is buying a house such a bad thing?

[kotatsuneko]

am seriously thinking of buying a nice house when we get back, but so many people say that buying isnt such a good thing, that you could sell the land afterwards, but the house is worthless, is this true?

i have several options open re funding (could rent out or sell my property here) and want to get whats left of my life back on track..

any advice would be nice =^^=

[AssKissinger]

I think you'd be better off buying a rope. If you know what I mean.

[Mulboyne]

Are you asking us if house prices are going up?

Maybe property prices have finished their worst declines but I don't think anyone posting here has the foresight to know if residential property prices are set to rise. I have a friend who believes prices will double and has already bought a place. Other friends of mine believe that prices are still too high relative to the quality of the buildings. And you'll always find people who will never buy because of the earthquake risk.

For that reason, I would only buy if it improves your lifestyle (no fussy landlords) and you can live through any possible price declines. Buying can be a cheaper alternative to renting in some locations but you had better like the place you buy. It is still better to buy land and build in Japan but this requires a lot of time and money. You still have to rent somewhere while you are building.

A lot of foreign buyers are seeing Japan as "cheap" because property markets in the US, UK, Australia, NZ, France and Spain are so overvalued. I've never liked the idea of something being regarded as cheap because isn't quite as much as something else that is expensive. We did that in Japan in the bubble and as recently as the internet boom.

[Mulboyne]

Asahi: Land price rises seen propping economy (http://www.asahi.com/english/business/TKY200409230122.html)

The buzz in the real estate industry about a reawakening property market got some statistical grounding this week when a government survey showed that land prices in some urban areas are on the rise.

The question now is whether the trend will spread beyond the metropolitan heartlands and buttress the gains made in the overall economy.

The average residential land price in Tokyo's eight central wards as of July 1 rose 0.3 percent from a year earlier, posting the first rise in 17 years, according to the land ministry statistics released Tuesday.

...For many real-estate executives, the highlight of Tuesday's survey was the rise in residential land prices, which supported their own observations of increased property transactions in Tokyo.

...Still, analysts caution it is too early to predict an end to asset deflation, particularly in rural Japan.

In the land ministry statistics, the rates of decline in residential and commercial land prices in regional areas were still among the largest for the past decade.

N.B. the surveys cover land prices, not condominium resale prices.

[canman]

We built our house in 1999, and while it is great having your own place, don't have to worry about bothering neighbors or anything like that, its no like it is back home. You buy or build a house and it depreciates every year you live in it. The only type of houses that has any value after a 20 year period is a concrete house. As for the condo's or apt. my wife has four in Tokyo, they were purchases during the bubble, each costing about 15 million yen, now here it is 12 years later, and she was told she could sell them for, wait for it,........................... 3 million yen. Yes the price of a car. In 12 years these condos have lost 12 million yen's value.
I love my house, you can come and visit if you like, but I know that when the mortgage is paid off the house itslef will be worth nothing. And now with the recycling law that was past, if I ever want to take it down that will cost me about 3 million yen.

[gaijinzilla]

I remember a few years ago when the missus and I inquired about buying a house (it was more her idea than mine). They told us that it would take 35 years to pay off for the house, with the monthly payments increasing after we were in our 60s! The image I had was of me in my 70s making that final blood and life sucking payment, dying the next day and then having the kids bulldoze the blasted thing down and turn the property into a parking lot so they could pay-off the inheritance taxes. :crazy3:

I second that, AK is right about the rope!

[dimwit]

If you are looking at housing as an investment, I don't see a huge long term future in it. Japan is getting old and will soon depopulate so guess where land prices are headed.

As for houses, most Japanese would prefer to tear down any old house, based on the notion that few old houses are worth restoring or living in. To some extent this is right, as much of the housing built from the early post war period up to the 1970's is clearly worthless, as the cheapest and often worse construction materials were used in housing. With modern housing and better materials, it is an open question whether the market is better. The few friends I have who have bought secondhand houses, have all bought fairly modern houses.

If this doesn't discourage you, it depends alot of if you are planning to set up shop in the city or out in the countryside. In the city, you'll get REALLY stupid zoning bylaw galore (in Matsuyama, trees on property can not be more than 1 story in height), and will find it difficult to get anything much in the way of space or comfort. If you are trying to build a house the way you want it, small towns and villages are the way to go as they are not nearly as deranged with there zoning, but good luck working out in the boonies.

[Mini_B]

I've been living in Japan for over four years on and off. I bought a house a couple years ago in Florida - five minutes drive from Saint Petersburg Beach. I've been spending most of my time in Japan and have decided to sell the house. Its a two bedroom, two bath, 1100 sq. ft. home. Looking to sell for $168,000 USD. If anyone interested, send an email to pokem2001@yahoo.com. I'll send some pics, details...etc.

