I am considering buying a house in Tokyo. The area where I live has monthly rents of 175,000 yen for 70-75 sq. mt. apartments including parking, close to station.
The houses I am looking at are in the range of 50-70 million, depending on how far from station and how old the construction is. Assuming I pick something in the middle, 15 minutes away and construction of 10-15 years old, I can probably get something around 55-60 million.
I did some calculations based on my understanding of real estate finance and lot of assumptions. According to my calculations, I will breakeven somewhere around 15 years. I thought I should be able to breakeven earlier, and seems like I am missing something.
Here is the spreadsheet: https://docs.google.com/spreadsheet...C1N3tGYn6Yh6W31qEBPc2hDfclgswriMMNw56/pubhtml
List of assumptions:
The houses I am looking at are in the range of 50-70 million, depending on how far from station and how old the construction is. Assuming I pick something in the middle, 15 minutes away and construction of 10-15 years old, I can probably get something around 55-60 million.
I did some calculations based on my understanding of real estate finance and lot of assumptions. According to my calculations, I will breakeven somewhere around 15 years. I thought I should be able to breakeven earlier, and seems like I am missing something.
Here is the spreadsheet: https://docs.google.com/spreadsheet...C1N3tGYn6Yh6W31qEBPc2hDfclgswriMMNw56/pubhtml
List of assumptions:
- Property tax, insurance, monthly maintenance, increase in utilities (I find them hard to estimate and it may also depend on luck, so I don't know how far off I am)
- Tax deduction for pending mortgage for 13 years at 0.7%?
- Building cost depreciates at 5% each year, but I have kept it as logarithmic value, since the most depreciation would be in the earlier years. (Or am I very wrong here and the depreciation would be linear? Changing it to linear does reduce the number of breakeven years to 10).
- Hoping initial fee (bank, agent, etc.) are a total of 3% :fingers-crossed:
- Land cost increases at 3.5% yearly, given the latest data from https://tochidai.info/tokyo/