Tokyo rental: ¥132,300,000 purchase and ¥831,500/month rent — sanity check?

S

SharpSparrow

Developer
Adding the building charges took much of the shine off the advertised 7.5% gross yield. This would be our first rental: a three-bedroom Tokyo duplex priced at ¥132,300,000, with projected rent of ¥831,500 per month.

Its apparent condition is reassuring, but that is not enough to establish the owner’s maintenance responsibilities or the cost of changing tenants. I can model ordinary repairs, management and a vacancy allowance. The harder scenario is a vacant period coinciding with cleaning, remedial work and reletting, especially if “duplex” means one expensive unit rather than two independently rentable homes.

Rather than accept or reject it now, I am considering an offer conditional on checking the recurring charges, insurance, division of maintenance duties and evidence supporting the rent. I would adjust the price for costs that can be quantified, but uncertain rent or an unmanageable maintenance obligation may justify walking away. What other evidence would you want before setting a net-yield requirement?
 
Start by separating building service charges from costs that arrive directly: property tax, insurance and any financing expenses. I would also stress-test tenant turnover rather than model only a smooth vacancy percentage. A vacant period plus preparation for the next tenant can hit cash flow at the same time.

I wouldn't choose a target net yield until seeing the actual recurring charges and the duplex's maintenance responsibilities.
 
Is ¥831,500 supported by an existing tenancy, or is it an asking-rent estimate? That is the biggest missing fact for me. Also, does “duplex” mean one rental unit over two floors, or two separately rentable units? One high-rent tenant leaving creates a different vacancy risk from losing one of two tenants.
 
Agreed that the rent evidence matters, though I wouldn't automatically treat a single existing tenancy as safer. It proves the current rent, but you still need to consider what happens at turnover.

The gross calculation is sound: ¥831,500 × 12 is ¥9,978,000, about 7.5% of ¥132,300,000. The concern is how quickly that margin contracts after service charges, tax, insurance, management and reserves. If financed, rerun it at less favourable borrowing terms too.
 
I’d ask for an itemised history of service charges and building repairs, then build three cases: expected rent, lower rent with turnover costs, and a prolonged vacancy. Keep one-off purchase costs separate from annual operating yield, but include them when judging the total return on cash invested.

If the deal only works in the first case, the 7.5% headline is doing too much of the selling.
 
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