Japan Foreclosed Property 2015-2016 - Buy this 5th edition report!

Over the years, this ebook has been enhanced with additional research to offer a comprehensive appraisal of the Japanese foreclosed property market, as well as offering economic and industry analysis. The author travels to Japan regularly to keep abreast of the local market conditions, and has purchased several foreclosed properties, as well as bidding on others. Japan is one of the few markets offering high-yielding property investment opportunities. Contrary to the 'rural depopulation' scepticism, the urban centres are growing, and they have always been a magnet for expatriates in Asia. Japan is a place where expats, investors (big or small) can make highly profitable real estate investments. Japan is a large market, with a plethora of cheap properties up for tender by the courts. Few other Western nations offer such cheap property so close to major infrastructure. Japan is unique in this respect, and it offers such a different life experience, which also makes it special. There is a plethora of property is depopulating rural areas, however there are fortnightly tenders offering plenty of property in Japan's cities as well. I bought a dormitory 1hr from Tokyo for just $US30,000.
You can view foreclosed properties listed for as little as $US10,000 in Japan thanks to depopulation and a culture that is geared towards working for the state. I bought foreclosed properties in Japan and now I reveal all in our expanded 350+page report. The information you need to know, strategies to apply, where to get help, and the tools to use. We even help you avoid the tsunami and nuclear risks since I was a geologist/mining finance analyst in a past life. Check out the "feedback" in our blog for stories of success by customers of our previous reports.

Download Table of Contents here.

Thursday, September 13, 2007

Philippines Property Market Outlook

I am forecasting falling prices in the Philippines property market, and I suspect vacancy rates will increase. There are several reasons for this:
Filipino expats abroad are mostly in the USA, and lesser proportions in the Middle East and Asia. I think they are likely to be feeling a little less rich with falling housing prices, so less inclined to send money home. I think it’s the financially illiterate who will fair worse, and that includes a lot of Filipino domestic workers whom I think will have either:
1. Bought late in the USA – with a ARM loan due to reset with 30% higher mortgage repayments
2. Bought a lot of condos in the Philippines as a retirement income
3. Higher vacancy rates – actually vacancy rates are already high since a lot of Filipinos are sitting on property without letting it. I think financial pressures will either lead them to sell or rent.
4. The peso has fallen against the USD – so they might be waiting for further falls – decreasing remittances. I think it will fall as oil prices rise further
5. High oil prices will undermine economic activity in the Philippines as consumer spending falls. A weak peso will make oil even more expensive.
6. Prospect of higher inflation – as credit growth has been very strong along with remittances flowing in
7. Demand for yield – a lot of Filipinos have bought apartments but are just sitting on them. The problem is that if they have any financial problem they might find them back on the market. one can expect that some of them are in over their heads.
8. Supply – I don’t think local developers will cool off on projects – I think they think the global economy will recover, and its true that chinese investors will increase as investment out of China is relaxed. But I see that as a longer term influence
The value of those remittances will increase as the peso falls – but this will be offset by higher oil prices in local peso terms. So I believe there will be net selling. I don’t see a collapse in property prices though….more likely just a stagnant market.

Sunday, August 12, 2007

Buying property in the US market

The current sub-loan property loans crisis in the US will present a very good opportunity for investors and home buyers to buy property in the USA in about a year. It just so happens that banks tend to expect loan applicants to have a 1-year employment history for loans, so if you have just secured your first job out of university or have saved enough cash for a deposit, then your timing will be fantastic. Appreciate that you will not see the same gains that you have seen over recent years, but there will still be some goo buying.
So if you are 'ready to buy' start getting a feel for market prices because we are going to see some sustained selling by investors as well as foreclosures at the lower end of the market.

