[Book Sip] Investment Success Story 'I Sold Seoul and Bought Tokyo'

Some sentences encapsulate the entire content of a book, while others instantly resonate with the reader’s heart, creating a connection with the book. Here, we excerpt and introduce such meaningful sentences from the book. - Editor’s note

Here is a person who went from an ordinary salaried worker to a building owner earning 8 million won in monthly rent. This is Baek Seung, the author of this book. The secret is ‘Japanese real estate.’ In 2019, when the Korean real estate market was soaring, the author sold his apartment in Seoul and bought a small building in Tokyo. He recorded a 10% return. According to the author, Japan currently offers the lowest loan interest rates in the world, bank loans open to foreign investors, an unprecedented weak yen phenomenon, and the benefits of diversified investment all at once. Based on his experience, the author completed a manual for investing in Japanese real estate. From how to find a real estate agency, site visits, bank reporting and remittance, corporation establishment, contracts, to post-management, he details the entire process of acquiring a building and earning monthly rent income.

The PIR index stands for Price to Income Ratio, which indicates the ratio of housing prices to income. It measures how long it takes to buy a house in a specific region or country based on the annual income of households owning homes. A PIR of 10 means it would take 10 years of saving the entire annual salary without spending a penny to buy a house. In other words, the higher the number, the more inflated the housing prices are relative to the economic power of the people in that area. As of 2021, the global PIR figures are: Hong Kong 45.19, Beijing 41.70, Singapore 19.38, Seoul 28.86, and Tokyo 15.40. Comparing the increase in PIR from 2016 to 2021, Hong Kong rose by 20%, Beijing by 24%, Seoul by 73%, whereas Tokyo decreased by 41%. Despite the continued rise in real estate prices, Tokyo’s PIR actually declined. This means that Tokyo’s real estate price growth was slower compared to the income-based price increases in other cities. It indicates there is still room to support current housing prices. - From Chapter 1: Why Japanese Real Estate?

Japanese real estate is remembered as the “lost 20 years.” What is the situation now? After the bubble burst, land prices that showed no signs of rising have started to stir gradually. Land prices in major cities like Tokyo and Osaka have been steadily increasing since 2013. The official land price in Tokyo’s 23 wards has grown by an average of 3% annually since 2013, and in the five central wards known as Tokyo 5 wards?Shinjuku, Shibuya, Minato, Chuo, and Chiyoda?the increase has been an average of 6% per year. The important point is not that prices rose 6% compared to seven years ago, but that they have risen 6% every year. - From Chapter 1: Why Japanese Real Estate?

Japanese real estate loans generally provide 60-80% of the collateral appraisal value, with interest rates in the 2% range. Compared to Korea, you can borrow more and cheaper. This increases profitability and income. In other words, you can fully enjoy the leverage effect. Thus, in Japan, you can expect much higher returns with the same investment amount than in Korea. - From Chapter 1: Why Japanese Real Estate?

I Sold Seoul and Bought Tokyo | Written by Baek Seung | RHK (Real Holdings Korea) | 244 pages | 17,000 won