I was thinking of buying a house or apartment in Japan...but after reading this thread I think I'd rather rent. Just wondering...are any of these nightmare depreciation stories about places purchased in Tokyo? Or are you guys talking about inaka Japan? Location is key and it's hard to believe that a Tokyo property is on the downslide. I'll do some more reading...but very interested in this topic.

[Taro Toporific]

... Just wondering...are any of these nightmare depreciation stories about places purchased in Tokyo? Or are you guys talking about inaka Japan? Location is key and it's hard to believe that a Tokyo property is on the downslide.

Nightmare depreciation happens all the time. Public housing program condos next the German School in Nakamachidai (Yokohama) dropped from 600,000,000yen to 275,000,000yen in the past 6 years---I almost bought one but getting a loan without a perm. visa is basically impossible thus saving me from doom.
In my neighborhood 28 minutes from Shibuya. a trashed 2DK sold for 15,000,000yen last month outside Tama Plaza. Machida always has a few 10,000,000 yen trash houses from the 60s. However, it's always the case that these places are a nasty 20 minute bus ride to the closest station. Also since Japanese houses are equal to Ugandan quality, "trash" houses are true crap here.

[canman]

Mini B, if you are talking strictly about land prices, no they don't always go down. I read an article that stated that in certain areas of Tokyo the land prices are going up again. The difference between now and the bubble is that it is not uniform. Like Taro said some places are still dropping like a rock. If its a house and land the house will always depreciate. Don't ask me why it just does. Maybe because there is little resale market, or because the building codes aren't sufficient. I can't say for sure, but it does ALWAYS happen.

[Big Booger]

For the price of a home plus land here, I could buy one back in the states for about half the price and probably 10 times the square foot.. or meter whatever your standard.. :D

Still my wife probably will hate moving back to the US, and somehow I think I will too for some strange and wacko reason.. so I don't know what the hell we are going to do.

Ahh well, I guess I have a few years more to make a permanent decision.

[AssKissinger]

I've been living in Japan for over four years on and off. I bought a house a couple years ago in Florida - five minutes drive from Saint Petersburg Beach.....

"Well, well I been movin' down to Florida.
And I'm gonna bowl me a perfect game.
Well I'm gonna cut off my leg down in Florida, child.
And I'm gonna dance one-legged off in the rain.
Now, they say that Sidney Poitier was a blind man.
And they say that LBJ was a Soviet Jew.
When I go down Florida Way,
They're ain't no kind of sexual healing that I would not, could not, should
Not do, stick it right here.

Well I been movin' down to Florida.
I'm gonna potty train the chairman Mao.
I'm gonna make the governor write my doodoo a letter, child.
And I'm gonna grind me up a White Castle side out of India's sacred cow.

Well, I been movin' down Florida Way,
And I'm gonna build me the atomic bomb.
Well, I'm gonna hold time hostage down in Florida, child.
Ain't nobody, said ain't nobody gonna tell me what to do. Right here.

By this time I guess you've figured out about Florida.
Drink the muddy water in the Vaseline stain.
They be makin' tadpoles the size of Americans down in Florida.
That be tellin' Julio Iglesias what to sing, now.
Now, whoever said that Sidney Poitier was a blind man,
Knew the same of Elvis Presley, too.
When I go down Florida Way,
Ain't nobody, said ain't nobody gonna tell me what to do. Right here.

Well I been goin' down to Florida.
Pole cats lie naked in the Seminole sin.
When I go down Florida Way,
Like Vince, I wanna' win.
Well I went down to Florida.
I got away.
I took the children down to Florida.
I stuck the dick down the drain.
Get that boy down to Florida.
Give him a switch blade.
Tell him what to do."


"Moving To Florida" - Butthole Surfers, Cream Corn From The Socket Of Davis - 1985

Didn't you put that in another thread? It's funny, just reading those lyrics and I can hear all the weird background stuff in that song in my head. Man, you and Sparkle and I grew up on the same music. My fave from that era is Creep in the Cellar. I just got a new copy of Locust Abortion Technician recently, too. LSD classics

[talkingdog]

am seriously thinking of buying a nice house when we get back, but so many people say that buying isnt such a good thing, that you could sell the land afterwards, but the house is worthless, is this true?

any advice would be nice =^^=


I think buying a house is only smart if you are in for the long haul.

Buying new construction is like buying a new car. It depreciates to zero in a set number of years. This is only the market value, though; the house still has an intrinsic value: it can generate income through rent. to yourself (imputed rent) or to tenants. Thus, in an apparent paradox, although the market value may be zero, the house may still have value as an asset.

As for land prices, in most places you are screwed, demographics are against you. The eight, or better yet, five central Tokyo wards have a positive outlook: Shibuya, Shinjuku, Chuo, Chiyoda and Minato ku. Chuo ku is expecting especially favorable demographics in coming years. The long term trend of a U-turn back to Tokyo from the suburbs is expected to continue for the forseeable future.

