Transcript
Speaker: Let's open our beer cans before or after. Let's do it live. Okay. I got the ASMR mic. Let's do the ASMR mic. Okay. We are live in three, two, one. Welcome to the buying a house in Japan podcast. My name's Take. And I'm Joey.
Speaker: 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: Hello everyone. We are back with a buying a house in Japan podcast. Today, we are excited to have our very, very first guest, Ziv Nakajima again. Joy, you want to give a quick intro on Ziv? Sure. Ziv is a good friend. He had, he, he was the person who originally helped us buy our house in Japan. And on other points in this podcast, I've called him the glue. He's the one that made this whole thing possible. Yeah. The glue from, you know,
Speaker: Us just kind of like brainstorming stuff to me and Taka together to actually starting to believe that we could even make this possible. Ziv is responsible for all that. So big welcome to Ziv and we've grown, grown close to him since then buying the house in Beppu and Fukuoka being so close. So welcome Ziv.
Speaker: Thank you. Thank you. I appreciate that. And I should just point out that I'm like the mouth of the operation, but the person who actually makes it all happen is Chico, my partner. I just pretend it's me. Well, we brought some beers cause it's happy hour somewhere. I know it's a little early for you zip, but we like to do a cheers to you here. I got the course light here. Joey, what you got over there? I got a Tanner and co pale ale, Nova Scotia local.
Speaker: All right. Boring water over here. All right. Let's go for the ASMR opening three. Oh, you already did it. Oh, okay. Come by. Come by. Come by. Come by. Thank you for everything. Yeah. The glue, the glue. I think that's what I was saying on our, on our other podcasts, when we add you on ours, that you guys are definitely our coolest customers. So we're very happy to be here.
Speaker: You are one of our coolest friends, definitely our coolest friend in Fukuoka. We appreciate you for taking us out. But we wanted to ask you some questions today, just kind of starting out, you know, we've been talking to a lot of folks and we've been actually sending them to you because we think they're the right fit. Can you talk a little bit about NTI? What does your company do? Specifically with, I guess the main demographic that's coming to us are people that are looking to buy Akia who are abroad and not living in Japan.
Speaker: Yeah, sure. So we started the company about 12 years ago now, my partner Chikako and I. When we started, she was still not, but now is also my wife. So when I say partner, it's like a double -edged sword there. We mainly focused on investment properties when we started, because that's the first thing that we bought for ourselves in Japan. And, you know, going through the process, we recognized
Speaker: that just a lot of people could use help with it. It's a great market for all kinds of reasons that we'll probably get into later but it's a very insular market in the sense that if you're not Japanese don't speak, read and write the language and definitely if you're not living in Japan the professionals that you work with here just can't... it's changing a little bit but to this day still very difficult for them to wrap their head around the concept of
Speaker: conducting business in any other language than Japanese, receiving and sending funds overseas, handling stuff like phone numbers that are not in Japan, addresses that are not in Japan, and there just needed to be a bridge. So each big city at least would have maybe one or two in Tokyo, maybe a dozen
Speaker: realtors or property managers that you can work with, but anywhere that's not a major city and even in places like Nagoya, Fukuoka, Sapporo, which are big cities, there's very little professionals who can work with foreigners and especially non -resident foreigners. So we started doing that
Speaker: About five, six years ago, when the Akia craze started and all of these articles started coming out overseas and people recognize that you can buy very cheap homes in Japan, especially in the countryside, we started getting a lot of inquiries from people asking for holiday homes. And then we were approached by Michael from Cheap Houses Japan, who was probably
Speaker: the biggest resource at the moment. You guys are probably gonna give him a run for his money, but at the moment, he's still the biggest resource for Akiyas. And he was just thrilled. He first contacted us to help manage his own property that he's bought here. And then when he recognized that we also help with the purchase, then he was thrilled that he just, same as you said, that he has somebody to send people to. So these days, I guess 50 -50, we still do a lot of investment properties, but about half of our business is holiday homes.
Speaker: And what we do is essentially, so there's two sides to it. From the buyers or the foreigners side, let's call it, we give them a single point of contact in English and we handle everything that's outgoing on the Japanese side. So the communications and negotiations, due diligence, the purchase process itself, signing everything.
Speaker: and making sure that a property is delivered to them under their ownership at the end of the process. But equally importantly, on the Japanese side, we give the Japanese entities Japanese entity to work with. So we can promise them that they'll never have to speak to a scary foreigner directly, that everything will be done in Japanese the way that they're used to, you know, with the hanko stamps and the local addresses and phone numbers that they can communicate with. So that
Speaker: helps them get accustomed to the idea that it's OK to deal with a foreigner if there's a go -between like us. And what that does for the buyers, aside from giving them a single point of contact, is it opens up the entire market. Or most of them, I mean, I'd say 90 % of them agree, but 10 % are still very foreigners wary. But at least 90 % of the market then opens up to the buyers, and then they don't have to deal with the handful of professionals that cater to foreigners
Speaker: Whether they're pricey or not, whether they're professional or not, they can actually pick and choose the Japanese properties and the Japanese providers to work with via our services. Yeah. A lot to unpack there. You can see listeners. Ziv deserves the nickname, The Glue. You know, he is in every section for us personally. Context, if you don't already know, we bought a house in the countryside in Beppu. Both Joey and I were not in country. I was in California. Joey was in Canada.
