Buying an Apartment in Tokyo: What can you buy for $100,000?

In a recent post, we looked at what you can buy in Tokyo for $250,000.

Today, let’s take a look at one of the more popular price points that people search for on Real Estate Japan: 10 million yen (about $90,000 at today’s exchange rate).

At the 10 million yen price point in Tokyo, we are talking about studio apartments, referred to as 1R (one room with a small kitchen and bathroom) or 1K (one room with a kitchen separated by a wall) units.

Why is this price range so popular?

High-Yielding Investment Properties

For one, many people looking to buy in this range are looking for high-yield income investment properties, basically smaller, older properties that are already fully depreciated. As a rule, smaller apartments (studios) outside the city center tend to have higher rental yields. Many of these buildings were built in the 1980’s housing bubble and originally sold in the 20 to 25 million yen range, but are now listing for 10 million yen and under.

This is not to say that you can’t buy an older studio apartment to live in yourself!

It is not unusual to find studio apartments in Tokyo’s northern wards listing for between five and six million yen.  Here is an example of a typical 1K listing for six million yen ($52,300) in Tokyo’s Adachi ward.

This tenanted studio apartment (1K) located in Tokyo's Adachi ward is listed at 6 million yet. Unlike some older apartments (this one was built in 1988), it has been recently renovated. Please click on the photo for the full listing.
This tenanted studio apartment (1K) located in Tokyo’s Adachi ward is listed at 6 million yet. Unlike some older apartments (this one was built in 1988), it has recently been renovated. Please click on the photo for the full listing.

At the same time, average rent for 1K and 1R apartments in northern Tokyo (including, for example, Adachi, Katsushika, and Itabashi wards) are in the 50,000 yen range.

Here are some examples of 1Ks in Adachi ward renting for 50,000yen and less. This means that the gross yield would be about 8.3% (50,000 yen gross rent divided by 6 million yen purchase price), which is much higher than the average 4% to 5% gross yield found in the city center.

All Cash Buyers

Another obvious thing about the 10 million yen price point is that it is a reasonable amount for many all-cash buyers, who don’t want to go through the trouble of getting bank financing.

Drawbacks of Buying an Older Apartment

But there are many things to be aware of when buying an older apartment. Building maintenance and repair can significantly reduce your income.

When buying an apartment  in an older building (or any building for that matter!) be careful to check the reserves in the Repair Reserve Fund or Sinking Fund. This is a fund that the apartment unit owners have established to fund future capital repairs in the building. Most buildings require that owners make a monthly contribution to the repair reserve fund, so this is one of the expenses that you should plug into your spreadsheet.

Purchase Fees and Taxes

Taxes will add about 6% to 7% to the purchase price. Please see this article for a detailed explanation of Japanese real estate taxes.

Brokerage Fees

If you use an agent to buy a property, you will have to a brokerage fee (commission) of 3% of the purchase price plus 60,000 yen plus consumption tax (currently 8%). As we mentioned in the post on what you can buy for $250,000 in Tokyo, the government has plans to increase the consumption tax to 10% in April 2017, which is one reason analysts expect a rush of home purchases before that time.

Monthly Expenses

If you buy an apartment in Japan, you should also set aside building management fees, in addition to the repair reserve fees mentioned above.

Building management fees pay for the day-to-day running of the building, such as common area maintenance and the salary of the on-site building manager, if there is one. The building’s management association, consisting of the owners of the building, set the building management fees.

Let’s take a look of some examples of apartments in the 10 million yen range listing now on Real Estate Japan.

Shinjuku Studio Apartment For Sale

Where: 7-minute walk from Shinjuku station

Price: 10,500,000 yen ($91,600)

Size and Layout: 15.56-sqm, Studio (1R)

Floor: First floor unit in 5-story building

Land rights: Freehold

Year Built: 1981

Tenanted: Yes

Gross Yield: 8.0%

Structure: Reinforced concrete

Studio Apartment For Sale Shinjuku
1R studio apartment for sale near Shinjuku station. Currently tenanted. Please click on the photo for the full listing.

Studio apartment, 2 stops from Shinjuku

Where: Nishi Shinjuku Go-Chome station. Two spots from Shinjuku on the Toei Oedo line.

Price: 8,000,000 yen ($70,500)

Size and Layout: 13.39 sqm, Studio (1R)

Floor: First floor unit in 4-story building

Land rights: Freehold

Year Built: 1983

Tenanted: Yes

Gross Yield: 7.0%

Structure: Reinforced concrete

Studio apartment located
1R studio apartment two stops from Shinjuku station on the Toei Oedo subway line. Please click on the photo for the full listing.

Studio Apartment, One Stop From Shinjuku Station

Where: 3-mintue walk from Sasazuka Station on the Keio line. One stop from Shinjuku Station.

Price: 10,000,000 yen ($87,300)

Size and Layout: 14.13-sqm, Studio (1R)

Floor: Second-floor unit in a four-story building

Land rights: Freehold

Year Built: 1983

Tenanted: Yes

Gross Yield: 6.6%

Structure: Steel-reinforced concrete

1R studio apartment for sale near Sasazuka station. One stop from Shinjuku Station. Please click on the photo for the full listing.
1R studio apartment for sale near Sasazuka station. One stop from Shinjuku Station. Please click on the photo for the full listing.

These are just a few examples of apartments in the 10 million yen currently on the market.

To search for For Sale properties, please visit Real Estate Japan’s listing pages.

You may also be interested in: What can you buy in Tokyo for $250,000 and What is the average price of a house or condo in Tokyo?


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