Property Management

Finding Renters for Your Tokyo Investment Property

By Erik Oskamp

In this article, Erik Oskamp, founder and president of Akasaka Real Estate, offers practical advice and tips on finding renters for your investment property, including what types of apartments to avoid, how to set asking rent, and the thorny issue of discrimination against foreigners in the rental market.

Furnished or Unfurnished

Generally, properties in Japan are rented out unfurnished. Japanese people do not like to use second-hand furniture. Even if a previous tenant has left behind a refrigerator or washing machine it is normally thrown out and replaced. The typical unfurnished rental is for a two-year period with an option to renew.

In Tokyo there is a small market for furnished rentals, mostly to foreigners. Those rental periods are often much shorter and more expensive. The Japanese term for this type of apartment is “weekly mansion,” although a rental contract is for a minimum of one month. It is a less expensive version of a serviced apartment. Recently vacation rentals like Airbnb have become popular as well. So popular, in fact, I will write a separate article about this.

Even though the rents for short-term leases are higher, it does not mean it is a good idea for a landlord. Advertising for short-term tenants is expensive, agency fees can be excessive and renter turnover is high. Unless you have renters lined up all the time or want to run your own property website attracting new renters, I recommend renting your property out unfurnished.

Vacancy Rates

In the city of Tokyo demand for housing is high. In our portfolio, we are currently running a 98%+ occupancy rate.

Even during the aftermath of the earthquake in 2011 the occupancy rate never fell below 95%. However, the time an apartment is empty in between renters can be longer than in other countries. Normally it takes 2-3 months before a new renter is found, but it can take as long as 6 months.

In Japan renters stay 8-10 years on average, a very long time compared to other countries. This also means that at any given moment there are fewer people looking for an apartment. People tend to move in spring (March/April) and autumn (September/October).

Outside the major cities the rental market is dramatically different. In the countryside the population is ageing and declining. In small villages, many houses lay abandoned and the rental market has collapsed. In second-tier cities and suburbs of Tokyo, demand is mostly for small, inexpensive units as more people live by themselves.

Smaller Apartments Reduce Vacancy Risk

To reduce the risk of vacancy, it is important to stay away from family homes or larger luxury properties. The number of multiple-person households is declining and demand for luxury properties can drop quickly.

After the Lehman shock in September 2008 and the earthquake in 2011 so many foreigners left Japan that those expensive expat properties had a vacancy rate of 50%. At the same time the market for small apartments stayed stable.

And when I say small, I mean small. The medium unit we manage is 18-sqm. The smallest is just 10-sqm and that includes the bathroom. As such, small units are the least expensive, demand for them is high and so they consistently have the highest occupancy rates.

Recently there have been a few articles in the press that mention 30-50% vacancy rates. Even vacancy rates in Tokyo were reported to be around 15%. We believe that this data is inaccurate as it does not include second homes, apartments used as an office and generally places where nobody is officially registered. Our data indicates an overall average vacancy rate of about 1-3% in Tokyo.

Determining Asking Rent

Of course, any apartment will rent out if the rent is lowered enough. But as it can be difficult to increase the rent later, it is important to set the rent low enough to attract a renter, but not too low.

Many agents prefer to rent out properties at a low price because it is easier to find a tenant this way. At Akasaka Real Estate, our approach is to offer transparent market data so you can set the rent at a level that maximizes your investment. Please contact us using the inquiry form below if you are interested in our property management services.

Many Japanese renters are still used to paying one-month key money. However, when dealing with foreign renters and luxury properties it is more difficult to get that extra month.


In Japan it is normal to ask a renter for a guarantor. A guarantor is usually a family member.

However nowadays many renters are required to sign up with a guarantor company. This company is effectively a collection agency, with the renter paying a one-time fee of half a month’s to one month’s rent as a sort of insurance premium. If the renter then doesn’t pay, the guarantor company will make the payment to the owner and try to collect from the renter.

When occupancy rates are healthy (97%+) we recommend that our clients ask all renters to get approved by a guarantor company. In lean times it is possible to be a bit more flexible, but expect to encounter some problems in the future. Be especially careful when renting out to a small company where the guarantor is the company president or one of the staff.


Some foreigners in Japan say that they are discriminated against by landlords and agents. This undoubtedly happens.

I think that the biggest reason for this is that from a landlord’s perspective, foreigners indeed are not the best tenants. This is not because they cause trouble or don’t pay rent but simply because foreigners tend to stay much shorter in one place, on average maybe 1-2 years. The owner has to look for a renter again after that. Japanese tend to stay 8-10 years. However, we do not tolerate discrimination at our company. Instead, we add in the rental contract that if a renter moves out within a year they forfeit a month rent. This is a better way to screen for potential short-term renters.

Single seniors are also discriminated against. Their income is often low and Japanese landlords are scared that they will die in the apartment. We find this kind of discrimination mostly unwarranted. Generally, single seniors might have a low income, but it is steady and they have a high sense of duty to pay the rent. They also rarely move out and thus generate a stable income for the owner. As most single seniors are quite healthy in Japan, the risk of a death should not deter an owner from accepting such high-quality renters from the fastest growing demographic group in Japan.

Erik Oskamp

Erik Oskamp came to Japan in 2004 and applied for a mortgage the first day. Within 2 months of research he bought his first property in Tokyo, a 3-bedroom house in Shirokane. By 2005 he bought his first investment property. During this process Mr. Oskamp encountered a lack of transparency in the Japanese real estate market and so proceeded to build computer models to assist with the statistical analysis. By 2006 he was able to realize his first capital gains with a 60% profit on the house in Shirokane.

This encouraged him to take a more serious look at real estate. When many friends and colleagues started asking for information he realized the need for a real estate agency specialized in helping foreigners dealing with the Japanese market.

He started Akasaka Real Estate in September 2007. He took advantage of the financial crisis by purchasing more properties in the dark days of early 2009. By 2010 many investors started following this strategy.

Before Mr. Oskamp started Akasaka Real Estate he spent over 15 years working in finance for companies such as Credit Suisse, Citibank, UBS and Barclays in New York, London and Tokyo, as well as his native Amsterdam. In his last position at Barclays he was working as a quantitative analyst, modeling the yen yield curve for swap traders.

Mr. Oskamp divides his time between Manila and Tokyo and has five daughters. He currently owns 24 properties in Japan, but rents the apartment he lives in. In his rare free time you might find him at the beach with his daughters or enjoying traveling.

Akasaka Real Estate

Akasaka Real Estate focuses on helping foreigners buy property in Tokyo, including both primary residences and investment properties. Other services include property management, help with obtaining financing, and organizing renovations.

To contact Akasaka Real Estate, please fill out the inquiry form below.

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