Report #17: Gold in the hills
Join us on a journey to find the priceless autumn scenery unique to rural Japan
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What does Akiya & Inaka actually do? Our new explainer video breaks it down
We continue to get an unprecedented number of inquires at Akiya & Inaka. However, it is sometimes unclear to clients how we actually work. Check out our latest video where we break it down for you in an easy to understand explainer video.
Taking a step back to revisit the allure of rural Japan
Why are akiya so fascinating? Why are they so cheap? Are you crazy, or is there actually a massive opportunity at your doorstep?
The fascination is real.
Even Japanese people are starting to take note in the global interest in vacant houses. This is reinforced by consistent TV spots where Japan’s major TV networks have featured our service on news programs. We are always humbled by these opportunities, and it has fueled an ever-growing number of Japanese nationals from across Japan reaching out to us with their akiya to seek for a potential buyer.
The low prices are a complex issue, and there is more than meets the eye.
The super cheap akiya are perhaps the most intriguing, but you have to take extra care before jumping on these low-priced houses. It’s true that we have sold akiya at a wild variation of prices, from 3 million yen to upwards of 40 million yen.
We have a simple methodology for discovering the best deals. The key is in the building. Most akiya are sold for the book value of the land. Once a wood-framed house reaches 25 years of age, it is considered valueless by Japanese standards. However, new construction in Japan is quite expensive. As you might imagine, most of our recommended properties are older than 25 years, so what you basically get is a free building for the price of the land. But if a building is free, does it actually have value?
Here’s the equation:
Land value + residual value of house - projected renovation costs: actual value
We judge the residual value of existing structures by the quality of the build, and subtract that value by the replacement cost. We are focused on custom builds, not the prefab houses that aren’t built to last. To build anew, the average construction cost is on average from ¥210,000 to ¥300,000 per square meter. Your average Japanese house is 100 square meters. That puts the average replacement cost at ¥21,000,000 to ¥30,000,000.
Then we have to subtract the projected renovation costs from this number. On average, a basic renovation costs ¥3,000,000, and a complete interior and exterior rejuvenation can be upwards of ¥30,000,000. This is where we have to make a value judgment based on what needs to be fixed. This depends on the client’s preference, so each case is different.
Once this value judgment has been made, now we know the actual value of the house in an objective manner. This is our own methodology, and it can be debated, but that is the secret sauce of how we assess whether a property is a good deal or not.
So, are you crazy or onto something spectacular?
Obviously, we believe in the value of old Japanese houses, and we strongly believe that the juice is worth the squeeze. While owning property becomes out of reach for an increasing number of people across the world, in Japan it’s a totally different situation. Especially with the Yen at historic lows, there is no reason to stay on the fence if buying Japanese property is something that you have resolved to do.
Whether it will be a profitable endeavor or not is yet to be seen. However, these old Japanese houses can either become your dream home, or will likely be demolished as domestic buyers curiously continue to prefer new construction. We think that there is both actual value and a satisfying lifestyle investment that can be found in these homes, whether they’re 25 years old or 250 years old. We remain committed to matching buyers with quality old houses that deliver the best that rural Japan has to offer.
Autumn foliage in a Japanese garden
As the Kanto region is now in the midst of peak autumn colors, it is a majestic time to experience Japan. From my own Japanese garden, I love to watch the colors change right before my eyes. With the pesky weeds of summer whacked and a bit of pruning, finally seeing the colors come to life is truly rewarding.
“There’s gold in them there hills!”
If you are tired of seeing properties in Saitama, I apologize in advance. It’s just so convenient to Tokyo and has so much to offer, it’s hard to ignore the great deals in the prefecture. Saitama is often the butt of jokes given that the majority of the population lives in suburban areas that aren’t exactly areas of natural beauty, but it is the very reason why the deals are so good!
Blah blah blah, what’s so good about it?
Nestled in the picturesque rural reaches of Saitama, Japan lies the enchanting town of Yorii. With its rich history, stunning natural landscapes, and warm hospitality, Yorii offers a unique and unforgettable experience for travelers seeking an authentic taste of traditional Japan. The terminus of the Tobu Tojo Line, Yorii presents you with stunning landscapes like this one, with direct train service to Ikebukuro in central Tokyo.
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