Real Estate Holding Company (KK)

[Soldaris]

Hello Folks,

Would like to seek your advice.

We are thinking of retiring to Japan. One of our thoughts are to incorporate a KK and capitalise it, so as to purchase commercial, residential and/or rental properties in Japan.

Is it feasible or possible to obtain commercial loans by the KK to fund the property purchases? We are thinking of two properties, one for residential and the other to let. We have sufficient capital for a cash purchase, but would like to take a loan or two for cash flow reasons, and maybe even tax considerations.

Would it also make sense to purchase the residential property as a private individual, and use the KK to purchase the to let property?

Thanks in advance.

[TokyoWart]

What is your experience in managing commercial investment property? Japanese bankers are more conservative than most countries but in general a commercial real estate loan will require good evidence of cash flow that can cover the mortgage. For companies with relatively small capitalization and no history of income what usually happens is that a small business loan is effectively a personal loan secured by your personal income so starting in a new country where you are not employed and can only offer the theoretical future cashflow of property you haven't been managing is a very hard sell to a banker. Buying the first property in cash, running it profitably for a few years and then applying for a loan for the next property might be an easier path to take.

[Soldaris]

Thanks, we figured along the same lines.