As part of our series of posts about real estate loans for foreigners in Japan, we provide this overview of real estate investment loans available to foreign-born investors, as well as our list of the banks that offer loans to foreigners for real estate investment in Japan.
Real Estate Investment Loans for Foreigners in Japan
— Overview of Real Estate Investment Loans for Foreigners in Japan
— Can Foreigners Get a Loan for Investment Property in Japan?
— List of Banks in Japan that Provide Real Estate Loans to Foreign Investors
— Criteria to Get a Loan for Investment Property in Japan as a Foreigner
— Real Estate Investment Loans for Established Property Owners in Japan
— Forming a Japanese Corporation to Buy Investment Property in Japan
— Local Real Estate Brokers that Specialize in Investment Property
See below for more information on each of these topics.
Overview of Real Estate Investment Loans for Foreigners
When foreigners and international borrowers meet certain criteria, there are banks in Japan that offer loans to buy income-generating property in Japan.
The criteria to get a loan for a real estate investment in Japan include residency status, ability to speak Japanese, and the location of the property. When the investment property is to be purchased via a Japanese corporation (such as a godogaisha), the executives listed on the company filing, their nationality and ability to speak Japanese, and the history of the business are also determining factors.
While loans for real estate investments in Japan are possible, most foreign real estate investors purchase investment properties in Japan in cash. Compared to local borrowers, it is much more difficult for foreign investors to get an investment loan in Japan.
Can Foreigners Get a Loan for Investment Property in Japan?
Yes, foreigners can get loans to buy investment property in Japan.
Generally speaking, Japanese banks require foreign investors to have permanent residency, to speak Japanese, to form a Japanese company, and then only offer loans on qualified properties in major metropolitan areas.
An example of a case where Japanese banks are more likely to approve a real estate investment loan: an investor from America, that lives full-time in Japan, works for a major Japanese company, speaks Japanese, has an established local Japanese company through which to purchase the investment property (with an existing financial history), and is buying a relatively new investment property (10 – 15 years old) in a popular neighborhood in Tokyo. When the borrower is not a permanent resident of Japan, has no-/low Japanese language ability, wants to buy outside of the most popular cities, or want to buy a building that was built more than 20 years ago, that buyer will have more difficulty securing a loan.
While some banks specifically offer personal loans to buy investment property in Japan, banks in Japan may require that the borrow use a Japanese company as the structure through which the property is purchased. If that company has an established history owning income-producing real estate in Japan, the company will have more access to loans from Japanese banks.
Some banks offer fewer restrictions for loans for investment property in Japan. For example, lenders like SBI Shinsei can provide service in English, and may offer loans to non-resident investors. However, these banks may still require the property to be centrally located in a major city, and may offer less attractive terms (higher interest rates, lower LTV, prepayment penalties, etc) than other lenders.
Below we provide a list of the best banks that offer foreigners loans to buy property in Japan, and some of the specific the criteria required for each bank.
List of Banks in Japan that Provide Loans for Real Estate Investments to Foreign
In Japan, financial institutions offering investment loans to foreign borrowers can generally be divided into two categories: banks that require the borrower to have Japanese language skill, and banks that provide multilingual support (such as English or Chinese).
Banks that Require Japanese Language Skill
— Suruga Bank
— Orix Bank
— Mitsubishi UFJ Bank
— L&F Asset Finance
— JFC (Japan Finance Corporation)
Banks that Provide Support in English/Chinese
— Prestia SMBC Bank
— SBI Shinsei Bank
— Yen Loans Tokyo
Suruga Bank
— Language: Must understand agreement in Japanese
— Residency: Does NOT provide loans to foreigners without permanent residency
— Locations: Tokyo, Chiba, Saitama, Kanagawa, Osaka City, Sapporo City, Nagoya City, Fukuoka City, Kyoto City, Kobe City
— Ownership: Offers loans to both individuals and Japanese corporations
— Minimum Loan: Depends on the conditions
— Maximum Loan: 1,000,000,000 JPY (both individuals and corporation)
— Interest Rate: 1.9%
— Prepayment Terms: Within 5 years: 2% of the loan / after 5 years: 11,000 JPY
Orix Bank
— Language: Must understand agreement in Japanese
— Residency: Does NOT provide loans for foreigners without permanent residency
— Locations: Tokyo, Saitama, Chiba, Kanagawa, Osaka, Kyoto, Hyogo, Nara, Shiga, Wakayama, Nagoya, Fukuoka (maybe Sapporo)
— Ownership: Offers loans to both individuals or Japanese corporations
— Minimum Loan: 20,000,000 JPY
— Maximum Loan: 200,000,000 JPY
— Interest Rate: 2.5 – 2.6%
— Prepayment Terms: Within 1 year: 2 % of the principal amount / 1-3 years: 1.5% / 3-5 years: 1.0% / more than 5 years: 0.5%
Mistubishi UFJ Bank
— Language: Must understand agreement in Japanese
— Residency: Does NOT provide loans for foreigners without permanent residency
— Locations: Loan applications are processed by local branches, each of which is responsible for its designated service area
— Ownership: Offers loans to both individuals or Japanese corporations
— Minimum Loan: 100,000,000 JPY
— Maximum Loan: Depends on the conditions
— Interest Rate: 3.0 – 4.0%
— Prepayment Terms: 2% of the outstanding loan
L&F Asset Finance
— Language: Must understand agreement in Japanese
— Residency: Does provide loans for foreigners without permanent residency
