Investing in Japan

Hello fellow investors,

My partner and I have been looking into buying a ski lodge in Japan and have encountered a major hurdle that is preventing us from purchasing the property. We already have a 10% deposit for the property (as required by Japanese law), which would be cashflow positive with income from the ski season and a property manager that we can use to advertise and manage the property for accommodation. It would be ideal to purchase the property using a Japanese loan as they currently have lower interest rates and with income in Japanese Yen, there wouldn’t be any currency exchange impacts on the cashflow. However, for foreign individuals to be eligible for loans from Japanese banks, you need to be a reistered resident in Japan.

The definition of a resident is as follows:
“Any individual who has a domicile or owns a residence continuously for one year or more is classified as a resident. Among the residents, any individual who has no intention to permanently live in Japan and has had a domicile or residence
continuously for the period of five years or less is classified as a
non-permanent resident.”

Therefore, as we both live and work in Australia, we are not eligible for loans by Japanese banks.

Having done the calculations using Australian interest rates, the property will still be cashflow positive but not as high as with Japanese rates. We are currrently refinancing our properties to access more equity in our other properties, but we will still fall short of being able to buy outright. We were also thinking that we may have enough super between the two of us to start our own Self Managed Super Fund as this amount would make up for the shortfall. In this way, perhaps we could try to buy the property outright using the line of credit and Super.

Has anyone else experienced a similar problem? We would appreciate any advice or ideas about our proposed approach.

MLo