Transcript
Speaker: Welcome back to the Buying a House in Japan podcast. My name's Take, joined by my co -host Joey. How are you hanging? What up? What up? Doing well. All right. We've got some interesting, we've learned a lot about property actually. We've been in this game for about a year and a half now, Joey. It's actually interesting. We've learned a lot about Japanese real estate in such a short time.
Speaker: I'm feeling way more confident with the closing costs. Like I've got a spreadsheet now with everybody's that's purchasing through us and just keeping, butts oh, stamp duty. That's expensive. right You're seeing different people, the prices that different people get depending on the house that they're purchasing. And it's interesting to see the patterns and when something's an outlier.
Speaker: And it's interesting, I think most people don't deal with like nationwide closing costs. And we're seeing, like it feels like Tokyo versus Niigata versus anywhere else. is like There's small nuances and and differences, right?
Speaker: You're definitely right about, there's very few people doing nationwide. It's NT, it's Ziv over at NTI. And then I feel like it's us. Everybody else is either very local to the city that they're in most real estate agents based out of Tokyo or Osaka or these other cities. And as the foreign buyer, you need to find, ah if you want to buy in Nagano, you've got to find somebody speaking English in Nagano that can help you buy this property.
Speaker: Speaking of Ziv, he's coming on the podcast again. he's good I think he's been on the podcast twice. Actually, we interviewed him once he interviewed us. We're bringing him back on as our favorited guest here. I'm excited to have some good questions lined up for him. Next week, I think, right? We're checking. Yep, exactly. All right, but Topica today, I think people have heard our podcast that we are buying indeed a $3 ,500 spot in Kitakyushu. This is a little bit of a different property class, I'd say. And that we've bought something for Airbnb. We bought something more in Tokyo. That's like turnkey. And this is like truly a long -term rental play. We're learning a lot, Joey. We actually chatted with our guy Keaton. He's our deal finder on this one. He gave us a download last week on um a lot of things, right?
Speaker: Yeah, just a quick word on the long -term renter situation. Airbnb is difficult in Japan and when I first attended Ziv's Japan Real Estate Summit at the end of 2023, most people in the room were investors looking for long -term Like to buy a property and then get a long -term renter in it. So this is seems to be quite a thriving market in Japan for investors. Again, they're not looking for equity returns, looking for cashflow on these properties, but there are some advantages Japanese tenants seem to be.
Speaker: quite safe, they're not going to cause damage to the property. They're going to stay for the long -term. It seems like Japanese renters are very easy to deal with when it comes to a tenant. And on top of that, as we we we spoke, Taki was alluding to a conversation we had but with Keaton before. And one of the things that Keaton mentioned in that conversation about long -term renters Is that a lot of the time you get these tour companies in between you and the renter and they'll replace the renter if they leave and they'll also you're what did you say you're insured for the rent if they stop paying rent.
Speaker: Yeah, that was interesting. But also on the flip side for anyone listening, not familiar with Japanese long -term rentals, very different than the United States. You like cannot kick out tenant cat cannot kick out a tenant. Tenant laws are very strict here. I think once the tenant's in, from what we've heard and learned that it's nearly impossible to get them out there, sometimes you can pay them like a year's worth of rent. But if you're thinking about buying a place and That already has a tenant, just be warned. It is very challenging to get them out or replace tenants or even. Yeah, I think that's one of the big, big differences between the Japan and the US s from what we've learned.
Speaker: Yeah. Anyways, this conversation that we had with Keaton was about renovations and a lot, or that was the purpose of the conversation for us to learn about the renovations that he thinks we should do on this property. But also it went into a little bit of his philosophy on how he thinks about these properties and what sort of calculations he does in his head when he's thinking about, excuse me, um thinking about renovations and that type of stuff.
Speaker: It was really interesting. The philosophy was really very different. Joe and I both went in thinking, we definitely want to take out the second floor room, make a high ceiling. We definitely wanted to approach it from, let's make this place cool.
Speaker: i think we were very quickly wet blanketed or whatever cold towel or whatever the term is when he kept pushing on what is your mokuteki? What is your but is your reasoning or mission? And we brought it back to, I believe, Joey, I don't remember exactly what we said, but we were like,
Speaker: We want to make money off rent. Yeah. We have two properties right now. We haven't made a a single yen off of them. So negative yen. But yeah, like Taka said, we went into this conversation and the first thing I'm looking at is like, t like, how do you say remove ceiling? like I'm asking yeah on the side, like how do you say removes it? Like that's something that I've seen Anton.
