For a lot of people, myself included, the thought of buying property in Japan was never really an option. Financial institutions have understandably strict criteria regarding who they will lend money to. Sure, if you earn a certain amount, and you are a permanent resident, preferably by way of marriage, and you have a 10% deposit then yes, a low-interest 35 year mortgage can be yours.
While that represents a small section of people currently choosing to make Japan home, after more than 10 years of renting a lot of different apartments, like a number of other people, I decided to switch gears, and buy a home.
First issue: finance
As a non permanent resident, with a non spotless tax record, married to a non-company employed artist, I am persona NON grata with Japanese banks.
Overseas banks require a monthly combined income of more than we currently make, and charge a higher interest rate.
Finance 1 – Us o
Next option, cash. AKA why would anyone not do it this way? a couple of reasons straight off the bat:
actual cash or lack thereof
or not wanting to buy a really cheap house…
Wait, what? You can just buy an apartment in Japan, with the equivalent of a 20% deposit on a house in New Zealand?????
yes, as long as you are happy with something a bit older. I am, and the approval of my wife is conditional on renovations. Again, something I am happy with.
So that`s what we did, we scraped together our life savings and had 75% of the purchase price of a 30-year-old apartment. With some negotiating, we talked the price down, borrowed some money from the in-laws, and took the leap.
After helping hundreds of people find rental property, I can now say with confidence, that the actual purchase of property here in Japan,while complicated and a bit stressful, is actually easier than renting an apartment.
How, you ask? the big difference is that the seller has already said they want to get rid of this property, they do not want it back, and are not really concerned about who buys it, or what they choose to do with it. As long as you have the cash, you could be using the property to host human sacrifices for all they care.
A property owner who rents property is going to want every imaginable assurance that there will be no late rent, no feline micturition, blocked drains, or soirees, let alone arcane rituals during your lease term.
Most people who rent here in Japan have experienced the stress of applying to rent an apartment. Providing an often uncomfortable amount of personal information and being left in the balance for a few days, while a faceless entity decides your fate. This does not happen when buying. Your offer, the number written on the piece of paper and only this number is up for consideration.
A lot of people have asked me how I can consider property built to depreciate a wise investment. This comes from a very western idea of property as a perpetually appreciating commodity. Here, most residential properties are built as single generation homes.
Buy new – live in for the life of the mortgage: 30 – 35 years – demolish and sell for the price of the land at the end.
Even though our new home is 30 years old, and at the tail end of its depreciation cycle, the previous owners did pretty well out of their investment.
They got a brand new house, for 10% deposit and made monthly mortgage payments at a fraction of what the same property would cost to rent for 30 years and then walked away with about 30% of the original purchase price. Now property taxes and maintenance fees stack up, and the previous owners may not have experienced any capital gain from the sale, but a lifetime of savings are the motivation behind most people’s decision to buy a family home.
Hopefully my wife and I can look at our house in 30 years and say ” I think we did alright”.