Seriously, how is it profitable for anyone to own property and rent it out?
To buy land & build where I am would be ~50,000,000 JPY and the rental it would pull in is ~150,000 / month
The depreciation alone (to zero in 22 years, assuming 30m is building cost) is 113,636 per month.
What am I missing in this depreciating insanity that makes it sustainable? Are the just aiming ultra-long term and praying that the rental value stays high?
https://www.reddit.com/r/japan/comments/16abz4o/how_does_the_rental_market_not_collapse_in_japan/
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I think it’s because the investment opportunities for regular folks are so dire that it looks attractive by contrast.
Y150,000 for rent sounds like an awful lot. Tokyo average is a little more Y80,000, and the national average is a hilarious Y50,000
That might cover HOA fees in the US, which is hilarious in the opposite direction, but the rental market in Japan has already collapsed.
Renters also progressively own more of the house the longer they stay there. I think they can even sell the house(not the land) after 30 years or something
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Declining population and oversupply of rental options keeps prices low, and the japanese goverment is very lax on zoning compared to other places. i honestly wish more countries would copy this model and adopt policies that make housing more affordable rather than a investment opportunity.
Depreciation is a concept used by tax officials to calculate the tax value of land. It has no necessary direct relationship to the return on an investment or to the ultimate resale value of a property. No one comes to collect the value lost each year, but your tax burden does go down as time passes.
People buy old buildings all the time which technically have little remaining tax value, and yet in Tokyo they pay amounts significantly higher than the value of the land alone, especially if the building is good.
That said, most investment properties are in reinforced concrete buildings which have much longer and slower depreciation curves than the 22 years given for detached wooden houses.
You either think bigger (~3 floor mansion apt ~9 doors) for 150M and reel in 600-1000k per month in rent, or think longer term/desirable area.
A place 2min walk from shinjuku will probably not collapse during our lifetime in rent price.
The gymnastics in building to rent in Japan are tough and not really for amateurs I would say
My husband owns several empty lots in this area. He had parking spaces marked off in them and runs them as monthly parking lots (月極駐車場). All of them are either full or nearly full.