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Free Guide How To Buy A Cheap House in Japan As A Foreigner
Free Guide How To Buy A Cheap House in Japan As A Foreigner
I’ve been a real estate investor since 2018 and I was able to retire from my corporate career in
2022 with my rental income. I started my company to help others achieve financial freedom
through real estate investing.
I’m a Japanese native and currently living in Japan. I invest in real estate in the US. While most
of the clients I help are interested in investing in the US, I've received so many requests about
teaching people how to buy akiya houses in Japan, ever since I posted a few videos on akiya on
my social media.
A disclaimer I have before you jump into this guide is that I do not own property in Japan... yet. I
won’t get into the details of the reason behind it in this guide but the main reason is that my
family is quite international and like to move and we enjoy having the flexibility we do by renting
where we live.
This doesn’t mean I’m against other people buying real estate in Japan. For the right invidicual
or family and circumstances, buying an akiya home in Japan is a great option.
I’ve been studying about akiya and real estate investing in Japan and what I’ve noticed is that
the process of buying one is quite similar to what I know about investing in real estate remotely.
There are countless books and resources on how to buy akiya houses in Japanese but
resources for buying akiya in English rarely exist.
So this guide is a resource for foreigners to find their dream property in Japan—and at a
very affordable price. In this guide, I hope to provide useful, actionable information on how to
start your own search, while saving time and money in the process.
I would like to also disclose that I am not a licensed real estate professional or financial advisor.
I simply share here what I know about buying a property in Japan as well as my own research.
Before making any major investment, please seek advice from qualified, real estate, tax and
immigration professionals.
Table of Contents
The answer is a resounding yes! Despite what you might have heard, Japan is actually pretty
relaxed about foreigners owning property in the country. Whether you’re a resident or just
visiting on a visa, you’re free to snap up real estate and land without any extra hoops to jump
through. And get this: there is no special tax for non-Japanese buyers, either. So you’ll have the
same rights as a Japanese investor, including the ability to pass down your new properties to
your heirs and paying the same taxes.
And before we get into the details of the how, there are a few things you MUST know as a
foreigner in Japan.
#1 - Buying real estate in Japan will NOT give you residency here, if
that’s what you’re after.
Unlike some other countries, Japan doesn’t have a specific visa for real estate investors. But
don’t worry. If you’re looking to stay longer than a typical tourist visa allows, there are still visa
options that might work for you. So keep your chin up and don’t give up on your dreams of living
and investing in Japan, just yet.
Of course, there are certain areas of the real estate market where high returns can be seen. For
instance, in central Sapporo, investors may experience returns of up to 12% before accounting
for costs and taxes. However, since the aim of this guide is to help you find a Japanese property
for under $75,000, I will mainly focus on affordable options.
Unfortunately, if you’re not a permanent resident, it’s highly likely that you’ll need to pay for your
property in cash. While this may seem daunting, don’t let it discourage you from pursuing your
dream of owning a property in Japan. With some careful planning and budgeting, you can make
it happen. And remember, there are many affordable options available that may fit within your
budget.
In addition, Japan values a strong sense of community, particularly in regional towns and
villages. Building relationships with neighbors and engaging with the local community is
important and highly valued. While this sense of community may be diminishing in larger cities,
it remains a core aspect of life in many parts of Japan. So approach your transition to Japan
with patience, and open mind, and a willingness to learn and adapt to a new way of life.
Next, I’m going to tell you what to expect in terms of older Japanese houses.
I want to briefly address the likelihood of depreciation and the fact that the 'official' lifespan of
housing stock in Japan is just 35 years.
Going rural
You may feel apprehensive about purchasing a property in a rural area due to concerns about
depopulation and lack of services. But, there is a positive trend worth noting - the movement of
people from urban areas to the countryside in Japan. While it is still uncertain whether rural
migration will continue to increase, some smaller towns have actually seen a rise in population.
So don’t let depopulation discourage you from considering the unique opportunities and benefits
that come with owning a property in a rural Japanese town or village.
