Question Has anyone bought a house in Okinawa?

[David]

I'm looking to buy a house in Okinawa and wondering what the first bank I should take a trip to should be. I have JA and Okiginkou. Though, I will definitely shop around to get the best contractual terms.

I plan on putting 12%-40% down and wondering if this is sufficient enough too.

What bank did you end up using, what rate did you get, and how much did you put down for a loan of what size?

 

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[island cyclist]

We bought a house here in Japan the interest rates are super low to give you an idea we bought a $300,000 house and our payments were only $700 a month you have to really shop around for a bank that will approve you your wife will have to be a cosigner your income will determine whether or not you'll get a loan you'll be considered head of the household but your wife is a Japanese national so she will definitely be the one who will qualify for the loan but both the incomes are necessary most loans are for 35 years but it's best to pay off your house in 10 years hope this helps. And you'll be head of the household you'll have the legal ownership of the house but the banks will require your wife to be part owner of the house too so don't expect to be 100% owner of the house

 

[David]

we bought a $300,000 house and our payments were only $700 a month

We're looking into the neighborhood of $800,000~ with a downpayment of $100,000 as it will not only be our home on 100+ tsubo, but will also have 4 rentals on the low end of the design, provided the construction costs of anything larger is too much.

your wife will have to be a cosigner your income will determine whether or not you'll get a loan

Does being a permanent resident have no role in this?

most loans are for 35 years but it's best to pay off your house in 10 years

As it'll be a rental—plus our home—we plan on paying a 35 year loan off in approximately 12, if there aren't any early pay off penalties, as we'll still face taxes, etc., on it because there will be about $2500/mo in rental income and the "unexpected" such as having to replace someone's air conditioner.

the banks will require your wife to be part owner of the house too so don't expect to be 100% owner of the house

The house and land will be my wife's as it's the only "life insurance" that I can get in Japan due to not being able to enter a contract for a policy with any company.

 

[island cyclist]

Ok. Just came on line. In our case both the wife and I had to sign for the loan basically she's the owner of the business and I being head of the household what they say legally in Japan would be in my name but my income was not really that high enough to substantiate the the cost of the loan so it was mandatory for both my wife and I just sign the loan papers personally I think you'll have to go on the the title of the house with your wife and it's in my opinion it's best to have it that way anyway your life insurance policy I'm not too sure what you mean by that.

 

[David]

Ok. Just came on line. In our case both the wife and I had to sign for the loan basically she's the owner of the business and I being head of the household what they say legally in Japan would be in my name but my income was not really that high enough to substantiate the the cost of the loan so it was mandatory for both my wife and I just sign the loan papers personally I think you'll have to go on the the title of the house with your wife and it's in my opinion it's best to have it that way anyway your life insurance policy I'm not too sure what you mean by that.

I'm sure my income meets the threshold for the loan, especially with 1/8th down.

That said, I don't mind if she's on the loan or not for as long as I pass away before her, there's no heartache of transferring property, which may include taxes (I'm unsure on "death tax" in Japan).

 

[David]

your life insurance policy I'm not too sure what you mean by that

I can't get an actual policy that I pay into monthly in Japan as she can. Therefore, the next best thing is an asset that appreciates in value.

These are arbitrary numbers to describe what I mean: Say I die and have a property that I paid $100 for and at the time of death it's worth $300 or can be utilized for something as passive income (a parking lot for instance). She then has the option of selling it and essentially gaining $200 or to make $5 a month on.

 

[island cyclist]

OK. I understand. Taxes are not that high. So you are building ? You do realize there is a shortage.of building material. Finished houses due to lack of building materials here so I'd be careful if you're going to start building now if so make sure all the building supplies have been ordered and delivered before I leave out any cash and this would be a stipulation in a loan agreement that would end up paying the contractors

 

[David]

So you are building ? You do realize there is a shortage.of building material.

Thanks. Good information to know!

Yes. We are planning on building a more modern apartment complex that is concrete supported by steel beams as opposed to all concrete, or whichever is cheaper. Though, knowing that there could be a shortage of either on island does make for a good question to ask the contractors prior to entering into an agreement!

 

[Bernice W]

I'm looking to buy a house in Okinawa and wondering what the first bank I should take a trip to should be. I have JA and Okiginkou. Though, I will definitely shop around to get the best contractual terms.

I plan on putting 12%-40% down and wondering if this is sufficient enough too.

What bank did you end up using, what rate did you get, and how much did you put down for a loan of what size?

Do you know Chris Willson? If not, I can ask him if he’d be willing to talk to you about it. He bought a house a few years ago up in Motobu.

 

[David]

Do you know Chris Willson? If not, I can ask him if he’d be willing to talk to you about it. He bought a house a few years ago up in Motobu.

No, I haven't heard of him. Any info on the buying process to banks would be nice.

 

[Square]

No, I haven't heard of him. Any info on the buying process to banks would be nice.

Have you guys made any headway on this? And is that right that property appreciates in Okinawa? Of course it's generally the case in Canada/US but I was under the impression land in Japan has been depreciating the past few decades. Or is Okinawa just an exception? We are still going back and forth on whether to rent or buy so some history of property prices in Okinawa would be a huge help.

