Today, we would like to talk about the work of building management after the tenant has moved out.
First, the management company that receives notice of the cancellation will set up a date and time to be present with the tenant. The purpose of this is to check the condition of the room when it is handed over, and the person in charge of the management company and the tenant will check the room together on the day. At this time, the renter will be asked to arrange the delivery of all luggage, the disposal of garbage, and cancellation of water, electricity, gas, and internet in advance. By doing so, we will be able to check the empty room, and no one will receive bills for utility expenses after the fact. In the meeting, the damaged area is mainly checked. We will check the condition of the room and the burden of each, whether it is the damage due to the renter's responsibility or the burden on the lessor. Therefore, if there is damage due to the renter's responsibility, we will confirm whether he/she will compensate from the security deposit or pay additional repair costs. By carrying out this kind of work together, it is possible to prevent troubles at a later date, such as the fact that the security deposit was not returned and the requested repair cost was high. When the lessee vacates the room, the principle is to return it to its original condition. Therefore, without leaning unduly to one side or the other, be fair and determine who, what and to what extent will bear the burden. The next step is to restore the room to a leasable condition. For example, cleaning a room, repairing damaged areas, repairing or replacing damage or wear and tear due to age, upgrading equipment, or work to increase the value of a room. The only work actually done by the management company is to arrange for the work to be done by each specialist contractor. For example, cleaning and replacement of wallpaper is done by a cloth company. Cleaning is a cleaning company. Repairs depend on the location, but it is a water supplier, carpenter, or electrician. We will also ask a specialist Tatami shop to change the tatami mat. In addition, check the expiration date of the fire alarm, replace the faucet rubber packing at the water leak point, and replace the original plug of the washing machine with a new type. After that, a new key is exchanged and the tenant can move in anytime. These multiple tasks are from the move-out to the move-in of the new lessee. Even with all the preparations done so far, there are cases in which problems can be identified even after actually starting living. Even in such a case, by responding promptly, tenants can be reassured and trusted. Recognize a good relationship with the tenants, have them move in for a longer time, and make a good investment for the landlord. Today we would like to talk about the points to note when non-residents invest in real estate. When investing in real estate in Japan, it does not matter whether the buyer is Japanese, resident or non-resident. However, if you are a non-resident and you want to get rent from the property you invest in, then note the following: Cases other than the rent paid by individuals who rented the land and house for themselves or their relatives to reside in. So what happens in the case above? The National Tax Agency has the following information. No.12014 Real estate income of non-residents https://www.nta.go.jp/english/taxes/individual/12014.htm
In such a case, there are two points to keep in mind.
First, the lessee has to pay the withholding tax collected to the tax office every month. This puts a heavy burden on the lessee and results in complicated tax procedures. If the rent is high, there is a possibility that the corporation has a lease agreement, and inevitably additional corporate paperwork will occur. Due to this increase in processing, there is a possibility that the lease contract will be terminated. Therefore, the method of avoiding such complicated processing from the lessee is to change the contract so that we will enter into a sublease agreement with the landlord, enter into a lease through us, and we will be obligated to pay tax. By doing this, the original lessee will rent a room from us, so there will be no additional burden. Our additional operating costs are covered by normal property management fees and are not incurred separately. The second point is to make the tax accountant a partner of the tax advisor. Every year, you will be required to file a tax return for real estate income, and at the same time, please request a refund for the withholding tax. By doing this, you will be asked to refund the tax by accurately claiming the tax and overpaying the tax. The above are points to keep in mind when investing in real estate. These cases include special circumstances, so please consult us individually. We can also introduce tax accountants who are fluent in English and Chinese. Please contact us for more details. In today's case, an investor residing in Asia established a corporation in Japan, opened a bank account, purchased a property, and rented it out.
