real estate investment of detached house in Japan

source of picture is https://www.homes.co.jp/chintai/b-1256510000161/. HOMES. Monthly rental fee is 120,000 yen. Built in year of 1977. Room area is 43 ㎡ .

When  you think of purchasing a investment property in Japan, you will look for an apartment that may yield enough profit for you.
But, here I want to recommend you to purchase a detached house ( 戸建 = Kodate ) for investment.

When you live in an apartment, you will care about noise you cause toward neighbors and noise caused by neighbors.
Especially, when you have a children, you will care about noise your child will cause.
And when you live in an apartment, you cannot keep a dog in your garden.

If you have experience to live in Japan, most of you have lived in an apartment.
Especially in urban area, it is difficult to find a detached house to rent.
Because, the number of detached house for renting out is smaller than the number of apartment.
And detached house is popular for family with children. Parents do not need to care about noise caused by their children.
And they can listen to music at loud sound.

If room area is same, the amount of rental fee is higher than that of apartment generally.

And in the case of detached house, even if the property is not close to the nearest station, you may be able to find renters.

pic lot with old apart

Source of this picture is “中古のアパート経営が そんなにうまく、できるか? “http://blogs.yahoo.co.jp/z_a_ma/64432077.html

Some people want to live in a detached house and they choose to live in the suburbs.
So, you can purchase a detached house outside of Tokyo and find renters easier than in the case of an apartment.
The amount of property tax of detached house outside of Tokyo is cheaper than that of apartment in Tokyo.

And in the case of detached house, you do not need to pay Apartment management fee and reserve fund for repair to other party.

In the case of apartment, a part of your income is exploited by management company.
Even if there is not a renter, you need to pay their management fee.
And you can not determine the amount of their fee by yourself.

If you purchase a wooden apartment ( In Japanese language, this is called ” apart “. Hereinafter I call this property terrace house.  ), you need to clean the corridor, garbage area and maintain slope,  cut grass.

But in the case of detached house, renter will clean the garden and cut grass and they can enjoy gardening.

And when you sell terrace house in the future, next buyer will be other investor. So, selling price will be determined by yield on investment.

But in the case of detached house, next buyer will be persons who intend to live there by herself as well as other investor.
So, it will be easier for you to sell at higher price than in the case of terrace house.
( Person who intends to live there do not calculate yield on investment when she purchases it. )

In the case of detached house, renter can park his car at the parking space. So, there is more chance that even if the property is far from station, you can find a renter than in the case of terrace house.

If you purchase a terrace house in the suburbs, it is likely to find difficulties to find renters.
But, some people are willingly to live in the suburbs to live at detached house.
So, in the case of detached house, it may be easier to find renters even if that is located in the  suburbs.

And in the case a property is for family, not single person, wife will determine whether they  will rent the house or not.
And as for wife, distance to the nearest station is less important than distance to super market and school for their children.

Thus, in the case of a house for family, even if the property is not close to station, it may be rented by a family.

A person bought a detached house of 1.4 million yen at Hokkaido prefecture.
He found a renter after 1 month of his purchase and the amount of monthly rental fee was 62,000 yen.
So, yield on investment is 62,000 yen × 12 months / 1.4 million yen = 53 %.

After you purchase a detached house, you need to find a renter.
In that case, you need to ask local realtor to find a renter for your property.
You can ask several realtors at the same time to find a renter.

In that case, you need to pay expense for advertisement worth at least 1 month.
With this money, a realtor can show your property at several media.

In the case your prospective rental fee is 60,000 yen, if a realtor find a renter for your property, you need to pay 60,000 yen.
And when renter and you sign lease contract, you need to pay another 60,000 yen for realtor’s fee.
And some landlord promises to pay another money as a token of your thanks when she ask a realtor to find a renter. You can purchase gift certificate and give it to a person in charge if the realtor has found a renter.

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