Speaker: Ziv was essentially the extension of us in Japan. We did everything from identifying property to even a Zoom viewing where Ziv went to the house and physically saw it for us, to the closing process, and lastly, kind of to the property management and more of the utility setup. And honestly, we talk to Ziv every week with random questions and he's there as a great resource. So I can't overstate how much stuff you're doing here, Ziv. Joey, anything from you?
Speaker: One reaction that people have sort of given me or asked me is how did Japanese people feel when you say that, Oh, I have a business that sells Japanese homes to foreigners. So I'm never quite sure how to answer that question myself. I can't speak for Japanese population, but I can see it being a little bit of a contentious issue, the idea that, Oh, these houses are cheap. So we're going to sell them to foreigners. Has anyone ever brought that up to you and had, you know, what are your thoughts on that?
Speaker: Yeah, actually as you're speaking, as they've kind of thought about a little bit of a hardball question, if that's okay.
Speaker: No, to be honest, I think that's a thing with Japan. In most cases, when you present them with something that they're unused to, and especially if it involves foreigners, the reaction... I mean, you never know with Japanese. The reaction is always, you know, that surprised, appreciative, and then they ask a lot of questions. They tend to be very positive about it.
Speaker: If any of them feel badly about it, they've definitely never expressed it to me, but I guess I'm a foreigner, so I don't think they would. They're very conflict averse to Japanese generally. They might be talking about it amongst themselves, but I really don't think so because, for example, we had an article about us run in Rakomachi, which is Japan's biggest property investment web portal.
Speaker: And they contacted us when they found out about us, they were very excited about the fact that people and then, since the article was published, we were constantly contacted by people who own properties in Japan and are very interested in potentially selling them to foreigners right so.
Speaker: I think I probably only get contacted by the people that are on the positive side of that equation. I'm sure there are some people who don't like the fact that Japan is being sold off to foreigners because that's another way to look at it. But we definitely were not exposed to it. We get very positive reactions. The only, I can't call them negative, but some of, like I was saying at the start, some real tours are still scared of potentially having to deal with foreigners. We've had
Speaker: Two sellers over the course of these 12 years out of I think about 400 transactions done today, two sellers that just refused to sell to foreigners and they quoted some bad experience in the past with an attempted purchase or something like that, but I'd say yeah, the vast majority of them seem to be very positive about it.
Speaker: Yeah, you mentioned a really interesting and surprising thing for us. When we were purchasing this property, we thought the seller would be very, very eager, very fast, very open. Do you think that's changing? It seems like I'm surprised that a lot of Japanese real estates are so hesitant to talk to foreigners. Is it an English barrier language or is it more of just dealing with someone not Japanese? What are your thoughts on that?
Speaker: The way I see it, it's part of the Japanese psyche. People talk a lot about Japanese not investing in anything because they're very risk -averse or not pursuing an entrepreneurial career because they seek the stability and the steady paycheck. I think that's part of the same mentality.
Speaker: they really want everything to go along the smoothest channels that they're used to and introducing a foreign aspect into that freaks them out because you need to remember that for Japanese any kind of debate or negotiation or you know creative solution finding tends to be perceived as conflict
Speaker: For example, we've got tenants who have lived in the same property for 20 odd years, which is not rare in Japan.
Speaker: They're paying the rent that they were paying just post -bubble days or pre -bubble days in some cases. These days they could have, I mean, if they only contacted the landlord, they probably would have cut the rent in about half, right? Because salaries haven't gone up, rents haven't gone up, property prices have, but that's a different story. But just the thought of approaching somebody and negotiating a new price for anything is,
Speaker: perceived as conflict for them so they just don't do it even though they could have moved out and again moving out would mean relocating and looking and
Speaker: The boat rocks, which freaks them out, so they just avoid it. I think that's the same story that you're getting when you're approaching them with the foreigners. Back. Yeah. So to answer the second part of your question, it is changing. Like anything in Japan, it's changing very slowly and it's changing mainly in the bigger cities or the very popular tourist destinations first. But these days,
Speaker: I think the foreigners instigated it because with the advance of online translation technologies a lot of people are browsing Japanese websites on their own as I'm sure you would have done when you were looking for your house and then they obviously you know they click a button and they try to contact the agent because it's there and then they try to send them an email with Google Translate and the agents over time have learned I mean a lot of them are still just ghosting those inquiries and not replying but more and more of them are trying to reply
Speaker: And they kick off the conversation again with the aid of Google Translate or whatever they're using and then
Speaker: Well, we used to be contacted mostly by people who are trying to buy and were hitting a wall. These days, a lot of times we're contacted by agents who have hit a wall in their communication because at some point the translation app just doesn't cut it when the questions get too complex or the requests get too detailed. Then somehow they find out about us and they ask us to help them with the sale from their end. So it's definitely changing.
Speaker: In Tokyo and Osaka, there are definitely agents now that are hiring Chinese English speakers, French speakers, what have you, to actually facilitate that. And in the rest of the country, at least they're trying. So yeah, there's a change there, but it's very, very slow.
Speaker: You had an interesting point. Joey and I had tried to contact a couple of real estate agents via email. You know, we were always, even though I have a very Japanese name and we were using Google translate, I actually didn't get responses. We were kind of told that maybe the phone number thing, having a Japan -based phone number is maybe the key to contacting them or any advice if, you know, let's say I am fluent in Japanese and I'm trying to contact an agent, you know, is it calling them? What's the best way to reach them initially?
