Tokyo 5-bed at ¥120,900,000 and ¥752,600/month — does it stack up?

[kai.roan]

The advertised 7.5% yield looks appealing, but tenant turnover could change the picture quickly. The Tokyo apartment is a 5-bed priced at ¥120,900,000, with projected rent of ¥752,600 a month, and I have allowed for only eleven paid months each year.

I am separating management, insurance, ongoing upkeep and a substantial repair contingency in the calculation. Before deciding what net return is acceptable, which building records or cost statements should I obtain, particularly for service charges and planned works?

 

[EarlyGlass]

Using eleven months, annual rent is ¥8,278,600, so the yield is already about 6.85% before any costs. I’d focus less on the headline 7.5% and more on the building’s actual service charges and repair-fund position. Add property tax, insurance, management, leasing costs between tenants and your own maintenance allowance as separate lines. Then stress-test a longer vacancy rather than assuming turnover always fits inside one month.

 

[GoodAnchor]

Eleven months of rent may be a sensible base case, but I would not call it a full vacancy stress test. The market for a 5-bed could be thinner than for a small apartment, so a single slow changeover might mean several empty months rather than one.

Before setting a target yield, get the building age, current service charge, repair-fund contribution and schedule of major works. I would then model both a normal year and a difficult turnover year, including extra leasing costs and insurance.