for Japanscott

Terryw, I must admitt I am a bit surprised by how cheap your place is in Osaka. I am not disputing the price I just didnt realise how much the market has come back since the bubble. What I know about the market is just stats from the bubble and stuff locals have told me about it so it is not really that up to date. And the current prices I have looked at here are just in my area which is only one station from the centre of Kobe so is probably a bit more expensive than normal. With your apartment, if you are having trouble finding tennants then you might like to aim for the student market. A lot of the students that go to Osaka Uni live in Suita. I understand that there can be problems with students but it is an excellent uni and all the students there would have had to work like crazy to get there so they are on the whole pretty studious and quiet. I say this because i go to Kobe Uni and it has about the same reputation so I am going on what my classmates are like. If you do wish to do this a good idea maybe be to get your real estate agent to contact the uni coop as they probably have a section for finding accomodation for students.
The bad loans here are still a big problem here. As of the 2002 financial year they were still increasing because alot of banks and politicians are reluctant to force painful change. The financial services and economic minister Takenaka has been trying to sort the problem out and last year drafted a bill to tighten up the rather poor accounting principles of the banks but it was watered down to the point of being useless by the old guard of the ruling LDP.He has however succeeded in making the auditors be tougher on banks and this resulted in Resona Bank being found to have a cash ratio below the required level so some things are being done to solve the problem. A reasonable period of sustained growth and the resulting increased profits for business might knock a bit of a hole in the problem but profer principles must be put in place to ensure the problem never gets as bad again.
Japanscott the reason I am not as confident as you about the market improving is that the 3.9% annualised growth for the last quarter was almost entirely because of increased exports and not because of a strong domestic sector. This means that domestic spending hasnt really improved that much yet. It is basically the opposite to the Australia’s situation where economic growth dropped greatly because of the export sector (drought and terrorism/SARS related drop in tourism) but domestically Aus is still pretty much going along like a dream (although the possible real estate bubble is causing worries). However I do think there are many opportunities for the savy investor particularly ones looking for positive cashflow rather than quick capital gains. I dont know much bit I would imagine that with 1% interest rates even properties with the most average rental yields could be made cashflow positive.
Finally, would you guys ever have the confidence to invest here, particularly without much investing experience elsewhere? The reason I ask is that I am dying to start but I cant get home at the moment for long enough to build a team,study an area etc and here i dont think i could ever be confident enough that i know enough given the language barrier. I think i would feel that i have missed stuff cause I dont understand Japanese 100% or that I couldnt be as well researched as if I was in Aus. What do you guys reckon?

I agree with you that hidden costs would be the worry here, particularly due to the language. I would also want to find some good research material hopefully in english before going anywhere. I also agree that for cash flow rather than capital gains this could potentially be a great situation with such low interest rates and with good cash flow any further drop in the market could be ridden out.
Regarding Aus versus Japan, until the last few days my plan was to graduate in 2 and a half years with some cash and work for 3 years to get more cash while putting it all in some sort of fund back home, probably an index fund. I thought that by the time i got home in 5 years the Australian market would hopefully have rationalised a bit. But from this post and others and a bit of looking around over the last few days the Japanese market has caught my attention. I think with such a depressed market there has to be heaps of bargains around as there is such negative sentiment around and nobody seems to be considering investing locally. I think anything other than sticking your money under the mattress is unpopular here at the moment. Saw a figure that I have my doubts about that there is US500bn dollars under Japanese mattresses cause they have no confidence even in the banks(especially the banks). With this reluctance to buy and financial hardship forcing many to sell there must be opportunities everywhere. I would be reluctant to enter the Australian market at the moment because I gather from this forum to cashflow any property would require some more creative ideas like wraps or renovations or something like that and I would probably want to start on something more simple like a standard buy and hold strategy. So for that reason the Japanese market would be more attractive i guess.Some other drawbacks to investing in Japan that i can think of off the top of my head is that I only have a student visa with permission to work part time atm rather that a work visa so that may affect things. Also I dont know how the banks would like me going home while still having loans. And if that was ok and I went home I wonder how much business I could conduct coming back on just a tourist visa if i had to in the future. These are just some ideas I have thought of. May not be a problem but would just have to find out. Also going around and conducting interviews to build a team seems dawnting enough at home let alone in Japan but it would be a learning experience.
Have I thought much about investing in Japan? To be honest, until about 2 or 3 days ago….nope. But atm I am very keen to at least look further into it and see what the possibilities are. Plan to talk to a mate from NZ in a few days who has married a Japanese girl and bought an apartment here and see if i can learn a bit from him and then maybe look around for a few resources and see what the story is about finance and so on. I dont know what to expect but just quickly last night I looked at the Japanese Yahoo in the real estate section and found a place in ten minutes for 4800000yen in the centre of Kobe with 3 bedrooms, living room, laundry and kitchen. It was a bit old admittedly but my friend and I both agree that it should confortable rent for way more than 150000yen per month from our experience of renting here. However that is a rental yield of 37.5 percent I think so I believe i must have missed something or the place must be in very bad condition. It was about 28 years old and while being listed in order of price was surrounded by one bedroom places so something is amiss i think. Either way is definitely worth further inspection.

Your right the building standards are a factor, particularly here where they had the earthquake in 1995. Think they lifted their standards after that, here at least. Will have a look and see if there is any obvious increase in prices for properties built after the quake. Cant see myself getting a loan from my company as I dont have one. I just work about 7 or 8 hours a week and they are basically just private lessons or in small schools. I get an allowance from the Japanese govt and uni is paid for by them so I dont need to much and dont have much time to work. I can get interest free loans from them but the limit is about 150000yen so wouldnt mean much and has to be paid back within a few months. If u get any cool ideas or interesting stuff please give me a mail or a message.