| Real Estate
In Japan |
| Home Sweet
Home...Sumo Style |
| By David Markle |
Home Sweet
Home ...Sumo Style
or Magilla
Gorilla Goes Home Shopping in Japan
Japan is NOT
a country open to foreigners (GAIJIN) wishing to purchase precious
Japanese real estate. NO DOUBT ABOUT IT. Japanese are suspect of any foreigner
showing more than a casual interest in anything more than some ancient
religious relics in Kyoto, electronic fad items at Akihabara, or the torment
of climbing Mt. Fuji in winter (when the portable toilets don't operate).
Given culturally inbred inflexibility to admit into their country anything
other than profits from exported manufactured goods, and U.N. donated blankets
for Japanese earthquake victims, there DOES exist a crack in the Tokyo
dome. |
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It exists
in the legal system. I say this from first hand experience. The Japanese
have locked themselves by their culture and rigid inflexible interpretation
of their legal system into a situation that can be taken advantage of by
anybody with the will to do so. The rest of this is about why and how we
did it and it can be a guide (or you could call it a light at the end
of the tunnel) to anyone wishing to own real property in Japan without
paying off a mortgage for 30 or more of the most productive years of your
lives.
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Anyone can do
it by bidding on properties auctioned off by the judicial courts for non
- payment of debts and taxes. It is as simple as that. It is legal. Anyone
with a residency permit is legally allowed to bid on and purchase properties
under duress through the legal system. |
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| Many of you
out there might be thinking; Wait a minute, this is for the pro's and lawyers
and don't they charge a fortune for their services?' and you are CORRECT,
they do. That is why anybody looking for an alternative LEGAL way to purchase
all kinds of real estate in Japan should examine this avenue.
Let me explain
why.
1. The Japanese
legal system has been overhauled to allow regular citizens access to it
and has simplified procedures and rules to admit anyone, even foreigners,
with basic knowledge (ability to read and write) the right (yes,
legal right) to access the courts. This means anyone not an illegal
alien can walk into a court house anywhere in the country and state their
grievances in writing and the court is obligated to take it up for them.
It might as well be written in the cement walls. |
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Offshore
Resources Gallery
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you deal with the courts there is no hanky panky, wishy washy, well maybe
this, maybe that, greasing of palms, sort of thing AT ALL. If there
is, it won't be there for long. Maybe you don't believe me...OK.
2. This means
that anyone can take advantage of the legal system to purchase real property
auctioned by the court.
So the logical
question is: Why would anybody want to buy something this way?
A: Three reasons
1. Price 2. Price, and 3. Price, because it is the only way you can legally
get real estate at desperate discount value quickly, and efficiently, unless
someone happens to walk up to you on the street and give it to you.
Which is more likely to happen?
JAPAN
HAS AND WILL CONTINUE TO ATTRACT PEOPLE FOR ECONOMIC REASONS (teaching
English is an easy job to get, not so easy to do) |
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a lot of people who have come to Japan from many countries as students,
laborers, teachers in the JET program, executives, and just
the curious who stay for a few years and move on. This is fine.
There are also
many who would sincerely like to put down roots here if they could for
many reasons, mainly economic such as business, but also family,
and personal. Many of these give up (or wish they had given up earlier),
and find the traditional Japanese methods of obtaining a home daunting
at least, and usually another dead end.
There are also
those out there who without the financial means to cut it in Japanese society,
without a full time job, getting by on a combination of this and that or
even having a full time position somewhere respectable, who find the doors
closed to gaijin by Japanese real estate establishments and respective
financial loan institutions. |
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| At this
point these people usually give up and move on. Nonetheless there are those
who are persistent and desire a semblance of security and stability that
comes with owning their own home, even in a place that only welcomes them
with only half outstretched arms.
This must be a universal basic of human existence everywhere. I asked myself
why should I be denied this while very ordinary native folks seem to be
able to acquire what it is they desire.
I decided to
take action based on some common knowledge.
Since the
collapse of the economic bubble in 1991-92, real estate prices have fallen
50% for residential and 80% for commercial property in Japan. Combine
this with pressure on banks to unload bad debt, stubborn deflation, rising
personal and commercial insolvency, an aging population, among other things,
and what you have is a growing opportunity to take advantage of judicial
court foreclosures to pick up distressed real estate property in the country
at bargain basement prices. Foreign investment groups like Ripplewood Inc.among
others, have at this time already bought about 200 golf courses from Japanese
companies forced into bankruptcy along with condominiums, office buildings,
department stores, resorts, railroad lines, and the list keeps getting
bigger all the time. The same thing is happening and will continue
to happen individually on a smaller scale.
