Points for choosing an investment property in Tokyo

September 18, 2018
yield calculation for choosing property in japan

Compare to many other major metropolis in the world, especially compare to other major cities in Asia countries, properties for sale in Tokyo are with relatively high rental yield. This attracts foreign investors buying Japan properties as well.

Nowadays more and more foreign buyers are buying properties in Japan. They even can decide to choose a property without coming to Japan to see it because the property basic information are quite open in Japan. Also they can see the locations and environments by Google map and street view. You have to notice that if the property is already with tenant, then the potential buyers cannot view inside of the property even if they want to come to Japan and see inside. In Japan, investors have to buy a property without seeing inside if the property is already with tenant.

Before you become to be the owner of apartments for rent in Tokyo, what kind of points you should check for choosing properties?

Location

Location, location, location! This should be most important point not only in Japan but also in most of other countries. Most expensive area in Tokyo is Minato-ward. The expensive area, the lower yield because yield is inverse proportional to the property price. Many foreign investors start from searching in central five wards-Minato, Shibuya, Shinjuku, Chiyoda and Chuo wards because they focus on capital gain than rental yield and they think that the better area, the higher possibility for capital gains.

Land ownership

Japan has properties, which are freehold or on leasehold. This is a crucial point to be reflected upon. If you are interested in buying a high yield property, which is on leasehold, you will not own the land it is built upon but only the structure! So be aware. Also, if you buy a leasehold property you have to pay land rental to the landowner. Of course leasehold properties also have pros- high rental yield.

Floor of the unit located

When you are looking for an apartment in Japan, you also have to notice about this point. This also affects the view from the inside of the apartment. In Japan usually the higher floor, the higher price. Especially ground floor units are with quite lower price than upper floors. However sometimes ground floor unit is with small garden and this should be an attractive point for 1st floor units.

The age of the property

Find out the year when the building was constructed. Knowing the age of the property will give you a fair idea of the effective age if the property has not been maintained. What kind of reinforcements were done structurally to withstand various environmental and natural calamities? What is the structure base built upon? Is the building earthquake resistant? The recent earthquake resistant codes are started from 1981 so if you want to get better earthquake resistant structure building you are better to find those built after 1982 or 1983. However, again this is a trade off with rental yield so you have to decide which point should be more important to you.

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Shinjuku-ku, Tokyo, Japan 169-0073

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