- April 26, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Considerations Before Purchasing the Property
Hi all, I am currently in the process of deciding whether to purchase a house and would appreciate your input on my decision-making process.
#### Background Information:
I am a 42-year-old US citizen and permanent resident, employed full-time at a public university. I am married with two preschool-aged children.
#### Property Details:
I am looking to buy a used home from https://selcohome.jp/, which is 26 years old but in good condition. The asking price is 18m yen, and I plan to make an offer starting at 25% less. The property is a 4LDK with a 470sq. m piece of land, south-facing, and features 2 carports. It has had recent upgrades, including a new bath and plumbing, siding repainting, and an eco-cute water heater.
#### Pros and Cons:
Positive aspects of the property include its proximity to my workplace, ample garden space, and overall good condition. However, there are concerns about its location near a cemetery and being far out in the countryside. Additionally, the presence of bamboo behind the house could pose maintenance challenges in the future.
#### Reasons for Considering the Purchase:
1) I am considering buying this property as a long-term investment. I believe that if I were to change jobs, I could pay off the loan and rent it out to mitigate any potential financial losses.
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2) I prefer to maintain liquidity and invest in index funds rather than tying up a large amount of capital in real estate. This property allows me to keep my mortgage manageable and allocate funds to other investment opportunities.
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3) With a mortgage on an 18m yen house over 35 years, monthly payments would be lower than renting a similar property. This affordability factor influences my decision to purchase.
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4) The affordability of this property would also allow me to allocate more funds towards my children’s activities and well-being, providing a better quality of life for my family.
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Considering the above factors, along with the possibility of buying a new or newer pre-built house, I seek your advice on whether there are any aspects of my decision that require reconsideration. Thank you in advance for your input.
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1. Before buying a house with kids, check the schools that they will attend. Like if the house is on one side of a city / ward line than the other then it will determine which elementary school, middle school, and high school they go to by default. Going to a shitty elementary school, which the countryside often has, will start them off in a more difficult place in life. Some yochien and hoikuen also have limitations on where you can live.
2. At 26 years old, you are mostly paying for the land. If you go to sell it down the line, the value of the house will probably be zero. Consider that when you are looking at prices around the area.
3. Pay to do a third party inspection in addition to the one from the real estate agent. The inspector will crawl through every inch of the house including under it. They are kind of pricey, like 10 man yen but it can save you a ton of money and headaches in the future. Even for the newer house you are looking at, you should do it.
If he was DIYing a lot, including a separate building, have you confirmed everything has the correct permits and inspections done?
BTW, why is the location next to a cemetery a minus? I’d consider that a plus. You’re guaranteed quiet at least on that side.
All in all, this sounds like a great deal.
Just a quick aside on your second option of buying and selling for higher – you won’t. Unless the land is crazy hot and people are vying to purchase, you likely won’t get more than what you paid for.
The location and conditions of the home you’re looking to buy for 18m sounds amazing, actually. Having that much space to do stuff in the yard is great. If there’s some type of public transit (buses etc.) nearby so your kids can be independent down the road, that’s good too.
One thing I’ve heard about purchasing older homes is that banks are less willing to give good rates for them, or possibly demand a higher down payment. They may also not be willing to do a flat 35 due to the age of the home. So keep that in mind – but definitely shop around at a bunch of banks. I have a friend who bought a home in Yokohama but the only bank that would work with them is this tiny regional bank in Miyagi.
Definitely walk around the area – you’re buying a neighborhood, not just a house! Although perhaps you’re already familiar with the area.
One thing I’d be a bit concerned with is whether the house is still compliant with various zoning restrictions on house size and such, after the previous owner’s DIY work. See if you can get that assessed.
I think your overall idea of buying less than you could afford is *extremely* prudent. Hard to give much advice on the property itself without knowing the specifics, but a fairly good-sized property for Y18 million is decent – of course, it’s probably that cheap because of the cemetery and the inaka location, and those factors are unlikely to change.
Could just look at it as a cash flow problem, of course: If you spent X on rent for 30 years, after 30 years you would have spent X, and you own nothing.
Or you can buy a house, and after 30 years you spent Y, and have a house. Adding in property taxes, maintenance etc, roughly how far would the property (house / land) need to go down in value before renting was the prudent choice?
18m sounds pretty cheap and 26 years old is I believe, right after the earthquake norms were upped after the Kobe earthquake.
On paper this sounds really solid imho.
If the place make sense for you and your family in the medium to long term, I would go for it. Borrow and include renovations to make the place a good as you can.
Do you know how long the home has been on the market? Are there any houses nearby for sale right now? How close to the cemetery? Anything blocking the view of it? What region of Japan as well?
Bamboo isn’t too much of an issue – you just gotta make sure you chop it when it comes up in the spring. If you chop a plant young it will deteriorate. Old bamboo just remains dead below the ground.
As far as your reasoning.
1) If you do switch jobs are you in an area where someone would want to rent the house? If people aren’t buying the house because of the cemetery then I don’t see Japanese folks wanting to rent it.
2) Makes total sense. A house in Japan probably shouldn’t be seen as an investment unless you believe the area you are in will see growth in the future.
3) Think about maintenance and how it may tie you down.
4) This is always good. How would the house be as far as schools are concerned?
Schools are most important. And your commute if you change schools.
Aside from that. 18m yen is not a lot of money. Don’t sweat it.
You seem quite certain of your ability to always make money in the stock market. That’s interesting. Best of luck!
Since the house has almost depreciated to zero at 26 years, as historically Japanese houses were ammortized to 20 or 25 years (more recent 30- or 35-year mortgages notwithstanding), is the ¥18M (or ¥13.5M if seller agrees on your 75% offer) a fair price per tsubo / m2 of _land only_ in that area?
That is how other potential buyers will calculate the value and their offers.