[Chelly] Mansion de écrasée Vol. 4 Purchase

Vol. 4: The process of purchasing

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First, I shall summarize the pros and cons of Mansion de écrasée:

Pros:

• Reasonable price. Listed for 3.65 million Japanese yen (≈US$23,000).

• Seller is listing agency. Can save at least 182,600 JPY commission (≈US$1,200). Not a huge amount but still great to save.

• Three separate units in totally. Great annual rent yield When fully occupied. Good enough rent yield even with two out of the three units occupied.

• Unit 1 is in great condition can be rentable with minimum fixing. In fact, the seller agreed to fix a few spots and make it rentable before turning it over. (Thank you buddy!

• Okay location. Slightly on the far end but still located on the "Niigata-jima." Commutable to the Niigata city hall and hospitals by bus. 5 minutes walk to the closest supermarket. Friendly to senior low income renters.
  

Cons:

• Renovation costs. Unit 2 and Unit 3 will need some work that takes time and money. Although Unit 1 can generate rental income relatively quickly, it takes time for the entire building to yield satisfying annual rental yield.

• Higher property acquirement tax. The land is rebuildable so the property acquirement tax will be higher than non-rebuildable properties.

Other important factors:

• Resourceful and trustworthy management partner. Seller also manages properties and specifically specializes in arranging housing for renters on social welfare programs.

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Given these factors, we went on the purchased Ms. Mansion de écrasée in the beginning of Aprial of 2024. Of course we did a bit of bargaining, because we always do, and managed to negotiate to the price to 3.4 million JPY! Even a better deal 😎

AND, since we have collaborated with the seller so many times and have developed a friendship with the selling agent, the seller agreed to make Unit 1 immediately rentable before turning the building over and start advertising for renters before the renovation finishes. If we can swiftly find a single renter for 35,500 JPY/mo. We will immediately secure about 10% annual rental yield. Even it will take time for Mansion de écrasée to unlock her true potential, 10% annual rental yield will be a good enough start.

The following is the cost of the entire transaction (home owner's insurance is not included here):

• Purchase price: 3,400,000 JPY

• Registration fee paid to title attorney: 190,000 JPY

• Land acquirement tax: 92,500 JPY

• Property acquirement tax: 12,900 JPY

• Revenue stamp: 1,000 JPY (paid to the government for each purchase based on the sales price)

• Property tax: 20,888 JPY (property tax is billed to the owner as of January 1 of each year. The seller is charging the amount to cover property tax for the rest of 2024)

So, the total initial investment is 3,717,288 JPY, which is about US$23,300. Not bad at all! We signed the contract on April 10 and seller finished fixing up Unit 1 by April 17. The Niigata District Legal Affairs Bureau was a bit busy at the time so registering the deeds took a while but was finished on May 1.

There it is. The official beginning of the legend of Ms. Mansion de écrasée. We shall see whether she will fulfill our expectation for her and becomes home to people in need while producing great rental income!