 

[island cyclist]

Although not in Okinawa, but here in Yamaguchi our experience with getting a loan with a bank went fairly smoothly. You'll have to show an income with what you filed your income on there in Okinawa. If you can't do that, perhaps you'll rent first for a couple of years. Important to always file your taxes in Japan.
The other route is to pay cash for your house. Nothing like not having a mortgage to pay. Also, at least where we are, the older you get, your real estate taxes actually go down.

 

[David]

Have you guys made any headway on this?

Yeah, we were sadly denied by the banks. We'll turn to most of our free cash in a few years and combine that with a 10 year 5% loan offered by the construction company, which is so short and high as they take a business loan.

Banks work a bit differently here in that you apply for the full amount before even discussing how much you're going to put down (1/3 to 1/2, which American banks would salivate at).

And is that right that property appreciates in Okinawa?

Property seems to always rise here. I've always speculated that we were in a bubble that would pop near 2020 because the rate in which property keeps rising is exceeding high.

So while it'd be nice to get a sale, being wrong about 2020 and the correction happening in 2030 instead wouldn't hurt much as I would still be buying it underpriced, so to speak.

The price for construction has been driven up the most with 3.3 sqm of reinforced concrete costing ¥1,000,000. This price makes wood homes look good, except the RC starts to depreciate after 40 years while wooden drastically after 20. I can easily see this surpassing ¥1.5m with supply and demand as time passes as well, further taking away any savings on property.

Another thing that I need to consider is the strength of the U.S. dollar as my savings is primarily that. It's good now, but I would have never pulled the trigger at $1 to ¥74—which is where we may be heading again—unless my growth stocks far outpace that.

 

[island cyclist]

David, you want to find out about the requirements about the maintenance cost that the construction may include in the loan agreement.
termite report
paint schedule of the house by them
approval of any additions or major repairs during the period of the loan
whether if solar panels will be require in the future by regulation changes to the law for new construction

just some food for thought

 

[island cyclist]

I remember the 74 yen for the dollar. It was a killer.
Now it seems to be at around 109 but to exchange expect 104, luckily our SS is based on the high amount..

 

[David]

David, you want to find out about the requirements about the maintenance cost that the construction may include in the loan agreement.

The loan is not the same as the warranty provided by the construction company. Though, they do have a fairly nice policy to fix and repair issues that arise. As far as termites go, I don't think that'll be a problem with reinforced concrete and modern materials.

Now it seems to be at around 109 but to exchange expect 104, luckily our SS is based on the high amount..

It's never the advertised price if you exchange $10,000 or more. More likely than not, in the instance that I bring in 6 figures to convert, I may get the ask or a yen below. This is because, if that were to be $200,000, they could have 5x leverage and trade $1,000,000 to reap all profits of that which would far exceed 1 yen.

 

[island cyclist]

The yen went up too fast this time. At 109 now. That is good for us when we get paid in yen for SS here, at least I do anyway. Is it the same for you.

 

[Pascoflyer]

Hi found this while doing some research on building a house here. Not sure if this is helpful, but it seems some construction companies are trying to find ways to set up homes for foreigners who can't get mortgages. Details are left out and it might well be the very thing you're already doing but I thought I'd share. Build your Dream House on Okinawa! | Okinawanderer Okinawa News travel

 

[David]

Thanks, @Pascoflyer. We actually just closed on a ¥27,000,000 mansion paid in full (no mortgage). This purchase hopefully allows us to have "liquidity" in the future as the bank could see it as a rental asset when the time comes.

Hopefully, we're not in it for much more than 5 to 10 years while we save the difference of our current rent to our dues at the mansion and taxes. This extra money, put along with our traditional savings amount will definitely speed up the process to get some money flowing in.

When the time comes, I'll either liquidate the mansion and add that to the cash saved for a new place or rent it out for income and use the savings as a down payment while the rental income pays for the mortgage I could have afforded without it anyway.

Just hoping the banks don't see me as a peasant anymore cause we could never get to the "downpayment" part of negotiations which were always around 30-40% of places that we liked.

 

[David]

Oh, and I did end up finding that link.

Kyan is a borderline shark, but they have to be. Instead of getting a traditional home loan, they go out and get a business loan with 3% interest over 10 years. They then pass this on to the customer at 5% interest over 10 years.

Even if I had a $250k downpayment, that would pay for the land ($100k) and leave me with just enough for 15 tsubo, which is about 3 tsubo smaller than most average apartments. I would want about a 40 tsubo house if anything at a cost of $10,000 per tsubo for construction.

To get this construction through Kyan, with my wants/needs, it'd be a minimum of a $250,000 loan (40 tsubo - 15 tsubo * $10,000) as that just covers RC (concrete construction) and not grading the land, etc. Just from this perspective alone, my monthly payment would be approximately $2650/month for 10 years. Insane!

Maybe I will use Kyan or shop around for cheaper construction (less than $10k per tsubo) or find a nice concrete base house and reform it instead for much less.