Speaker: calling, I mean, inquiries via websites and email work, but they'll take their time getting back to you. I think when they send anything foreign, either in the content of your communication, like if you might actually write, I live in the USA, or you might actually, you know, even if when you use the translation app,
Speaker: In some cases, you and I, and definitely Joey, think that we're fluent in Japanese, but there's something little nuanced in the way that we've composed the email or the way we spoke on the phone definitely if we have an accent that just tends to indicate that we're foreigners, and then a lot of them unfortunately still shut down communications.
Speaker: Yeah, just to toss over to Joey, I think Joey's been using chat GPT to kind of add a little humor into his, his translations. Joey, talk about that. Sometimes, uh, I, so this, this, this is a personal opinion, but when I was in college in Tokyo.
Speaker: We're living in a all male dormitory. And I personally believe that Kego, like the use of Kego with senpais, maybe a little bit held me back from making like better friendships with those senpais. I thought some of them were really cool dudes, but you know, I was trying to fit into the system and using a Kego there. So.
Speaker: One thing i have been doing with a contractor is trying to make a point of just skipping the keigo and trying to be like friends with him right away so sometimes i mean he's the contractor you're the customer so it kind of that is a good point i find that for example.
Speaker: when we make first contact with the realtor for the very first time, if there's a meeting or a zoom call or whatever the case may be, then it's better for me to stay in the sidelines with my casual Japanese and foreigner face. But once we've done a few meetings or definitely once we've done a deal with them, then they're a lot more open to having me with my nonsense and you know I'm not dressed
Speaker: Always exactly dressed for the part and I I speak very casually and I make jokes They seem to be okay with that once they recognize that there's a relationship there and it's everything is going smoothly, right? So strategic use of gaijin power sounds Yeah
Speaker: Cool. Going to switch gears a little bit and kind of focus on some of the listeners here. A lot of these guys are first time home buyers. What's maybe one of the biggest or top two misconceptions you feel like when you first talked to a first time home buyer? I also want to add, add part to that question too. I was wondering like, so
Speaker: just a little, a little bit more to add. So one thing that I noticed when we bought our house in Japan was like, there was a lot, we had to use a lot of Japanese. So it definitely, I feel like this is not for everybody. So if you could also add like maybe what type of person should not do this.
Speaker: Well, the language barrier, I don't think is an issue. In your case, you are obviously more involved because you speak the language and you know Japan. But I'd say 80 or 90 percent of our customers, if they have been here, they've been here on trips, right? They haven't ever lived here, studied here, definitely don't speak the language. So that part of it, our involvement will be as hands on or hands off depending on the customer. So.
Speaker: familiarity with the language is not a big deal. Familiarity with the way things work in Japan is a huge deal though, so I find that that's a bit of a rant of mine, but doesn't matter how many times I explain to people that things work differently here, they still expect them to work in many ways the same way that they do in western countries or other countries, and they just don't. So for example, it's very common
Speaker: Definitely in the US and a lot of the times in Australia where I've lived and I'm sure in many other countries as well it's very common that realtors are extremely hungry right so they'll, they'll have a deal they're dying to kill that deal and get their commission.
Speaker: They'll, you know, you come to the house, you do a viewing, you like the place, they'll immediately go off to the side, call the seller, try to make it all happen within 15 minutes or an hour or a day or whatever the case may be. It just doesn't work that way here. Everything has protocol, proper channels to operate in. You might occasionally get real throws like that again if they're dealing in multi -million dollars in Nisek or, you know, big tent houses in Tokyo, whatever the case may be.
Speaker: the vast majority of the country will take their time to reply to any question. They will take their time and give you ample warnings about everything. It almost feels like they're trying to convince you not to make the purchase just because they're so, and again, it's the risk aversion thing. The last thing that they want is for you to come back and complain after the deal is done. So everything takes a lot more time when they try to convince a seller to sell at a certain price, they will take their time.
Speaker: multiple calls, multiple emails, slowly drip feed in the notion that maybe he should be reducing the price. And we get a lot of customers that they hire us, they pay us, we send them the content to explain how things work here. And then they submit their first applications in 24 hours. Oh, no response, let's go on to the next one. But no, wait, it doesn't work that way here. So that's the first thing that people need to wrap their head around. And the second thing is more of a financial thing,
Speaker: The reason, again, we're focusing on Akia here, but the same goes for other properties. The reason that you're buying them so cheaply is that Japan is definitely not a capital appreciation kind of market, right? So people buy a property and expect that if they renovate it nicely and they'll be able to flip it for a profit, and that's, I wouldn't say very rarely the case, but it's definitely not for the kind of profit that you're imagining that you'll be able to sell it for.
Speaker: so financially and i don't know manners wise protocol wise it's a very very different market and people need to understand that.
Speaker: Totally. And we totally hear you and feel the same. Those were kind of unexpected things for us. And, you know, me and Joey talked about it. We were trying to find more properties around us. We'd go to the real estate agent offices and see, can we see this Acia next to us? That's been abandoned for a while. That's on sale. They didn't even have the keys for it. And we're like, do these guys want to, are they trying to anti not sell us on this property? So it's a, it's really shocking, especially me being a California real estate agent. And you mentioned it like how hungry agents are here.
Speaker: For that question, it seems like there's a lack of that hunger in Japan for cultural reasons. It's not just the agents, it's the sellers too, right? Especially when you're dealing with Akiya. In many cases, it's a house that's been abandoned. The seller might have preconceptions dating back to pre -bubble days that it should be selling at hundreds of thousands of dollars, even though it's worth maybe 50 or 60 now.