You should start talking to banks to find our their terms, and decide the best place to buy, and get an idea of prices. Apartments are cheaper, but appreciate the least because you are buying space in the sky and that doesnt appreciate in value...land does. Ideally you want a shit lot next to a nice suburb. Need to think about where you plan to live. Apartments are more flexible for renting.
I personally make a list of all the things I want in a certain area, then search the street directory, maybe Google Maps looking for those things. eg. kintergarden, schools, shopping malls, you can even think about where the next shopping mall is likely to be built.
Anyway, its the most important asset you will buy in your life...and it really pays if you can get it at the bottom of the market...because yeh property prices might only increase 5% a year in normal market conditions, but its rent-substituting and that 5% on say $300,000, $15,000 of passive tax-free income a year. We are entering a period of high inflation but in a year or two that will feed through to higher property prices when all the surplus property has been sold off.
There will be alot of banks offloading foreclosed properties, as well as investors trying to sell. So if you get the timing right, you can get a bargain. Best to time it, then low-ball a few bids around town, and see if anyone takes one. Banks will readily sell to liquidate bad loan portfolios with little regard for the vendors. Basically the banks are happy if they can just get their money back...so dont expect them to care if the vendor looses equity.
Expect interest rates to squeeze out alot of loan defaulters, so your intent should be to buy about 4-6 months before they have all been liquidated/cleared, and the market starts talking about the lack of foreclosed properties available and buyers start reappearing in their droves. You dont want to wait for the turn around...general market trends offer a better clue to get your timing right. Its the difference between being a price taker and price setter ($40,000). The best time to buy is when everyone thinks the world is about to end...well in a way. Its a little bit different from equities. Property is not a liquid market.

There are alot of online websites like www.realestate.com.au (Australian equivalent) so you dont even need to leave the home. No doubt they are already alot of 'for sale' signs up. Well there are more than you think because banks dont advertise. They have off-site auctions, so see bank websites and follow prices.

PS: It will be interesting to see if bargain hunting in the USA causes remittances to the Philippines by expats living in the USA to dry up. I suspect it will, as there will likely be a weaker peso and higher interest rates in the USA.

Wednesday, August 01, 2007

Why buy property abroad?

Reasons to buy overseas
The idea of buying property overseas is a pipe-dream for alot of people, and perhaps alot of people can't imagine doing so because them seldom get the opportunity to travel overseas, and if then, only for short periods. These restraints are understandable 'deal breakers' though for certain people the idea of owning property overseas makes alot of sense. Here is my rationale for buying overseas:
1. Exchange rate benefits - Careful it can go both ways!
2. Holiday destination - Do you really want to go to the same place every year? Does the place meet your lifestyle objectives? Do you know enough about the country to buy? Do you have support if you need it?
3. Investment income - Sure the properties can be cheap, but how are the investment yield, forex variability and interest rates going to work for you?
4. Residence - If you are thinking to stay in the country for a while, you have the capacity to borrow, the local forex rate is strong and the local property market is booming, then why wouldn't you invest?
Grounds for not investing
Well there are a number of compelling reasons for not investing in a country despite the apparent benefits:
1. Legal or constitutional restrictions - In alot of countries foreigners can't own property. In most developed countries foreigners are allowed to buy improved or strata-based property only, eg. apartments and condominiums.
2. Sovereign risk - the country is governed by a statist regime which gives you reason to question whether you will have the right to repatriate your capital, whether you will be exposed to rapid movements in exchange rates or changes in interest rates or the tax regime. We are looking for stable policy, and wishing to avoid poitical instability and military coups.
3. Cultural barrier: When you are looking at buying land overseas, you take a risk if you dont speak the local language, or culture. Being a foreigner can make you a target for theft, public ridicule or torment, so its worthwhile determining people's attitudes to foreigners, as well as the governments. Generally having a local technical language proficiency is desirable because you might need to deal with solicitors, conveyancing agents, plumbers or disgruntled neighbours. Having friends might seem the ideal solution if the friendship remains. For these reasons the Philippines, Singapore and Malaysia are attractive for ENglish-speakers, while Japan, China and many other Asian countries are problematic.
4. Undesirable fiscal controls: Some countries will display laws that undermine investment returns or the functionality of the property. There might be constraint on the uses for the property, such as land use or development heights, licensing or approval processes or delays. Locals might even ignore these laws, but because you are a foreigner you are risking more by breaking the law. Unfavourable tax regimes are another big issue
5. Rule of law: There are several aspects that we are looking to establish from the legal system. (i) Whether the local law is conducive to our investment goals, whether the legal system offers affordable and accessible justice (no long court delays), support for foreign language speakers, no sign of discrimination of foreigners, integrity in the judicial process.
6. Safety issues: You need to know that you and your property are safe, safe against destruction of property and person. This is where a condominium or land makes more sense, or having people say there, but they may well be the culprits, even if you know them, if you are not there to supervise, or have not established the basis for trust/respect.
Positive investment criteria
1. Proximity to your home country: If the place you are intending to buy is in a neighbouring country then you have much greater opportunity to use the property, as well as the ease to sell it.
4. Good information support: When dealing in a foreign market it can make all the difference if you can rely on information from fellow expats who have already dealt with the issues you are confronting. Take care though as some expats you might regard as 'kindred spirits' from the mother countries are actually out to fleece you. There are often numerous forums for people living in each country. Some have local GFs so have local knowledge they can share with you. Its worthwhile to confirm info that looks dubious.
3. Income growth: We are looking for healthy economic growth which will flow through to higher incomes, greater employment, more housing demand.
4. Relaxed monetary policy: We are looking for a positive terms of trade, solid productivity improvements and high capital inflows to support a rise in capital inflows, a stronger currency and a relaxation of interest rates in a low inflation setting. These conditions will increase the capacity of residents to borrow money for property purchases. All the better if the country has previously had a protracted period of tight monetary policy because there will be a bent-up demand for housing.
5. Favourable regulatory controls: Generally we are lament the existence of government controls that inhibit our freedom or decision-making, however certain controls have a favourable impact on property prices. Favourable controls will be those that restrict supply of housing stock, whether because of building height restrictions (Japan) or strict zoning laws (Australia, NZ)
6. Subdued population growth: We are looking for stronger population growth because that will increase domestic demand for property and other goods, as well as boost the liquidity of the labour market. Be advised that whilst a country might display weak or negative national population growth (Japan), their may be significant internal migration into the larger capital cities - perhaps for jobs, or away because of excessive property prices.
7. Building repair infrastructure: I always reflect positively on those markets where there are local building supplies which I can buy with ease.
8. Favourable exchange rate: Forex rates play a big role in your decision because you will likely be holding the property for more than 3 years. Therefore its critical that you know the forex dynamics between your home and host countries. The biggest factors are relative differences in the impact of global growth, fiscal policy and interest rate differentials.
Examples of people buying overseas
Here are some interesting examples of people buying property overseas:
1. Lifestyle seekers: Retired, divorced men buying an apartment in the Philippines, Thailand, Russia to meet and entertain younger girls. Some use the apartment for holidays only, others retire there with the promise of a low cost of living.
2. Expat executives living in Asia who buy a property in their host country because they envisage being their several years, and have the support of a local bank, so are able to borrow in the local currency.
3. Sports fanatics who want to buy ski or trout fishing resort accommodation in the opposite hemisphere to avail of the reasonal benefits involved. eg. Australians are causing a housing boom in Japan by buying new resorts in Nagano and Sapporo areas, close to international airports.
These people are buying properties across a wide pricing spectrum. For instance, you can buy a 1-2br (40m2(townhouse or apartment in the suburbs of Manila for as little as P700,000 ($US14,000) or an prestigious mid-city penthouse for P35mil ($US0.7million). Beach-side land away from Manila in a poorer province might go for P200/m2, but a nice beach close to Manila might be as much as P70,000/m2.