Unfortunately, the land prices in these wards are high. If you purchase an average priced new house, of 35 milllion, you will end up with a lot that is well under 1000 sq. ft. More likely 500 sq. ft. (under 20 tsubos). Unfortunately, in this market you cannot build a good house on such a small scale with such a budget (under 20 million yen for construction). Very small houses are expensive to build well.

Thus, if you are on an average budget, you really cannot afford to purchase the kind of prime real estate that has a hope of capital gains.



Nevertheless, some adroit people are making money on real estate by holding their noses and picking up cigar butts that still have some smoking int them.　One thing you can do is purchase a reposession and renovate. Or else purchase a renovated repossession from a specialty operator. There are good deals to be had.

Something that stinks to Japanese but doesn't necessarily stink to you as a gaijin, a house with an untimely death, proximity to yakuza,
rumors of ghosts, bullet holes in the doors, located across from the graveyard, with garbage pickup in front, an oversized house (over 200 sq. m.) etc., can be got at a steep discount.

The people who are really making money are purchasing crappy old properties in the above five wards, tarting them up with "designer" fixtures that appeal to women in their 20s and 30s and then renting them out for prices approaching market benchmarks. Worthless, hah!


Another alternative, is a 50 year leaseholding. There is a national program that allows you to rent your plot for about 30 thousand yen a month, with 2 million down. This amounts to a huge subsidy, and really brings good housing to within reach, if you forget about investment value.

http://www.ur-net.go.jp/

You can then go out and have built an ultra low cost import stock house from the US or Canada. 40 tsubos can be built for around 10 million yen.

http://www.annexhomes.jp/

If you can amortize this over 10 or 15 years then you can just shrug it off.
If you are only here for five years, then, no, buying is not a smart choice economically.

[Buraku]

two sites with some info

http://www.escapeartist.com/efam/42/Real_Estate_in_Asia.html

http://forum.japantoday.com/m_109546/mpage_1/key_/tm.htm

[twilightzone]

you would be a dumbfuck to buy a house/mansion/apartment in Japan.

biggest pieces of shit I have ever seen.

if its not imported, its fucked.

[AssKissinger]

. We saw them a few times in SF in the late '80s and early '90s. First time was the 'Hairway To Steven' tour A band I was in opened for them around that time. I was totally fuckin' thrilled. During the sound check they all had short hair and were very serious about getting the sound right and then they came out with wigs on during the show and rocked out. Standard sex change operation movies going. I saw them in once in Boulder, too. They had two full size movie screens going one with bloody car crashes and one with medical films of syphilitic dicks falling off. They Asian babe was nude and jumping on a trampoline. I almost had a fucking heart-attack. Oh yeah, don't buy a house.

[talkingdog]

you would be a dumbfuck to buy a house/mansion/apartment in Japan.

biggest pieces of shit I have ever seen.

if its not imported, its fucked.


You would also be a dumbfuck if you ended up stuck living
in Japanese rental housing for the rest of your life.

It's purely a cash flow question. For a given cashflow, let's
say a typical 15 man/mo. rent, can you build/import something
bigger than your rental rabbit hutch? Yes, if you do your
homework.

As for imported vs. Japanese made, what is fucked is
the price rather than the quality. You can probably get
more for your money with imported. But there is no question
that houses built by Japanese firms such as Sekisui or Hebel
in 2004 are very good indeed. The new standards are very
high, higher on the whole than US standards. The 2004
Japanese house will withstand a Florida hurricane and a
California quake and a Chicago Fire and do so while consuming zero energy and
containing 100 percent recyclable materials.

Technologically on a par with Lexus cars I'd say. Too bad I can't afford either.

[Taro Toporific]

[The new standards are very
high, higher on the whole than US standards. s.

Technologically on a par with Lexus cars I'd say. Too bad I can't afford either.

Nope. Standards that are NEVER enforced are not standards,

[AssKissinger]

All I know is what I see. In America really nice houses can be over a hundred years old. In Japan, they fall to the ground in 25 years. If I buy a house I want to be able to live in it when I'm old for fucks sake.

[talkingdog]

All I know is what I see. In America really nice houses can be over a hundred years old. In Japan, they fall to the ground in 25 years. If I buy a house I want to be able to live in it when I'm old for fucks sake.

Actually, US housing has an average lifespan of about 42 years. You need to go to the UK or Europe to find housing with 100 year lifespan. IMHO US housing is pretty damned shoddy, unless you are talking custom home built by one of the few real craftsmen around.

At the same time, Americans move every seven years, again, on average, so why would you need a 100 year house? Better off spending the money on interior decorators each time you move than paying for an expensive high quality structure.

As for the 25 year Japanese house, this is largely a function of poor maintenance on the part of negligent owners, with he biggest problem being white ants. People generally don't maintain their houses properly, no preventive maintenance, and they don't bother to keep up with extermination--but this is not the fault of the carpenter.

