Is Buying an Akiya in Japan a Crazy Idea? Jarrod Spills the Tea
An interview with Jarrod from the Local Japan Podcast
You can find out more about Jarrod and his work at his Pateron Local Japan Podcast or right here on Substack at
.If you have ever considered buying property in Japan, this insightful conversation with Jarrod from the
is a must-read.Jarrod shares his comprehensive journey about purchasing and renovating a traditional Japanese house, detailing every step from legal issues to future plans for Airbnb rentals. His passion for Japanese architecture and deep involvement in the renovation process makes this a detailed guide for potential property investors in Japan.
Table of Contents:
- Buying a Property in Japan
- Renovating the Property
- Renting Out on Airbnb
- Future Prospects
- Conclusion
Buying a Property in Japan
Rei: It's often thought that investing in properties in Japan can be quite lucrative given their perceived low cost, especially outside major cities like Tokyo. People finally seem to have opened up their interest for Japanese properties when they see just how cheap it is compared to markets in the West, where prices are so high it feels almost like a joke for most people to own property. However, it is not always as green as it seems, right? Could you describe the process from the initial interest to the actual purchase?
Jarrod: Absolutely! So, I think it's common to start your search on one of those really large websites like Suumo, kind of like the Japanese equivalent of Zillow. These platforms give you a broad overview of what's available. However, to navigate the market, you may need intermediaries who are fluent in Japanese and can facilitate connections with local real estate agents, helping you build a property portfolio. Typically, you pay a small fee for these services.
For me, my successful acquisition stemmed from having a personal relationship within the industry. I worked part-time at Nishimura Gumi, a construction company in Kobe that specializes in restoring rather than building new properties. They focus on acquiring properties, restoring them, and either selling them or renting them out, which includes everything from apartments to restaurants.
Rei: How did this relationship influence your purchase?
Jarrod: This company’s extensive network across Kobe provided me with unique opportunities to view properties that were off the market. I expressed my long-term interest in owning a property that I could eventually turn into an Airbnb. Over time, I earned their trust, and they started showing me properties that were available but not actively on the market. One of these properties really caught my eye. It was more of a strategic investment for them, something they had acquired without any specific plans. They offered it to me as they had no use for it, which worked out perfectly.
Rei: Can you tell us more about the property and the transaction process?
Jarrod: The property is located in a rural part of Kobe City, close enough to essential amenities like a train station but surrounded by the tranquility of nature. It’s an older property, requiring significant renovation, which I was prepared for. The purchase was direct, without any real estate agents involved, which saved costs. There were still mandatory fees, such as property taxes, which can range from ¥200,000 to ¥500,000 annually depending on the property value. The price was based on a third-party valuation, and because of our relationship, they sold it to me at no profit, just covering their own costs.
Renovating the Property
Rei: Renovating such an old property sounds challenging. What kind of work does it involve?
Jarrod: It's quite an undertaking. The house was built during the Meiji period, with some additions from the Taisho era, making it about 100 years old. It retains many traditional features, like thatch roofing and large, uncut timber beams, which are incredibly well-preserved. However, it lacks modern utilities like electrical outlets and plumbing. The renovation involves installing these basic utilities from scratch, which includes digging for plumbing and wiring for electricity.
I'm handling much of the work myself to learn and save on costs, though critical aspects like the foundation are handled by professionals due to the technicality and importance, especially in an earthquake-prone area like Japan. For example, retrofitting the foundation alone is expected to cost around ¥500,000 to ¥1,000,000. The property is quite large, with three buildings: the main house (131 square meters), a workshop (50 square meters), and a storage unit (16 square meters).
Renting Out on Airbnb
Rei: Renting it out on Airbnb sounds like a great idea. How did you navigate the legal and practical aspects of this?
Jarrod: The property's location and traditional charm make it ideal for Airbnb. However, navigating Japan’s Minpaku law, which governs private lodging, was essential. I had to ensure the property met all the legal requirements, including safety standards and proper zoning. This meant a lot of discussions with local ward offices and ensuring compliance with various safety regulations.
The Minpaku law restricts private lodging operations to 180 days per year to prevent constant turnover in residential areas. Before purchasing the property, I researched and confirmed that my zone allowed for Minpaku operations. This involved checking with the local ward office responsible for zoning and ensuring there were no fire, landslide, or flood hazards.
To comply with the Minpaku law, I had to notify my neighbors about my intentions to run an Airbnb and submit an application to the prefectural office. I don’t think they can prohibit me from renting out my place, but you definitely do not wanna be on bad terms with any of your neighbors here. On top of that, the application process involves multiple documents exclusively in Japanese and a possible inspection by an officer to ensure the property meets all safety and size regulations. It's a tedious process, but necessary to ensure everything is legal and above board.
Future Prospects
Rei: Finally, what do you see for the future of such properties in Japan, given the ongoing economic and demographic trends?
Jarrod: Japan faces significant challenges, like depopulation, especially in rural areas, which affects property values and community vitality. However, there's growing interest in revitalizing these areas by attracting young people and entrepreneurs.
This approach has been discussed extensively in forums like the Minka Summit, where advocates for preserving Japanese cultural heritage meet. Successful examples, like the town of Kurashiki in Okayama, show that preserving historical properties can boost local tourism and economy. My goal is to contribute to this movement by not only restoring but also integrating into the community and enhancing the local area.
Sadly, even with the best of intentions, it's inevitable that more abandoned houses and entire villages will emerge as Japan’s demographic trend continues. That’s why it’s so important to consider the local government before deciding where to buy a property. If they demonstrate strong leadership, entrepreneurship, and a willingness to change, there is a chance they will survive. Otherwise, they may face the same fate as many villages around Japan are already experiencing.
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Conclusion
Rei: Wow, honestly, this has been so eye-opening for me. Thank you, Jarrod. Is there anything else you want to say or conclude with?
Jarrod: I'm kind of in a midway position between being a Japanese resident and a foreign business person. I have an interest in restoring these homes and making them productive, generating profit that can bring value to customers and hopefully to the local people in the neighborhood. But the other half of me also wants to live in the place, nurture it, love it, and enjoy it.
Rei: That's really cool. Thank you so much for sharing your experience and insights with us.
Jarrod: Thank you for having me. I hope my journey can inspire others to explore and invest in Japan's unique property market.
Rei: Absolutely. This has been incredibly informative and inspiring. To our readers, thank you for joining us. If you want to know more about investing in Japanese properties, stay tuned for more articles and interviews. Until next time, may your dreams of finding the perfect home become a beautiful reality. Bye-bye!
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