¥17Mpurchase price (2021, Covid)
≈ ¥3M/yrshort-term rental income (2023)
≈ 18%net yield (cap rate)
¥42.8Mresale price (2023)
+100%capital gain in ~2 years
The opportunity: a hidden licence
Bought in 2021, mid-pandemic, this Kyoto machiya had been run as a short-term rental by its tenant, who had obtained a hotel-type operating licence (旅館業): easy to get back then, very hard today. That licence is still active and will remain so for life. The owner, unaware of its existence and value, sold the house at land value: in Japan, old houses are worth little and are often demolished to rebuild new homes that Japanese families prefer.
!
Good to know: from a property's address, you can check whether an operating licence is still active.
The strategy: reveal and create value
- Spot a lifetime hotel licence the seller ignored
- Buy at land value (the house is 'worth nothing')
- Light renovation: sliding door, Japanese garden, shoji on the windows
- Short-term operation (Airbnb / OTAs), international guests
- Resell with the licence and the yield as assets
The numbers in detail
| Item | Amount (¥) |
|---|---|
| Purchase price (2021) | 17 000 000 |
| Taxes + agency fees | 2 000 000 |
| Renovation | 1 500 000 |
| Equipment & furniture | 1 000 000 |
| Total investment | ≈ 21 500 000 |
| Short-term income (2023, annualised) | ≈ 3 000 000 |
| Resale (2023) | 42 800 000 |
| Gross capital gain | ≈ +21 300 000 |
Real deal figures. Past performance is no guarantee of future results.