Americans OTOH are obsessed with home maintenance and flock to Home Despot on weekends. No wonder their houses last longer--they take care of them and spend lots of money on them. Duh.

[canman]

I don't think that termites are as big a problem these days. The construction industry has been used treated lumber for the past 20 years. I do agree that Japanese people put zero into maintenance, which really boggles the mind. I mean housing is a hell of a lot more expensive here than almost anywhere else, you'd think that would be incentive to keep the place up. But speaking of Home Depot, there are no such places here, and if you do go to any run of the mill "home center", the cost of the raw materials are outrageous.
When we built our house, I wanted to install a shower stall. Nothing fancy, you can get then back home(Canada) for about 250-300C$ Here the damn thing was going to run us almost 200 000 yen. For a bloddy PVC shower stall.

[devicenull]

well, if japan actually built houses that weren't squallar, what ever would the contruction business/racket do when people didnt have to rebuild all the time? imagine, building a house that would last for 60+ years and having a families move into used houses on a regular basis, it would destroy like a fifth of japanese economy and force them them to be creative and get other jobs... such as warning pedestrians about open manhole covers or directing traffic at intersections that already have stop lights.

[talkingdog]

The 2004 Japanese house will withstand a Florida hurricane and a
California quake and a Chicago Fire and do so while consuming zero energy and containing 100 percent recyclable materials.

Why the hell are they so bloody awful in Japan, then?


All the structural performance in the world doesn't make a bit of difference to you as a user, though, because all you care about is how the facade looks and what the interior is like.

The main reason Japanese houses are so bloody awful is that people don't give a shit about their houses (or didn't until just recently).

What is awful about them, then?

First, the module used for layout is around 36 inches, not 48 as in the US. As a result, all the hallways, doors, stairs and other spaces are cramped and narrow. Stairs end up being steep and ceilings low. Claustrophobia.

Second, the HVAC systems are primitive. Most people end up with a goddamn unvented heater in the living room of their airtight house. This is awful and dangerous.

Third, the wallcoverings, cabinetry, flooring and fixtures are all covered with icky vinyl finishes that feel terrible to the touch, age rapidly, and cannot be repaired.

etc., etc.

[GomiGirl]

Don't forget badly designed kitchens with zero bench space and no ovens. Impossible to do any decent cooking.

Also zero storage space and not enough room for my shoe collection. :lol:

[talkingdog]

well, if japan actually built houses that weren't squallar, what ever would the contruction business/racket do when people didnt have to rebuild all the time? imagine, building a house that would last for 60+ years and having a families move into used houses on a regular basis, it would destroy like a fifth of japanese economy and force them them to be creative and get other jobs... such as warning pedestrians about open manhole covers or directing traffic at intersections that already have stop lights.

This is exactly the case. The present situation of poor resale value is a result of a deliberate and concerted strategy between the bureaucrats and industry after the War. What most people fail to mention is that housing had resale value _before_ the War.

Nevertheless, this is beginning to change. Note the adverts on TV from Hebel House touting their resale value (shisan kachi). Japan's largest contractor, Kajima, is also touting the resale value of its condos. Others, too.

This is all because some people have awakened to the fact that the big thing dragging the economy down over the past 15 years has been that people's live savings have been eaten up by negative equity in their homes. In order to get people to start spending again, they need a way to reverse that situation. This is issue numero uno for Japan IMO.

[talkingdog]

Don't forget badly designed kitchens with zero bench space and no ovens. Impossible to do any decent cooking.

Also zero storage space and not enough room for my shoe collection. :lol:

yep

I was recently redoing the kitchen in my summer place. Typical galley style kitchen, 170 cm from wall to wall. I noticed that with normal cabinets 60 cm in depth on both sides you only have about 50 cm of passage in the kitchen. Thus, if somebody is working there, nobody can pass--without getting intimate, that is. As a designer you have to get really creative to overcome the limitation of this 91 cm module.

Same goes for stairs and halls. Two people cannot pass without sidling. That's pretty bad.

[AssKissinger]

I believe that they are one of the great all time rock'n'roll bands so opening for them was like opening for The Who or something (to me). but you saw them on two (2) FULL-SIZE movie screens AND the naked Asian babe WAS JUMPING ON A TRAMPOLINE!!! OH MY BIG HAPPY BUDDHAYeah and it was really terrifying. The show was in a gymnasium on the University of Colorado campus so they had tons of wall space. Plus, I don't mean to make you jealous, but, it was on fucking Halloween. And back then Boulder had a big party called the 'Mall Crawl' on Halloween where everyone took shrooms and went totally nutter. Does anybody know if they're still doing that?

