Vol.26 - Single Family Homes for the Small Investor & Shinsei Bank Interview : Part 1

**CONTENTS**

-Feature - Single Family Homes for the Small Investor
-From the Editor
-Forex Weekly
-Yen Watch
-Events
-Job Watch
*Please scroll down below to read the disclaimer*

FEATURE

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Single Family Homes for the Small Investor
(By James Robinson, Propius Investments Ltd. | September 15, 2005 | Comment on this Article)
In the real estate industry there are many ways for investors to profit. -Purchasing shares of Real Estate Investment Trusts (REIT) to loaning money for mortgages. -Buying land and subdividing it to buying and renovating buildings. I think for the new or small investor buying and holding single family homes for long term equity growth and cash flow offers the best opportunities and here is why.

Single family homes are easy to purchase relative to multifamily (5 or more Units) or commercial property. It is the single most prevalent property type in US. There is a significant amount of inventory to select the best investments for one’s portfolio.

Simply put they are simple. Each home has one roof, one furnace, one water heater, and one tenant. If something needs replacing or repair the investor knows that his or her costs are contained.

Click here to read more....

FROM THE EDITOR

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Shinsei Bank Interview: Mortgages for Foreign Residents in Japan
Part One: Loans – Who Qualifies?

“If you can create a good enough home loan program, customers will beat a path to your door.” So speaks Darryl Knopp, the new home loans Czar at Shinsei Bank's retail arm here in Tokyo. Knopp, a native of Canada, has been on the job just 6 months, but with a background in risk management and now bank manager, he is creating a stir in the foreign community with recently introduced low-interest home loans to foreigners who do not yet have permanent residence status.

That's right, to buy a “mansion” or “aparto” now, you simply need a job, a “gaijin torokusho” (Foreigner registration card), and the will to borrow to buy property in Japan. And the interest rate per annum really is outstanding, currently 1% for the 5-year life of the mortgage, and an upper cap of 1.9% if the JGB rates move up above 3% -- something they haven't done for more than 6 years now.

The Shinsei deal is good anywhere in the country of Japan, including Okinawa and the islands. Loans are available either through their branches around the country, or remotely, by virtue of online documents and postal submissions – although a final confirmation visit to a branch will be necessary. Knopp tells us that the bank has already made loans to both Japanese and foreign customers even in Sapporo, Sendai, Osaka, and Fukuoka.

What are the conditions of getting a loan? Apart from some obvious and reasonable financial guidelines (details in later article), Shinsei's one main requirement is that their loans are only made to customers who are using the mortgaged property as a primary residence. So clearly you need to reside in Japan, and right now, holiday and second homes are not covered. However Knopp acknowledges that there is a large demand for second house purchase and he would like to explore this opportunity in the near future. Having grown up 60 miles from Banff, Canada, Knopp is quick to agree that he expects home loans for ski cabins in Nisseko and other resorts to be a big hit!

For personal reasons, I grilled Knopp a little more on just who has to be living in the property – the borrower specifically, or would family members qualify? On checking, he told us that indeed, any of your dependent family members could be the resident of the premises. This certainly makes yen-based loans a lot more flexible for international couples who may be transferring in and out of the country on a regular basis. In my case, my wife's home in Kitakyushu is occupied by my mother-in-law, who is a dependent, and thus, at 1% p.a. interest, I'd like to get that mortgage refinanced.

Asked about loans to those of us with larger ambitions, Knopp says that Shinsei retail home loans are specifically targeted at customers who want the real estate for personal use, not for commercial returns. Knopp says that from a risk point of view, it is one thing to look at the income of a family and assess what they can afford, and altogether another to consider a potential spiderweb of commercial loans where the player can easily become over-leveraged.

Does that mean that Shinsei doesn't want the business of people seeking to buy/build apartment blocks? Knopp assures us that this is NOT the case and in fact when he gets such enquiries, he passes them on internally to Shinsei's commercial lending arm or the Wealth Management Division. In particular, the Wealth Management Division is a rapidly growing business and welcomes both lending and investment enquiries from suitable individuals.