That property is cheap seems to be one of the compelling reasons to buy property overseas, the other one seems to be, if there is a compelling reason for going there. Those pursuing vices abroad are advised that non-substantative relationships quickly break down into problems, or otherwise are a basis for disrespect and abuse, and that goes both ways. You can trade value for value or vice for vice - you determine the market and the way your are treated from the outset whether you deserve it or not.
Source: Sermon on the Mount, Act 50.fool.2.75.po

Thursday, July 26, 2007

Philippines Property Market

The Philippines has been growing at a fast pace of late, and this has contributed to a strong property and equity market. Its apparent that the economy is growing on global recognition that the Philippines has turned a corner. I see a rosy future for the Philippines with the following reservations:
1. The Philippines economy will only remain strong as long as the Peso keeps rising. The peso is being supported by repatriation of earnings by Filipinos abroad
2. The Philippine peso will only continue to rise if it can boost productivity and its terms of trade. The laxed 'work culture' in the Philippines is a testimony to Spanish influence, and Chinese ownership of most 'influential' business does not offer an attractive model for improvement.
3. There are 3 sectors which are critical to boosting exports - mining, agriculture and call centres. The mining/commodities boom started in earnest in 2001, yet the Philippines really has failed to position itself. There is constant harrassment of miners in this country by environmentalists, politicians and other collectivists. There seems to be an unwillingness on the part of Filippine companies to engage foreign companies to explore their title, which they have long held. It has helped that the Philippine government now requires title holders to meet expenditure commitments. Agriculture is another weak sector, largely because of the lack of institutional support for farmers. One positive development has been the development of a system of 'roll-on, roll-off' ships to facilitate cheaper cartage of goods between islands with multipl handling. These vessels are able to transport farmer vehicles to market. Clearly the 'work ethic' in the Philippines is the biggest problem for foreign investors in food production. In call centres the Philippines has a natural advantage, though I was amazed to realise that Filipinos English is not so good. I had always assumed it was good because they display good fluency and alot of confidence. But they win hands-down over the Indian call centres.