[Caustic Saint]

Also zero storage space and not enough room for my shoe collection. :lol:
The problem may not lie in the amount of storage space.... :D

[Big Booger]

All I know is what I see. In America really nice houses can be over a hundred years old. In Japan, they fall to the ground in 25 years. If I buy a house I want to be able to live in it when I'm old for fucks sake.

My brother travels around the US building homes and log cabins that would really make a Japanese joint look like a shithole.. But then the homes he builds are worth more than I will make in 30 years.. :D

[Watcher]

Had a couple of students a year or so back... one worked for a company that made fibre cement (the faux-brick exterior siding that makes up the bulk of so many modern Japanese houses) and the other worked for a company that made the exterior fibre cement paint. Get this... Fibre cement has a lifetime of 30 years before it starts to break down while the paint has a lifetime of 35 years! Now here's the kicker... the fibre cement paint salesman was building his own home out of concrete.

I believe that most have the Japanese housing issue all wrong. North American houses may be built stronger but that doesn't mean better... a home costs a lot to maintain here. Roofing, driveway sealing, cracking foundations as homes settle, old pipes leaking, exterior painting, ancient fuses blowing out due to modern demands on the load, termites munching on the frame, boilers going every 10 years or so, etc. etc. etc. If you don't keep your home up it will fall apart... I've seen plenty of tax assessments with the "improvement" valued at less than $10,000 while "land" valued at $190,000.
I knew quite a few Japanese who owned old family homes in Shiga, these houses from the Meiji era, and they had a modern attachment 'cuz who wants to live in the drafty, old, uncomfortable, cool looking museum? Most people realise that homes become outdated and build a new house every 30 years or so. Once you've got the land (paid off... and many do with family money) you can amortise the home over the lifetime (30 years) and figure that and land taxes costing between 500,000-1,000,000 Yen/year. The key to this affordability is to have the land paid off. It's really not so different, except one group has a new house of their own design every 30 years or so.
On the other hand... if you have no land then you're better off renting... condos are the biggest scam going in depopulating, crap-building, Japan.

[devicenull]

ok, so, here is what you do... buy some land, live in a tent. you can get a dining tent and everything. hook up a generator for your appliances and you are set.

[maraboutslim]

I'm very surprised by the low purchase prices quoted in the Tokyo suburbs. How much do these places rent for? One can borrow US$100k on a ten year loan for about $1000 month payment. I suspect interest rates and special programs in Japan may even make that mortgage more affordable. Have rents dropped as well? I don't remember ever seeing a 1DK anywhere near Tokyo/Yokohama for less than $1k a month even in the 90s. If one can rent out these places for a slight positive cash flow over the mortgage payment, then ten years from now, though the place may be even more crap, all rental income is cash money in pocket. Any of you looking into becomming slumlords?

[Mulboyne]

talkingdog talk much sense to white man.

I still sense a bit of confusion between buying land, with or without a house, and buying an apartment.
During the bubble, both assets went up exponentially and, subsequently, both went down. The recent surveys showing rising prices are land price surveys. If you bought land in the central Tokyo wards at the right price a few years ago, you can make money by selling it to someone else today. However, if you bought an apartment off-plan in the same locations, you will probably lose money if you sell it (just as you would if you tried to sell a new car).
But many apartment buyers are looking at yields rather than re-sale values. It may be a bad building but if your rent can cover your loan, you have a working asset, no matter how you depreciate the building.
In short, it has not been easy to buy an apartment and sell it for a capital gain because there is no land underlying the asset. But you can make money through income.
Take the case of a restaurant. In most cases in Japan, the restaurant owner does not own the land but is renting/leasing. If he does well and the restaurant makes a profit, he may want to sell his business. But he doesn't own the land. He has taken a fixed asset (land) and generated revenue so anyone buying his place is buying a revenue stream, not land. Similarly, anyone buying an apartment is buying a revenue stream, either because you rent it to someone or, as talkingdog has said, you live there yourself and avoid paying someone else (imputed rent).
So, you can buy an apartment if there is a revenue stream attached and your financing costs don't exceed that income. Can you sell the apartment later? That is a different question. If you need to sell then your fate is in the hands of buyers. That depends on sentiment so if you think you will need to sell, you probably shouldn't buy.
But, if you own a place long enough for the rent to cover your finance costs, then you end up owing an asset that someone else paid for. That's not so bad. If you are living there yourself, it probably isn't your dream house but, over time, you may have spent less than you would have on rent and ended up owning a place.

