Transcript
Speaker: Welcome to the Buying a House in Japan podcast. My name's Take. And I'm Joey. And we're two friends who just quit our corporate jobs and bought a cheap house in rural Japan. The goal of this podcast is to document the highs and lows of the process while informing you of every step you need to take in order for you to do it yourself too. We're by no means experts and we're doing this for the first time, but we hope this gives you a realistic expectation if you embark on this journey yourself and we hope you enjoy the show.
Speaker: Scooter's getting married soon. You are right. Scooter, our friend who made that little intro song, is getting married next week. Shout out to you, Scooter. And Joey, I'll be back in Japan this Friday and then heading over to Beppu next Tuesday, so see you soon. But give me updates. How are things going?
Speaker: Good. Yeah. I've been chilling by myself for the past month. Just had to get a space heater is the new big news in the house. It's been pretty hot since I've been here. And then just something happened past two days. Like my, no, I'm inside and like my nose is cold. I was like, okay. Our house has zero insulation. Right. Joey, any other surprising facts on the quality of our construction of the house?
Speaker: No, maybe not unsurprising, but not great to hear. I did ask contractor, what are his impressions now that he's got the walls open, floor open? What does he think about the construction of the house? And he said simple. It was his, he used the English word simple. But when I asked him what he meant by that, he actually just means cheap construction from 1970s Japan. Okay.
Speaker: But hey, at least we know this era of building. We were looking at a couple of photos on Akiyamart and we're just like, oh, we, if we go do another building with the same stuff, it's going to be the same. Right.
Speaker: Yeah, very likely. He did say that the new, they are like new builds now. He was like, they all, everything is insulated now. People are more conscious about how much money they're spending on energy and heating. So he did say like newer. I don't know when that started though, but. Gotcha. Okay. For anyone listening, this is going to be another dear diary series. Things we're going to talk about today is actually, we met with a lawyer a couple of days ago. Actually yesterday, was that yesterday, Joey? Yeah. Early in the morning for me.
Speaker: Yeah, we talked to KKOS. They have helped us set up a partnership LLC. So we talked, we had an hour of just like back, like packed questions. So we got a lot of good information about it. The first and biggest one, Joey, I want to talk to you about is self -directed IRAs and using your 401k to
Speaker: Invest and how can we grow with that? For anyone listening, you can self -direct your IRA and help kind of invest how you want with your 401k and properties. There are very stringent rules, so please do not take this as investment advice and do your own research. We could be making a huge mistake here if we are. If someone else, please tell us. But you can more or less use your 401k to purchase a property in Japan.
Speaker: The stipulations again, you can't do work on it yourself. So we aren't physically able to tear down walls. We have to have like very clear barriers. So we're not touching it. You can't withdraw that money. But what I'm currently seeing in my fidelity is probably like a seven to eight, maybe 9 % gain year -over -year. So if you think you can outperform it, it might be a good idea.
Speaker: A lot for me, Joey, what are your thoughts? So you are definitely more investment savvy than I am. Could you like break it down very simply for me? What's a mean, a self -directed 401k? Like from my perspective as a W2 employee in my life up to about a year ago, I just clicked a few boxes and I guess money was taken out of my paycheck. And now you're talking about using it and you look at that money from time to time.
Speaker: and then
Speaker: Yeah, high level. I can try to explain it, but for anyone actually listening, please do your research and make sure correct me. I'm not sure if this is a hundred percent, right? But to my understanding, employers will typically set up a 401k for you in which they will do like a company match or some amount match per year. Over time you build that 401k. It's traditionally going to be auto set to be invested in things like foreign stocks, domestic stocks, bonds, things like that.
Speaker: The idea with a self -directed IRA is you roll over your 401k into a self -directed IRA. In a self -directed IRA, you can invest that money how you want. It still has the same and actually very strict regulations on when you can take the money out and how you can interact with that investment. But the basic idea of what we're trying to do here is we are going to roll over our 401k into a self -directed IRA.
Speaker: That self -directed IRA is going to own an entity in Japan and that entity in Japan will own the property. Again, there's very strict rules on what you can do and can't do, but high level, yeah, we're more or less, we can use our 401k money after a couple of steps and a couple of restrictions to invest in property in Japan. Right. Okay. And the other interesting thing about, okay, so yeah, so you're essentially you're taking your money out of wherever it's currently being stored in the American 401k system.