Speaker: A lot of the time it's descendants who inherited the house and want nothing to do with it and it's a local government trying to convince them to sell and plenty of time to just not really motivated because financially they're okay, you know, so if it sells, it sells and if not, not so.
Speaker: The negotiation techniques that we use in the West, we recently had a customer walk into a property and do the Western thing of, oh, what's that over there? That doesn't look so nice. And oh, the floor is tilting. It doesn't work here. The psychological warfare that you have with sellers to try and reduce the price is just not done here. What you'll probably achieve is that agent will never want to work with you because you're a tire -kicking guy, Jean.
Speaker: And there's ways to negotiate for sure, but that's not the way to do it here. Things are very different.
Speaker: Yeah, that was one topic Joey and I had birthed with you of, Hey, we want to negotiate on this place. You know, again, California, we negotiate, we're tire kickers, you know, we go low and we expect to go somewhere between, I think you had given us the advice about 10 to 15 % off list price. You care to elaborate, is that typical or, you know, what would you say specifically for these Akiyas that have been on market for a while? Have you seen prices go lower or, you know, what do you advise clients?
Speaker: The only way, basically clients or Acia banks work with local realtors. And when they put a listing on the market, they put it at fairly reasonable, close to market value of what that property should sell for. So nobody is pricing them two or three times the price thinking that they're gonna negotiate it to half the way down. It's just not done here. So you can definitely offer 10 % off, maybe 15 % off if it's a vacant home and it's been vacant for a while or it's been on the market for a while.
Speaker: but really not beyond that the only way to potentially go beyond that is let's say you conducted a structural inspection and you found out that there's something very wrong with the foundation or the roof or it's going to take a few million yens to repair sometimes that will enable you to slightly reduce the price beyond that initial 10 -15 percent but to be honest the sold is cheaper because it's expected that there's going to be stuff to repair that's already factored into the price and again it's not a
Speaker: it's not really a negotiation kind of culture. Again, that all changes in very internationally active markets like central Tokyo or Niseko and definitely changes with very pricey properties but not with the Akiyas and not with investment properties that they're just priced based on the rental income that they generate. The investor knows how much they're making in yield and that's the price they're selling it for.
Speaker: Ziv, do you ever come across murder houses or houses where there was like a death in the unit? We looked at one in Kamakura way back when, before we even looked at the bamboo place. And I remember, I think this was on cheap house, Japan's one of his Instagram pages and all the comments were like, oh, this is a murder house. This is a murder house. So I'm curious if, um, yeah. So we personally, I mean, on behalf of our clients, we've only ever purchased one. There was a re not a murder house, but a suicide house where somebody hung himself in the attic.
Speaker: And then the family obviously promptly moved out and put the property on the market. The clients who are buying these properties, unless they're coming from an Asian country, usually don't care. So our Western clients definitely don't mind buying a house that somebody died in, even if it was a murder or a suicide. But the Japanese buyers will not. So if you're buying the house for your own private use, that's definitely a good potential bargain to be had.
Speaker: But just bear in mind that reselling it will also have to be done in most cases to foreigners or to somebody who really doesn't mind buying a very cheap property and you'll have to factor that into the price. We've produced a few, not murder, but death properties of our own. Japan being Japan, you don't get the tenant issues if you get another country. So there's no drug labs or people squatting or stripping wires or refusing to be evicted when they haven't paid the bill.
Speaker: You don't have to take them to court, but you have other issues. So you have Japan's population being what it is. A lot of people just die in the property of old age, right? So I'd say about 5 % of the investment properties that we had have had tenants in that just died in them. So that's a thing. It's not as strong a stigma as an unnatural death, but it's also something that's going to be a bit challenging to re -tenant or resell down the track.
Speaker: It has to be disclosed, right? At a certain point in the future. To the next tenant and the next buyer. They've actually enshrined that in law. And recently they've also put into the law that if it was a natural death, it doesn't have to be reported. But there are, there are web portals all over the place that list those properties. So there's no point in trying to hide it in any case. I actually know a guy up in Sapota that specializes in these Australian guy who buys and flips them to foreigners who again, don't really mind.
Speaker: Hmm. Joey's been really fascinating with the haunted house kind of motif recently. So we've thought about putting a Halloween filter on Akiyama art someday, but coming soon there. Bring it back to Joey's actually question too, you know, who do you think should not buy in Japan? We've kind of had this discussion ourselves. And as we talk to some folks, we need to know who do we recommend against and who do we recommend towards? How do you kind of, what do you kind of use to, to measure that or guide people you chat with?
Speaker: I would say, again, focusing on the Akia side of things, or let's call it the holiday home side of things, I would definitely recommend that people are at least slightly familiar with Japan.
Speaker: You know, just watching movies with summarize and bamboo forests and seeing pictures of Akiya and say, wow, that's really cheap. I want to get it and I want to have a holiday home there. Visit the country at least once before you decide to purchase and especially visit those remote rural areas where you might be thinking of buying a cheap property because
Speaker: Life on the ground can be very, very different to what you're experiencing. I mean, all of those things are true. It's a beautiful country and the food is amazing, the environment, the nature, everything is true. But living here and dealing with the Japanese on a daily basis, especially in very rural areas, is something that you should very much
Speaker: be aware of before you actually go ahead and pull a trigger on a purchase like that. And the other one, the other client profile that we normally reject are wheelers and dealers. So if you're looking for a quick property, you know, drive, like you were saying, local offers, drive the price all the way down, then negotiate with the contractors and make them half their price for the renovation, then flip it at a profit that
Speaker: That's not the market here. You're going to be immensely disappointed if you think that you can do that here. It's just not done. Yep. Totally here. The depreciating market and just how Japanese society looks at real estate is so different than some of the Western countries that I think that was also one of the biggest shocks for us. Yeah. And we totally agree with you. You know, people have never been to Japan who watched the one movie and think they want to move there because the house is $5 ,000. We've definitely turned and recommended those people away. But Joey, any thoughts?
