A lot of real estate agents have market the properties in Japan as high and stable return, from 4% to 10%. However if you consider the purchasing cost and taxes, the return will be reduced by 30 to 50%.
Let’s go through the exercise based on 10% gross return and with 100% vacancy rate
|Withhold tax for foreigner||20.42%|
|Property Management Fee||6%~10%|
|Building maintenance and co-op fee||10% ~ 15%|
So with the above expenses, you will only get 5.5%~6.4% net return. The average vacancy rate in Japan is 14%* (lower in Tokyo and Osaka), 5.5% return will be far-fetched.
*vacancy rate in Japan： http://www.fujitsu.com/jp/group/fri/en/column/message/2015/2015-06-30.html
Now what if you change the regular rental to vacation rental making use of platform like Airbnb?
Taking Kyoto, one of the popular tourist hot spot, as an example.
The average price 10,143 yen per night and the average 182,574 per month
|Number of Guests|