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With record tourist numbers in Japan, investment in hotels and Airbnb properties is booming to meet growing demand for short-term rentals. However, as an individual investor, what is the most advantageous approach to capitalizing on this market?
In this article, we discuss the advantages and disadvantages of investing in monthly rental properties and tips for how to be successful with this type of investment.
We also highlight how an experienced bilingual agent and property manager can help make the property buying process and property management for overseas residents as seamless and stress free as possible.
Valuable insight for this article was provided by IREA, a Tokyo real estate brokerage with over 20 years of experience and Axios Management, their property management company. They are leaders in providing comprehensive brokerage and PM services to global investors and are long-time partners of Real Estate Japan.
Let’s begin by looking at the underlying conditions supporting sustainable demand for short-term vacation rental properties in Japan and Tokyo, in particular.
Meeting the short-term rental needs of inbound tourists
Inbound tourist numbers have skyrocketed since Japan re-opened its borders just a few years ago.
In 2024, foreign visitor arrivals set a new record of 36.87 million, trouncing the previous record set in 2019 of 31.88 million.

The Japanese government is targeting 60 million foreign visitors to Japan in 2030, with the average visitor staying 6.9 nights per visit in hotel and other accommodations in 2023 (Source: Japan Tourism Agency).
Concurrently, hotel rates in Tokyo continue to set annual records, as the majority of tourists spend most of their time in the greater capital region or Osaka. The average room rate for a hotel in Tokyo has set year-on-year monthly records for 21 consecutive months, since December 2022 (Source: The Mainichi)
Many tourists opt to stay in Airbnbs or monthly apartments rather than hotels, either out of necessity or because they are looking for a self-catering experience.
This trend has not gone unnoticed by real estate investors looking to capitalize on the inbound tourism boom.
Operating an Airbnb: Some downsides
One way to tap into the tourist market would be to invest in an Airbnb-type property where you lease out part or all of your home to short-term guests.
However, it is important to note that Japan has very strict regulations regarding the operation of private lodging or minpaku, in Japanese.
These include: the necessity of obtaining a minpaku license to run an Airbnb, a maximum number of 180 days that your home can be rented in a year, the outright banning of Airbnb in some neighborhoods and the requirement that the unit owner obtain prior permission from the condominium homeowners association. Many condominium buildings, as a rule, do not permit owners to operate their property as private accommodation.
Some investors have found success with Airbnb investment, but the regulatory roadblocks are a significant downside.
Monthly Rental Apartments: Advantages and disadvantages
Considering the potential for continued growth in tourist demand, buying an apartment and leasing it out as a monthly rental offers several attractive advantages.
Earn rental income
For many overseas buyers looking to buy a property in Japan, the ideal scenario is one in which they can live in the property when they visit Japan but to utilize it as an income property while away. Operating a monthly rental allows owners to earn rental income in Japanese yen, while still using it whenever they visit Japan.
Avoid regulations associated with Airbnb-type lodging
Monthly rentals utilize fixed-term rental agreements, which means that they are classified as rental contracts, not private lodging, unlike minpaku, so you can avoid the associated regulatory hurdles.
Earn relatively higher gross yield
Renting out an apartment as a short-term rental can offer a higher gross yield than if you were to rent it as a regular rental.
Here is a simulation prepared by IREA and Axios Management that shows how a short-term rental can offer a higher gross yield than if the property were leased out as a regular (two-year lease) rental (4.40% v. 2.90%). Basically, the monthly rent for a short-term rental can be set much higher, so that net operating profit is also higher, even accounting for the property management and other associated fees.

Managing short-term rentals requires specialized knowledge
However, buyers should also be aware of the disadvantages, mainly:
Managing monthly rentals requires specialized knowledge and expertise, especially if you are a non-resident owner.
It is highly recommended that you use the services of a property management company, such as Axios Management, to handle such matters as tax payments, utility bills and rent collection and remittance.
How to succeed when investing in monthly-rental apartments: Advice from IREA and Axios Management
It is helpful to begin with a few basic points to think about when investing in a short-term rental.
IREA, a bilingual brokerage in Tokyo that is experienced in working with overseas buyers, have offered these helpful tips.
Who should be your target customers?
IREA advises that buyers should consider marketing their short-term rental properties to short-term international students, business travelers and long-term tourists.
What type of properties would work best for a short-term rental?
Buyers are advised to look for 1LDK (1-bedroom) apartments or larger. The reasoning is that nearly 70% of furnished monthly rental apartments on the market are studio apartments of 30-square meters or less. Since hotels are also small, ranging from 20 to 30 square meters, IREA recommends that buyers choose a larger property to avoid competing with hotels.
It is also a good idea to find properties that are located within a 7-minute walk from the nearest station, as this distance will offer your guests optimal access to transportation and proximity to shops and restaurants that tend to be clustered near train and metro stations.
Which areas and train lines in Tokyo are ideal for short-term rentals?
In IREA’s experience, the following are worth mentioning:
- Locations with good access from Haneda Airport and Narita Airport.
- Keikyu Line and Asakusa Line: Convenient access to Ginza, Tsukiji, Akihabara, and Asakusa.
- Hibiya Line: Good access from Ginza to Toranomon, Roppongi, and Ebisu.
- Ginza Line: Access from Ginza to Shibuya.
Importance of having a local tax agent
As an overseas owner or an owner who does not have a Japanese address, it is also essential to have a local tax agent to handle tax matters associated with your investment, so that you are compliant with these financial regulations.
Services offered by Axios Management
Axios Management specializes in property management and is known for adding value to their clients’ properties through an all-integrated management of the processes, systems and workforce required to optimize the life cycle of their clients’ properties.
From initial consultation to tenant exit procedures, the company offers clients a full-range of customized property management services, with a focus on protecting their interests while maximizing owners’ ROI.
Here are some of the services they offer:
- Drafting and signing of fixed-term lease agreements
- Payment of utility costs such as electricity and water
- Payment of building management fees and sinking fund
- Payment of real estate acquisition tax and property fixed asset tax. Axios Management can act as your tax agent but additional fees apply.
- Rent collection and remittance (including international transfers
- Settlement and house cleaning arrangement when tenants depart the property
IREA and Axios Management
Axios Management is an experienced, bilingual property management company based in Tokyo, with a strong track record of helping overseas property owners manage their property investments in the greater Tokyo area. If you are considering buying a property in Tokyo or need property management services, please contact them below for a free consultation!
Learn more about IREA’s real estate brokerage services here!
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Sources:
The Mainichi, “Foreign visitors to Japan, their spending, hit record high in 2024” (January 15, 2025)
Japan Tourism Agency, “White Paper on Tourism in Japan, 2024)
Japan Times, “Is Japan Ready for 60 million tourists?”
The Mainichi, “’Dynamic pricing’ drives up Tokyo hotel rates, but still room to rise in dollar terms”