Soliloquy of the President [land usage] vol.37
2 consecutive months "overseas real estate" seminar held
On 11th November (Wednesday) was the “Hawaii real estate” seminar and on
20th December (Sunday) was “Los Texas real estate” seminar. Everybody
heard about recommended overseas real estate investments in Johobaru,Malaysia or New Zealand or in the past in Australia or in China. I invested
in overseas real estate in 8 countries over 10 units during the past 20 years
but it did no go quite well. It is a difficult thing.
I paid a lot of tuition fee. I grabbed the points or “tricks” finally after 20years. If we understand the overseas real estate investments then buying
land or build rental apartments in Japan becomes silly. Overseas real estate
investment is “advantageous” over the Japanese “large amount of tax”. FirstI rise the good points, next the bad points and finally the cautions. Pleasestart your overseas real estate investment those of you whom been convincedbased on that. I will consult you (3% consulting fee).
First the good points, ① it is trivial now in Japan that “capital gain” hascapital benefits. In Hawaii is an average 6% and 4% in the US mainland.
This is amazing. 100 million Yen will be 179 million Yen in 10 years by 6%compound interest. In 20 years it will be 321 million Yen. ② An 80 years old
man can have a 30 years loan in the US. Half of a 100 million Yen property
must be self financed and the remaining 50 million in a 30 years loan. ③The
rental income will be between 8% and 13%, that means 8 million to 13 million
Yen by a 100 million investment. 4% to 6% remains after paid back the loandebt. The self capital of 50 million Yen will return after 10 years. ④ The“escrow system” is in the US, not like in Japan where one can be cheated.
Public institutions keep record of prior sales and price records of a given unit,
that’s why we know the history of the property. The buyer’s commission isfree, the seller pays 6% fee. ⑤ An excellent tax saving is that a 23 years oldwooden building costs 20 million and yearly 5 million Yen is recognized asexpense (depreciation is 4 years). In the case of 2 buildings in Japan then 10million tax burden and the profit is zero. And this wooden building can besold for 25 million Yen. 5 million yen is the income tax when it is sold but if
you buy another building then it is free (1031 system in the US). My property
in Hawaii is 450 million Yen, the building is worth 3 billion and theamortization is 9 years, 33 million Yen tax deduction from the Japaneserental income each year. A grate tax saving.
Now the bad points are. ① borrowing interest rates is 5% higher whencompared with 1% in Japan. ② The property is in overseas so it is not easy
to go and see, unlike me who spends near 100 days a year overseas. ③ The
most disturbing thing is to be cheated by a broker who see that one is anamateur. ④ A good “living trust” contract is needed and decide what to do in
an unexpected event. Otherwise, the property will be frozen for 2 or 3 years incase of death. ⑤Since the legal customs are different from that in Japan, it
took me 20 years until I understood. Please be careful.
At last here are the cautions. ① English knowledge is absolutely necessary.
That’s why the interpretation of a trusted real estate professional isnecessary. ② Next is an absolutely trustworthy broker. A company withmoneymaking principle is absolutely useless. It is har to understand that in
one week or one month, I been fooled a lot, so please consult me. I canintroduce anywhere in the world.
After 25 years in the Japanese property market, one must challenge inoverseas real estate. I pray for good luck.