Successful Hands-Off Investment in Akiyas: Case Studies from Sumica Corporation

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In the last few years, akiya – vacant houses in Japan – have captured the imagination of individual investors around the world.

The number of akiya has increased steadily as Japan’s population is aging, and many adult children are not able to take care of formerly multi-generational properties. These homes are piling up around the country and in the statistics.

As of October 1, 2023, the number of vacant homes increased 507,000 from the previous survey in 2018 to a record 9 million, with a total of about 13.8% of all the housing stock in Japan being vacant, the highest ever recorded. (Source: Ministry of Internal Affairs and Communications).

Possibility of outstanding returns

Japan’s akiya market offers exciting investment opportunities with properties available at significantly lower prices than western markets while offering outstanding returns.

Sumica Corporation, a highly specialized real estate company focused on revitalizing and repurposing vacant homes across Japan, estimates that their clients are earning on average 8% to 12% annual returns, compared to 3% to 6% for an equivalent investment in western markets.

Amid this backdrop, both social and traditional media are filled with stories of foreigners who have seemingly acquired abandoned homes at a fraction of the cost, then transformed them into profitable Airbnbs or second homes with some DIY effort.

The reality is not so straightforward.

The case studies below provide actual examples of how Sumica Corporation has helped its clients invest effectively and profitably in Japanese vacant homes.

Whether you are considering buying a vacant property in Japan to renovate as an investment or second home, it’s worthwhile to note some of the challenges to expect.

Hurdles to buying a vacant home in Japan

Language Barrier

Japan does not place any restrictions on the foreign ownership of real estate, which is an advantage compared to many other countries in Asia. However, this does not mean that the process to purchase property itself is simple.

First, most real estate agents do not speak English and property listings, documentation and contracts will all be in Japanese. Second and unfortunately, perhaps because of the language barrier, many real estate agents will not take on non-Japanese speaking clients, so as a foreign buyer, you are limited in the pool of agents that you can choose from.

Local knowledge, complicated procedures and tenant management

In addition to the language issue, investors should also consider these obstacles which will arise in the purchase process:

Need for local market knowledge and experience
Limited time to travel to Japan and view properties
Expertise required to assess the property itself
Complexities of filing documentation and taxes
Escrow accounts are not the norm in Japan. International money transfers to pay for the purchase can be difficult and are sometimes rejected by the seller’s agent.

On top of this, if you are buying a property to be used as an investment property, you must also consider what needs to be done post-purchase.

Complexity of managing property renovation
Challenges of finding, screening and managing tenants

DIY versus working with an experienced full-service company

Thus, despite the images circulating on social media of enterprising DIYers taking on vacant house renovation projects, the reality is that there is more to it than being able to sling a sledgehammer.

Pitfalls that foreign buyers face include:

Misinterpreting contracts, which can lead to legal difficulties
Renovation and budget overruns
Long vacancy period due to inexperience in finding and retaining tenants
Difficulty understanding tax and administrative procedures

Your property purchase can be a high-performing asset or even your dream home in Japan, but success is much more likely if you work with an experienced company with a proven track record.

Below are representative case studies of clients who have worked with Sumica Corporation to achieve their property purchase goals.

Case Studies

Case Study 1: US-based IT Engineer (30s Male)

Testimonial: “The numbers spoke for themselves. 12% annual returns vs. 4% back home. Remote management through Sumica made it surprisingly hands-off.”

Case Study 2: Australia-based Restaurant Owner (40s Female)

Testimonial: “I never expected Japanese vacant properties to deliver such consistently higher returns compared to our Australian market.”

Case Study 3: Singapore-based Finance Professional (50s Male)

Testimonial: “As a finance professional, I was impressed by the transparency and ROI potential. The weak yen created a perfect entry point for foreign capital.”

What sets Sumica Corporation Apart

The case studies themselves provide strong evidence for Sumica Corporation’s track record, but there are many more reasons why a buyer might consider partnering with Sumica, from their unique philosophy and background to strong sourcing and professional network.

① Background

Sumica Corporation was founded by the CEO, Motonori Kimura, a former government official who worked on vacant house issues and who believed it was a waste to leave such valuable vacant properties abandoned. Leveraging his experience managing numerous properties himself and practical knowledge as an active real estate manager, the company balances regional revitalization with the utilization of vacant properties.

② Philosophy and contribution to regional revitalization

The company is guided by a simple but powerful principle: to make it safe and simple for overseas buyers to invest in Japan’s hidden real estate gems. The team at Sumica Corporation believes that vacant homes are not a problem but an opportunity.

By working with global clients to renovate vacant homes that would otherwise deteriorate and add to the decline of regional areas, the company’s business model contributes to revitalizing local communities and bringing vibrancy, creativity and people of all ages to Japan’s countryside — thus directly helping to alleviate the country’s larger population issue.

③ Track record and expertise

The company has over 9 years of experience handling 1,200+ vacant properties in 39 prefectures across Japan and managing over 150 properties in-house.

④One-stop support system for overseas residents

Sumica Corporation handles everything from property selection, contracts, and renovations to rental management and sales in-house. Even if a buyer is living overseas, they can complete the entire process online.

⑤ Comprehensive support for immigrants and those entering the Japanese market

Along with helping secure housing, Sumica Corporation also offers support with visa acquisition and tax procedures for those relocating or starting a business in Japan. They leverage a network of experts, including administrative scriveners, tax accountants, judicial scriveners, and architects, to assist with the process.

⑥ Unique property supply sources

The company has access to vacant properties and traditonal-style Japanese houses before they are even listed on the market.

⑦ Proposals tailored to the customer’s lifestyle

Sumica Corporation does not just buy and sell. They understand the customer’s values and lifestyle and will work together with the client to design a vacant home utilization experience that will make them fall in love with Japan even more.

⑧ Highly transparent management of the entire process

The company offers English support throughout the entire process, from contracts to construction and handover, keeping clients updated with photos, videos, and reports along the way.

⑨Social significance and credibility as a vacant home utilization company in Japan

Sumica Corporation serves as a direct liaison between vacant homeowners and potential tenants. They’ve earned positive feedback from both the government and local organizations, building a strong track record. This includes developing a facility with government subsidies, offering rental spaces at the request of local shopping districts, and organizing inheritance study sessions at a nearby Community Comprehensive Support Center.

For more information

For more information about Sumica Corporation‘s services and how they can help you find your dream akiya home or investment property, please contact them using the form below.

Article lead image: iStock / gyro, iStock ID 844721594

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