Buy a house or be miserable?

[inaka_rob]

We are thinking of buying a house and if we have to move out in 4 years and move somewhere else, we can figure we can hire a PM and rent the house out. Is that crazy? Is that reasonable? Buying a house in Japan and selling it after 4 years is 100% a waste of money. The money from taxes, fees, and depreciation is unbearable to even think about. We are both 40, and I feel like we are taking this major step backward in terms of our comfort unless we buy a house. We can not find a place to rent that checks all the boxes. The only way to check all the boxes is to buy a used house. I just don't understand the financial ramifications well enough to know if this is financial suicide or renting it out is actually a sound and good option.

I am moving to a new city. My new contract is pretty much a guaranteed 4 years. I can probably find work at other universities in the area, there is 7+, but nothing is guaranteed of course.

My wife and I have been looking for months and months at places to rent. We can find nothing. We are both so stressed out and frustrated.

The boxes that need to be checked
#1. Close to work. I hate commuting to work. I mean HATE! My current job is 45 min each way driving and it's 50% the reason I am leaving. It was easily my least favorite thing about the job. In the previous 11 years and 3 jobs, I could bike and/or walk to work. I can't put into words how important it is to find a place within 10km of my new job.

#2. Pet okay. We have a cat. It is insane how many people list "small pets" but then when you call they say... oh ALL small pets but cats.

#3. Parking. We have two cars. No, we are not selling them. (We are not moving to Kansai or Kanto area.)

#4. No neighbors (meaning mansions and cramped apartment complexes). We HATE neighbors. Let's see. I have literal PTSD from my 2nd neighbor in Japan who I had to call the police on no less than 3 times. The cranky old lady next. Then 8 years of good neighbors. Followed by hell neighbors again, no idea who is even living next to us. counted 15 different cars in 6 weeks. 2 women, sisters? Mother-daughter? Friends? no idea. They have two toddlers. 10 boyfriends. Parking in our spots, won't shovel snow. You get the idea.

We have been trying to find a house to rent. This guy wants 300,000 yen fee for a 50,000-month place. That place is no cats. Another perfect house... no parking!!!

We have been looking for months. And no goldy locks place.

[Tony]

If you can pay for the house in cash, then sure, living in it for 4 years, the renting it out might be an option, but if you are going to get a mortgage for it, most banks do not allow properties to be rented out if using a low interest home loan. You could always discuss it with the bank, but in all likelihood they would make you refinance the home, at a much higher interest rate, at that point it's difficult to say whether it would be a good investment or not, but I'm guessing it would be no.

[RetireJapan]

The standard advice is if you can live in it for at least a couple of decades, buying a property will allow you to live somewhere nicer for less money. Buying and selling costs are 5-10% of the price, so it is generally a bad idea to buy and sell repeatedly.

[inaka_rob]

The standard advice is if you can live in it for at least a couple of decades, buying a property will allow you to live somewhere nicer for less money. Buying and selling costs are 5-10% of the price, so it is generally a bad idea to buy and sell repeatedly.

Of course, but is renting it out a viable option? Live in for 4-5 years then rent it out?

[adamu]

To simplify: You want a detached house close to work that allows pets and has parking. That doesn't sound too difficult.

Is there something else making it difficult? Lack of options? Small budget? Are you using an agent? Discrimination? Is your wife Japanese?

Are there short term compromises you could make? If you live near work, do you need the car? With a name like inaka_rob, I guess so. Or maybe you could rent a parking space nearby? Times car club?

Just thinking aloud, I only have experience renting apartments. Buying doesn't sound like a good idea for a temporary option.

edit: another thing you could do is rent a place short term, and once you're more familiar with the city / have more contacts, try to find a place you are happier with? ...

[RetireJapan]

The standard advice is if you can live in it for at least a couple of decades, buying a property will allow you to live somewhere nicer for less money. Buying and selling costs are 5-10% of the price, so it is generally a bad idea to buy and sell repeatedly.

Of course, but is renting it out a viable option? Live in for 4-5 years then rent it out?

Normal mortgage terms and conditions do not allow this. You may get permission from the bank, they may ask you to remortgage.

You may be able to rent it out for a reasonable rate, you may not. When I did the sums for our place, renting it out at market rates would barely cover the mortgage, so it would make more sense for us to just sell completely if we decided to move.

[Gareth]

We found the house we rent through a specialist estate agent that helps families in Tokyo who have to relocate, often overseas, because of work but don’t want to sell their houses. The house we live in wasn’t listed on the usual Suumo, AtHome etc websites. Perhaps might be worth searching if such an agency exists in the area you are going to move to.

Good luck with it all.

[captainspoke]

Since you're not moving to kanto/kansai, I'll offer that you might be able to buy somewhat cheaper than the normal expectations.