However, it’s important to keep in mind that akiya often requires extensive renovations, and
budgeting accordingly is recommended. Fortunately, finding an akiya has become easier with
the establishment of akiya banks by NPOs and local authorities, which can match sellers with
buyers. It’s important to note that only someone with a real estate license can oversee a
contract or negotiations, so working with a licensed agent is necessary for completing a
purchase. Additionally, abandoned properties may be auctioned off periodically by the local
government through kobai.
Additionally, the layout of older homes can be perplexing to Westerners. Bathrooms were not
always a part of the original house design and may have been added later, often in a separate
building. Therefore, you may find that the bathroom needs urgent remodeling.
If the property features a traditional Japanese-style roof made of materials such as kawara or
clay tiles, it’s important to factor in the cost of repair or replacement.
Older homes can be uncomfortable during the colder months, so it’s worth considering the cost
of installing modern insulation and underfloor heating, which is often solar-powered, to ensure
comfort during that time.
For Japanese residents, there are some government incentives available to help with the cost of
renovations. For instance, Kyoto City offers half of the renovation costs up to 2 million JPY on
designated traditional townhouse properties in the city under its Machizukuri Fund. Hyogo
Prefecture’s Kominka Saisei Sokushin Shien Jigyo initiative provides up to 5 million JPY toward
the renovation of traditional farmhouses over 50 years old, with even more funding available if
the property is a designated cultural monument. Businesses, especially those related to tourism
are preferred.
In November 2021, the government extended the current tax relief scheme for renovations that
improve energy efficiency or quake resistance until the end of 2023, providing significant income
tax deductions for those who self-finance their renovations.
Remember, it is possible to find houses on the Japanese real estate market that may not need
much work, but it takes patience and networking with people who have access to such
information. Don’t be swayed by headlines suggesting that all it takes to buy a home is a small
amount of money and a willingness to live in a “ghost village.” The truth is that many extremely
cheap houses in Japan are in poor condition and require extensive renovations.
Here are some relevant Japanese terms that you may encounter:
● 不動産 (fudohsan) means real estate (不動産屋 or fudohsanya refers to a realtor), and
物件 (bukken) means property.
● 賃貸 (chintai) or 借りる (kariru) are rental-related terms, so you can skip them, whereas
買う (kau) or 購入する (kounyu suru) mean "to buy."
● For types of property, you might come across マンション (manshon) or アパート (apaato)
for apartments, 土地 (tochi) for land, and 一戸建て (ikkodate) or 一軒家 (ikkenya) for
houses.
● リフォーム (rifohmu) and リノベーション (rinobehshon) refer to property renovations, and
済 (sumi) at the end indicates that they have been completed recently, whereas 未改装
(mikaisou) means that none have been done yet, with the implication that the property
requires renovation.
● Two indicators relating to the interior floor plan and size are the number of rooms
(including the acronym for living, dining, and kitchen) and the size of rooms in tatami
mats (帖; joh). Whether rooms are 和室 (washitsu) or 洋室 (yohshitsu), they are
measured in tatami mats rather than square meters, with one tatami being about
91x182cm. Note that in Kyoto and parts of the Kansai region, the slightly larger
Kyoto-style 京間 (Kyoma) tatami (95.5x191cm) may be used instead.
● Another common unit of measurement is the 坪 (tsubo), which is used instead of square
meters to denote the total floor or land area. One tsubo is roughly 3.3m2, equivalent to
two tatami mats side by side. This site can convert both standard tatami and tsubo to
square meters.
Hiring an intermediary
It may seem like a good idea to work with a Japanese real estate agent directly, but I would
advise against it unless you are fluent in Japanese. English proficiency in Japan is one of the
lowest in the OECD countries, and it is not commonly used as a second language. Therefore,
realtors may not be confident enough in their own English skills to offer assistance and provide
you with the necessary advice.