Speaker: Warman does on his properties quite frequently and it it really opens up the space. And even Keaton, I think Keaton showed us one of his properties once where he did something similar. That was the first thing we asked him. We're like, all right, this is what we want to do kind of thing. And he like didn't reply and he was just like, all right, let's discuss what your goals are for this property. Come back to what your goals are.
Speaker: And yeah, we, so we have the two properties. We've got the one in Beppu and we have the one in Tokyo. We're both aiming to get them on the Airbnb market, but it's been a year and they, we've had no guests. Beppu is nearing completion, but the renovation is still ongoing with this long term renter property. Yeah. We want to earn some revenue from it. So that's what we told Keaton our goal was. He definitely switched us from like a.
Speaker: I don't know, like amateur investor mindset to a pro investor mindset where it was really all about returns. Like where do you really need to put money in? He gave us like a tour of the house and we just clicked through one at a time just going room by room analyzing what do we want to do or what do we need to do? And it was very much what do we need to do to get a tenant there? Are the floors walkable was like his first question, right? He was like, can you walk on the floors? And we're like, stuff like that, right?
Speaker: Yeah, where he was like, what do you think needs to be done to these floors? And we're like looking at it and now what was it? He asked us a trick question. What was the trick question? I can't remember. He had us do a lot of calculations and it's really smart. So in Japan, they measure a lot of room sizes by tatami. So we were looking at the floor maps calculating, okay, if we needed to replace the do the wallpaper, do the roof, how much would that cost? And Joey, I think you came through with the right calculations. So we I forgot the the numbers right now. We'll pull them up. but They were like clear calculations like for a six to Tommy room, it would roughly cost $200 to do brand new wallpapers. and And from there you can, when buying a property, you can do the calculation in your head and know like how much to bargain off, things like that, which was really interesting.
Speaker: He didn't, yeah, everything, so he told us how he does the calculation in his head and he encouraged us to use the same system that he uses. So Take on the side, I remember you were trying to bring it down to the square price per square foot or price per tatami, mats, one joe, tatami, one tsubo for the entire, but we were trying to bring it into the more western style of price per square foot and he did stop us there and he was like, think about it in terms of rooms or like he he was like,
Speaker: you know I'm not sure I agree with this, but it's worth exploring his method first before we write it off. But he was like, try to get a calculation in your head for a six tatami room. That seems to be maybe like a very common room size in Japan. And and you just ah adjust your numbers a little higher or lower if you're looking at a room that's say seven or eight tatami. But basically, he was like,
Speaker: Figure out what the price to put a new floor down for a six to Tommy room is. What's going to be ah the price to throw up new wallpaper for a six to Tommy room, including the ceiling. Those are the two calculations. He encouraged us to learn intuitively.
Speaker: Yeah, it's definitely, I think, pretty different than how we've approached things. We've been, like, clicking through. Ooh, that looks interesting. Oh, that looks fun or exciting. This is very practical. of Hey, looking through pictures, seeing, like, what wallpapers need to be changed. Specifically, I learned a lot about tatami. We traditionally think, when you buy ah and an akiya, that the tatamis are done. There's another process here. I forgot the term, Jerry. Do you remember what it was called? The tatami refurbishing. Oh, yeah. Omote gaie.
Speaker: a multi guy Okay. So we were like, okay, we're, so we need to replace the, to Tommy's ho ho, hold up here. He's, there's a thing called almost a multi guy where you are refurbishing. I think they like same on the top, right? Yeah. Like surface change, I think would be like the literal translation.
Speaker: Yeah, so there's like a, and and he gave us like price breakdowns per to Tommy Matt, how much it would cost. And he gave us scenarios of if you really need to replace one, try to change it first. If you really need to replace it, that's when you do it. So very scrappy mentality, um very investor savvy, I think.
Speaker: This is something we are not good at. Honestly, I feel like we spent, it's funny, we spent $3 ,000 on a live edge monkey pod wood table for our bet boost spot. Our entire house costs that much here, Joey.
Speaker: yeah Yeah, he definitely had an investor mindset. I remember that the trick, quite at one point he was like, all right guys, I have a question for you. We were fumbling with the Tatami mat conversions and he's putting up questions to us. He's like, all right, if the flooring is this person, he was giving us hypotheticals. And then he was like, let's say you change the floor in a room. Let's he's let's say you upgrade the the floor.
