Foreclosed property in Japan

[Iluvjapan]

Enlighten me. What's the scam?
Might I suggest your cynicism is a reflection of the fact that:
1. You fear to tread where others take steps
2. You fear the responsibility to make judgements where others recognise the value of doing so.

Mate it is so obvious that you're just trying to sell your book Japan Foreclosed Property.
One question for you, If there is so much money in Foreclosed property in Japan (which there isn't) why are you trying to sell ebooks for $US19.95? You are a scam artist. Go back to selling 2nd hand cars mate.

 

[gaijinalways]

Yes, he has gone awful quiet since I posted my last question. Oh well, when it appears to be too good to be true, sometimes it is.

 

[Base]

Not quite.

Tens of thousand of properties sell by foreclosure every month, mostly bought and resold by the same companies. It is closed (in effect) to most regular buyers, but VERY lucrative and a very good chance to make a LOT of money. Shouganai is questionable, but the numbers are not. It is a specialty, but Shouganai just does not have a grip at how to make money enough money at it, and needs to resort to flogging his ebook. Everyone else seems to do well for themselves, myself included (no Shouganai, I do buy foreclosures already, I just took issue with you telling people to buy blindly because you can get royally screwed if you don't what you are doing -- use foreclosedjapan or the anpanman guy or someone else)

But, in your defense, it is cute how one guy says if he defends himself he is full of it, and then others pick at him for not answering.

(but he seems to run off to his blog to defend himself anyway when this happens)

 

[gaijinalways]

Do you have a link to his blog? I don't see it on his profile.

But, in your defense, it is cute how one guy says if he defends himself he is full of it, and then others pick at him for not answering.

No in my case, I asked questions related to the process and what the exit strategy is. Since you have admitted that you also buy foreclosure properties in Japan (and I will assume that you also buy buildings without title to the land underneath for the same reasons the OP stated), then perhaps you can explain to me about your exit strategy from this kind of investment?

 

[Dogen Z]

Greater Fool Theory

An exit strategy in this economy is the greater fool theory. That is, find someone more foolish to take it off your hands. In the meantime, you will be responsible for taxes, maintenance costs, and agent fees.

R.E. taxes are explained at this site: http://www.realestate-tokyo.com/sale/guide/

 

[gaijinalways]

An exit strategy in this economy is the greater fool theory.

In other words, you don't have one. I didn't say you had to sell now!

So again, what is your exit strategy:??

 

[22yrsInJapGaijin]

Yeah exit strategy doesn't look so good. Actually not only Japan but any country with falling property values. Although I think in a couple of years we might see inflation in which case I hope property goes up.
I made my capital gains on my properties in Sydney (I sold most of them in 2003) I have been investing and developing in Sydney since 1988. I made lots of money 'cause it was a rising market, but who knew? I mean hindsight is a wonderful thing.

Anyway I brought my cash over to Japan and now I have about 114 apartments, (in Kanto area 1-2hrs from Tokyo)

Japan Foreclosed Property is really, really lucrative if you buy well. lol. That is the same everywhere with everything, buy low....(sell high?) I have sold some properties here (didn't gain/lose much) but they were ones that I bought through a normal sale. The estate agents made sure they were full at the time and then, after 3 years I was having problems letting them and the rents had come down too...so I was sucked in because on paper they looked good on paper, and the buildings themselves were high quality. But I paid too much..(about 1.8 million US. For 44 one beds)

Forclosed property is much cheaper. One Tekotsu 20 x 1 bedrooms only cost 23,000,000 Although as DogenZ said, maintanence costs can be high. I do all the painting myself and I employ another worker. I have been here long enough to speak Japanese fluently (although not write those damn kanji) so the risks can be managed. I have just bought shouganai's e-book and will start it today. But from what he has posted on this site it just confirms what I have already experienced. The reason I bought his book is because it is in English, and I tend to rely on my wife too much when it comes to many tax issues or rules etc. so the more knowledge I can get in English the better.

But I have to comment on Iluvjapan's comment up the top.
It makes me F_king angry.

Mate it is so obvious that you're just trying to sell your book Japan Foreclosed Property.
One question for you, If there is so much money in Foreclosed property in Japan (which there isn't) why are you trying to sell ebooks for $US19.95? You are a scam artist. Go back to selling 2nd hand cars mate.

