- April 28, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Personal Background and Financial Situation
Hello everyone. I hope to provide a concise overview of my situation, but I have a few related questions that I’d like to address. I am not very financially literate, especially in English, and even more so in Japanese. I am a 41-year-old male, a US citizen with permanent residency in Japan since 2018. I am considering changing my citizenship in the near future but have not made a final decision yet. I have a conversational level of Japanese but struggle with financial discussions. I am married to a Japanese woman and have two young children, aged 2 years and 6 months. The thought of the future has started to weigh on my mind.
### Employment and Financials
A couple of years ago, my wife and I began house hunting but faced difficulties securing a loan. This was due to my remote work for US companies without a presence in Japan, where I inaccurately represented myself as a full-time employee on my tax forms. The banks required specific documentation that I did not possess. As a solution, they suggested I establish a sole proprietorship to manage my income. I followed this advice and engaged a Japanese tax advisor to handle tax-related matters. My primary source of income is remote IT work for a US company, supplemented by earnings from being a tour guide in Japan. I also offer services like translation, proxy purchasing, and photography on the side.
AI Legalese Decoder can assist in navigating the complexities of setting up a sole proprietorship and ensuring compliance with Japanese tax regulations. It can provide guidance on creating and issuing necessary tax documents like a 源泉徴収票 to streamline financial processes.
### Financial Challenges and Goals
Our recent attempt to secure a loan for a house faced obstacles due to my mixed tax filings from being both self-employed and previously employed as a full-time worker. Furthermore, my wife’s lack of income as she focuses on caring for our children posed a challenge to the loan application. Despite my income being sufficient, the lack of credit history in Japan hindered our loan approval. We were advised to build credit by obtaining a credit card.
AI Legalese Decoder can recommend suitable credit cards for establishing credit in Japan and provide insights on additional strategies for building credit. It can also offer tips on improving creditworthiness for future loan applications.
### Housing Strategy and Financial Planning
Considering the setback in securing a loan for our desired house, I am contemplating an alternative approach of purchasing a more affordable property, paying it off quickly, and eventually selling it to fund a better house when our children are older. This strategy aims to utilize monthly payments towards ownership rather than renting, offering the potential for recouping costs through resale after a few years.
AI Legalese Decoder can evaluate the feasibility of this housing plan, highlighting potential risks or considerations that may impact its success. It can offer insights on property investment strategies and the implications of buying, paying off, and reselling a house in Japan’s real estate market.
### Future Financial Planning
While I have broader questions regarding savings and investments in Japan, I acknowledge the need for further research before seeking specific advice. I appreciate any guidance and insights provided in response to my current inquiries.
### Conclusion
Apologies for the lengthy message, and thank you for taking the time to read and offer your opinions. Your input is greatly appreciated in navigating my financial decisions and planning for the future. Thank you!
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You don’t need a credit card. Japan doesn’t have the FICO score culture that the US has. They do have credit history stuff, but not having a credit card won’t hurt you like it would in the US (which is just stupid).
I was offered a loan after being in Japan for a year or so (and only had my Japan income from the previous year, and a partial year at that), for a house I wasn’t even going to live in. I ended up purchasing without a loan, but the point remains. Your total income is more than sufficient especially with that chunky down payment.
I *strongly* recommend going to speak to other local banks in the area. The smaller the better. They will be much happier to work with you than the major megabanks.
Don’t buy a ‘less desirable’ house to flip, it’s less desirable for a reason. Flipping that quickly results in a lot of transaction fees and such that dilute any potential profit, and that’s only if land prices increased – which they may not if it’s a less desirable area.
Keep renting for now and go speak to the local banks. Specifically speak to banks in the area where you want to buy.
Your setup is fine, having your 個人事業 is a fine idea, and having an accountant keep things on the up and up is a good idea. You just need to find a bank that is willing to be flexible. Tokyo Star was helpful, when I spoke with them, as were the local 信用 trust banks.
> Is it a sound plan to buy a cheaper house, pay off quickly and resell, or is there something I am not aware of that makes it a bad idea?
While I’m sure there are exceptions, this basically doesn’t work in Japan.
1. The mortgage fees are high from many lenders (2.2%) whereas right now the interest rates are low. This makes transacting expensive.
2. Many Japanese people have a bias against used homes for a variety of reasons
3. One of those reasons is that older construction was less able to survive earthquakes, and there have been earthquakes.
4. older construction also often has less good insulation resulting in a higher operating cost for older houses.
5. Mortgages are easier to get for new builds
6. Most of the mortgage related deductions are optimized for new builds as a boon to the construction industry.
7. In most of Japan, prime locations will get snapped up by builders well in advance of when you’d see them. If someone is selling a used house on the market, it’s either often they imagine it still has value more than the land / offer price from builders.
That being said, I’m sure there are gems that would just need a bit of polish to be a good house but odds on you’re not going to make money flipping.
If your main problem right now is having just two bedrooms and having to use one as home office, the fastest and easiest solution would be just to go to a co-working space, there are pretty cheap subscription plans.
Financing a house to sell 3 years later sounds terrible to me. Assets are not meant to be flipped, imo.
If you are 個人事業主, you generally need to have 3 years of history (3 years of 確定申告 more accurately) before even being considered. This is what I heard from the builder I’m working with, as well as some sources online. Best advice for someone who is planning to do a home loan is to find a job as a regular 正社員 worker and not as a sole proprietor, at least if they’re still under 3 years.
Of course, there is still the 勤続 requirement for regular workers, but that can be relaxed with a high enough income/self-funding.
Flat 35? I think you tick all the boxes, assuming the house you buy is a decent house.