Originally, the owner who liked Kyoto had a few real estate properties in Kyoto city under the names of individual and family. The properties were not investment properties, but a second homes for him and his family when he came to Kyoto. We decided to put one of these properties up for lease, and since there was commercial property for sale in a good location for investment, he decided to increase the number of properties in Kyoto. In this scheme, a non-resident investor establishes a corporation in Kyoto, purchases real estate in the name of a corporation, opens a new bank account in the name of the corporation, transfers the lease agreement to the name of the corporation, then receive the rent in new bank account. This time, we have not set directors’ remuneration yet, but it is possible to receive remuneration from corporations, and when traveling to Japan, airline tickets and travel expenses can be recorded as necessary expenses. Also, even if an officer inherits, the real estate in the name of the corporation will not be changed and the inheritance of shares will occur. First of all, the establishment of a corporation requires a certificate of seal and signature of the investor. In countries with a seal certification system, documents can be prepared at the embassies or notary public offices of the countries of that nationality. You can also create a proof of signature at an embassy in your country. In some cases, a notarial deed may be required for the incorporation. If you have any questions, please contact us individually. The position of the investor this time is to be the representative director and the investor. We've registered an extra person as a board member, but having a local resident in the business with will make it easier to open a bank account and complete the necessary paperwork. Therefore, in this case, I am participating in the corporation as an officer. A corporate registration is the same as a real estate registration, where documents are prepared and applied for and registered through a judicial scrivener. For real estate sales and registration, it does not matter whether you sign a real estate contract after the establishment of the corporation or establish a corporation after the contract is concluded. If you make a real estate contract first, the buyer's name in the contract will be the individual, and we will add "The Seller and the Buyer agree to transfer the buyer's position to a third party after the contract" to the special provisions. By doing so, it becomes possible to transfer the purchaser's position to a corporation that will be established at a later date, and to register the sales contract contracted by an individual in the name of the corporation. As with the case of registering a earning property in the name of an individual, the procedure of taking over the lease contract is also performed at the same time when the real estate is handed over. The documents include notifying each lessee of the succession to the status of the property, changing the names of various contracts (high voltage power supply, air conditioner lease, internet, elevator inspection, notice to the management association, etc.), and entering into a new management contract. At this point, the establishment of the corporation is completed, and all procedures are completed in the name of the corporation. Also, regarding the opening of bank accounts, it is best to open it through a person who lives in Japan if possible. Even by the representative director, if not the resident in Japan, the bank refuses the application for opening the account for some reason. There are many reasons for the bank to refuse, such as contact information not being in Japan, communication in Japanese not being possible, and address not being in Japan. Therefore, the easiest and safest way is to create a new bank account through someone who can conduct a credit check on the account opener conducted by the bank. If you use this investment scheme that includes the creation of a corporation, you will be able to obtain a loan from a bank, a guest house license at a Japanese corporation, buy or sell a corporation, and get a visa for going and going. These methods require a trusted partner, so please contact us directly if you are interested . Let's take a look at the second real estate investment case, which is a single wooden apartment building with four units in Kyoto city, ownership registered in the names of both parents and children, who are living in Hong Kong.