Land is a different issue. Some of the calculations are the same - it is easy to imagine a restaurant owner getting a better price for his business if he owned the land and so it is with housing.
Land value is a function of what you can do with it. Subject to regulation, you can build a love hotel, house, car park, whatever. What you choose to build is based on whether you are trying to make money out of it or live there.
When someone buys land from you, they are rarely buying your love hotel, car park, house. The are buying the land and intend to do something else with it. If you built a car park and they want to build a house, then the buyer has to spend money converting your land. Consequently, the buyer may want a discount in relation to his conversion costs. That's why you hear stories of houses with "negative value". That means that no potential land buyer wants your building and so will have to pay for demolition. It would be better for that kind of buyer if the land was empty.
But a "negative value" house is not worthless if you are renting it out or using it yourself. It has a positive value.
Land prices have risen. IF this trend continues, then, if you buy land with/without a house, you will be able to sell it for a profit later. BUT, if you buy land and spend money on a house, then whatever you spend on the house is at risk. If you want a resale profit, then the land must rise more than the house goes down.
So, when you think of buying, you need to be very clear about what your economics are and the difference between owning land and buying an apartment. Income statements and balance sheets are different- you can make money on one and lose it on the other (now). Or lose on both (post-bubble) or gain on both (bubble)

[Watcher]

it has not been easy to buy an apartment and sell it for a capital gain because there is no land underlying the asset.

Unless it's different in Japan from the commonwealth nations... there is land attached to every apartment. No land attached would be a lease somewhere along the same lines as the concept of a hotel... that is you only pay for your right to be there. Apartments/condos/mansions must file a strata plan and each home is allocated a piece of the strata. That is the basis of the unit's taxation. In addition the owner of each space will pay maintanance fees in accordance with their unit entitlement. These fees go to the common area's maintanance such as lawn and garden care, elevator servicing, hallways and carpeting, security systems, etc. etc. etcas well as a contingency fund (which would cover major repairs such as roofing or lawsuits from someone falling down an open elevator shaft). If the building was to be destroyed, each owner would receive a portion of the settlement based on their unit entitlement.

Strata law... it's a wonderful thing.

ok, so, here is what you do... buy some land, live in a tent. you can get a dining tent and everything. hook up a generator for your appliances and you are set.

Nahhh... in Japan you don't need to buy land for that. It's perfectly legal to live on any public land. But you may want to look into blue tarp manufacturing if you want to cash in on that boom. Where do they all get that plastic tarping? And why is it I only see blue?

[talkingdog]

All I know is what I see. In America really nice houses can be over a hundred years old. In Japan, they fall to the ground in 25 years. If I buy a house I want to be able to live in it when I'm old for fucks sake.

My brother travels around the US building homes and log cabins that would really make a Japanese joint look like a shithole.. But then the homes he builds are worth more than I will make in 30 years.. :D

OK, but now we're talking high end housing. If you can afford high end housing, chances are the point of this discussion is moot.

If you want a place that would be equivalent to a home in Beverly Hills you can get it. Ever been inside a home-at-home for expat corporate executives?

As for log cabins, I beg to differ. The Japanese are hopelessly addicted to American and Canadian log cabins, and they import large quantities of kits and prime logs. The kits are foreign built, handmade by guys like your brother. The Japanese-built ones are done by Japanese carpenters and feature the characteristic superb Japanese workmanship in hand tooled wood surfaces. Actually, I find them rather too slick and perfect; it's almost a caricature. Shitboxes they ain't.

[talkingdog]

I'm very surprised by the low purchase prices quoted in the Tokyo suburbs. How much do these places rent for? One can borrow US$100k on a ten year loan for about $1000 month payment. I suspect interest rates and special programs in Japan may even make that mortgage more affordable. Have rents dropped as well? I don't remember ever seeing a 1DK anywhere near Tokyo/Yokohama for less than $1k a month even in the 90s. If one can rent out these places for a slight positive cash flow over the mortgage payment, then ten years from now, though the place may be even more crap, all rental income is cash money in pocket. Any of you looking into becomming slumlords?

I think anything outside of the five central wards of Tokyo, and certain select areas in Osaka, Kobe, Nagoya, etc. would be a losing proposition long term. After all, the population begins to shrink in 2005, and that means that demand will necessarily slacken in outlying areas. This effect is heightened by the re-turn-to-the-city-center phenomenon.

I used to work for a bona-fide slumlord, and lemme tell you it is not the business you want to be in. Much better to invest in JREITs (income-producing shares in new rental apartment buildings) and manage them just like any other electronic trade.

JREITs are one area where a lot of money has been made in Japanese housing during the past years, and this is expected to continue, as long as more people choose renting over buying.

[talkingdog]

>>talkingdog talk much sense to white man.<<

wan! wan!

>>But many apartment buyers are looking at yields rather than re-sale values. It may be a bad building but if your rent can cover your loan, you have a working asset, no matter how you depreciate the building.
<<

Again, JREITs are the way to go. Although there has been a lot of hype about individuals buying condos for investment, this can be turn out to be a bad business. Just do the math. It's tenuous.


>>In short, it has not been easy to buy an apartment and sell it for a capital gain because there is no land underlying the asset.
<<

This is inaccurate. Typical condos have about 5 tsubos of land included in the title. I saw a townhouse condo development recently that had 30 tsubos entailed.


