FICO, experience, and LTV are also factors but this is the basis of the loan.

You might find that installing a mini-split system, properly insulating, and ensuring the finishes match the main home’s quality will make a difference in how the appraiser views it.

What’s your main goal—cash flow, appreciation, or both?

This has to do mainly with the timing of property tax payments for your own home (not for your investment properties) and your charitable donations.

The main reason for this is to continue to do medical missions around the world  even when I'm dead.

2) Maintenance Reserves: So many factors here to consider!

My main concern with the Japanese market is that I really know nothing, and I find it a bit hard to find information about it, but I guess I also know "nothing" about property markets anywhere other than maybe Hong Kong. 800 square feet is not tiny by Hong Kong standards, you are absolutely correct, but just as you mentioned we have a live-in helper and are hoping to start having kids about 1.5 years later.

If cash flow is your main driver, not sure how well the Madison, WI market would stack up. 

Well worth the money, plus you will have already factored that expense in to your cash-on-cash requirements to justify a purchase decision)4. 

The baby on the way should not factor into your decision.