The Philippines property market has some similarities to Japan, but otherwise its more western in its institutional framework. There is one important exception. The ease with which land is offered for development in the Philippines means that there is a great deal of surplus land, though its mostly controlled by the developers (eg. SM, Robinsons, Ayala, Filinvest, etc). With property magnates driving development in this countriy, its hard to make good investment decisions. Nevertheless I offer the following advice:
1. Buy apartments for lifestyle reasons - not for investment yields. Apartments on the surface look like great investments because their prices are going up. But having looked at the offerings I would caution. There is some inflation in the asset price rises, rents tend to fall as buildings age, the quality of the construction, particularly the facade is not particularly good. The best buys are apartments connected to the bigger, newer shopping malls and rail networks, as well as those along the waterways.
2. Buy land based on existing patterns of land usage: There is a lack of clear planning in the Philippines because the government appears to adjust its development plans to suit developers. You can however grasp a sense of future developments for railways and even shopping malls, so you should be attempting to buy land in those areas. You need to anticipate where future buying will occur.
3. Anticipate future changes in investment: The biggest change in the way Metro Manilans will live is likely to be in transport. It seems likely that pollution is here to stay for another 20 years, but regardless there is another compelling reason to buy outside Manila. They are: Beaches and cool mountain retreats. We can already see that property prices in Tagaytay and Baguio are already very high, and we can expect prices will rise as transport conduits improve and incomes rise. But these are not the only areas offering potential. Places like Antipolo and Lipa are relatively 'cool' places to live. Beaches in the Philippines for expats are nothing to write home about...even Boracay is just OK. There just isnt enough 'wave action'. But thats OK, there are other ways to create a lifestyle, and at the end of the day, you are looking for areas with a 'high-end classy' trend going on. Alabang is a little like that, but is too controlled by developers. It really lacks atmosphere.
4. Identify future development centers and corridors: In the Philippines, most commercial development seems to be centered on Manila, Batangas and Subic in Luzon, and Cebu-Mactan in Cebu. Clearly these areas have infrastructure advantages that make living or buying along their corridors attractive. These are the first areas to attract road upgrades and rail lines. If you are buying for lifestyle reasons, take care to avoid busy centres, but you can still focus on satellite centres of development, which are cheaper.

Expect the property market to get stronger in the Philippines as the investment fundamentals have never looked better. The attraction is the sustainable inflow of earnings from Filipinos abroad that is driving an investment and spending boom. The implication of this is a stronger peso and rising incomes which is boosting foreign and domestic demand for property. New investment is creating jobs, and combined with a strong peso, ensuring that inflation stays low. The implication is interest rates are going down as inflation falls. The Philippines has had a very weak currency and high interest rates for so long, that there is pent up demand for property. For that reason, as interest rates fall and the capacity for Filipinos to buy improves, expect banks to be offering much cheaper and competitive loans. That will spark alot of investment and rising property prices, just as we have seen in other countries.

I just dont think the property boom will be as big as other countries because the Filipino work culture and Chinese anti-intellectual management culture in the Philippines will constrain improvements in productivity. for foreign investors, I would be pouring into Vietnam when they open up that market. Focus on the estuaries (for land) and lakes (for apartments) around Hanoi! I particularly like the estuaries because I can see in a few decades there will be house boats plying the Red River to get to the Halong Bay area. This area must be one of the most under-rated tourist attractions in the world. A few years ago I stayed on Catba Island for just $US4/night....actually $2 because I was such a tight bastard then, that I sharedwith an Australian I met on the ferry.

But back to the Philippines market. If you are going to buy property here, take a look at the offerings of foreclosed properties. Not the over-bid listings by the major universal banks that advertise in the newspapers, but the smaller rural banks that dont even have websites or marketing departments. They work through local agents with no idea about property. The serious agents are in Metro Manila. But there are opportunities in rural areas. eg. Filipinos can buy land in estates for P2500-6000/m2, but actually there are more appealing offerings.

'Buying NZ Property – Download the free sample readings!

The NZ property market is shaping up as one of the most attractive property investment markets for the next few years. High yielding property and the collapse of the NZD make NZ the perfect counter-cyclical investment if you buy right! In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.