The investors are not residents in Japan, the registered owners are parents and children, and the registered address is Hong Kong. The investment target is a wooden apartment, 4 units, and an old apartment that was located on land that cannot be re-built. This time, the investment is to buy an existing apartment at a cheap price, no tenants, renovate it, operate it as a rental, and sell it for an exit. The real estate purchase amount is 10 million yen or less, renovation costs are about 7 million yen, and rental income is about 1.6 million yen per year. Real estate prices were very low, as the property was in such disrepair condition that it needed major renovations, was before land prices soared, and could pn the not re-buildable land. Since investors could not come to Kyoto at the time of contract or settlement, they delegated to an agent and completed the transaction. For the renovation, we prepared a room with a unit bath for the university students and a room with a shower room only. Initially we did not install furniture, but now we are operating as a rental with furniture as furnished apartment. For the renovation, we asked a local contractor through the management company, and the management company confirmed the progress of the construction and detailed specifications. For rent management, we have been promoting recruitment centered on companies that are strong in renting students, and we have achieved almost full occupancy management. When international students rent a room, they prefer furnished rooms, so there are refrigerators, washing machines, beds, desks, and chairs. The internet is also contracted with the apartment, so it is possible to use it immediately after moving in. Currently we are both renting and selling an apartment at same time. Since the investor has an account of Bank of China opened in Japan, the rent is remitted monthly to the Japanese account. We are executing an exit strategy while investing and renting the property, including renovations. For renovations, we have English-speaking contractors and architect partners, so please contact us if you are interested. Case 2: Gross yield approx. 10%, Net yield approx. 8.87% *Management fee, fire insurance and property annual fixed asset tax included Today we're going to look at each investor's individual investment case. First of all, the investor in this case is a citizen of a country whose passport is in Europe, whose residence is in Asia, and who owns one property in Japan. The investment target is a remodeled Kyo-Machiya house, an attached house located in Higashiyama-ku, Kyoto City. The reason for investing is that they come to Japan regularly for work, love Kyoto, and want to have a vacation house in Kyoto to enjoy a relaxing time after retiring the work. The property in which they invested was a Kyo-Machiya house built in 1927 and renovated in 2019, a four-minute walk from Tofukuji. The investment method is for long-term leasing, they plan to use it as their own second home in the future when they retire from the company. In this case, the married couple registered 50% ownership of the property each, and the family owned the property. After purchasing the property, they signed a building management contract with us, and we began offering rentals immediately afterwards. The acquisition tax and property tax of the real estate are paid from the rental income, and the deposited rent is kept and managed by management company until instructed by the owner. The monthly balance report is shared in a folder on the cloud, and the monthly balance and deposit information are also shared. For the tenant recruitment, we will share the information with each agency and conduct business activities to find tenants. The management company takes photographs, draws up floor plans, assesses rents, and sets detailed conditions when recruiting. Once the details are finalized, we use the network system of real estate agents to register the information and recruit tenants through e-mails, faxes, and websites. Once we receive an offer for rent, we work with the guarantee company to screen the tenants, and take care of the necessary procedures such as the contract, fire insurance and other necessary procedures on owners behalf.
Before the tenants moving in, we will make sure that the room is cleaned and free of defects, change the locks and make sure it is ready to move in and hand the keys to the new tenant. The management company will take care of any inquiries or requests after tenants move in, and the owner basically does not do any work for management. We also provide information to owner's tax accountant and pay the income tax via owner's tax accountant. Therefore, after signing the management contract, there is no problem if owner leaves the various tasks to the management company. Case 1: Gross yield 6.04%, Net yield 5.28% *Management fee, fire insurance and property annual fixed asset tax included Today it's about investing in real estate. First of all, is it possible to buy real estate for investment and receive rent? Whether you need Japanese nationality, do you need a visa? Do you need to live in Japan or can you invest without living? The answer is that you can invest and receive rent. First of all, when considering the purchase of real estate, it is not necessary to compartmentalize whether it is real estate for residence or real estate for investment. When purchasing real estate, the Civil Code and the Building Lots and Buildings Transaction Business Act are the main rules, and when entering into a lease agreement, the Civil Code and Act on Land and Building Leases are the main rules. Whether or not you are Japanese has no effect on the purchase of the property, and you do not have to be a resident of Japan. With regard to Act on Land and Building Leases, it is not necessary for the owner of the real estate to be Japanese, nor is it necessary to live in Japan. Let's talk about the cases we manage.
*For Japanese corporations, the owner is a non-Japanese citizen. *Consultation on the establishment of a corporation is also available. The details will be explained at another time. Although the property is owned by a Japanese corporation, there are cases where the owner lives in Japan or resides outside of Japan. A foreign company establishes a new company in Japan and the rent is deposited into the newly established bank account in Japan. If you earn rental income from real estate, you will be subject to taxes on your real estate income claim and profits. We have tax partners who are fluent in English and Chinese, so please feel free to contact us.
Tomorrow we will explain each case. |
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AuthorArrows International Realty Corp. Archives
June 2023
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