Speaker: Yeah, I agree. And as I mentioned before, like I, you know, Japanese ability, I at least thought, well, I don't know how someone who hasn't lived here for a few years would be able to handle this. Cause I do feel like me and you had to lean on our Japanese ability more than I expected to. Well, that's cause you're DIYing a lot of this stuff, right? Once you purchase the house, you're actually going there boots on the ground and doing the work yourself, or at least negotiating with local professionals yourself. That's yep.
Speaker: Yeah, vast majority of our clients are like, here's what I want done, get it done. And when can I come and enjoy the house? That's another thing that we probably should point out to listeners is that even once you purchase the house, everything will still move slowly post settlement as well. So if you're doing renovations, you're doing repairs, you're connecting to utilities. This is not a country where you hop online, click, I want to connect and you have it done by tomorrow or,
Speaker: get a contractor in and they finish the job within a week, it's not everything here, it takes time and the more rural you are, the longer it takes and probably to add to those profiles of clients that shouldn't buy in Japan is if your entire life savings is 20 -30 ,000 US and you've got this image in your head that you'll put all of that into the perfect home that you'll be able to immediately
Speaker: you know, it'll be moving ready and you can go and enjoy it. We try to, we actively turn a lot of these clients away because we don't want to be in a position where they've invested their entire life savings because they thought that it's going to be a very cheap purchase and then end up
Speaker: having to pour the price of the property or three times the price of the property into it again just to make it livable. Not, not a good idea so don't. Yeah, I'm not saying it's a gamble it's definitely buying a house it's going to be yours and it's going to be a property that you will be able to utilize but
Speaker: don't expect don't put your entire life savings into this holiday home dream because it often takes even if there's nothing major to renovate after the purchase just the maintenance and expenses on a house and garden and yard in Japan that's over let's say 30 years old or over I don't know 10 square meters of garden in size that's going to run you a few thousand bucks a year in the best case scenario so
Speaker: Be aware of that and don't expect that if you pour all of your life savings into it and that's it, it's livable, it's not gonna be the case.
Speaker: Yeah, you've given us the warning. Actually, you know, we were looking at the house and you said, you gave us a quote and you said, at least you guys are spending about the price of the house or more in renovation. And, you know, we're looking at it now. You're totally right. You know, we're spending about a hundred percent plus of the purchase price and the renovation just to make it livable. We are definitely more optimistic when we first rocked up to the house, then we saw it and we're like, okay, Ziv's right. This house needs a little bit of work. So for all listeners who.
Speaker: this is just reinforcing what Ziv said here. You're going to spend money. It's going to be more than you probably expected. But also at the same time, we also feel like the value is still definitely there. Absolutely. Yeah. There's a reason people are buying here. That's probably, I mean, something that we need, like when we did what does our company do segment at the beginning. And the other thing that we try to do is protect people from making expensive mistakes, right? Because just being your go between and proxy,
Speaker: we had to turn away a customer, an existing customer actually already bought in a holiday home and was then looking into investment properties and he kept insisting on buying these murder houses really cheap, I want to get up to 50 ,000 yen within 30 minutes from central Tokyo and I don't care what I buy for that price, at some point we have to say look
Speaker: We can't really provide the service that we want to provide you with if you keep insisting on pushing us in that direction. So let me just put you in touch with the Tokyo Realtor who will help you buy whatever you want without any questions. That's not us.
Speaker: Yep. That's great call out. I think, yeah, Ziv, you know, kind of in line with that, it seems like your company seems to do A to Z service. You know, you're helping us register a car. You guys are helping us run our utility bills. What are specific things that you guys have not yet kind of covered that you think you guys will in the future? But yeah, as of now, our default is to be like, let's ask Ziv if he, if he knows. And usually you guys have some kind of service there. So what are you guys kind of working on or missing at this point, do you think?
Speaker: So NTI is the company, Ponteredis International is the company that handles everything related to real estate. And because of continuous requests and in the same vein that you're describing, I've set up another company a couple of years ago that tries to do everything else within reason. So registering car or helping people relocate to Japan, if they're buying furniture,
Speaker: get a company in there to assemble the furniture for them. If they're moving to Japan with a family, register the kids to school, register their address at the local ward office, apply for. So NTI will help you hook up the house to utilities and get your insurance, but if you want a mobile phone or you want to apply for any kind of banking service,
Speaker: stuff that's usually not really within the framework of real estate than my other company Nippon Bridge tries to provide those services to people as well as investing in businesses, buying businesses, setting up businesses in Japan and so forth. We are very open on the Nippon Bridge side, we're very open to trying new things when people ask for them
Speaker: But some things are just not feasible for us to do. So for example, if you want to run a business in Japan remotely that's very staff heavy, like let's say a food and beverage establishment, we're not going to do that. Number one, we're not professionals. We can do
Speaker: Part of that job via franchise operation, for example, if the franchise chain is holding our hands and giving us the blueprint of how to do it, but once it becomes heavy hiring, firing management of staff, heavy turnover, then at some point we have to say no to that. Like our limit is maybe one, two, three employees at most.