Shouganai is not a scam artist. He wrote a book because that is what intelligent people do. There IS so much money in foreclosed property. And next time mate, instead of knocking others, THINK before you post. You are OBVIOUSLY an unintelligent Dope. So F off.
Your comment makes me sick. (Everyone, not all Australians are dumb.)
Iluvjapan why don't YOU go back to selling second hand cars you f-king ignoramus.

At the very least Shouganai is writing something that will help people to become self-reliant.

If people took responsibility over their own lives and pension funds they wouldn't be whining when they don't have enough money..(read "Rich Dad Poor Dad")
I don't have to work anymore because I have always invested in property.
I am not as clever as some engineers and professionals in Japan, but I am a lot f_king richer. (I have just bought a new Lexus IS-F) Many people work hard and deserve to have a nest egg. For me that has been mainly foreclosed apartment blocks. I gained wealth even though my salary is nothing special.

Both in parts of Sydney and parts of Japan there are opportunities but you do need to research carefully.
Find out if the population growth is declining in that area. Find out the rentals, ASK around what other people are getting, how many vacancies in the area...have a look at numerous foreclosed properties and do the math before blindly putting in a bid. Try for a low bid and miss out several times, but, my point is, if you don't try, you will never succeed...and it is not Rocket science people. If I can do it, anyone with half a brain has a chance. Just spend the time researching it. It is a great hobby, once you get into it you become enthralled.....


P.S. Iluvjapan...don't bother replying to this post. I don't want to hear any more of your dumbass comments.

 

[Dogen Z]

Land Speculation

In other words, you don't have one. I didn't say you had to sell now!
So again, what is your exit strategy:??

You guys who keep bumping up this thread are proposing a very unsophisticated "investing" proposal. You seem to want suckers to believe another real estate bubble is on the horizon so its time to buy now. Just because it was successful in the past does not translate to success in the future. Such a claim is called survivor bias in the investing world. Just because it happened in the past does not mean it is going to happen again, especially with a shrinking population and a financial crises that showed how imperfect market fundamentalism is, so don't expect any structural reform in the neaf future.

If Tokyo wins its Olympic bid, there might be a temporary increase in value in some properties, but Goldman Sachs has already scooped up the most promising properties. Other investors should be very careful.

 

[22yrsInJapGaijin]

Oookay...so don't speculate...but what are you going to do with your spare cash?
It's either the stock market or property. If you can leverage by getting a loan and you can find a block of apartments at a low enough price, then it can be very good return and cashflow. I am in a rural area and can find some real bargains, and my only other competition is from Real Estate agents who bid low.
I don't know your area or whether the rent market is decreasing in that area etc. But it's worth a look.

 

[Dogen Z]

I wonder why REITs are having such a hard time staying afloat when you are having such an easy time.

Maybe you could start your own REIT. With a good track record, you'll have an easier time attracting a following, especially since investors wouldn't have to risk so much of his/her savings in a single property.

In the meantime, I think I'll try to preserve my cash rather than risk it on anonymous tips from the Internet.

 

[gaijinalways]

Originally Posted by gaijinalways

In other words, you don't have one. I didn't say you had to sell now!
So again, what is your exit strategy?

Dogen Z posted

You guys who keep bumping up this thread are proposing a very unsophisticated "investing" proposal. You seem to want suckers to believe another real estate bubble is on the horizon so its time to buy now. Just because it was successful in the past does not translate to success in the future. Such a claim is called survivor bias in the investing world. Just because it happened in the past does not mean it is going to happen again, especially with a shrinking population and a financial crises that showed how imperfect market fundamentalism is, so don't expect any structural reform in the neaf future.

If Tokyo wins its Olympic bid, there might be a temporary increase in value in some properties, but Goldman Sachs has already scooped up the most promising properties. Other investors should be very careful.

Again, please answer the question? If you need to exit this investment at some point in time, how will you do it? Will you lose money when you sell the rental units, or do you have some other alternative (conversion to other use, then sell, etc..)?


22yrsInJapGaijin posted

Yeah exit strategy doesn't look so good.

Thank you for confirming what I feel is true.

If people took responsibility over their own lives and pension funds they wouldn't be whining when they don't have enough money..(read "Rich Dad Poor Dad")

Actually, if you read carefuly about the author, you'll find that his initial money came in from selling his books, which don't really give a lot of advice except to recommend to try and get income where the tax rates are more favorable and you can leverage your time better. And of course, try and put your money into things that will increase your passive income, and not just eat a hole in your wallet.