Speaker: How much more rent are you going to get in a house with a new floor versus the old floor? he's What's the rent difference going to be in the house with a new floor and the old floor? And we thought about it for a second and then I was like, the way he phrased this sounds like a trick question. I was just like, no difference. Like rent stays the same. Bing bong. Yeah, that's exactly the answer. So the point he was trying to make here is Think about it in terms of returns and these properties, the purchase price is low. The renovation price is low and returns are low. So you're really kind of like, that's the name of the game here is if it doesn't absolutely need to be renovated, um then you don't renovate it. We had all these like.
Speaker: good ideas, I think, of how we're going to do this and that and this and that. And that he definitely, definitely sobered us up there, but it's also very practical. So yeah, I think the exercise was very helpful of just going through each room. In short, like he thinks our Q2Q shoe spot only needs a deep cleaning, which should cost around a thousand dollars. He said might need a some wallpaper or Kurosu and we will resurface all the tatami mats. And I think that should be,
Speaker: All we really need is our current scope before we can rent this out to someone. Yeah, no, I think he just said deep cleaning and then a multi guy for the tatami mats, which is like resurface that tatami mats. I think he just said the walls, the floors, deep cleaning and should be good to go.
Speaker: Okay. and And we pushed back on him a couple of times. Ah, isn't the tenant going to complain? And he brought like an interesting point here in that like the whole purpose of this is to buy Akiyas and rent them out for very affordable rates for locals.
Speaker: He talked a little bit about, hey, honestly, like if you're going a lot of these lot of people renting just want it for a place to sleep that's affordable. there I've been working in the Airbnb game with kind of luxury people that complain about every small thing. He's like, most tenants, if you give an affordable rent, will not complain, which is very interesting and very flip -flopped from what I'm usually used to thinking about. Yeah. and you would think you hear that horror stories of low, like low rent areas where in America or Canada, where the drug abuse and, you know, people not putting holes in your drywall, that kind of stuff where it doesn't, that does not seem to be the case in Japan. It seems to be for that low income demographic, a pretty safe community to rent to.
Speaker: Yeah, so let's see. This place might make us money before both our other properties make us a dollar, Jerry. Very realistic. Very realistic, but again, it's going to be like, what what did he say his expected rent was? Like maybe best case, like 4 .5 Mon? Yeah, 4 .5, maybe Golmon or 5 .5 Mon, which is like $300. So interesting, such a small thing, but I think we're going to learn a lot from from this.
Speaker: Again, I know we have a lot of people reaching out that want Keaton's contact. we're goingnna We want to suss this out first and make sure it's legit before we pass this on. But for now, it seems like this could be...
Speaker: a repeatable model. The one challenge is really sourcing these off -market deals. Again, everything on AccuMart is on -market and publicly listed. The key here is like, how do we find these deals? And we actually, we dug into that a little bit Joey, right? Like how chuck keton how did you negotiate this deal? He had some interesting like emotional sales tactics that related to your forerunner, right?
Speaker: Yeah, he did mention people like the forerunner that I have, you have an emotional attachment to your house or your car in the case of my forerunner. And he's, you're not, if if you're trying to get a seller to sell to you and say you're trying to get a discount, but you still want the seller to sell to you.
Speaker: But you're not, if someone came to me and said, Oh, this is broken. Look at all the rust. Look at the interior is the fabrics all messed up. And if someone just comes with a bad attitude, trying to low ball you by saying all the things wrong with your car or house, you ah you don't really want to sell it to them. Especially if you're most emotionally invested. Like I, yeah I just recently, I almost got rid of the forerunner. I saved it from the brink of.
Speaker: death recently, but I'm still trying to figure out what to do with it. But one of the things that I didn't like, I was considering giving it to this guy who lives down the road from me, who has another forerunner. But what I didn't want to see is my forerunner picked apart for scrap picked apart and all the parts just go into his forerunner. And then I just see my car like rusting in his yard. Every time I drive by there, like I didn't want to see that. So it's almost like, this guy might have taken it he might even pay me five hundred thousand dollars for it but i didn't want to sell it to him for that reason he was mentioning the same thing right a lot of people especially the a lot of older sellers in japan right now who probably lived in that house for a long time the same sort of thing right they don't want to see
Speaker: They don't want to sell to someone if you're going to be like, I'm going to bulldoze this down because it's garbage trash house and look at all this whatever. If you're saying bad things about their house. or So he really stressed that aspect of it. If you're trying to buy these homes, be respectful and highlight the things that you do like about the house.