Speaker: We are now trying to help a customer who's looking to purchase a succession type business. So something with a unique Japanese product that maybe the owners of the shop or the manufacturers of the product are getting older and they've got nobody to succeed them and they might be interested in selling the business to somebody else.
Speaker: We're discovering that it's not as easy as we thought. So there are M &A type websites out there, but really it looks like the way to find a business like that is to make connections with accountants and lawyers and people who might be involved in the running of businesses and might have clients that are in that situation. Very much a personal network thing rather than just an online research and contact.
Speaker: We're figuring it out as we, it's a young company, we're figuring out as we go along, but I think there will be some limits to what we can do, but we're definitely happy to listen to the request and see if we can do anything.
Speaker: That's, that's awesome. You know, I think the typical response when we talk to Japanese companies and say, Hey, can you do this? And they will definitely go, no, we can't, we can't do it. And that's, it's great to hear that you guys are at least willing to try some of these out of box things. So I think that's what really separates NTI from the pack at this point. Big question for you. You know, why do you think people should buy in Japan and specifically now and a follow -up question, what are you seeing trending? Are more foreigners interested at this point? What are you kind of seeing on the ground?
Speaker: Definitely more for an interest. And again, media, especially Western media has been flogging the Akia horse for a good few years now and it's attractive to people. If you're in the market for a relatively not as cheap as you think it is from these articles, but a relatively cheap
Speaker: holiday home in a Japanese environment. And again, you should be aware of what the word Japanese environments actually mean. And then it's definitely a good market to enter. I mean, you get a beautiful property in a very peaceful location or even in a city location if that's your thing. But
Speaker: Again, be aware of all the caveats and have some kind of familiarity with Japan on the investment front. It's one of the most hassle free. Good cashflow markets in the world. I mean, in the first world, right? So you don't need to worry about the normal tenant issues that you need to worry about in other countries. You don't need to worry about, I dunno, HOA's insurance companies, property managers, trying to swindle your pocket, your money, everything is done very.
Speaker: Orderly by the book full legal recourse and very good and headache free cash flow every month. So it's a good market for those two things and not for many of the other things that we've discussed. Looking, looking ahead in the future, like if there was a neighborhood in Canada or I spent a lot of time in New York that with that had
Speaker: you know, homes being abandoned left and right. Like in our neighborhood in Beppu, I think, you know, from our windows, we can see maybe three or four different abandoned homes. Like I can't help but think that crime is going to increase. I know Japanese is a very safe society, but, you know, looking forward 20 years in the future, do you think it, you know, what type of effect do you think that this growing abandoned home problem will have in Japan or will it be solved? Two aspects to that question. First of all, on the crime front,
Speaker: I don't see that happening in Japan. It's not so much the fear of legal repercussions or fear of prison or the law. It's just the, you know, in Japan, there's the law and then there's the social norms and the fear of bad reputation or shaming your family or all of those things are huge here, right? So I don't see crime becoming a major issue in Japan.
Speaker: Unpleasantly, I have to say this because I'm a foreigner myself, but maybe if the gates of immigration, floodgates of immigration open and a lot more of us will be coming in, that might change a little bit. But on the Japanese side with the Japanese psyche, I don't see crime becoming an issue. The issue with the Akia is, aside from the fact that, you know, they're an eyesore and they could potentially be
Speaker: dangerous in the sense that they could be falling apart you know if the grass is overgrown vermin and that sort of thing and it's just it's bad for these smaller townships to be emptying out i don't know that i'm seeing any huge policy shifts that might reverse that immigration would be one of them you know promotion of equal rights for women and giving them the infrastructures to be able to be interested in increasing the birth rate might be another one but
Speaker: Aside from a few new visa types that are kind of catered towards elite university graduates and retirees that come here for one year and then have to leave again, I don't see immigration changing much. And I'm definitely with, I had hopes a bit for a while with Kishida -san, the new prime minister, but then the cabinet was all penguins and suits again. So I don't see those two aspects, which I think are the only thing that might change that picture, changing anytime soon, but fingers crossed.
Speaker: Dang, that was a hard question, Joey. Nice responsive. That was the hard ball right there. To end our podcast out, we're actually going to do something new. We're going to do a deal analysis with Ziv right here. We've been working on a yield property product. We're going to, we're going to let the cat out of the bag here a little bit to our podcast listeners. So if you're listening, check out the YouTube video we're going to post. We have.
Speaker: We chose, we've been debating, you know, we bought a house in Akia down in Beppu. We're now looking at maybe condos and specifically investment properties. Condos, Ziv, correct me if I'm wrong, a little bit of a smoother transaction process, a little bit of an easier management process as well. But we're looking at Ziv's hood here, Fukuoka City. We went to go visit, Ziv had a great time and, you know, we're looking at maybe a condo there, I guess. Ziv, first off, what are your thoughts on condos versus Akias? I know we only have a few minutes left.
Speaker: And condos are a lot easier right so we have a lot of customers who want the backyard the front yard the space that is usually a lot cheaper when you buy a house as opposed to a condo i mean to buy a four five bedroom condo is very expensive in japan they're usually in that it's not in the center definitely more urban locations.
Speaker: But if you're not laser focused on these aspects, a condo is a lot easier and you know what expenses to expect or a lot more so than the case of the house. So if we've mentioned that a house comes with let's say 2 ,000 to 3 ,000 if it's up to 40 years and maybe 3 ,000 to 4 ,000 beyond that in annual expenses.
