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As with any new business it is essential that you set up a detailed and realistic business plan, to ensure you have made provisions for any potential problems that may arise, and also so that you can budget enough money to set up your business and start trading straight away. There are some specific financial issues you will have to plan for in the real estate business and these include:

* Personal Expenses – real estate agents may need to travel long distances to meet potential clients and show properties, and so you will need to make allowances for personal expenses such as petrol, food and lodgings for you and any staff you employ.
* Marketing Campaigns – real estate agents rely on effective marketing to generate new business, (both in terms of getting properties on your books and selling them for a commission) and you will need to allocate a generous amount of your projected income to marketing. The general guide for a successful real estate business is to allocate 10% of the generated commissions to marketing campaigns, but if you are setting up a new real estate business then you may not be earning enough yet to spend this much on marketing. In this case you should try to concentrate on one or two low cost marketing methods such as a good website (this can cost as little as $40 per month) or a weekly advert in the local paper, and keep a close eye on how these methods are working for you to ensure they are cost effective.
* Business Stationary – real estate businesses generate a lot of printing needs, from business cards through to direct mailing campaigns, so it is very important to allocate some of your start up business budget to real estate printing. You can get some great deals from online printers such as PSPrint.com, and once you have set up an account you can use the in-house software to create your own custom made designs (or even you can use one of the standard templates provided), and then you can order as many prints as you need from this proof once you are happy with the final layout.
* Real Estate License and Membership Fees– to legally sell real estate your company will need to have applied for a special real estate state license, and if you are covering other jurisdictions you will need to apply for an ‘out of state’ license as well. You may also be required to pay professional membership fees to Real Estate School .

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The real estate market in Tokyo is thriving, and this means that borrowing levels are low at around just 2-4%. If you do not have permanent Japanese residency status, (or Japanese spouse) then you mind find it difficult to secure a mortgage unless you have lived in Japan for over 5 years and have a permanent address. It also helps if you can speak Japanese and have a good, permanent job as this will show the bank that you have a steady income and are intending to live in Japan for some time. If you are only in Japan for a few years with your job, then you would be much better off renting a property, as it is unlikely a bank will grant you a mortgage.

Properties in Tokyo fall in to two main categories, apartments or houses. In central Tokyo you will find it almost impossible to buy a house, as most of the property in this area are apartment blocks. Further out into the suburbs there are more houses, and if you work in the city centre you can commute quite easily using the fast efficient train services. New properties tend to be the most expensive, so apartments and houses that are over 5 years old are normally more reasonably priced and represent a better investment overall, as new properties deprecate quite significantly in value after five years.

However if you are buying a property to rent out then you can charge a much higher premium for new properties, so in this case buying a new property does make sense, and apartments in key areas such as Omotesando, Akasaka and Aoyama are always in demand and represent solid investment potential. It is important to note that many Tokyo apartments include additional monthly fees for building car parking, maintenance and restoration, so don’t forget to check this before you agree any sale, and ensure you can afford it on top of the monthly mortgage payments.

In Tokyo the contracts will be signed before the mortgage is finally approved in most cases, so you will also need to ensure you have organised the downpayment fee cheque with the bank (10% of the agreed price), which must be handed to the seller upon signing the contracts. If your bank does not then come through with the mortgage for any reason this fee will be returned unpaid, however if you cancel for any other reason you will lose this money, and if the seller cancels they will have to pay double this fee back to you.

Other fees involved in real estate buying in Tokyo include the following:

• Notary’s Fee – this will depend on the property and can be anything between ¥50,000 to ¥200,000.
• Registration License Tax – this represent 1% of the total property asset value, and is sometimes included in the notary’s bill, as they would normally collect this tax and pay it in as part of their services.
• Agents Fee – the average agent fee for property transaction in Tokyo is around 3.15%, plus a one off fee of around ¥60,000.
• Fire Insurance – it is important to set up fire insurance as soon as you have a date for the handover, so that your property is covered from the moment you sign the agreement papers.
• Annual Fixed Property and City tax – this will be split down the middle and shared with the seller.
• Purchase tax and Stamp Tax – these are one off payment that will need to be paid to the tax office after you have completed the purchase.

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