Speaker: And you're moving it to a company that you started yourself in Japan, but you can't touch it. Like what do we know about, like you, it does seem like you want to make it known that this money and investment is as hands off as it possibly can be from your perspective.
Speaker: Like that seems to be the name of the game or else you can get tax penalties or something. Yeah. And we got to really double check on that. But the general premise is if you think you can outperform what your 401k is currently, how your contributions are set.
Speaker: It is not a bad idea or not a crazy idea to try to self -direct your IRA. So if we think we can get say 20 % returns on flips of long -term rentals, let's say in Tokyo or whatever Fukuoka, I think the argument can be made that we should do that. If there's not too much work on our end, because honestly right now we're leaving it in our 401k, we are making money without really doing anything.
Speaker: it does seem like you have to be careful about, okay, so self -directed 401k, right? We're trying to buy a bunch of properties, make them nice again, a bunch of cheap properties in Japan, fix them up a little bit, get a tenant in there and earn somewhere between 20 to 25 % returns. But it does seem like
Speaker: To do that, you have to, one, fix up these properties, you have to manage these properties, but you don't want to be seen as doing that yourself is what it seems like. You need to shield yourself behind maybe like a property manager, contractors, or a business that does all that kind of stuff. Like you can't be seen directly involved, right?
Speaker: Yeah. The short of it is like you, this property needs to be a strictly investment property. So you and your family can't use it is the clear rules. And you, I think also cannot be doing the work. So we will need to hire someone and be very, I think just very mindful of making sure we have receipts and we are playing by the rules. Cause I think
Speaker: Mark said the minimum penalties of he mentioned some penalties that seemed like pretty minimum penalties. He mentioned that one. I don't know if it was what it was in relation to, but I remember that sounded steep. Yeah. So there's a lot of complexity to this, Joey. I'm not going to lie.
Speaker: They do feel good. They know what they're doing, but they're also going to cost money. So that's just something to really consider. Yeah. And you really did drive the point home. If you're thinking about making a move, like check in with me first. Good marketing strategy too, but also I trust them in the sense that it sounds easy to make stupid mistakes.
Speaker: Yeah. And I think, yeah, whatever, let's say we pay him a thousand dollars for advice. I do think long -term, if this is something we're expecting to do for a while, it's definitely worthwhile. Yeah. So I guess the other thing is say we went with a business strategy of what, so we've mentioned it before on this podcast, but it seems like there is one tried and true method with Akia in Japan and that's buying cheap, renovating for cheap, and then getting in a regular Japanese tenant and you
Speaker: It is possible to make 20 to 25 % returns with 20K kind of investment, and that includes the price of the home, the property, and the reconstruction, or not reconstruction, renovation costs. So 20K, you can make 20 to 25%, but it's going to take work. There's no way it's done to take work from our part, right? Like I don't see a way to have a W -2 job and do this in Japan at the same time.
Speaker: Yeah, we definitely need to look into this, but just to the listeners, we're giving you an inside peek of really what we're thinking right here. I think many will think this is very risky. And I think it is, Jerry, honestly, but the experience we gain, I think it's totally worth it. I think we had talked a lot about, we're not sure how we're going to do with this GsoG Lux renovation, but if we
Speaker: Break even, maybe even lose a little bit of money. I think it was a really good learning experience that we'll be able to carry into something else. Yep. I think another consideration for using 401k money, 401k, we want it to be something that main like bare minimum maintains its value because you're going to need this money when you retire.
Speaker: properties in Japan depreciate in value, at least from an accounting standpoint. But also I feel like rural areas, like think about in 20, 20 years, like with aging population is G so like our current property, is that really going to depreciate in value? If we bought a bunch of cheaper properties and like cheaper areas, are those going to depreciate in value? So.
Speaker: I mean, maybe like to pull this strategy long term, you would want to pick an area that is going to depreciate less like a city is what I'm thinking. Fukuoka, Tokyo, et cetera. Yep. So I think this strategy definitely is less appealing than we initially thought from, it's definitely less sexy. Eff it. I'll take a low return, low and consistent returns versus.
