[Chelly] Mansion de écrasée Vol. 8 Annual Rental Yield for Unit 3

Now, let's move to my second favorite part of acquiring new properties: calculating the expected annual rental yield! (Of course, my favorite part is collecting rent)

Again, as mentioned before, 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. Also, I have added legal fees and property acquiring taxes to the initial cost of Uni1. After all, Unit 2 and Unit 3 kinda came as a buy-one-get-two-free package.

Summary of Unit 3:

Initial cost	JPY	USD
Purchase price	900,000	6,168
Legal fees	0	0
Renovation cost	599,500	4,109
Renter introduction agency commission (two months' rent)	70,000	480
Revenue stamp	0	0
Property tax of the year (starting May)	0	0
Property Acquirement tax (one time)	0	0
Total	1,569,500	10,756
Initial income
Application fee (one month's rent)	35,000	240
Security deposit (one month's rent)	35,000	240
Annual cost
Management fee (2,200 yen/mo)	26,400	180
Home owner's insurance (80,690 yen/5 years)	16,138	111
Annual income
Rent income (35,000 yen/mo)	420,000	2,879

*JPY to USD has gone down quite a bit. I'm using the exchange rate as of 8/23/2024.

Net annual rent yield:

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

25.17%

What? Say that again?

Yes, that's right. 28%!

Imagine if Unit 2 also gets a renter sometime in the future!

As for now, Unit 2 seemed unpopular. If you recall from the pictures earlier, the kitchen and 1st-floor floorings of Unit 2 are in dreadful condition, maybe that's what is scaring potential tenants away. Just as I was going to discuss the option of doing a light renovation project with my go-to agent, a new listing from a real estate company in Tokyo caught my attention. Coincidently, this new property is only 6 minutes on foot from Ms. Mansion de écrasée! How can I not be interested?

Long story short, I'm acquiring a new property from a different agent! The process has been quite a saga as well so I will certainly write about it shortly. Stay tuned!