It's not easy for many people to do that (forvarious reasons), otherwise everyone would. But certainly his general advice is not wrong, just not that valuable.

Both in parts of Sydney and parts of Japan there are opportunities but you do need to research carefully.

I agree, and then even then, luck plays a part. That and having available money to make the intiial investements or an income to support a loan to get seed capital. I only recently have had more available cash, but now with a housing loan on top of that, it's not likely I can qualify for another loan. My wife and I have wanted to try and do it, but it's not always that easy.

But, hats off to you, you have been successful with it. I wish you continuing success.

PS When you say 1-2 hours from Tokyo, can you be more specific (if you're afraid of giving away your investment 'secrets', don't worry, I understand if you don't wish to say where)? Just wondering. I have in mind another area, but it much closer to Tokyo, but I don't think the number of foreclosures in that area are very numerous.

 

[Base]

i) i am sorry for the bump. it is not meant to bump, but it happens if people talk about things on forums. live with it

ii) i guess there are not 3 people talking about foreclosures. 22 years and shouganai look to me like the same person

iii) there is very good money in foreclosures. spend the 20 dollars on the ebook so you can understand what not to do. from what i have gathered by his posts on other forums, shouganai advocates buying a crappy property in a crappy neighborhood. you can make money doing this, they come so cheap, but this is not the best strategy and you might need to flog ebooks to make up for losses.

The attackers here don't seem to know much either.
Leased land is not very common and i am a traditional westerner, i like my land.
Nobody has actually looked or uses numbers anywhere. But for the sake of argument, even though I am not arguing:

I did bid on one leased land house. Normally I do not bother, but I will use this as an example because this is what everyone seems to be talking about.

The land rent was very expensive, 30,000 yen per month. There was 22 years left on the land lease contract.
The house was 12 years old (I think, I don't remember now exactly but about that). Location was kind of crappy but could get about 120,000 yen a month. I had someone before bidding that was going to pay 95,00 per month to rent, a big discount for friends and because it could be rented right away and I knew they would stay for many years. It was near my house, which anyone prefers of course, but I buy everywhere anyway.

I bid 800,000 yen. Closing costs and agent fees would have totalled in at 1,478,000 (I use and pay for professionals only if something I am not completely comfortable with, like leased land and negotiations).

I do not understand the exit strategy either. I know some people seem to think it is a zero-sum game "greater fool". If I sell then the buyer is ripped off. Or, if the buyer puts up a new office building and makes a killing, I am screwed because I didn't make any of that money.
Whatever, I am in for about 1.5 million cost, costs me 2 million to pull it down at the end, brings me to 3.5 million. On the other hand, I get 57,000 a month (after property management) for 22 years. Yes, there is maintenance, yes there are property taxes, yes there might be a time with no renters and I have to fork out for renovations. My exit strategy was to give back the land at the end after having pocketed a decent profit. Get your calculator.

Just to reiterate, I like buys with land better, but I did still bid on the above.
I got topped with a 2,200,000 bid and lost so never thought about it again until this conversation.
I did not want to bid higher because I did not like the 30,000 yen a month cost and if the house was not rented this still gets charged. It was in a major city and demand was there, so it would not stay empty too long. It is easy to see more clearly and have 20-20 hindsight after an auction, but you do not know the winning bid amount going in.

 

[Dogen Z]

Why are you guys (or maybe all of you guys are just one guy) are so adamant about promoting real investing in Japan? I would laud you for trying to support the flagging real estate industry in Japan, but I feel you have more self-interested motives. You rave about upside potential and gloss over any difficulties. Actually, anyone who really knew anything about the market and were honest, would warn people of the problems first, then talk about possible upside potential.

BTW, you haven't mentioned the difficulties in finding renters in this depressed market. Have you seen the number of "tenant boshuu" signs around? Landowners are desparate for renters. Many places remain empty for months, which is the reason so many REITs have gone down the drain.

So you have to including marketing expense to you numbers. And you forgot to mention insurance costs. And you forgot to mention renters rights, which are probably more numerous than in your country back home. You also need to include agent costs because most foreigners can't communicate very well with Japanese renters. Etc, etc, etc.

 

[gaijinalways]

Base posted

Leased land is not very common and i am a traditional westerner, i like my land.

