5 Reasons Why Purchasing Japanese Property is a Very Good Investment
When it comes to investments, real estate has already proven its usefulness in a diversified portfolio. Its various advantages that can acquire in the long run give the investors exceptional benefits. And this includes the growing value of the property over time. Investing in real estate, even if it offers favorable returns, requires several processes particularly in the legal aspect. For foreigners, purchasing properties in Asian countries will be difficult as there will be restrictions regulated by their state.
But Japan is different. Non-Japanese can own real estate with no citizenship or visa required. The same rules and procedures also apply for them just like for Japanese buyers. Yes, you read it right. Japan allows foreigners to purchase properties in their country – land included.
But let's be more specific. Are these Japanese properties really good for your investment portfolio? The answer is definitely yes. And here are the five reasons why purchasing Japanese property is a very good investment:
- Japanese properties have a low purchase price.
Many news articles have been circulating online about the aging and decreasing population of Japan. Accordingly, the population will continue to shrink and by the year 2065, it will decline to about 88 million people. And if you are aware of it, you have probably found out that there are a lot of abandoned or unused houses, especially in the countryside.
Because of the fewer population and more Japanese are moving in the cities, many houses are left empty. Some of the owners sell these properties with lower value compare to the properties in the urban areas. So for real estate investors, this is absolutely an excellent deal. Foreign investors can purchase the property without being a naturalised citizen or having a special visa.
- They have high investment returns, often above 7%.
It's no secret that real estate increases value in the long run. Due to the demand from the market, the value of the properties often appreciates. This concept also applies to Japan's property investments. Due to the low purchase price, demand is rising, and it attracts more foreign investors as time goes by.
Because of this, the market value of most used houses or properties grows higher than those newly constructed. Many real estate investors are continuously patronising these properties, resulting in a high yield of returns to the buyers in the long term.
- Opportunities of having tenants looking after the property.
Having your own property in Japan will give you many opportunities, and it includes earnings from a rental property. If you acquire real estate, having tenants will grow your money even faster. But the question is – can you assure that you'll be having good tenants?
Well, in Japan, as a landlord, you don't have to worry about having good or bad tenants. Because generally, tenants in Japan are incredibly responsible, and that's a fact. Aside from this, there are some rules and policies that secure the landlords' investments and monthly cashflows.
- You can have stable and long staying tenants.
As I've mentioned above, there are some rules and policies that safeguard the income of landlords. And one of them is having stable and long-term tenants.
Tenants must sign a contract with a minimum term of two years. It is always important when having an agreement, there is a contract between the parties. When the tenant signed a two-year contract, the income of the landlord will be secured.
Further from the contract, here are some benefits that landlords can also have:
- Landlords will receive key money. Key money is different from the security deposit. Tenants pay it upon signing of the contract as a gratitude fee because the landlord lets them rent the property. It is equal to one month's rental fee.
- There is a guarantor who will shoulder the financial obligation if the tenant fails to pay rent. Property rentals in Japan require the tenants to provide guarantors when signing the contract. The guarantor must be living and working in Japan and has a stable source of income.
- There is insurance to cover all property ownership issues.
Another great deal in investing real estate in Japan is the insurance that covers property ownership issues. Accordingly, since the past few years, Japanese insurance companies put their focus on real estate investments aside from infrastructure projects. This opportunity will give foreign investors protection from any damage, loss, or liability that may result from unforeseen events.
Being Asia's fastest-growing economy, there are a lot of reasons to invest in Japan. Many international real estate investors have already started their Japan property investments. The consistent safeguarding of the Japan government to investors give more assurance and security to all foreign investments.