Investment choices: one larger, or several smaller apartments?

[AustinJapan]

I’m looking into buying a house and apartment before it is too late to borrow and take advantage of the good interest rates. A friend suggested this pattern.

Pattern A
Buy a house and several smaller older depreciated but well located and maintainable apartments. Lease the house and use Air b’n b for the apartments. Then rent a place to live in. Stick to small apartments and buy as many as possible.

Pattern B
This was my idea. Buy a house to live in using a 住宅 ローン ( loan for owner-occupier) in a location I like and then buy several smaller and older apartments (using Aparto Loan) in good locations to either lease or air b n b.

Pattern C
The local Japanese nice-guy-foreigner-friendly-real-estate-agent’s idea. Buy one house in sellable location to live in, and one larger apartment (at least 2LDK or above and built between 1984 and 1995ish - so major depreciation has flattened somewhat and earthquake coded) in good area. Avoid small apartments - they are mostly purchased for tax-write offs and you (me) are not in it for losing money.

So three quite differing ideas. I wonder if anyone has any input about this.

And FYI, bank won’t loan to me when I hit my next birthday, it’s their rule. (Gotta love a little pressure lol)

[RetireJapan]

Hi Austin

Good question. Did you see our series on the blog by Ziv?

http://www.retirejapan.info/blog/catego ... jima-magen

My understanding is that you cannot rent out a property that has a residential mortgage on it. I also believe the smaller one-room apartments tend to have better cashflow in Japan.

I wouldn't make plans that are dependent on Air BnB as there seems to be some political risk there (ie the government shuts them down).

Anyone else?

[AustinJapan]

Good reading with that link. I’m not too fussed with the air B and B thing - it would be fine to let the apartments. Funny how the local Realestate guy says stay away from ‘low income bad neighborhoods and cites yakuza etc. Actually, the perception in local eyes of bad is so different from ours. We are not talking meth labs! However, even if it is just perception, perhaps resale values still take a hit and who knows what will be happening in 10-20 years in urban Japan.

One thing the link doesn’t make clear-at least until the comments section - is how a 60,000 monthly rental cheque could quickly become a 30,000 net collection after the building’s long term maintenance fund and the regular monthly fees are deducted. I saw a 3LDK in Fukuoka showing 77,000 - 80,000 rent with 18,000 and 10,000 deductibles for those fees respectively.

One thing I need to put to the real estate agent again is that the message that smaller/older tends to get better returns. I need to see why he disagrees.

[RetireJapan]

One thing I need to put to the real estate agent again is that the message that smaller/older tends to get better returns. I need to see why he disagrees.

Possibly because the commissions are smaller?