REI WEALTH MONTHLY Issue 31 - Page 66

FOREIGN INVESTORS APPROACH TO REAL ESTATE INVESTING UNDER $50K PRITI DONNELLY Earthquake Concerns While the recent earthquakes have not deterred investors from properties in Japan, we have had concerns about the effect of earthquakes on properties. Under a standard policy, earthquake, tsunami, volcano and flood damages are covered by insurance policies and insurance is surprisingly inexpensive, only a few dollars a month. Since the building itself carries an accumulated funds pool, any remaining losses not covered by insurance are generally covered by the pool. As part of the due diligence process at the time of the purchase, we check the status of the accumulated funds to determine whether 100% coverage is necessary. Selling Your Property Since the market moves very quickly in Japan, properties are listed only a few days before they are sold. Therefore, if you decide to sell your property, there is usually a buyer ready to purchase. Keep in mind the tax implications. A property owner, whether foreign or local, who sells a Japanese property within five years can expect to pay 40% capital gains tax. After five years, the tax drops to 20%.