Looking to see if someone has any knowledge or a past experience of owning a home in Japan. My family are in a bit of a pickle and it’s hard to find any solid information online, a lot of contradicting or out of date information out there.
So, a few years ago my Company moved me out to Japan to start up a new office. I was managing this office of 50+ people. The reason they sent me was because I’ve good experience in our company but also, my wife is Japanese. So I am allowed work here. I was to ensure that the new office was following all SOPs, the culture wasn’t lost, and revenue was good! The whole transition went really smooth and out of all global locations we opened, Japan was by far the best because it was the first time they “sent one of their own” to oversee operations. Business was going great, KPIs were exceeded. Until, the cost of logistics sky rocketed. Japan wasn’t profitable anymore so they closed the office. One year and a half later. Redundancies were paid, I was losing my job! However until the last month of my employment, they reached out to me and gave me a promotion. This would mean that I would need to move back to Europe. That’s ok! (Read below)
My wife and I had a beautiful boy, born here in Japan. We also purchased a house 10 months ago (mortgage). This is where things get messy. We bought the house knowing that business was going well, feedback from CEO was excellent. Only to be hit with 4 months later, we are both losing our jobs. Reality hit us, it is what it is and nothing can change the company decision.
We have three choices:
1: sell the house
2: rent the house
3: keep paying the mortgage (essentially an empty holiday home)
1** What is it like to sell a house in Japan? My wife says that essentially we would be able to break even on it. Scrap the mortgage. And move on. My overthinking though and experience in Europe is that you could end up never selling the house at a reasonable price and come out at a huge loss. Does anyone know what this is like in Japan?
2** Renting the house was our original plan, but turns out our bank doesn’t do the investment loan. So we would need to transfer it to another bank. Any experience in this? (Japanese friends said we should just rent it anyway without telling the bank, but we both want to sleep at night without thinking about committing mortgage fraud. Plus the house is in her name so I would never forgive myself if she got caught)
3** Lastly, keeping it as a holiday home is whatever. But what if I lose my job again? Paying rent in Europe is already expensive… Imagine paying rent or mortgage in Europe and another mortgage in Japan. Not ideal at all!!! We are in no way loaded with cash.
Life got very real in the last year… Can’t help but feel unlucky.. but it is what it is. Just looking for anyone who may be an expert in this field or have had any experience at all in the past. Thank you all in advance!
13 comments
Which one will let you concentrate most on whatever/wherever your future is, and not be a burden (financial/time/stress/etc)?
I’m guessing you already know the answer….
Sell the house. Investment loan usually has more or less 5% interest rates. Your monthly payment is going to balloon and you won’t be able to rent it for nearly what you will be paying the bank. Market is not bad right now, sell it quick and ask your company to cover some of the closing costs of the sale as part of your relo package. Worst they can say is no.
>My wife says that essentially we would be able to break even on it.
That depends. Is it a standalone house? Did you build it brand-new? If so, yes, maybe you could break even. If you bought a used house, you may or may not break even depending on a number of factors. There’s a strong cultural trend of tearing down a house and building a new one when a young family buys a house. They’re really looking to buy the land under the house and build their own house.
The bigger question is – are you planning on staying in Japan? If you are, either renting or selling the house are viable options but I would imagine dealing with all of this while living in Europe would be a massive pain in the ass.
sell your house, you’d likely lose (big) money on it but it’s the least risky option
you need to find a good realtor for this, ideally someone which access to foreign clientele that are less averse to pre-owned houses
is this in Tokyo? single family house prices gone up significantly in the past 2 years so you might even come up on top
My brother and I own a few properties in Japan. As a rule of thumb a house older then 20 years is deemed “worthless”, the house value significantly decreases as time moves on (opposite of the USA in most cases where price or value rises).
So essentially you’d be selling the land at whatever the land price is valued it.
Personally we hold on to whatever we have and rent it. May not be a lot of income but it’s better then selling the home for less and paying large taxes for the same etc.
This is of course our opinion. And no way near a legal professional. But just how we do things.
Keep in mind as well, renting opens another “can of worms”
Inevitably it’s what you want and what you think would be best for your family
Depending on where you are you might come out on top with the mortgage because the interest rates mean it’s essentially free money. Or you might not. Used houses in my area are now going for 20-30% over what I paid 5 years ago for our home.
Or you might get hosed.
Just remember firing either of you is incredibly difficult unless you happen to have the misfortune of being a managing director or higher in which case I’m sorry.
How is the housing market in the area where you live? Homes that go up for sale in this area tend to stay on the market for a long time.
Did your bank not allow you just rent out using the regular house loan rate? I was in a similar situation where I needed to move out of Japan, but I had a condo. I consulted with the bank, and they gave me the OK to legally rent out my property without changing to an investment loan.
Also, I had a coworker who did this 3 times with 3 different banks. He could rent out his condos in Tokyo without changing his loan, and he didn’t even move abroad. He just temporarily “relocated” to a far prefecture.
So rental is a very viable option, but I only recommend it if you return to Japan.
Ultimately, I sold my property cuz I didn’t want to deal with the expenses from the realtor managing the property and the yearly tax returns in which I would need to hire or find someone to file for me.
As you have mentioned, something to perhaps consider is the (not insubstantial) amount of ongoing stress that renting/holiday home will take on you.
Yes, you may well take a hit with selling, but the matter will be categorically DONE. With renting/holiday home, the property and associated costs and issues will constantly be on your mind, potentially for 30 years. Do you want that?
I am not suggesting you sell, but this “mental overhead” is very real and can be quite stressful.
Amateur landlord is generally a recipe for disaster. This advice from someone who had close to 20 rental properties in U. S. at one time. All self-managed.
What exactly is the risk you take by renting without the bank’s approval? E.g. can they force immediate repayment of the loan?
Wild card option: Find a new job in Japan and keep the house?
Where is the house located?