— Locations: Tokyo, Saitama, Chiba, Kanagawa, Osaka, Kyoto City, Kobe City, (maybe Sapporo, Nagoya and Fukuoka)
— Ownership: Offers loans to Japanese corporations or self-employed person
— Minimum Loan: 10,000,000 JPY
— Maximum Loan: 300,000,000 JPY
— Interest Rate: 3.5 – 4.5%
— Prepayment Terms: 2% of the prepaid amount
Prestia SMBC
— Language: Must understand agreement in Japanese or English
— Residency: Does provide loans for foreigners without permanent residency
— Locations: Tokyo, Kanagawa, Chiba, Saitama
— Ownership: Offers loans to individuals (Prestia Investment Loan)
— Minimum Loan: 5,000,000 JPY
— Maximum Loan: 100,000,000 JPY
_ Interest Rate: 2.08 – 2.48%
— Prepayment Terms: 2% of the prepaid amount
SBI Shinsei Bank
— Language: Must be able to understand the agreements in Japanese, English, or Chinese
— Residency: Does provide loans for foreigners without permanent residency, non-residents in Japan (must have Japanese corporations)
— Locations: Tokyo, Kanagawa, Chiba, Saitama, Osaka, Kyoto, Sapporo, Sendai, Nagoya, Kobe, Fukuoka (property should be located in 10-15 minutes from the station)
— Ownership: Offers loans to Japanese corporations or self-employed person
— Minimum Loan: 10,000,000 JPY
— Maximum Loan: 1,000,000,000 JPY
_ Interest Rate: 3.2 – 4.35%
— Prepayment Terms: 2% of the principal
Yen Loans Tokyo
— Language: Must be able to understand the agreements in Japanese, English, or Chinese
— Residency: Does provide loans for foreigners without permanent residency, non-residents in Japan (people who live in Australia, Canada, China including Hong Kong SAR, EU member countries, Singapore, South Korea, Taiwan, Thailand, UK, USA, Vietnam)
— Locations: Hokkaido, Saitama, Chiba, Tokyo, Kanagawa, Kyoto, Osaka, Kobe City, Nagoya City, Fukuoka City
— Ownership: Offers loans to individuals
— Minimum Loan: 5,000,000 JPY
— Maximum Loan: 200,000,000 JPY
_ Interest Rate: 4.47%
— Prepayment Terms: Within 1 year: 3.0% / 2 years: 2.0% / 3 years: 1.0%
JFC (Japan Finance Corporation)
— Language: Must understand agreement in Japanese (if necessary, you can bring a Japanese-speaking supporter or interpreter)
— Residency: Does provide loans for foreigners without permanent residency
— Locations: Most locations in Japan
— Ownership: Offers loans to Japanese corporations
— Minimum Loan: 48,000,000 JPY
— Maximum Loan: 72,000,000 JPY
— Interest Rate: 3.50 – 5.20% (No collateral), 2.50 – 4.80% (with collateral)
— Prepayment Terms:
Clients and business contacts report that some of the best real estate investment loans in Japan originate from Suruga and SBI Shinsei.
Criteria to Get a Loan to Buy Investment Property in Japan as a Foreigner
All of the banks that offer real estate loans to foreign buyers have criteria they consider in the application process. The most important criteria are:
— Ability of the borrower to discuss the terms of loan in Japanese
— The visa/residency status of the borrower
— The decision to buy the property as an individual or as a Japanese company
— The business history of the Japanese company buying the property
— The nationality/Japanese language skills of the executives listed on the company formation documents
— The location of the property
— The age and type of construction of the building
Real Estate Investment Loans for Established Property Owners in Japan
One strategy for getting money from banks in Japan to buy Japanese real estate is to pay cash for the first property, then to get a loan for a second property (or refinance the original property).
First-time foreign real estate investors in Japan will often get rejected for loans to buy investment property. While a newcomer to Japan may present more risk to Japanese lenders, a foreigner that can show an existing real estate business with a financial record of profitable income-generating property (including bank records and Japanese tax returns for that business) may be seen as a better candidate for a loan.
After a foreigner real estate investor has demonstrated a history (one year or more) as a successful owner/operator of a real estate investment property in Japan, that track record of success can be used to apply for approval for a loan on a second property, or to refinance the first property (and pull out cash that can be used toward a second rental property in Japan).
The actual financial plan for the property selected for purchase always matters, but a proven history of success as a real estate investor in Japan will help the approval process.
Forming a Japanese Corporation to Buy Investment Property in Japan
Some banks in Japan only offer business loans to buy real estate for investment to Japanese corporations; you may have to form a Japanese company (godogaisha or kabushikigaisha) in order to be eligible for a loan from certain Japanese lenders.
Foreigners that want a loan to buy investment property in Japan commonly form a Japanese company (godogaisha or kabushikigaisha), and then purchase the property via that structure. Foreigners can form local Japanese companies relatively easily; you can apply directly via a process at the Legal Affairs Bureau, or hire a legal specialist (called a judicial scrivener or a “shihoshoshi”) to complete the company formation on your behalf.
In many cases, the details about the members of the company, their nationality, their responsibilities, etc. will impact the ability to secure a financing for real estate investments in Japan.
For help finding local judicial scriveners in Osaka that speak English, contact us.
Local Real Estate Brokers that Specialize in Investment Property in Osaka
The ability to find financing for real estate investment purchases in Japan is often the first step for many investors. Once you have done some research on funding the investment purchase, working with a local Osaka real estate broker will be a logical next step.
We offer free introductions to local Osaka real estate agents that specialize in Osaka investment property.
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