I disagree, if you were looking at what the same or two other posters were talking about, they were talking about buying apartments (not houses, which is the example you gave), which generally in Japan don't come with their own land. Even when you buy buildings in Japan, for example an apartment building, you may not get the land underneath it. You do normally have an indefinate lease (where the lease amount can go up sometimes), but it is usually not a case of being forced off the property at some time in the future.

The example you gave is interesting, with a possible net income of some 12 million yen (of course, as you mentioned, there are taxes too and some other costs, as well as missed rents, but you may be able to raise the rent at some point too, by putting on a few coats of paint). Of course that is assuming you don't need any of the money you put in for 22 years, which to me is a fairly long time frame to make 12 million. Then again, if you were able to do the same thing with several properties like this, and set aside enough money to 'pull everything down', you'd be sitting pretty good at the end of that 20 or so year period, and probably wouldn't need to sell ebooks.

 

[Base]

Why are you guys (or maybe all of you guys are just one guy) are so adamant about promoting real investing in Japan?

It's a discussion board.
You are the one adamantly against investing in real estate. You misunderstand, I can respect that, a lot of people have lost a lot of money at real estate.
But no, you may not have the last word ("I spoke, now stop bumping"). People will continue to discuss it.

I would laud you for trying to support the flagging real estate industry in Japan, but I feel you have more self-interested motives.

No argument here.

You rave about upside potential and gloss over any difficulties. Actually, anyone who really knew anything about the market and were honest, would warn people of the problems first, then talk about possible upside potential.

The problem is I was looking for a more advanced discussion. Warning people of the problems first? Guess what, I am not here to sell anything and if others do not want to buy, good for them. Their choice and your choice. To add, I think the majority of people here need more help with answering "How can I go to Japan after I graduate high school."

I was listening to your opinion because it was negative. I was hoping actual numbers I put up would be met with actual numbers of a very pessimistic nature. This I might learn from.

 

[Base]

I disagree, if you were looking at what the same or two other posters were talking about, they were talking about buying apartments (not houses, which is the example you gave), which generally in Japan don't come with their own land.

Yes they do. The land is usually shoyuken freehold, but you get only a small portion depending on the number of apartments in the building. Leasing happens, more often than the west which is why everyone seems to think this is how it is here.

The example you gave is interesting, with a possible net income of some 12 million yen (of course, as you mentioned, there are taxes too and some other costs, as well as missed rents, but you may be able to raise the rent at some point too, by putting on a few coats of paint).

12 million? No way, it would turn out much less after expenses.

Of course that is assuming you don't need any of the money you put in for 22 years,

The idea was to be cash-flow positive from the get-go with friends ready to move in, not put money in.

which to me is a fairly long time frame to make 12 million.

I'd agree that 22 years is a long time, but the buy in is only 1.5 million and can always sell during that time if a good price is offered, redevelop, etc.

wouldn't need to sell ebooks.

Better than schizophrenia. The other end of the spectrum, where we are all one.

Okay, look man, you got me, I'll give you a discount on the/my/our ebook, okay? You just help me push it here to the kiddies and I'll give it to you for the everyday low price of $9.95

 

[Rollin_j's]

Buying a foreclosed condo

Well I hope the guys/gals at this site can help > foreclosedjapan.com/openrealty/search.html[/url] .. My wife and I found several condos and detached homes we are interested in. I am still awaiting word back from them. I E-Mailed them yesterday.
Has anyone dealt with this agency in the past?

 

[Shouganai]

You seem to want suckers to believe another real estate bubble is on the horizon so its time to buy now. Just because it was successful in the past does not translate to success in the future. Such a claim is called survivor bias in the investing world. Just because it happened in the past does not mean it is going to happen again, especially with a shrinking population and a financial crises that showed how imperfect market fundamentalism is, so don't expect any structural reform in the neaf future.
If Tokyo wins its Olympic bid, there might be a temporary increase in value in some properties, but Goldman Sachs has already scooped up the most promising properties. Other investors should be very careful.

Actually I am conveying that the yields on foreclosed property exceed 13% even before debt leverage, which is not too shabby when interest rates are so low, and often very little work needs to be done on properties. Based on these yields you don't need to worry about exit (but that issue was solely concerned with land leases) and 'turn arounds' when you will have recouped your equity in a few years (if leveraged). The outlook for Japanese property is good because yields are good...enough said. Any reform is a bonus. Present tense. I might add that not all of Japan has shrinking population. There is intra-regional migration.