So knowing
this, this was the conversation I had with myself, and the answers I found.
Q: Don't I
need a lot of money to start with?
A: NO!
They (the Pros) do it with a lot more money to start with, but they make
a lot more too.
Q: Do they
know something I don't know?
A: Of course
they do, they are highly trained professionals well funded and organized
with tremendous resources at their disposal.
Q: Well,...
is it possible to do something like what they do, only on a smaller scale?
A: Yes, anybody
can buy distressed properties in Japan.
Q: I see...Then
why doesn't everybody do it?
A: They do,
they are called professional real estate agents, they do it for the money.
Q: How can
I compete with them?
A: By knowing
more than they do.
Aahh...so!
I wondered if a gaijin individual could do the same thing without so much
cash to invest on a smaller scale. I decided to give it a try because the
financial risk is small in comparison to the potential gain (a place
to live).
HOW TO DO
IT (or at least what we did)
In our local,
the newspaper lists all properties and their location that have been processed
by the court for the month. This usually comes out the last Friday
of the month in our prefecture. We noticed one property listed in our small
village and decided to investigate it. We went to the court house and asked
to see the file on the property we were interested in. The clerk informed
us that we could see it and that we were allowed to make photo copies if
we so desired. The court had records of the type of debt, a diagram of
the property, the full names and address of the current owners, photos
of the outside of the property, along with copies of registration documents
and other particulars. In our case the property was 800 tsubo of land (about
2500 square meters - a little over a half acre) a large old farm house,
several out buildings, a garage and a recently built small home separate
from the main house. Also listed will be how much the minimum amount
for a bid to be accepted will be. In our case we put down just a little
over the minimum amount and it was the second time it had been auctioned.
It was not desirable for the pros because people were living in it at the
time, so would have to be evicted. Then if you want to put a bid in on
it, you have to fill out some forms, but they aren't difficult, then put
290,000 yen as a deposit into the court's bank account. If your bid is
successful this amount is applied to the purchase of the property and if
not successful, it is returned to you. Then you put your bid into a box
and wait to see what happens. I just told the court officials that this
was my first time and they walked us through it. They were helpful enough.
I had to submit a 'gaijin toryoku kisai jiko shomeishou' from the city
office which proves I have permanent residency. We put our bid of 1.5 million
yen in the box. We went to the opening of the box 'ceremony' at the
court house, it was very interesting because of the reaction of the 100
or so people present when my GAIJIN name was put up on the board as the
winner, but you don't have to be there. The property we bid on was
valued at 8 million yen by the court (very conservative) and we
got it for what we bid on.
THE DRAWBACKS
There are of
course some disadvantages with this method.
1. You have
to be able to speak, read, and write the local language, or know somebody
who does.
2. You have
to have legal permanent residency (not to be confused with citizenship).
3. You cannot
look inside the property you are interested in bidding on. You can ask
around though about what sort of shape the interior is in. We asked relatives
of the residents and they pretty much gave us the straight scoop. You also
cannot haunt around the outside (this might cause the residents 'stress').
4. You may
have to compete with professionals. They will bid up the price if it is
a valuable (to them) piece of property which means it can easily
be resold for a good quick profit.
The professionals
downside is your upside which means that if it is tedious or difficult
to realize a quick turnover on the property, the pros will avoid it.
This means you as an individual could pick it up and make use of it easily
and cheaply, but probably not quickly because it will involve the
snail like court system.
Anyone can
obviously go the proper route and buy something from a reputable real estate
agent and legitimate lending institutions. What I have said here is
not meant to be taken as a recommended route in opposition to the standard
methods. They do work, and I would even say could be a better way to go
for the sake of convenience and hassle. The method I chose to go was an
alternative legal route given my circumstances and means. Most people would
probably not have chosen this way under any circumstances. It is meant
for those who wish to take a bigger calculated risk for possibly larger
gains in the end. Again I stress 'possibly'. It is also very possible
to make a big mistake going this way. I say again it is vital, as in most
things, to do your due diligence and KNOW about the property you intend
to bid on, at least to the knowledge level of any professional that would
possibly be competing against you. Or ask someone to do it for you if you
can't. If you enjoy the challenge, as I do, where you definitely have the
disadvantage, the satisfaction is even greater. |
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