I feel like letting people buy their way in to visas is actually a pretty good system from a strictly pragmatic standpoint but 5 million yen seems far too low.
That depends of what you're hoping to prevent.
If you want to filter out people who can't sustain themselves, petty crime or the like, it works. But it can open the door to a lot of unwanted effects.
A foreign national that just extracts capital by capturing real state and collecting rent is a great example, this person is a large net loss for the country.
Even to their home country.
You can outsource pretty much the entire thing, and just be a name on a paper, and receive money in your bank account, that's as close to "passive income" as you can get. Lots of people do this today, pretty common for landlords to do so in Spain for example, and I'm sure all around the world.
My parents had a beach house for a while. It was rented May-Sept every year. They'd visit for a week in each shoulder season, spend half the time doing major cleaning/fixing, and left the day-to-day during rental season to a management company (same one that managed bookings for the house).
It wasn't 100% passive, but it was about as close as you can get as a retired upper-middle-class couple.
Apparently it's not passive, then. It's a seasonal job essentially.
The rent paid the mortgage, but that was about it. Repairs were more or less out of pocket.
I gave it up because I didn’t live locally and got raked over the coals on repairs a couple times. I finally quit because the property managers had an “emergency repairs” clause where they could do repairs without my approval and bill me.
One of the renters clogged the toilet at 11pm on a Saturday, moron decided to call the property management because I guess plungers are confusing, they decided that was an emergency, and I got a $700 bill to send a plumber out at midnight to plunge a toilet. Like not even a roto rooter or something, just a generic grocery store plunger.
Became clear I was either a) going to have to be much more involved, or b) accept that the returns are basically just equity in the house on a 15 year mortgage, minus overpriced repairs.
It only made sense as a medium-term investment - buy with cash, maintain for a decade (and maybe you're cashflow positive for part of that), then sell for a profit (hopefully).
Similarly, local to me, renting a house really only makes sense if you bought cheap (which for us normies means we bought it years ago, so the mortgage is cheap vs current rents).
The returns don’t seem substantially better than an index fund, it’s a headache to deal with, and if housing actually becomes affordable then you’re upside down (and the govt might air drop cash on upside down mortgages, probably not if you’re already paid off).
Not my forte though and I hand-waved the hell out of that math, maybe I’m way off. Just feels like a ton of capital to tie up for mediocre returns.
A beach house makes some more sense because you get the utility of being able to use it, which is worth something if you like to vacation to the same place.
Also if your business is real estate then you probably operate more efficiently due to integration and scale plus the rental could be part of a longer term redevelopment plan.
Ahh, that does make more sense.
I do 100% believe there's an economy of scale there. Even just being large enough to employ an in-house repair person would probably be a huge savings. There's a lot of stuff anyone that can swing a hammer could fix that you end up hiring expensive tradesmen to do when you're not local.
This is probably the fantasy part.
Quality of maintenance, honest, doesn't take all the money - you can pick only 2 of these for your property operator. Actually, you have to be lucky to get 2.
If it works great and you aren't involved in solving constantly incoming troubles, you're earning peanuts.
It really isn't, some of people I know personally are literally doing exactly that. These "management companies" basically does everything for you, if you haven't heard about them since before, go look them up, I'm sure there is at least one active in your own area.
Fun :| Impossible that different people have different experiences? Not claiming you're wrong, the world is a pretty big place after all.
> suddenly it's basically all downside for the country and the people living there
Producing something, goods, services, useful information, etc. is a net plus for society, adding value for both the producer and the consumer, making the society overall richer.
Rent-seeking is purely extractive - it extracts value from the consumer, and in the cases where the extractor is outside of the society, e.g., a foreigner or oligarch-type, it extracts value from the society, leaving the society poorer.
"Efficient capital allocation" is another hand-wavey concept with no clear definition which is far too often used to justify fundamentally evil results, up to and including arguably the most massive and fundamentally stupid strategic blunder in history.
The USA was the worlds remaining superpower and was democratic.
