What are the key points when purchasing vacation properties in Japan? We will introduce the benefits of buying and how to use them after purchase.

Vacation properties in Japan, such as in Hokkaido’s Niseko and Karuizawa, are attracting significant attention from foreign investors and are considered an attractive investment.
Vacation properties offer not only personal use but also the potential to generate income by renting them out.
However, the ability to fully capitalize on the benefits depends largely on the property you choose.
In this article, we will clearly explain the key points, uses, and benefits of purchasing vacation properties in Japan.

Key Points for Purchasing Vacation (Second Home) Properties in Japan

Japan is a long country from east to west, and vacation properties differ significantly depending on their location.
Popular areas among foreign investors include Niseko, Karuizawa, and Zushi, but there are also many other attractive areas such as Okinawa, Hakuba, and Atami, each offering distinct features.
Just because a location is popular doesn’t mean it’s the best fit for you.
When purchasing, it is important to choose a location that matches your needs and objectives.

Here, we will introduce the key points to consider when purchasing a vacation property.

Clarify Your Purpose

First, it’s crucial to clarify the purpose of purchasing a vacation property.
The location and property you should choose will vary depending on whether you plan to use it for personal vacations, as an investment for rental purposes, or for living after retirement.
For example, even if it’s for vacations, the location will change greatly depending on whether you want to enjoy the beach in the summer or winter sports.
When considering purchasing a vacation property, you should clearly define the purpose and how you plan to use it.

Choose the Location Carefully

Once your purpose is clear, select a location that fits that purpose.
When choosing a location, it’s also important to consider the following points:

• Disaster risk
• Accessibility
• Growth potential

Japan is prone to natural disasters such as heavy rains, typhoons, and earthquakes.
For instance, typhoons can lead to flooding or landslides, while earthquakes can cause building collapses. The level of disaster risk varies by location, so it’s important to check hazard maps in advance.
Since vacation properties are often far from urban areas, transportation access can also be inconvenient in some cases.
Even if you purchase a property, if it takes several hours with multiple train transfers to get there, you may end up using it less frequently.
If you’re considering the property as an investment, it’s also important to check the area’s growth potential.
In high-demand areas now or in the future, you’ll have more options for utilizing the property when you’re not using it, and it may be easier to sell it at a favorable price.

Wagaya Japan offers multilingual support for foreign investors interested in buying and selling real estate in Japan. Please feel free to contact us.

Create a Long-term Budget Plan

Vacation properties come with maintenance costs in addition to the initial purchase cost.
Typical maintenance expenses include property taxes and management fees.
If you don’t consider these running costs, you may face worsening financial returns later, so it’s important to create a long-term budget plan in advance.

Plan for Property Management

For vacation properties that you don’t use frequently, it’s essential to think about how to manage the property during unused periods.
If the property is not properly managed while unused, it may deteriorate, and when you want to use it, you might encounter issues such as equipment failures.
Since vacation properties are often located in nature-rich areas, leaving them unattended can speed up deterioration.
Consider options such as hiring a management company or using the property for short-term rentals like vacation rentals during periods when you’re not using it.

Check the Property’s Condition

When purchasing a second-hand property, it’s crucial to thoroughly inspect its condition.
Since vacation properties are often used infrequently, they may be more prone to deterioration.
Also, some older properties may adhere to outdated earthquake resistance standards.
The current earthquake resistance standard in Japan is based on the “New Earthquake Resistance Standard” established after June 1, 1981, with further updates in 2000.
Properties built before May 31, 1981, follow the old standard, which increases the risk of collapse.

It’s recommended to have the property inspected through a home inspection or earthquake resistance diagnosis to check its condition and ensure it doesn’t require extensive renovations after purchase.

Be Aware of Local Regulations

Some vacation areas have unique regulations that may affect your plans.
For instance, some parts of Karuizawa impose restrictions on development to protect the environment.
In other areas, rental restrictions may be imposed by local management associations, which may prohibit renting out vacation homes.
If you’re considering renting out the property, make sure to research the regulations carefully.

Choose a Real Estate Agent Familiar with the Area

Navigating Japan’s laws, local regulations, and understanding the property’s condition can be challenging.
A local real estate agent with detailed knowledge of the area can provide valuable advice and information.
Choosing a reliable agent who is well-versed in properties for foreign investors and local market conditions can help you avoid mistakes when selecting a vacation home.

Wagaya Japan offers multilingual support for foreign investors interested in buying and selling real estate in Japan. Please feel free to contact us.

How to Use a Vacation Property in Japan

There are three main ways to use a vacation property in Japan:

• Rent it out during the vacation season to earn rental income
• Use it personally during the off-season
• Move to Japan and live in it after retirement

Rent It Out During the Vacation Season

Vacation properties in popular areas tend to see high demand during peak seasons and can generate significant rental income.
With the increasing demand for vacation homes driven by remote work in Japan, many people are looking for properties to rent on a monthly or yearly basis.
However, be mindful of potential local regulations regarding rental periods and methods.

Use It Personally During the Off-Season

You could rent out the property during the high season and use it for personal vacations during the off-season.
Since it’s your own property, you can enjoy the freedom of using it without the hassle of reservations or strict rules.
Of course, you could also choose to use it during the high season to enjoy the peak seasonal attractions without worrying about expensive hotel rates or difficult reservations.

Move to Japan After Retirement

Owning a vacation property also gives you the option to use it as a residence after retirement.
Japan is known for its safety and convenience, making it a suitable place to live after retiring.
Even in rural vacation areas, urban amenities are usually not far away, so you won’t lack essential services.
Choosing a vacation home with retirement in mind opens up more possibilities for your future lifestyle.

Benefits of Purchasing Vacation Properties in Japan

There are three key benefits to purchasing vacation properties in Japan:

• Relatively affordable property prices
• The ability to use the property whenever you want without worrying about peak season
• Potential for rental income

Relatively Affordable Property Prices

With the weakening yen, Japanese real estate is relatively affordable for foreign investors.
Even in popular vacation areas, properties in Japan tend to be more affordable compared to those in other countries.
Given Japan’s safe environment and growing inbound tourism, Japanese real estate is expected to continue growing in value, making it an attractive investment.

Use It Whenever You Want Without Worrying About Peak Season

Owning a vacation property allows you to use it at your own pace, without worrying about high hotel costs during peak seasons.
This flexibility to enjoy your property at any time is a significant advantage.

Potential for Rental Income

Since vacation properties are not used frequently, you can rent them out during unused periods to generate rental income, covering maintenance costs and potentially leaving extra profit.
High demand in popular areas ensures stable rental income, particularly during the high season.
However, it’s important to check local regulations beforehand, as some areas may have restrictions on renting out vacation homes.

Conclusion

Owning a vacation property provides a range of options, from enjoying personal use to earning rental income.
However, the characteristics of vacation properties vary greatly by area in Japan, so it’s crucial to carefully select a property based on your objectives, the property’s condition, and local regulations.
When choosing a vacation property, working with a trustworthy real estate agent will help you find the perfect property for your needs.

Wagaya Japan offers multilingual support for foreign investors interested in buying and selling real estate in Japan. Please feel free to contact us.