property owners, the bank has a fiduciary duty first to the debtors. The bank wouldn't ally with you in the hopes that such an alliance will dislodge some money from the deadbeat owners. (I say this speaking in general terms. I am aware that banks operate on much more informal terms out in the sticks).

The good news is that tenants have fairly secure rights in Japan, and if you speak with a lawyer you stand a good chance of getting a reasonable outcome.
 
Majestic said:
You mentioned inheritance, but you didn't mention whether or not the registered owner is still alive.
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The registered land owner died five years ago, leaving a charge on the land above 520万円, that is over 30 years old and has never been paid.

If not, did he have a wife, other children, brothers or sisters?
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His wife died first.

There are only two sons, one of which handles things to do with the property on behalf of his brother, who is the main beneficiary, the reason being is that the younger brother married and took his wife's family name.

If he is not alive, and the son is the only heir, and if that son abandoned his right to inheritance, the land would eventually become subject to claims of creditors.
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Based on our understanding of the Japanese inheritance law, the sons would have either had to have accepted their inheritance which would also include all debts, or abandon/forfeit their inheritance to avoid having to pay the debts, this would have had to be done within 3 months of them becoming aware of their inheritance.

If they abandoned/forfeited their inheritance, the land/property would be sold to satisfy the debts, however as we are occupying the property there is a possibility that we are in the way and they want us out to ensure we do not buy.

Do you honestly feel that the sons are going to accept a property inheritance that would result in them being responsible in having to pay debts that could be in excess of 7 million for land that is not even worth 1 million today?

Generally Japanese lawyers would advice that if debts are greater than the value of the property, they should abandon inheritance.

Additionally it has to be considered that there may also be unpaid land/property taxes, which would also be part of any inheritance.

Likewise the improvements and modifications and complaints, etc...are probably only white noise as far as your wishes are concerned.
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I agree, that what the son has said and done is white noise, with the aim of getting us out of the house, as he does not want us buying it.

I think you would be better off speaking with a lawyer, rather than the bank.
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The reason we are considering talking to the bank, is because it is JA Bank that is listed on the property documents as placing a charge on the property for 500万円 and as I am a registered farmer member of JA I feel they could assist us, as the land may be owned by them due to the security charge on the land.

A lot of banks like JA hold non-performing loans on their books as its cheaper than foreclosing, as foreclosing increases costs, as the bank then becomes responsible for insurance, repairs and property taxes.

The good news is that tenants have fairly secure rights in Japan, and if you speak with a lawyer you stand a good chance of getting a reasonable outcome.
Click to expand...

I would agree. But tenancies have legal maximum lengths depending on location and as we live in a mountainous forested area the maximum term is ten years, at which point an owner would need to give or sell the property to the tenant for a nominal amount due to acquisition rights.
 
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Majestic said:
The good news is that tenants have fairly secure rights in Japan, and if you speak with a lawyer you stand a good chance of getting a reasonable outcome.
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I have spoken with a lawyer and have appointed him to handle this.
 
jt9258--I wish you luck (and patience/persistence).
 
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