Speaker: Absolutely, yeah i think my yeah. He makes a good point. I think going into someone else's house when it's already pretty discounted and pretty cheap and like pointing out the flaws is not the right move, especially if you're trying to negotiate. I think he really talked about like, hey, I i could really see him showing things you like about the house. Wow, this gencon is really awesome. Or hey, I could see myself raising a family here.
Speaker: And that that seems to work very well with owners. And I think a combination of that plus also him knowing how much things are going to cost to fix and having that confidence helps him negotiate. Again, we're still learning from him, but I think that combo in Japanese seems to be the magic the magic sauce. Unfortunately, that'll be hard for us, Joey, to do. You actually said we could do it as foreigners too, right?
Speaker: Yeah, no problem. He did stress that it's go in. I asked him to, I was like, how do you manage the trade -off between. You want to get this for a cheaper price. So obviously you do need to bring up the property shortcomings, but also on the other hand, you don't want to disparage the house too much. And so he framed it that approach these properties in the sense that you want to take care of it after the owner sells it to you. You want to try very hard. Renovation is going to be expensive for you, but you're going to try your best to make the budget work kind of thing, approach it from that angle.
Speaker: and And that's probably your best bet. He also mentioned be very respectful when speaking with the real estate agent too, because very likely the real estate agent is just going to copy paste the conversation he has with you and send it to the seller or screenshot it on his phone to, to let the seller know what's going on. Also be respectful in your conversations with the agent.
Speaker: Yeah, so this is an interesting space. Again, everything off market, we're we're learning from Keaton. we're goingnna We're going to learn more. Again, keep you guys up to date, see if we're getting scammed. I don't think we're getting scammed. I think things will work out, but it's definitely a different process than what we tell other people to do. Please do not go in low ball offers, especially agents will get yelled at, but there seems to be a delicate art to doing in this, which is something where we're slowly uncovering.
Speaker: I think you're right about having the confidence, knowing the costs of renovation, which is something we don't have yet. Keaton showed us how to start. Actually, you know what the best aspect of Keaton's way of thinking about the sixth to Tommy Matt room is that's probably how contractors think about it as well. So if you're speaking the same language as the contractors, that might help a lot. Yeah.
Speaker: Very last thing. Nice job, Jerry. That, that entire conversation was in Japanese. ah We were using like chat GPT. There was some technical jargon there, but I think overall we learned a lot from that combo. Yeah. we do our Our Japanese wasn't that bad in the end. Yeah. I could understand most of it, but it was, it's, it's interesting. It's awkward sometimes being on a Google meet when we neither side is fluent in the other person's language. Very little small talk. Yeah. You can't like joke around in this, in the downtime.
Speaker: But it was cool. We learned a lot. You should you should still sell your forerunner, Jerry. I think it's funny. The last time I saw you in person, you're like, yup, it's going to the trash compactor. Now it's made a full 180 return and it's back alive. Yeah, we'll discuss offline, but that, that was after it had been bricked for 11 months. My favorite moment was when we were in Hawaii and you were just fixing it up and like you came in all all sweaty and you just raised the lock and you're like, I got the lock to work.
Speaker: ah You're like back locking. I just hammered it. is Is that what you did? Yeah, I hit it with the hammer. It was, it's the back. It's the lock that lowers the window in the forerunner, which is the back window, which is really great. Cause then especially in Hawaii, you can fit the surfboard sticking out the back there. I took it apart and I could see this like kind of corrosion all over it. So I just whacked it with a hammer a couple of times and it loosened it up and it started working right away.
Speaker: Then my roommate Brett said something pretty insightful. He says, sometimes you got to hit life with a hammer. And I was like, well, that really stuck with me. He did say that sound like that. Sometimes in life, you just got to hit it with a hammer. So anyone listening, if you feel, if you feel stuck on a project, maybe sometimes you just got to hit with a hammer. So, all right, good stuff. We'll keep you guys posted. All our properties are coming together against still zero dollars. Which one will make us our first dollar, Joey? Don't know.
Speaker: Stay tuned. Yeah, actually equal in the race almost. All horses are in the race. So anyone listening, we're renting out Tomah Basecamp. It should be ready to be V1 with office ready setup pretty soon. Gso, Glex, our betboo spot will be ready soon too. And if you want to midterm or long -term rent, this Kita Kyushu 20 is what we're calling it. Please reach out to us. But other than that, we will catch you guys all later.