>>But you can make money through income. anyone buying an apartment is buying a revenue stream, either because you rent it to someone or, as talkingdog has said, you live there yourself and avoid paying someone else (imputed rent).
<<

OK, the imputed rent is the crux of the discussion. I personally would prefer to live in a home-at-home style residence. High ceilings, wide hallways and stairways, big US appliances, lots of space, over 2500 sq. ft. woodwork and cabinetry made out of solid wood, hardwood floors, tiled bathroom, central HVAC, etc. Can a normal guy afford to build something like this in Japan? Yes, if you do your homework. What is the imputed rent on something like this? Well, the rent on a home-at-home is how much? 75 man? 100 man? 200?



>>But, if you own a place long enough for the rent to cover your finance costs, then you end up owing an asset that someone else paid for. That's not so bad. If you are living there yourself, it probably isn't your dream house but, over time, you may have spent less than you would have on rent and ended up owning a place.
<<

Again, you end up being in a place that is much better than you could afford to rent. We are all dead in the long run anyway, so might was well live well now.


>>Land is a different issue.... the buyer has to spend money converting your land. Consequently, the buyer may want a discount in relation to his conversion costs. That's why you hear stories of houses with "negative value". That means that no potential land buyer wants your building and so will have to pay for demolition. It would be better for that kind of buyer if the land was empty.
<<

Yes, and here is where there is a chance for some arbitrage. If you have the vision to take a thirty year old shitbox wooden apartment house and tart it up just enough that it appeals to young single females, you have a chance of recouping your investment quickly and catching a good revenue stream.

Furthermore, there is sometimes a differential between the price of the same land with structure extant plus demolition cost and the price as cleared, vacant lot. In other words, the "negative value" is overstated, and you can save a few million by having the demolition done yourself.

Better yet, I have heard stories that one recent practice is to tear down the house but leave the foundation and utilities hookup intact. Then you just build a different building on the old foundation. There could be between five and ten million in savings right here, but this really needs to be a foundation built to the 1981 seismic standards.

>>BUT, if you buy land and spend money on a house, then whatever you spend on the house is at risk.
<<

The BIG RISK is that you will somehow become unable to pay the housing loan and not die. If you die, at least the life insurance is going to cover the loan. If you become insolvent, you cannot just return the keys to the bank and get a deed in lie of foreclosure and then walk away from the obligation. No deeds in lieu of foreclosure in Japan--because there are no (or few) mortgages secured by the land and house. Instead the housing loan is secured by your guarantor, by your own bodily parts, and those of your daughter...

In other words, when you default, the bank just unloads the note at a discount onto some collector--who just may or may not perceive some resale value in your kidneys.

[talkingdog]

it has not been easy to buy an apartment and sell it for a capital gain because there is no land underlying the asset.

Unless it's different in Japan from the commonwealth nations... there is land attached to every apartment.

You are correct.


ok, so, here is what you do... buy some land, live in a tent. you can get a dining tent and everything. hook up a generator for your appliances and you are set.

Nahhh... in Japan you don't need to buy land for that. It's perfectly legal to live on any public land. But you may want to look into blue tarp manufacturing if you want to cash in on that boom. Where do they all get that plastic tarping? And why is it I only see blue?


The blue tarp is cheaper, and there is so much of it around that they can get it for free. Buit actually, the gray tarp is better because it is UV resistant and provides you something of a radiant barrier.

I think that the age-old solution of getting a place under a bridge is better. Then you can build a nice place with cardboard. I saw some guys hanging out in front of their cardboard homes on the east bank of the Kamogawa here in Kyoto, under the Shijo bridge. They had their fishing lines set, and were sitting around a little table eating yakiniku and drinking cold beer, little TV going in the background with the ballgame on. Livin' the good life.

[GomiGirl]

Can somebody explain to me in simple terms the Japanese tax loop-hole called the "Wooden House"?

It is linked with the depreciation of the property but that is about all I understand.

[Mulboyne]

it has not been easy to buy an apartment and sell it for a capital gain because there is no land underlying the asset.

Unless it's different in Japan from the commonwealth nations... there is land attached to every apartment.

You are correct.

My very bad. I meant, and failed, to contrast land you own where you can change the structure and land attached to a condo. Once you have bought an apartment, you can't do anything else with the land. So, to get a capital gain, someone else has to want to buy the actual apartment. In a raging bull market, a developer might try to buy everyone out to build a whole new structure but that isn't happening right now.

[talkingdog]

Can somebody explain to me in simple terms the Japanese tax loop-hole called the "Wooden House"?

It is linked with the depreciation of the property but that is about all I understand.

I think they depreciate faster as fixed assets than steel or concrete
structures, for taz purposes. They also get favorable treatment
in other ways, too.