Speaker: Those annual expenses, that number is a statistic, the annual expenses can spike in ways that you're not expecting. So you could have, you know, four or five years where you don't have to pay anything and then the roof goes for 20 ,000 bucks or you find a termite infestation, then you find out that foundation is actually not as good as it used to be.
Speaker: All of these things don't happen with condos. So with condos, you pay your monthly fees, you know what to expect. The fees will go up slightly over time or even more than slightly over time as the building ages and requires more maintenance. But you know that by paying those monthly fees, you can project ahead what your expenses are going to be for the year or for the next five years at least, right? Yes. Which is something that you can't really do
Speaker: with that wooden structure that you own the entire responsibility for. With a condo, the reserve fund contribution that you make every month lets the owner union and building management company handle all of those structural aspects that you would have to factor in and budget for and handle yourselves if you own a house.
Speaker: And from the investment perspective, they're just a lot easier to tenant. Japan, again, is probably the poster child for a declining population in first world nations and with a 1 .2 or 1 .1 average of children per family,
Speaker: It's a lot easier to find a single person or a couple to populate a condo than it is to find a family to populate a house. They also, because they're smaller, one or two or maybe two and a half bedrooms at most, they're a lot cheaper to renovate between tenants, whereas if you have 120 square meters of floor space, whether it's a condo or a house,
Speaker: if and when a tenant changes over, there's going to be a lot more money that you'll have to put into it. And they're usually the asset class of choice for investments. Or alternatively, if you have the budget for it, owning an entire building, which is a lot cheaper than what people think you could buy that for. In a good location, you can buy a small
Speaker: let's say two, three floor unit apartment building, wood or steel frame wood, which would give you between, let's say four to 12 doors. And those can be purchased for as little as 300 ,000 US in some pretty good locations. So that's something as well.
Speaker: We're, we're coming back to that one another time. So we enjoy, I'm interested, but for this purpose, we have, for the people that are not viewing, we have a condo hundred, let's see, 150 square foot. I don't know what that is in meters. I'm pulling out 13 point something square meters. It's basically half a hotel room kind of thing. Yeah. Half a hotel room. We're looking at it with a number. Yeah.
Speaker: $30 ,000 or 4 .5 million yen, built in 1974 in what we think is a pretty good spot in Fukuoka, correct us if we're wrong. Yep. If we're looking at the building, it looks in New York beat up studio, Joey. Joey, am I right? Yeah. I paid $2 ,000 a month for something this small. Well, this one, if you bring up the rent amount again, this one is renting out for a lot less, which is again, something that people, oh, 10 % of that, right?
Speaker: Yeah. So we're actually in the Akiyama yield. We, they don't actually have the rental income here. So we're kind of just basing it off what we see, but purchase price is $29 ,000. We pulled the management fees as well as the maintenance fees for our purpose. We put like the joy. What was it called? The housing fund in the management fees.
Speaker: Repair fund. Repair fund, yeah. I call it maintenance fee, but maybe repair fund is a better word. Okay. Data product. Top floor, that's a good thing. Manager patrol. It's a good thing if there's an elevator in the building. Okay. If it's a fourth, I mean, in Japan from six floors, from six floors and over, an elevator is mandatory. But if you look at a building that only has four or five floors, fourth or fifth floor units without an elevator are quite difficult to tenant.
Speaker: Okay. You're, you might be right. That might be, I see a staircase over here on the right. I see about, I can see this one's got about 10 floors. It's got to be an elevator. Okay. That's the fire escape you're looking at. Do you have an expectation on what a return on this investment would be as if given given its location and but tiny, tiny size.
Speaker: With a typical Japanese tenant, that one will be yielding about 20 to 25 ,000 yen per month. So about 180 to maybe $200. And if you can bring up the... Oh yeah, it is the building I was thinking of. Thank you for showing me that interior. Yep. So we actually know this building because we had a customer purchase there a good 11 years ago, I think.
Speaker: note the lack of balcony, which is rare for Japanese properties. But if you have a look at the management fees, right. So, um, your reserve fund, I'm not sure that's correct, man. I don't think those are the management fees. Beta products and beta products. So, okay. So yeah, I think both of them would be closer to a hundred, 120 bucks, not, not anywhere near that. Okay. Round it up.
Speaker: Yeah. 120 bucks. Okay. So we were over both of them in total. I don't think, yeah. Oh, really? Okay. Well, that's, that's good news for investment. It is, but I mean, again, you'll be making about 200 bucks in rental income. So you're ending up with about 80 bucks in pocket, right? Yeah. If you factor in, if we do a quick calculation, we're just shooting numbers out of our butts here, but let's say you're making, um, 80 bucks a month times 12.
Speaker: divided by the cost of the property plus purchase costs. So let's call it 36 ish thousand dollars. And that's like two and a half percent, not the best investment in the world. But you had a different idea, right? Not a typical Japanese tenant.
Speaker: Yeah, we're thinking about maybe, I know Fukuoka has a big startup kind of community, thinking about doing kind of a digital nomad monthly rental. We're kind of shooting in the dark there and numbers we could expect, but if we, one, how much money would we need to put into this place to make it, do you think livable or desirable by a digital nomad? And two, how much do you think we could rent it to a digital nomad for?
Speaker: Well, the interior, can you bring up the close up on the interior photos again? So you definitely need to replace the flooring, the wallpaper. I would replace the lighting fixture, but that's maybe a matter of taste. So you're looking at probably pretty bad, pretty bad, pretty bad. Can you show me the bathroom?