But based on "efficient capital allocation", the USA decided it was more "efficient" to offshore its "fungible" labor to cheaper Chinese workers. This gutted entire regions and sectors of the economy, literally destroyed the middle class which formed the basis of stability in the country, and handed to an adversarial authoritarian regime both numerous choke-points on it's economy and defense capabilities and technological advantages sufficient to turn it into a serious peer-threat. On top of that, the gutting of the economy brought about conditions for a full-on assault in democracy in the USA.
You seriously need to rethink your "philosophy" based on glib quips.
Landlords such as Airbnb hosts usually invest a lot in furniture and equipment, helping to keep the producers in business. Not to mention provide employment thanks to renovations, cleaning and maintenance. I'd say it leaves the economy more vibrant and benefits all. A classic example where landlords were banned was the Soviet Union, and all the housing problems that followed. Although the USSR finally collapsed, people there still live in the old Khrushchevkas...
Sure, let's talk about second-order effects as if they somehow contradict the main issue of extracting all profit.
Yes, to the extent there is investment that returns to the local economy, both as good/services purchased locally, and assets that remain local. that is a positive. But remember, these are ALL ostensibly profit-making ventures. To the extent the profit leaves the local/national economy, it is an absolute negative. If the landlord is a local, and their profits are spent locally, it is all positive. When the landlord is foreign or doesn't participate in the local economy, it is a hard negative. And a foreign or corporate-/oligarch-ish landlord has no incentive to put anything back into the local economy, or maintain the buildings beyond the minimum, so any positive effects are minimized contrasted with a local landlord who might take pride in his buildings & reputation and participate in community building because it is his community too. (Obviously exceptions exist, but exfiltrating the profits is a pure net negative.)
AS for your AirBnB argument, it is fabricated fantasy. There may be isolated instances where it is a positive, but I've recently read reports from four continents how both movements and laws are underway to attempt to undo the damage AifBnBs do to communities; you conveniently ignore this while tacitly arguing against it. The fact is, even as an AirBnB guest, remote owners suck, while on-site owners are typically great (I just enjoyed one of the best examples last week). The remote owners superficially spiff up the place so it takes good pics, but do the absolute bare minimum of short-term maintenance, while the on-site owners renting out parts of their own building actually invest in the property.
And overall, the influence of turning a substantial number of buildings into short-term rentals is pernicious. The people staying in those buildings by definition have no investment in the local economy, culture, or society, so they do nothing to help the commons issues. The reduced housing stock droves up rental rates for actual locals, allowing often remote landlords to extract more money from a declining community. It is effectively two methods of stripping assets and wealth from a community, effectively making it poorer — please explain how involuntary impoverishment makes improvements in the life of a community or it's individual people.
Is this a creative way of arguing that landlords are a net loss for the country? Because I would like to remind you that MANY people cannot afford to buy homes, and renting is how they make sure they don't become homeless.
I guess that’s a good thing (for voluntary renters… not so much for involuntary renters) but not really supposed to happen.
Foreign capital is undesirable in the housing market because:
1) It raises demand (when buying a home as a local, you now also have to compete with foreigners "investing", and this raises prices).
2) It often develops housing in a very unhealthy direction: Airbnbs and vacation apartments are toxic for local society and must be kept in check, otherwise you end up with half the houses just being shuttered for the whole off-season, and towns becoming empty husks.
3) Rent is a lot of money, and its obviously beneficial if it stays in the local economy instead of flowing abroad.
2) rent being the only way to afford shelter has zero relation to whether it is a net loss or not
Not landlords as a general concept, but there are many categories that are:
- Investors buying areas in bulk to monopolise available living space and manipulate prices
- Demand of renting space by investors making purchases unaffordable
- Temporary living space (Airbnb, etc) removing long term residence offer.
- Foreign investors exploiting living space from abroad, since the money extracted from rent will not be reinvested in the country.
The usual free market response to this is "more offer will even out demand". But there's lots of obstacles to this in real life. Regulatory capture, high upfront costs that limit builders, near inhexaustible demand by investors and tourism, etc.
However, it can be difficult for foreigners without a Japanese support network (like a blue-chip employer) to rent property in Japan at market price, because of discrimination by landlords. This isn't because of government policy, it's because building managers have the impression, mistaken or otherwise, that foreign tenants won't respect the rules, will be difficult to communicate with, or might skip town with unpaid rent.