Speaker: actually, hopefully higher, we're aiming for higher than what our 401k can perform, but also get trying to get stable passive income, right? Yeah. Stable growth. So the difference is if you were to use your 401k for something in the U S and it's appreciating asset that that's a huge play, right? And if you buy a plot of land at it 30 years from now, it's bound to be a lot more expensive than what you got it, got it out now, right? Yeah. Yep.
Speaker: I think for that reason, Tokyo seems to be the spot would be my gut instinct. Just given Tokyo Kyoto, like maybe Niseko, like maybe those are the only ones. Hmm. Yeah. We'll look into it, but I think Tokyo or Chiba and just doing some kind of flip light flip and long -term rental is, I think.
Speaker: Not a bad idea. We don't need to use all our 401k amount that we can figure out how we're going to pull this. By the way, anyone listening, the lawyer recommended we create a partnership LLC for me and Joey. If we wanted to do this together. And again, we would have an LLC or company entity out in Japan. We'll keep you up to date on if we actually do this, there's a lot of logistics there, but ultimately he, their podcast always goes invest in much. I know we don't even know this, but I feel better about.
Speaker: taking control of my own finances and money versus letting it just sit in like a money market fund. Do you like, I dropped that and he was like, ooh, yeah, that's our motto or something like that. I happen to know a lot about crypto right now, but I'm not, actually now is a good time to potentially put money in crypto, but it's gambling. Even though, even if I understand it a little bit, like it's gambling.
Speaker: I say again, I bring it back to, and again, people listening to this may be like, you're an idiot, but the learning experience and exposure we get to having access to this money in my mind is worth it. Right. Like this. And starting a business, like it seems.
Speaker: tried and true, almost this like cheap, cheap hockey, a renovate for cheap kind of thing, like to get experience understanding that side of the business, I think is valuable. Yeah. The question mark is like, how much is the work? And obviously people will say numbers and figures that sound better than they truly are. I think we definitely have to take what we're hearing with a grain of salt, right?
Speaker: Yeah. That's the other thing. 20 % returns on a 20 K property. Like it's not a lot of money each year. Yep. At the end of they don't, I know there's also risky thought, but we can't pull that money out to our tour in our sixties. And I feel like it's much better used now. And I don't, it's the world going to be around 30 years from now, Joey. I don't know.
Speaker: And so much could happen with demographics in Japan too. If they decide to take an influx of foreign workers or whatever, population could come back and then housing prices could go up. Who knows? Hard to say, huh? I do feel confident saying that Tokyo will still be a pop in place for the rest of our lives. I agree with that. I think Tokyo is the safest bet for property value.
Speaker: Yep. So with that, Joey, I'm putting it on record here. I think we should consider using our 401ks to get a Tokyo property that we renovate and try to rent out for long. Yeah, I'm down for that. Like even on a part like a condo, they call it a mansion here, if I use the word mansion, but yeah, I think we should even like, not just look at like homes and like old Akiya in Tokyo, but also like condo, Akiya condos, that kind of thing.
Speaker: Okay. Yeah. I've been looking at AcciaMart. By the way, anyone listening, we have axedgillo .com. It is now AcciaMart .com. I changed the name back. Unless we come up with another name. Yep. So we're back due to legal reasons, which you can ask us on the side. We've decided to make this move. So we're calling it AcciaMart for your search and discovery tool for all Japanese cheap real estate.
Speaker: Let's go some changes coming soon. Hopefully I'm working on something that'll make it load faster and yeah, some new exciting add -ons to slice and dice the data a little bit better too. Joey, by the way, if I can add on a, on a chat button, maybe I can set up a calendly link or something where people can chat. Did our first, did a first consult today of, of a big listener of the pod. Shout out to Sato and Lucy.
Speaker: We talked to them about, I talked to them today. I actually haven't talked to you about it, Jerry, but just gave a little bit of advice. They want to do something. A lot of people are in the similar zone as us wanting to buy something in Japan. Rent it out long, but they also want to use it or they, they're just strictly thinking of investment. Yeah. Yeah. They're thinking about using it as a vacation property twice a year, but renting it out while it's not there. They mentioned.