That doesn't mean that some of the usual aspects don't apply (they will) but the amounts will likely be lower than for the big cities, and so possibly within your financial ability to handle.

I'd assume you're thinking of buying used? (中古)? Depreciation will be much less, as will taxes (ours are about ¥55,000/yr).

But, just as you're having trouble finding a goldilocks rental, anything you might buy is going to have some things you don't like, too. Those things will likely be its condition, rather than parking, pets, and hopefully neighbors. You may have to live with (or spend to upgrade) an older kitchen/bath/toilet. And you'll have to factor in how you'll heat/cool it, maybe some light fixtures, and so on.

I'd be optimistic, thinking that it'd be doable, depending on the city you're headed to.

[inaka_rob]

The standard advice is if you can live in it for at least a couple of decades, buying a property will allow you to live somewhere nicer for less money. Buying and selling costs are 5-10% of the price, so it is generally a bad idea to buy and sell repeatedly.

Of course, but is renting it out a viable option? Live in for 4-5 years then rent it out?

Normal mortgage terms and conditions do not allow this. You may get permission from the bank, they may ask you to remortgage.

You may be able to rent it out for a reasonable rate, you may not. When I did the sums for our place, renting it out at market rates would barely cover the mortgage, so it would make more sense for us to just sell completely if we decided to move.

That makes sense about the mortgage terms. I didn't know/realize this. That makes the choice a little easier.

@ adamu: Not getting rid of the car unless it's a last resort. It's an MX-5 ND2 RF. My dream car (until we get to the 10 million yen range, which I am not even close to). I LOVE my car. And we have the kei car. Which my wife needs, and we need for practical reasons, like hauling anything larger than a 6 pack. Yeah.. you would think the things we are looking for are not too difficult. (we are going to Kyushu, I would rather not say more. But it's proving hard than we thought to find the perfect place).

What frustrates me so much is that in no small part because of retire Japan, my wife and I are doing really well financially. We are way ahead of our savings/retirement goals. Our emergency fund is full. Crypto is treating us nice. I shaved off 5% at ATH this December and now have our next vacation more than 100% paid for (whenever we can travel next), have bought back in on the dip, and made even more. Traditional retirement funds in the US and Japan are doing well and ahead of schedule... Kei car paid for. The MX-5 low-interest loan is not even a speck on our income. Other than the Mx-5 loan, zero dept. And yet we can't afford to improve our standard of living?! This is so frustrating.

(I did not reply to everyone but read your thoughts. Thanks for the input)

[mighty58]

Is renting after owning a used house for just four years, in small-town Japan, a viable option? Generally speaking, the answer would be no... but getting deeper, there are a couple angles to consider to answer the question:

1. The Rental Market
Is there enough demand? And what rental income you could expect? Get that info and run a few simulations, remembering to factor in an appropriate level of downtime (time with no tenant) and see if it all makes sense. can you realistically expect positive cash flow? if not, will it at least cover your mortgage? can you handle paying out of pocket during downtimes? You can, of course, improve your chances by buying in a high-demand location. If you're in an area with 7+ universities, I'm guessing it's a mid-sized city at the minimum, so there should be some level of latent demand. However, more often than not, you'll likely find that when you run the numbers, it just doesn't make much sense from an investment perspective.

2. The Resale Market
You'll likely need to exit at some point, whether that's 4 or 15 or 30 yrs down the road. As property appreciation is highly unlikely, the question becomes more of how to limit the loss. Again, buying property that would be in demand (location, location, location) would increase your odds here. But if you can't expect positive cash flow as a rental, and significant property depreciation can be reasonably be expected (i.e. you're in a depopulating area), then it probably doesn't make sense... unless avoiding 4 years of "miserableness" is more valuable to you than that potential loss.

As for the bank (assuming you're getting a mortgage), as mentioned by others above, mortgages do disallow renting, but that provision is there to prevent people from abusing cheap interest rates for investment purposes. It's not meant to lock you in and prevent moves for legitimate life reasons. Japanese salarymen who get stationed away from home do this all the time... and they are not forced into a resale. The most common way to get "permission" from the bank is to frame the situation in a way that makes your return likely and/or possible (ie. you're going away for a few years, but are planning to come back at some point, and thus would like to rent it out in the meantime). This can obviously be stretched out for a pretty long time if you so desire. If life intervenes and you end up never returning, or the bank clamps down, you will not be forced into a sale, but a refinance request may be received. In that case, you'll need to factor that increase into your calculations. It's difficult to say how interest rates will look at that time though.

BTW, nice ride! As a fellow car owner, I feel you there.
As for neighbours, haha. But yeah, like family, you generally can't choose your neighbours, so wouldn't stress too much about that.