Hiring an intermediary can save you time and trouble, and if they are particularly skilled, they
may be able to negotiate a better price for you.
In addition to the important items we have already covered, there are some key questions to ask
the realtor when visiting an older property:
Make sure to bring enough memory on your device to take ample photos and take notes during
the visit.
Although the realtor may have arranged one on behalf of the seller, it's recommended to hire
someone with no conflict of interest. Basic inspections usually cost between 50,000 JPY to
70,000 JPY, while more detailed ones may cost over 100,000 JPY. This may seem like a hassle
to the seller, so an intermediary can be especially helpful in navigating this process. The
Japanese Society of Home Inspectors website has a comprehensive country-wide database to
help you find a qualified inspector.
Naturally, payment options may be on your mind, but there are other costs involved in a
transaction.
However, private sellers may include a clause to exempt themselves from any obligation, which
is only valid under the Civil Act if it can be proven that they were aware of any defects. In such
cases, the buyer has one year from the point at which a defect is discovered to take action.
When buying any existing house and land in Japan, there are five different taxes to be paid.
From most expensive to least expensive, they are:
Some Japanese banks may request that you possess enough proficiency in the Japanese
language to comprehend the loan agreement terms and be capable of providing your name and
address in Japanese characters. Otherwise, your alternatives may be more restricted.
It should also be noted that the specific requirements outlined above may differ marginally
between banks, with some offering more advantageous conditions than others. Therefore, if you
are interested in this option, I recommend conducting your own investigation and contacting the
banks directly.
Utilities
For a single person, it is advisable to set aside around 15,000 JPY per month to cover utility
bills. This amount includes the cost of electricity, which usually accounts for around half of the
total cost, as well as gas and water expenses. However, the use of solar panels is becoming
increasingly popular in Japan, with prices starting at around 300,000 JPY. By installing solar
panels, you can significantly reduce your monthly utility costs.
Electricity and gas bills are typically billed on a monthly basis, while water bills are issued every
two months. If you have a Japanese bank account, you can request a direct debit form (口座振
替, kouza furikae) from your utility company to automate your payments. Alternatively, if you do
not have a bank account, you can settle your bills at the nearest konbini convenience store
using the payment slip provided by the utility company.
Insurance
The most common type of home insurance in Japan is known as "fire insurance" or "kasai
hoken," and while it is optional, I highly recommend it. The policy usually lasts for 2 years and
costs between 20,000 to 50,000 JPY. Despite its name, it offers coverage that is much wider
than just damage caused by fire, and is similar to home insurance policies in other countries.
However, it is important to carefully read the terms and conditions of the policy before
purchasing it. If you plan to rent out your property, you can find a policy that includes tenant
liability coverage under the fire insurance umbrella. It is worth noting that earthquake or natural
disaster coverage is typically not included in this policy, even if such an event causes a fire that
damages your property. For that reason, I strongly recommend considering a separate
earthquake insurance policy and carefully analyzing the costs and benefits beforehand, as
prices can vary widely.
Final Notes
For the most part, I’ve been recommending people NOT to buy akiya or real estate in Japan
because houses in Japan do not appreciate in value. In other words, investing in Japanese real
estate strictly from the financial perspective isn’t the smartest move in my opinion.
BUT owning a house in Japan can absolutely be the smartest move for the right person and
circumstances.
As a Japanese national living in Japan, I wholeheartedly love my home country. I love the food,
the climate, the culture and many other things that Japan has to offer. I want Japan to stay
beautiful as it is for many years to come.
With the country’s birth rate and population decreasing, there will be more and more empty
houses in Japan. Towns and villages are disappearing while houses remain abandoned. My
wish is that by helping you purchase an akiya house in Japan, you will deepen your connection
with the country and help revitalize the beautiful country.
Owning a house in Japan may not make sense on the spreadsheet but the cost of home
ownership is relatively low, compared to many other countries. If you dream of owning property
in Japan, it is a realistic and attainable goal, and there are many non-financial benefits.