[Lifer]

I built a house a year ago, so have a bit of up-to-date info on the subject BUT:
1. I live in the countryside - nowhere near Tokyo or Kansai
2. We chose an imported 2x4 design from Canada

As far as the "wooden house" thingy - it doesn't matter where your house comes from - it depreciates in value every year as far as I can tell. The reasons have pretty much been touched on in the other posts but summarize as: poor construction, poor maintenance (it's a cultural thing), & factors of the environment in Japan that tend to age wooden structures (termites, humidity, ocean salt in the air,etc...)

I think owning a home here is MUCH better than renting:
Pros: no neighbors above or below, my own yard, DIY maintenance & improvements, only 10,000 more than renting a small apartment (except for bonus payments), better environment to raise my kid
Cons: loss of the housing stipend from my co. (Apartment=40% of rent House= 3,000 yen/mnth), 25 year loan, depreciating value of house, bonus payments

But hell, I plan on living in this house till I die, so why should I care if the property taxes go down every year? Not withstanding another typhoon year from hell or the gran mal of earthquakes, I know this house will last another 60 years with the proper mainenance. So just for the piece of mind (making my own little America) it's well worth the BS required to do it. Looking for a financial investment is a whole nuther ball game.

Anyone intersted in my thoughts on Japanese construction methods - let me know :?

[talkingdog]

I built a house a year ago, so have a bit of up-to-date info on the subject BUT:
1. I live in the countryside - nowhere near Tokyo or Kansai
2. We chose an imported 2x4 design from Canada



Which company did you choose for your Canadian house? What was the final cost per tsubo?

BTW if you are interested in hard core discussions of gaijin DIY and home improvement, check out this new mailing list on Yahoo groups:

http://groups.yahoo.com/group/gdiy

[Mini_B]

The 2004
Japanese house will withstand a Florida hurricane and a
California quake and a Chicago Fire and do so while consuming zero energy and
containing 100 percent recyclable materials.


No fucking way will Japnese wood framed houses withstand the winds of a Florida hurricane...earthquakes yes, hurricanes not a chance.

[Mulboyne]

Can somebody explain to me in simple terms the Japanese tax loop-hole called the "Wooden House"?

It is linked with the depreciation of the property but that is about all I understand.

If you are have lived in Japan for more than five years, then the tax authorities have the right to tax you on global income (i.e. including earned outside Japan). Many foreigners take a fast and loose approach to declaring overseas income. Overseas property is assumed to be an income earning asset so many people don't declare their property but, since Japanese depreciation on wooden structures is accelerated, if, for instance, you are lucky/rich enough to own a Tudor-period wooden structure in the UK, you will not be taxed since depreciation rates here have already written the structure's value to zero. That is a definitely a"loophole".

[Lifer]

Which company did you choose for your Canadian house? What was the final cost per tsubo?


We chose Selco Homes and as for cost/tsubo well... I hate Math. It's about 44 tsubo and minus the cost of land was a little under 2,000 man so that's about 450,000 yen/tsubo. That includes all the insurance, paperwork fees, lights, curtains, yard design, drivaway cement,etc. Seems to me it was actually a little less than that but that was a year ago and I am getting old :cry:

I liked Selco because they process the lumber in Canada (giving Canadians jobs) and because the basic no frills package is pretty damned good. All oak floors and cabinets on the 1st floor, wall to wall carpeting on the second, exterior walls are actually made with 2x6s so they are thicker and packed with excellent insulation (an 8-jo oil heater kept the whole house a constant 22 degrees last winter), all double-paned glass, and windows that actaully seal shut so you don't get that Japanese draft on windy days.

Also, the only reason we could get a loan was because the construction company majorly backed us up with the bank and searched until they found a loan insuring company that would take us. They even fronted us 10,000,000 yen when the land developer called and said, "Sorry to keep you waiting for 5 months, but we need payment in full, in cash tomorrow." :twisted: (I didn't have my permanent residence status at the time)

[Taro Toporific]

Anyone intersted in my thoughts on Japanese construction methods - let me know :?
Japanese contractors ought to start comedy clubs. They have 100% "creative" compliance with the laughable Japanese building code.


Oh by the way, Japanese building code does NOT mandate in housing:
Smoke alarms
Proper drain diameters larger 1.5 inch
Vapor barriers
Insulation greater than R-5
Dual pane windows
Central heating
Rain gutters
Number of wall outlets per running meter
Sufficient amperage for kitchens
Separation of electrical circuits among kitchens, utility, and bath
Integrated counters and cabinets in kitchens
Buried utilities
A single pour for concrete foundations


Of course without ANY Japan city planning or zoning we can't expect them to have setbacks and landscaping covenants. Besides, earthquake-prone Japan is much more exciting with forests of the National Tree, the sacred concrete utility pole, water tanks unsecured on building tops and air-conditioners hanging by rusted bolts to sides of new buildings.