Everyone talks about entry: how to find the property, how to finance it, how to get the yield numbers right. In our experience, far less gets said about the exit, and that’s a problem, because in Japan the tax bill on selling a short-term rental can swing by more than 19 percentage points depending on a single number — how many years you’ve owned it.
I’ve been through this calculation for our own properties and for owners who ask us to help them think through timing a sale. The short version: the exit is not a footnote to your investment plan, it’s a variable you should be modeling from day one.
Every foreign investor I talk to gets the property search part figured out reasonably fast — agents, listings, even negotiating price isn’t the hard part. The hard part is the phone call that comes after: “Congratulations, now how are you paying for it?”
Financing is where a lot of otherwise-solid deals for foreign buyers in Japan quietly die. Not because the numbers don’t work, but because the loan never materializes on the terms the buyer assumed going in.
A few years back, we were evaluating a small wooden house in a Tokyo suburb — decent location, ten minutes’ walk from a station, priced noticeably below comparable units nearby. The gap felt like margin. Then we looked harder at the listing details.
The building was from 1975. That six-year gap — 1975 vs 1981 — turned out to change the entire investment calculus.