Speaker: Airbnb equality was quite low and expensive. So I feel pretty aligned with how they are feeling. And I know other people too are feeling the same way. Yeah. So chat now button or whatever. Yes. If you can set up a calendly, I can figure out a way to put a button on. Okay. Cool.
Speaker: Yeah. So anyone listening, if you're interested in chatting with us, I don't know how much advice we can give, but I would love to free 30 minute consultation or how you want to read this free. Yeah. Let's just do it. I think talking to people interested in the space is better than not. I feel like we're talking to a little bit of a black box right now as we don't know where this is going in some sense, right? Yeah. Yep.
Speaker: So cool. But yeah, that's what we discovered about our 401k going back to it. We are considering it. I think it's a good option, Joey. Our, but also our backs are a bit to the wall financially. I think we're, we got a couple more months of runway. But if, but like worst case scenario, what you think about it, like getting a job for one year will get us back to where we were at. So it's not worst case scenario. We just have to get a job. Yeah.
Speaker: I think we've talked about this and maybe on our previous Dear Diary series, but selling G Soji Lux. If we sell G Soji Lux at any profit coming out of this, just breakeven. I think this has been a 10 out of 10 experience. Yeah. And we'll know so much more. I feel like.
Speaker: Break even it'd be like, Oh man. Okay. All right. Break even. But even if we did, even if we were like, all right, let's just sell it and we break even probably we put, we're going to be close to the a hundred K maybe in when everything's said and done. Like to put that a hundred K into a second, another property, like the subsequent, the following property, it, yeah, we will, we can do a lot better. I think in the sense of.
Speaker: uh, far from neighbors or a little bit more privacy is one thing that we wish we had. And, uh, yeah, we'll know much better, like, Mmm. Squatty potty toilets. Just buy a house that has already the regular toilets.
Speaker: I think as of right now, like I was thinking about if we were to completely do it again, it's really the step one identify. I know we need to record that podcast, but like we got to go there in person. You got to go there in person to find the deal. I agree. There's so much that you understand just by, by physically being there. And there's so much that you miss out just doing the virtual viewing.
Speaker: Yeah. So that's our, I really, after this month, best advice is go to the neighborhood, live there for a little bit. I know not everyone has that luxury, but now that we've, we know our neighborhood, I think we could knock it out of the park with a good deal.
Speaker: Yeah. If you can swing it, like when you're home in America, Canada, and you're like looking at properties, you want to just move on them is, is like the, you FOMO, you FOMOing in, but if you can swing it. Yeah. Yeah. I totally don't regret doing it the way we did it. Sometimes you just got to get your foot wet. Yeah. And GSoG Lux is pretty nice. Like I like chilling here. I like being in this room, even though it requires a lot of work. Like it's pretty.
Speaker: We did a good job setting up what we've set up. Yes, sir. And I do remember our contractor Sato son. He did say we got a good deal, right? Does he still feel that way?
Speaker: Did he say that compared to his next project or something like that? Oh yeah. They paid about, yeah, actually that's true. Yeah. So his next project, these people paid about the same amount of money, 6 million yen. And it's, yeah, it's somewhere else, like some Hills somewhere. And yeah, he thinks we got a bet. That's that is correct. He did say we got a better deal than they did yet.
Speaker: Okay. Okay. All right. We did. Okay. Jerry. Our next one will be better there. I think so. I think we know what to look for much better now. We're, we might be getting too far ahead of ourselves. We still have a lot of work to do. Jerry, what's your estimate? When will the construction be fully done? I was thinking March now. I don't know. Like really? No way. Yeah. I think more, although maybe he's just like,
Speaker: It maybe it's like my presence here. I don't know. I don't know if he's like holding back or not. I don't know. It's hard to say, but based on maybe he's tackling the most difficult thing first, which is the Horikotatsu, where he really needs to like redo the structural aspects of the floor. So maybe that's why it's going slower, but we shall see.
Speaker: Okay. For anyone listening, we had predicted January. I think that's what he flew me or our fixer had told us that two months was about the right amount of time, which I was also personally surprised by, but I think when you get here, you're going to agree March. Okay. Okay. Time pressure's on. My parents want to come in March. So I think we'll make it happen by then. Oh, that's cool. They, they, that they're going to come.
