Understanding Property Management Fees and Expenses in Japan
1) 5 Million Yen Example:
Renting out property in Japan involves several costs beyond the basic rental income. To give a clear picture, let's consider a practical example of a property rented out for ¥40,000 per month. Here's a breakdown of typical expenses and the resulting monthly income for a landlord.
Gross Income Calculation
Monthly Rent: ¥40,000
Duration: 3.5 years
Key Money: ¥40,000 (one month's rent)
Renewal Fee: ¥40,000 (one month's rent)
Total gross income over 3.5 years amounts to ¥1,760,000.
Property Management Fees
Property management fees typically include:
Tenant Finding Fee: ¥40,000 (one month's rent)
Renewal Fee (50%): ¥20,000
Management Fee (6%): ¥100,800 over 3.5 years
The total property management fees come to ¥160,800, which is 9.14% of the gross income.
Additional Expenses
Monthly expenses include:
Management Fee: ¥6,860
Repair Reserve Fund: ¥3,540
Insurance and Property Taxes: Assuming ¥1,000 for insurance and ¥2,000 for property taxes
The total monthly expenses add up to ¥13,400.
Net Monthly Income
After accounting for all expenses, the net monthly income from the property would be ¥26,600.
Rental Yield
Considering the initial investment of ¥5 million and the annual net income, the real yield on this property deal is 6.38%.
Conclusion
Renting out a property in Japan comes with various costs, including property management fees, repair reserve funds, and other necessary expenses like insurance and property taxes. In our example, a property renting for ¥40,000 per month yields a net monthly income of ¥26,600 after accounting for all expenses. With a real yield of 6.38%, this investment offers a clear picture of its profitability. Properly understanding and calculating these costs is crucial for effective property management and financial planning.
2) 33.2 Million Yen Example:
Renting out property in Japan involves several costs beyond the basic rental income. To give a clear picture, let's consider a practical example of a property rented out for ¥1,158,000 per year. Here's a breakdown of typical expenses and the resulting monthly income for a landlord.
Gross Income Calculation
Annual Rent: ¥1,158,000
Duration: 3.5 years
Key Money: ¥96,500 (one month’s rent, calculated as ¥1,158,000 / 12)
Renewal Fee: ¥96,500 (one month’s rent)
Total gross income over 3.5 years amounts to ¥4,149,500.
Property Management Fees
Property management fees typically include:
Tenant Finding Fee: ¥96,500 (one month's rent)
Renewal Fee (50%): ¥48,250
Management Fee (6%): ¥243,180 over 3.5 years (calculated as 6% of ¥1,158,000 per year for 3.5 years)
The total property management fees come to ¥387,930, which is 9.35% of the gross income.
Additional Expenses
Monthly expenses include:
Management Fee: ¥8,150
Repair Reserve Fund: ¥3,400
Insurance and Property Taxes: Assuming ¥2,000 for insurance and ¥4,000 for property taxes
The total monthly expenses add up to ¥17,550, resulting in annual expenses of ¥210,600.
Net Monthly Income
After accounting for all expenses, the net monthly income from the property would be ¥79,450.
Rental Yield
Considering the initial investment of ¥33.2 million and the annual net income, the real yield on this property deal is 2.86%.
Conclusion
Renting out a property in Japan comes with various costs, including property management fees, repair reserve funds, and other necessary expenses like insurance and property taxes. In our example, a property renting for ¥1,158,000 per year yields a net monthly income of ¥79,450 after accounting for all expenses. With a real yield of 2.86%, this investment offers a clear picture of its profitability. Properly understanding and calculating these costs is crucial for effective property management and financial planning.