Speaker: Yeah, this is the actual bath. This is it. The shower only. At least you don't have to install a brand new unit bath in there, which would be about a million yen. I would say you're going to be putting 6 ,000 to 7 ,000 bucks into the interior renovation.
Speaker: Okay. How much it would rent out to foreigners. I'm not sure I mean digital nomads are people who like to work from home. Are you sure they'd be happy in this balcony less 13 square meter place.
Speaker: Good call. I think we ran into a couple of digital nomads. Sounds like there's a lot of co -working spaces potentially they can use. If they really just need a place to come back and sleep in, then it might be, but I would maybe float that question to the digital nomad community. We've got a good one here in Fukuoka, so you can definitely ask them. Yeah. Okay. So location, what would you give this? A to F scale, A being the best.
Speaker: Location is A. It's one of the best spots in the city. It's less than a 10 -minute walk to Hakata Station and it's right next to Canal City, which is the biggest shopping... Oh, it used to be the biggest shopping center in Fukuoka. There's a bigger one now near the airport. But it's right in the heart of the CBD, Fukuoka -wise. So, location is fantastic. The kind of tenants that we get in there are normally
Speaker: shift workers, waitresses, hostesses, bar workers, restaurant staff, people like that. We had one tenant who was doing
Speaker: probably illegally but was running a massage parlor in there and one was subleasing it via Airbnb which again is against owner union regulations but the advantage of the place was that it never stood vacant. I mean we had applications coming in before it was even renovated and presented in photos between tenants because the location is just amazing.
Speaker: Got it. What do you think about the price? Does this seem about too high, too low, pretty reasonable for the little shoebox? It's priced a little bit below market price at the moment, probably because the interior needs to be renovated. I'd say that it should be more like 35, 40 maybe. And the rent, I mean, look, maybe the rents has gone up.
Speaker: I don't, I don't think so though. We haven't seen rents go up in Japan at all. I can tell you that our, I mean, it's, this is, this is probably going to piss people off, but our customer who bought it in that building when they did buy 11 years ago, bought it for 1 .6 million yen, which I think is like 12 ,000 us. Jeez. Any concerns around the building age, 1974 from a seismic or, you know, reinforced perspective?
Speaker: Seismic is not a huge concern for us normally because you're insured for that, right? So if anything happens, your insurance policy will cover up to 50 % of the official market evaluation of the property, and the building's reserve funds will cover the structural renovations that will need to be done in that case. Got it.
Speaker: But the fear with older buildings is number one that building fees will go up a lot more sharply than they do in their younger years because more and more and more maintenance is required. Understood. And also that developers tend to swoop in and try to get the property sold to them in bulk by agreement. They need 80 % agreement in the owner union to pull off that purchase.
Speaker: And because Japan again is not a very investment savvy kind of environment, it's not as profitable as a proposition as it is in other countries. So whereas in other countries, they would be offering a new unit to any unit owner in the big building that they're planning to build there.
Speaker: Here zoning regulations over time actually mean that they're not going to be able to build as big a building as this one is. They'll have to build something a lot smaller. So obviously they can't offer a unit per person and they can't even offer a very attractive price. So what they normally do is
Speaker: they first try to weasel the... First of all, it's important to know that they got their time on their hands. When they want a private location like this one, they can take five or 10 years to get it. And then they'll weasel their way into the owner union by first buying a few smaller units at normal market prices so that they get more votes and more influence in the owner union. They'll do kind of gray areas, semi -shady practices of sending the head of the owner union to a holiday with the family and...
Speaker: getting them to be favorable and pushing various owners into selling because the owners are usually, some of them are savvy investors but a lot of them, this is the only investment unit that they own. So the developers with the help of other members and the owner union will start
Speaker: pushing them into you know if you don't sell it to us now at this price you're never going to be able to sell it again and then it's getting older and older and it's going to run down and you're not going to be eventually they will pull it off and that'll be at the price that you've purchased or slightly less so got it no huge money to be made here aside from the rental income that you would have accrued until that point in time got it so overall a to a to f what do you give this deal rating
Speaker: I'd give it a C just because of the low rental yield. The location is amazing if you can get creative with it, which is another thing to point out is that owner unions will not allow you to Airbnb, for example, and the law is behind them in that. So the most you'll be able to do is monthly rentals. And even then, they would potentially make it difficult and challenging. So, in your case,
Speaker: your guidance and you don't mind dealing with conflict, but if you try to put a monthly property manager in there to manage it on your behalf, then the owner union will come knocking on the doors and asking the guests if they're Airbnb -ing it and telling them not to put the key lock box in public areas in the building and just making life
Speaker: more difficult for them. If you're up for the challenge and you find that it could be potentially an attractive profile for monthly stays, I would say it goes up to a B. Got it. But otherwise I'd say C or maybe even D, because you're going to be left with 80 bucks in pocket at the end of the month. If you're actually going the long -term, risk them to the least route.
Speaker: There we have it, the deal analysis from Ziv, the expert. What we thought was maybe B plus turns out to be a C and it's, it's great to get your eyes on this if you're familiar with the market and could save us trouble. So, I mean, we'll wrap up the podcast here and say, thank you for being on here, Ziv. You've shed so much knowledge on everyone that's listening and us ourselves. We'll be back for some more deal analysis. Hopefully we can find an A for you soon. Yeah. I really appreciate you being on here. Great seeing you again.
Speaker: Cool. Thanks. Thank you so much.