Another area that Shinsei is staying out of for the time being is overseas investment. Knopp feels that there are already a lot of players in that space, and since Shinsei does not yet have broad coverage overseas, it is not in a position to effectively assess the value of properties being purchased. He concedes that a tie-up with another global entity, especially for larger commercial lending situations, could change that situation in the future. So for right now, you'll have to be content with Hawaiian yen-based home loans from one of the many financial brokers present in Japan.

Terrie Lloyd
・・・Investor in Training/

FOREX WEEKLY

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September 7- September 14
Yen Holds it's own... better invest now while she is hot!

The yen is expected to hold its own in the currency market for the time being amid expectations of a Japanese economic recovery and the velocity of structural reforms.

Following the Liberal Democratic Party's victory in Sunday's election, "Japanese stock investments by overseas investors will continue for the near term, and this will underpin yen buying," said Noriyuki Kato.

The yen could rise to 105 yen against the dollar, analysts predict. But domestic investors and importers will be ready to place dollar-buying orders if the yen rises. Therefore, a small sudden increase in the yen against the dollar is highly unlikely.

The main point will eventually shift to interest rate differentials between Japan and the US, a factor that will make the yen subject to weakness against the dollar. There is speculation that the US economic recovery could slow in the aftermath of the Gulf Coast hurricane.

"The interest rate differentials between Japan and the US are clearly a buying incentive for the dollar," said Junya Tanase, a foreign exchange strategist.

This may create an environment that will somewhat motivate dollar buying progressing into the year-end.

 

 

 

 

 

YEN WATCH

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Currency	9/5 Mon	9/6 Tue	9/7 Wed	9/8 Thu	9/9 Fri
USD	110.68	110.25	110.52	111.28	111.68
GBP	204.39	203.84	204.16	204.97	205.71
EUR	139.01	138.05	138.01	138.40	138.58
CAD	93.83	93.26	93.58	94.33	95.17
HKD	14.53	14.47	14.51	14.60	14.66
SGD	66.41	66.13	66.22	66.55	66.79
AUD	85.98	85.69	86.02	86.46	87.25

(The above TTS Exchange Rates has been brought to you by the courtesy of GoLloyds TSB)
The above rates were posted at 10:09 on Friday, September 9, 2005 and are valid for funds received before 3:00 pm on Friday, September 9, 2005. All funds received after 3:00 pm are remitted the following day at the following day's exchange rates. The exchange rates provided are intended only as a guide. The Bank reserves the right to apply a different exchange rate if the market is particularly volatile.

EVENT

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Japan Inc Communications Presents
Yen Mortgages for Local Properties
September 29th, 2005

A Roundtable with Industry Specialists from Shinsei Bank, Plaza Homes, Banner Japan & PLATINUM.

Date: Thursday, September 29th
Time: 7:00pm – 9:00pm (Doors open @ 6:30pm)
Venue: Shinsei Hall, Shinsei Bank SFC Headquarters

          (1-8 Uchisaiwaicho 2-Chome, Chiyoda-Ku)

Cost: FREE (RSVP required)

*Interested parties, please RSVP online or by Fax(Download Form.pdf)  with your name, company and Tel/Fax numbers by Thursday, September 22.

Complete event details at www.japaninc.com/mortgages/index.html

JOB WATCH

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Brought to you by DaiJob, Inc – providing jobs for bilinguals.

- Senior Client Service Officer (Negotiable)
- Senior Project Manager (Over JPY 10M)
- Quantitative Risk Analyst (PM) (JPY 9-10M)
- Shared Service Manager (Negotiable)
- Head of Processing Team Associate Director (JPY 8 -13M)

Check out these and other jobs like these here!

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Edited by Burritt Sabin (editors2@japaninc.com)

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Disclaimer: This commentary is designed to help foreigners living in Japan understand the financial and investment opportunities available to them. It is NOT intended to constitute professional financial advice or an inducement to purchase the services and products mentioned. A condition of subscribing to this newsletter or reading this web site is that any actions taken by readers as a consequence of reading this column shall be the sole responsibility of the reader and no liability, implied or otherwise shall be assumed by Lloyd, Japan Inc. Communications, or other business entities related to either person.

© Japan Inc. Communications, 2005

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