After determining the clients investment needs, we will place a bid on a suitable, vetted property. Depending on the market, we may be able to place an offer that is 10-30% less expensive than the selling price. During the bid process a real estate purchasing document will be sent to the sellers agent.
If the bid is accepted, then we request a 10% deposit to be put down, while we settle the next stage of documentation.
A template of an affidavit will be sent to you in advance of the next stages and we will need the original notarized copy to be couriered to us.
When a bid is accepted the seller’s broker will prepare the contract. We then proceed to do the due diligence. During this process we check all the relevant details of the property. This includes the land, building maintenance records and management, rental payments (if any), zoning, etc.. When this is completed we provide a single page summary of the contract and the conclusions of the due diligence. This process normally takes 2-3 weeks. However it depends on how quickly the seller provides the required documentation.
This report of important matters on the property will be translated into English, and couriered to you. After receiving we will cover in a Skype call the details of the property so there are no misunderstandings.
You can sign the contract either with a registered seal (hanko) or your signature. You will need proof of residency. For non-residents a notarized statutory declaration is required for which we will provide the template. The scrivener who handles the title transfer will confirm your identity and intentions.
After signing the contract, you will need to send both the affidavit and contract back to us via courier.
Once we receive the said documents, we will advise a settlement by date.
At the closing day everyone will come together. The transfer of the title deed and the payments will be made simultaneously. Large payments are normally done by domestic bank transfer, smaller ones by registered check and sometimes even in cash. If you can not make it to the closing everything can be done through a Power of Attorney as well.
Non-residents therefore can have a trusted friend come to the closing and make the payment. Otherwise they can transfer the funds to JIPC a few days before (the wire by date will be provided).
After the closing the scrivener will register the new owner with the local registration office. They issue a new title normally within 2-3 weeks. The scrivener will provide the title JIPC on behalf of you and we will organize delivery of the deeds by registered mail.
This would conclude the purchase process and the next phase of process, PROPERTY MANAGEMENT would then ensue.
Deal Breakdown example by numbers:
This is what the end costs and income involved come up to, with slight fluctuations due to exchange rates possible
At the end, we’ll list the factors that make this deal attractive in our view, and in the process outline some of the criteria we would recommend for anyone considering investment in Japan at this time –
1. Property advertised for several weeks at app. $22K. As funds were prepared in advance, gaining interest, and exchange rates seemed stable, we waited, then applied at app. $18,500 – this price offer has been set based on the final return we would like to see for our client.
2. Allow 4-6% for the sellers agent/s, 10-11% for registration/stamp duty, purchase tax & legal fees (can be slightly discounted in some cases, such as multiple unit purchase for instance)
3. JIPC’s fee for the entire sale process is then added – 5% again.
4. This brings us to a total of app. $22,200, with gross current rent income at app. $350/mth
5. On a monthly basis, we deduct app. $21 for property mgmt, $49 for building management (equivalent of HOA or body corporate – in Japan, combination of public area mgmt & future public repair/renovation fund – so no other building related expenses are to be expected), $11 for our translation & proxy fees and an astounding $1.10 for comprehensive insurance which includes earthquakes, fires and other natural or man-made disasters.
6. The total remaining takes us to app. $268/mth income on our $22,200 total expense, and 14.62% pre-tax return p/a. (To minimize taxes, vacancy periods and repairs on occasion, JIPC utilizes a hand-picked team with a proven track record, consisting of property manager, accountant and renovation/repair professionals).