[Chelly] Mansion de écrasée Vol. 6 Tenant Inquiry - Rental contract

In my earlier post, I mentioned that we got an inquiry from a potential renter one week into May. A senior couple is looking for a place to live in the Chuo Ward area. For the protection of privacy, I cannot show the renter background introduction sheet here, but the following is a summary of their current conditions:

• Senior couple in their early 70s.

• On governmental welfare.

• Distant from children and family members. No financial assistance from family.

• Husband proclaimed himself to be an artist and musician.

• Husband began to show signs of mental illness last May and was hospitalized.

• Evicted from the previous rental for failing to pay rent.
  

• Did severe damage to the previous rental (probably due to improper use and disposal of trash and painting tools) and was billed several million yen by the landlord

• Willing to receive adult guardianship to prevent future disputes

• Will use government-sponsored home-visit nursing service to help with daily living and chores, especially cleaning.

At first glance, these renters might be risky, given their history of not taking proper care of their home due to age and mental health issues. The previous landlord had to spend several million yen to restore his property to proper condition, which gives you an idea of how bad the property was by the time of eviction.

Despite these problems, since the government welfare organization had stepped in after the husband was hospitalized for mental illness last year, we find this couple ideal for unit 1. Reasons are:

• Senior residents are less likely to move, guaranteeing long-term stable rental income.

• Once the adult guardianship takes effect, an appointed supervisor will monitor the renters' legal behavior and financial condition, which means the risk of failing to pay rent due to misuse of welfare checks will be significantly lowered. The following is the part in the Japanese Civil Code about adult guardianship:

（後見開始の審判）

(Decisions for Commencement of Guardianship)

第七条精神上の障害により事理を弁識する能力を欠く常況にある者については、家庭裁判所は、本人、配偶者、四親等内の親族、未成年後見人、未成年後見監督人、保佐人、保佐監督人、補助人、補助監督人又は検察官の請求により、後見開始の審判をすることができる。

Article 7 The family court may decide to commence a guardianship in respect of a person who constantly lacks the capacity to appreciate the person's own situation due to a mental disorder, at the request of the person in question, that person's spouse, that person's relative within the fourth degree of kinship, the person's guardian of a minor, the person's supervisor of a minor's guardian, the person's curator, the person's curator's supervisor, the person's assistant, the person's assistant's supervisor, or a public prosecutor.

（成年被後見人及び成年後見人）

(Adult Wards; Adult Guardians)

第八条後見開始の審判を受けた者は、成年被後見人とし、これに成年後見人を付する。

Article 8 A person subject to a decision for commencement of guardianship becomes an adult ward, and an adult guardian is appointed for that person.

（成年被後見人の法律行為）

(Juridical Acts by Adult Wards under Guardianship)

第九条成年被後見人の法律行為は、取り消すことができる。ただし、日用品の購入その他日常生活に関する行為については、この限りでない。

Article 9 A juridical act performed by an adult ward is voidable; provided, however, that this does not apply to the purchase of daily necessities or to any other act involved in day-to-day life.

• Home-visiting nurses will help with cleaning, at least removing the garbage so the place doesn't become a hoarder's house like those on the A&E show Hoarders.

In a nutshell, they might be awful renters on their own, but they can be great renters with the proper government assistance. Sounds like a pretty good match!

After a house tour, the renters seemed to be comfortable with unit 1, but we needed to fix a few spots to prepare it, including installing a working air conditioner. The additional work was done by the beginning of June for an additional 120,000 yen (US$767), and the couple moved in on June 3.

Honestly, I hope that unit 1 will improve the quality of life of this senior couple now that they have a spacious new home for a new start. There is not enough information for me to judge why they were living in such an awful environment before and why they seemed to be distant from the rest of their family, but I do believe that, even people made severe mistakes in life, they still deserve some basic quality of life, and the Japanese government, as far as I can see in this case, is offering good assistance to this couple.

---

Finally, let's calculate the annual rental yield of unit 1. Mansion de écrasée was purchased as a 3-in-1 deal, but here, I will separate the purchasing cost of each unit for the purpose of calculation––Uni1 1 for 2,000,000 yen; Unit 2 for 500,000 yen; and Unit 3 for 900,000 yen.

Summary of Unit 1:

Initial cost	JPY	USD
Purchase price	2,000,000	12,783
Legal fees	190,000	1,215
Renovation cost	120,000	767
Renter introduction agency commission (two months' rent)	86,000	550
Revenue stamp	1,000	1
Property tax of the year (starting May)	20,888	134
Property Acquirement tax (one time)	105,400	674
Total	2,523,288	16,124
Initial income
Application fee (one month's rent)	43,000	225
Security deposit (one month's rent)	43,000	225
Annual cost
Management fee (2,200 yen/mo)	26,400	169
Home owner's insurance (83,050 yen/5 years)	16,610	107
Annual income
Rent income (43,000 yen/mo)	516,000	3,299

Net annual rent yield:

(Annual income - Annual cost) / (Initial cost - Initial income) =

19.43%

Yummy!

Well, that is all about unit 1. Hopefully, the renter will live a long and happy life there! Wish them the best!

In my next blog, I will write about unit 3. Surprisingly, unit 3 attracted renters first. I thought since unit 3 needs more work, especially the Japanese-style toilet, renters may choose unit 2 over unit 3, but the world is always filled with surprises. Anyway, stay tuned!