Pros and Cons of buying back in the US
Rental Property Investor · Minato-ku, Tokyo Prefecture · Member since 2017 · 42 posts · 17 votes
Although I think I have already decided on my actions, I wanted to reach out and get some comments from other BPers. I have been living in Japan for 11 years and recently married. I do not see myself returning to the US, although I am not planning on giving up my citizenship. I used to own long distance when I lived in the US but sold them all for personal reasons when I moved to Japan (bad mistake, but lessons learned and personal situation required that).
Should I return to buying in the US or continue buying in Japan (looking to pick up another apartment building within a year)? Since I won’t be returning, getting the cash out of the US and back to me in Japan when needed is one concern. Since I keep all real estate (and associated credit cards) in a separate account, I do not want to use a credit card to pay for trips etc.
I already file taxes in Japan and the US, and can get through the taxation on different properties and different depreciation schedules, but wondering if people have any thoughts on the best path forward.
Appreciate everyone’s thoughts.
Yo Bruce -
Invest in both, obviously ;) How's Tokyo these days? This doesn't directly address your question, but here are some thoughts:
While I fully agree with the fine gentleman from Hawaii ('sup Kiley?), I'd also consider the current lending environment in Japan. Fresh on the tails of the Suruga Bank debacle, I understand that Seibu Shinkin is also under investigation. Seibu Shinkin was another one of the few banks that was willing to lend on investment properties at terms that make it feasible - not the least of which is disregarding Japan's "useful life" tax rules as guidelines for the term of a loan.
It's my understanding that other banks are also increasingly skeptical of making the loans that exceed the artificial useful life, and that banks are looking for more in terms of down payments. Anecdotally, I was looking into selling one of my J-properties, and the couple of brokers I spoke to basically told me to hold off because there's no way a buyer could find feasible financing in the current market that would bring me a purchase price to my liking. I don't think that'll affect a refi now that you have PR. I presume you have contacts already, but if you need I've worked with Chiba Bank and Yokohama Bank, I'd be happy to introduce you.
And you've hit on another big issue - how does the foreign national spouse manage US properties when the US citizen dies? Let me know if you have thoughts there, it's something that's on my mind, and on that of a few of my buddies.
In the end though, for me I'm skeptical to put my cash into Japanese properties, where you're more likely to see actual depreciation.
The answer here is going to be ... it depends
1) You need to evaluate the market in Japan (versus one in US). While I understand it is a broad term, but pick locations where you potentially plan to invest and compare as to what are you gaining by investing in one versus the other?!
What are the advantages and disadvantages of going into one versus the other. How easy/difficult it'll be to execute it for each.
2) Maybe the answer will be - invest in both?! But that entails doing it more or less passively in one or both markets. So this entails, selecting the niche for your real estate investing adventure - whether it'll be syndication, lending funds, buying properties and what type of properties - it is all on you to decide and weigh in.
Although I think I have already decided on my actions, I wanted to reach out and get some comments from other BPers. I have been living in Japan for 11 years and recently married. I do not see myself returning to the US, although I am not planning on giving up my citizenship. I used to own long distance when I lived in the US but sold them all for personal reasons when I moved to Japan (bad mistake, but lessons learned and personal situation required that).
Should I return to buying in the US or continue buying in Japan (looking to pick up another apartment building within a year)? Since I won’t be returning, getting the cash out of the US and back to me in Japan when needed is one concern. Since I keep all real estate (and associated credit cards) in a separate account, I do not want to use a credit card to pay for trips etc.
I already file taxes in Japan and the US, and can get through the taxation on different properties and different depreciation schedules, but wondering if people have any thoughts on the best path forward.
Appreciate everyone’s thoughts.
Hi @Bruce Crawford
The advantage to REI in Japan is, in my experience, the financing terms. Since you have been living in Japan for 11 years I assume you have permanent residency status at this point?
There is an active community of investors in Japan that host meetups in Tokyo. Try the search below and reach out to a few of the JP members.
https://www.biggerpockets.com/search?utf8=%E2%9C%9...
Best of luck!
Kiley
@Alina Trigub Thanks. I think I can do better in the US but getting my money back to Japan is my current thoughts and also how to ensure my wife gets the properties when I die (she's not a US citizen and doesn't have a SSN). Already investing in Japan and will probably continue to do so and add some US properties and figure out the death stuff later (sounds morbid, huh? hahaha)
@Kiley N. Thanks Kiley. I am already quite active with the local BP meetups and pass along the details to as many people as possible :-) I just got PR last year - it took a full year with lots of submissions of additional documents. I will refi 2 buildings that I bought prior to PR at a higher rate, then consider more here and back in the states. Even without PR I was able to secure 3.5% financing which is pretty high for here, but the cashflow worked. Now with PR, I am hoping to get these below 2%.
Yo Bruce -
Invest in both, obviously ;) How's Tokyo these days? This doesn't directly address your question, but here are some thoughts:
While I fully agree with the fine gentleman from Hawaii ('sup Kiley?), I'd also consider the current lending environment in Japan. Fresh on the tails of the Suruga Bank debacle, I understand that Seibu Shinkin is also under investigation. Seibu Shinkin was another one of the few banks that was willing to lend on investment properties at terms that make it feasible - not the least of which is disregarding Japan's "useful life" tax rules as guidelines for the term of a loan.
It's my understanding that other banks are also increasingly skeptical of making the loans that exceed the artificial useful life, and that banks are looking for more in terms of down payments. Anecdotally, I was looking into selling one of my J-properties, and the couple of brokers I spoke to basically told me to hold off because there's no way a buyer could find feasible financing in the current market that would bring me a purchase price to my liking. I don't think that'll affect a refi now that you have PR. I presume you have contacts already, but if you need I've worked with Chiba Bank and Yokohama Bank, I'd be happy to introduce you.
And you've hit on another big issue - how does the foreign national spouse manage US properties when the US citizen dies? Let me know if you have thoughts there, it's something that's on my mind, and on that of a few of my buddies.
In the end though, for me I'm skeptical to put my cash into Japanese properties, where you're more likely to see actual depreciation.
Hey @David Gotsill - good to hear from you. Lots going on over here. . . . had one of my PM's go bankrupt on me with no warning. Lost 1 1/2 mo rent while I scrambled to get a new PM. Luckily I already dumped them for my Yokohama place so the loss is only on one (but they f'd up the other bad enough to cause me to dump them and work on filling that one). Let us know if you come back to visit - we'll have a special meetup ie beers ;-)
Thanks for the news on Seibu Shinkin - I have been so busy with work that I haven't followed it. Your suggestion is exactly where I am in my thinking - invest in both! I will PM you once about Chiba and Yokohama banks for the refi or contacts for a future purchase.
Also hoping someone can chime in on how a non-US spouse can keep / manage properties in the US after the US owner dies.
Hope SF is treating you well. All the best.
Bruce