 

[Dogen Z]

I was going to ignore your post, but since it's addressed to me, so I'll have to reply.

If anyone believes they can make a 13% ROI excluding leverage, go for it! Even the boys at Toyota or JR East would be interested in such a lucrative vehicle for their extra cash, not to mention the REIT pros. So if you can do it, dozo bozo.

P.S., you should have listened to me about opportunities in South Korea and Australian bonds.

 

[Shouganai]

I was going to ignore your post, but since it's addressed to me, so I'll have to reply.
If anyone believes they can make a 13% ROI excluding leverage, go for it! Even the boys at Toyota or JR East would be interested in such a lucrative vehicle for their extra cash, not to mention the REIT pros. So if you can do it, dozo bozo.
P.S., you should have listened to me about opportunities in South Korea and Australian bonds.

Well I hold gold stocks and Japanese property, so I'll give Aussie bonds a miss thanks.
Their just might be some JR workers at the auctions. Can't say. I can say that the last auction I went to was packed full of Japanese people. Most are pretty scared, but there are so many of them, so you do get a good crowd. Maybe most of them are fence sitters and naysayers. But some people love a bargain. Japanese real estate agents love flipping foreclosed properties as the returns are so good. So I suggest targeting where they don't venture. I am not addressing that to you of course.

 

[gaijinalways]

Base posted

12 million? No way, it would turn out much less after expenses.
Sorry that should have been gross income of 12 million, and yes with expenses it would be far less.

I think 22 years is a long time frame, and I can't imagine there would be a lot of buyers around.

shouganai posted

Actually I am conveying that the yields on foreclosed property exceed 13% even before debt leverage, which is not too shabby when interest rates are so low, and often very little work needs to be done on properties. Based on these yields you don't need to worry about exit (but that issue was solely concerned with land leases) and 'turn arounds' when you will have recouped your equity in a few years (if leveraged). The outlook for Japanese property is good because yields are good...enough said. Any reform is a bonus.

Yes, the yields are okay, but as I mentioned earlier, how do you sell? The real estate agents I talked to didn't see it as possible. Of course I was looking at property in remote locations or property that hadn't gone through foreclosure (or had previously before the RE firm swept it up).

 

[Shouganai]

Yes, the yields are okay, but as I mentioned earlier, how do you sell? The real estate agents I talked to didn't see it as possible. Of course I was looking at property in remote locations or property that hadn't gone through foreclosure (or had previously before the RE firm swept it up).

I believe you are talking about leased properties in your case, which is just some of the property on offer. Simply buy property you can rent out and property where you own the underlying land.

 

[gaijinalways]

Shouganai posted

I believe you are talking about leased properties in your case, which is just some of the property on offer. Simply buy property you can rent out and property where you own the underlying land.

Apartments generally don't come with the land, unless you're buying up a building.

Sorry Base, my comment said that 12 million should have been gross income (still got dropped from my last post for some reason).

 

[Shouganai]

Shouganai posted
Apartments generally don't come with the land, unless you're buying up a building.
Sorry Base, my comment said that 12 million should have been gross income (still got dropped from my last post for some reason).

True. I tend to avoid apartments because of the excessive management fees. I like house & land subdivisions because they are low cost. I pay just Y30,000 a year in land tax. Apartment/mansion mgt fees of Y9-30,000 per month are just a waste of earnings.

 

[tomodachidave]

A lot of good information throughout this thread. I am getting ready to start purchasing foreclosures with several partners. We are going to form an LLC (limited Liability Company). One of the partners is Japanese and has purchased his own personal home through foreclosure. There is actually a website out there that you can use to search foreclosed property through the varous government offices. The information available on that site is extensive. It will tell you everything that you need to know about the property being auctioned. Only problem is you need to be able to read Japanese.

If you use the site japanforeclosed.com you can pull some up but thats only the ones that they choose to list on their site. There are literally hundreds of properties out there with minimum bids that are probably 1/3 of the property value.

You can also see on the japanforeclosed.com site a listing of sold properties, the winning bid amount and the number of bidders. I did a quick check on properties in Kanagawa prefecture. Out of 168 properties on my search I looked at the first 80 for the number of bids submitted on each property. Out of those 80 nearly half the properties had only 1 or 2 bids placed.

That would tend to indicate that this is a virtually untapped market.