Speaker: Yeah. When's the next time you want to come back? When's our next trip, man? It's sad that this is our last planned trip until a lot of things could happen. Especially because I want to scoop cheap tickets. I was thinking about that when I woke up this morning. I was like, all right, just plan another trip out here. Worst case scenario, there'll be a room finish that you can sleep and live in. I'm sure of it.
Speaker: But I'll think about when you come here and see your assessment of the work being done. I think that's when I'll buy a ticket. I'll buy a ticket next week, probably April. Oh, but that's the, oh, I, if I have really bad allergies in Japan, March, April, dangerous time for me. It's just itchy eyes and a runny nose. It's not the end of the world, but it sucks.
Speaker: Okay, okay. Hey, it's good to mention the pros and cons. Again, we can only be in Japan for six months a year. So it's not, you can pick and choose the time as we go. So maybe end of February. It's really cold during end of February. Yeah. Yeah. Fall was very nice here. So I was thinking spring again, but that is the pollen season.
Speaker: Okay. All right. I think, yeah, a lot has happened. I think we're constantly brainstorming. If you want to connect with us, we're going to put that let's chat button on Acia mart acia dash mark .com. A lot happening, Jerry. Anything you want to talk about? What else? We got to make moves on a car situation. So we're returning our car to our friend. So that's another thing that we got to get figured out. You really need a car to get around here.
Speaker: But yeah, maybe a friend, we might buy one off a friend here. So things might be moving smoothly. Hopefully. Yeah. And we're using our intermediaries. I think like side company, it's called neat bone bridge. So they're helping us figure out how to get a car. I think step one, we needed to have our utility bill, which I think we've got Joey, any bets on what our utility is going to be? Good question. I think it's going to be cheap. I'm hoping it's going to be cheap. I don't think we use too much energy. We don't have ACs running or nothing.
Speaker: Each of mine is my bet sub $100. I think that's $80. What do you think? Yeah, I would guess around a hundred bucks. Okay. Um, all right. Yeah. We're going to get that car. Need to go to the car. Yeah. Oh boy. One thing that, uh, I would say though, is like, I miss, uh, the kitchen is it's like half under construction, but just enough that I don't feel compelled to cook down there and also going to be leaving.
Speaker: in just under three weeks now. So it's how much investment in kitchen equipment do I want to do at this moment?
Speaker: Like eating out and now I'm trying to like be a little bit more money conscious eating out every day. And so it's just getting really starting to think about meals and cooking for myself, that kind of thing. There's like this fish soup that we ate a lot in Montenegro when we started this trip. And I keep thinking back to that fish soup or like salads or different stuff I was eating when I was in Canada too. So yeah, that like the restaurant game day after day, like I didn't think that would tire me out, but it's a little tiring.
Speaker: Yeah, you've been on a mission and I hear you on the money thing and no pressure, no diamonds though. I feel like we're close to something Joey that I feel certain about. And I think we still have runway, but I, again, I think the diamonds are around the corner. I think we're about to monetize and start seeing our first couple bucks. I know we've been in the red every single up until now, no pressure, no diamonds.
Speaker: Yep. Yeah. You spend, you do spend like this kind of thing. You spend a lot, I think you said it before we embarked on this journey, but you're like, it can't be a little scary. You spend a lot of money really fast, but it feels good making kind of executive decisions. That a boy. And also starting to do some Amazon FBA. If anyone listening trying to be a wholesale distributor, Joey, I think this is a job we can actually do from Japan, which I'll show you when we get there, but.
Speaker: Once you get the hang of it, the simple of it is identifying deals online, shipping that to fulfillment center, and then Amazon will then fulfill it, is the quick one. We'll fill you in, but I think that's a path of making US dollar while being in Japan.
Speaker: lot of good advice from our lawyer. I think we'll pepper it in future episodes, but the simple one we spoke about today, you can use your 401k to buy property in Japan. And again, don't take it as legal advice and do your research and we'll keep you up to date if we end up doing something. All right. That's a wrap baby. That's a wrap. Catch you guys.
