Charming resort mansions in Yuzawa area, Niigata?: Think twice

(Naeba ski resort in Niigata)

Sparkling ?

There are many resort condos in Yuzawa in Niigata for sale at a very reasonable price.

I found an interesting article about resort condos and would like to share the summary with you today.

 

After the burst of the bubble, the residents of the condominiums became elderly. 

Yuzawa Town, Niigata Prefecture, the Joetsu Shinkansen entered Ueno in 1985, and the entire Kanetsu Expressway was opened, becoming a tourist destination that attracts 10 million people annually. 

You can enjoy skiing and hot springs effortlessly from the Tokyo metropolitan area. 

In the bubble economy, 58 resort condominiums were built by 1993 with a total of approximately 15,000 units. 

According to real estate information company Tokyo Kantei, there are about 80,000 resort condominiums nationwide.

Yuzawa accounts for close to 20%.

 

However, the ski boom has gone, and prices have fallen due to oversupply.

About 30 years since the bubble, condominium users have also changed significantly.

According to the town, out of over 8000 townspeople as of April 2016, more than 1000 people registered the current address in apartments.

It accounts for 12% of the townspeople.

People who bought the condominium after the bubble economy moved in to retire and the locals are also moving in because of the age.

Some local aged people moved in because they do not want shovel snow off the house and the sidewalk in the winter.

 More than 40% of the owners are over 65 years old or older, which is 8 points higher than the whole town.

 Some old residents who need care sometimes make the public baths dirty.

 

The director of an owner’s association settled on their own tells the story.

 

“Because it is only hundreds of thousands of yen, you can easily buy it without any mortgage loan.

The monthly management fee is quite expensive, but the public bath can be used so that the utility cost could be cheap.

 In September 2017, at the Niigata District Court Nagaoka Branch, nine apartments in Yuzawa Town were auctioned for sale as collateral for the debt.

 

It was about 23 to 88 square meters built in the bubble period from 1988 to 1990, but the standard amount set by the court was only 10,000 yen.

The reason why it is so low is that all of them are not paying the

monthly management fee and reserves for repairs.

 

 The amount of delinquency exceeds the building’s appraisal value and is negative, but if you accept the negative price, the “successful bidder” will get money.

That is why the court has set a standard amount of 10,000 yen for convenience.

 

As a result of this bidding, three units were sold for 10,000 yen, but six units were priced around 200,000 yen.

 

Most of the resort auctions are sold and bought by the owner’s associations.

 

Regular auctions are often set up by banks that lend mortgages.

However, the price of resort condominium is often too low, and the auction price does not cover the administrative expense and fee for the lawyer.

 Many of Yuzawa’s condominiums have this case, and there are several auctions every month.

Another condominium owner’s association is worried.

“When an apartment becomes cheaper, various people buy it and come in. The difference between an apartment and a conventional house is that the owner’s association has a reserve of 100 million yen for repairs.

“It will be a big deal if the association is hijacked.”

Another issue is property tax.  

The building from which the property tax is calculated the estimated value of is estimated by how much it takes to build the same building according

to the standards of the government, and reduced by aged deterioration.

Therefore, the appraisal value of the apartment is the same regardless of the location if it is the same building.

However, looking at real estate advertisements for resort condominiums, there are cases where properties over 70 square meters are 100,000 yen(U$1,000),

and the annual property tax amount is close to that.

The principle of fixed asset valuation is market value. 

 That is because 80% of the town tax revenue is a property tax of fewer than 3 billion yen. 

 Of these, condominiums account for about 90 million yen, accounting for 30%. 

 It is a stable financial resource for the town that can be called the last resort.

In Yuzawa, the condominium owner’s association is desperately supporting the value of their assets.

Final Thought

They are very very affordable but these units often suffer unpaid fees (delinquency).

You need to check the status of the fee before you jump the gun.

It is strongly advisable to investigate the health condition on finance of the owner’s association before the contract.

The association’s book could be deeply in red and may not able to sustain the building.

 

 

Toshihiko Yamamoto
Real estate investing consultant and author.
Founder of Yamamoto Property Advisory in Tokyo.
International property Investment consultant and licensed
real estate broker (Japan).
He serves the foreign companies and individuals to buy and sell
the real estates in Japan as well as own homes.
He holds a Bachelor’s degree in Economics from
Osaka Prefecture University in Japan
and an MBA from Bond University in Australia

Toshihiko’s book, “The Savvy Foreign Investor’s Guide to Japanese Properties: How to Expertly Buy, Manage and Sell Real Estate in Japan”is now out on Amazon, iBooks (iTunes, Apple) and Google Play.
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