Business Management Visa through Real Estate Investment

About the Business Management Visa

The Business Management Visa is intended for individuals who intend to manage or start a new business in Japan.

To qualify, applicants must meet several criteria, including investing sufficient capital, securing physical office space, and presenting a viable business plan.

For more information on Business Management Visa, please click here.

Real Estate Investment as a Business

Many people say, “I have purchased real estate in Japan and would like to obtain an investment visa,
However, as a general rule, you cannot obtain a Business Management Visa for “only investing in real estate” or “only purchasing real estate.

A Business Management Visa is a visa for “investing in a business and managing the business,
Therefore, it is not possible to obtain a business management visa if one only purchases real estate for speculative purposes, thus a Business Management Visa cannot be obtained.

However, if the real estate investment is conducted as a business, such as a real estate rental business or a private lodging business, there is a possibility of obtaining a Business Management Visa.

For example,
Purchasing real estate and renting it out as private lodging (like Airbnb)” is one example.
Such businesses may be eligible for a Business Management Visa as long as they meet all the legal requirements for the respective permits and licenses, as well as the legal requirements for customer service.

Additionally, if you own multiple condominiums or commercial buildings and conduct “real estate leasing business,” you may also be eligible for a Business Management Visa to conduct real estate leasing business.

Business Model of a Private Lodging Business

Earlier, we mentioned that in addition to the real estate leasing business, there is also the possibility of obtaining a Business Management Visa for private lodging. Let’s take a look at the private lodging business.

Legal Framework of Private Lodging

In Japan, the field of “private lodging” is regulated under various legal frameworks, each with its own rules and requirements.

◆ Simple lodging business license

The simplified lodging business permit falls under the Hotel Business Law and is intended for lodging facilities shared by a large number of people. In order to operate under this permit, an application must be submitted to the local public health center, and a series of requirements must be met in order to obtain the permit.
The location is also limited to areas where hotels and lodging facilities can be operated.

◆ Special Zone Private Lodging

Private lodging in special zones is operated in accordance with the National Strategic Special Zone Law, which has less stringent requirements for facilities.
However, at least one foreign language service is required for that accommodation, and the minimum stay is two nights (three days). It is also limited to areas in National Strategic Special Zones.

◆ New law on Private Lodging

The New Law on Private Lodging, which went into effect in 2018, establishes a comprehensive framework for private lodging services to ensure safety, hygiene, and harmony with the neighborhood.
It covers three types of businesses: private lodging operators, private lodging managers, and private lodging agents, each of which is subject to specific obligations and duties.
Under this system, private lodging is limited to a maximum of 180 days of operation per year, and if the owner does not reside on the premises, the management must be entrusted to a registered private lodging manager; however, the requirements for the premises are less stringent and allow for operation in a wider geographic area.

◆ Criteria for choosing a legal framework

Each framework has its advantages and limitations, and the choice between these frameworks depends on various factors, including the location of the property, the type of guests targeted, and the willingness of the operator to comply with each regulation. Property owners should carefully assess their situation and objectives when deciding under which legal framework to operate their private lodging business in Japan.

The type of private lodging and the prefecture in which the private lodging is to be operated will determine the legal framework under which it is to be operated,
Please consult with a specialist for more details.

Real Estate Leasing Business

◆ Real Estate Leasing Business Overview

Real estate investors may be able to obtain a Business Management Visa by engaging in the real estate leasing business, in which they earn income by purchasing properties and renting them out on a long-term lease basis.

This real estate leasing business does not require a license or permit such as a “real estate transaction business” if all you do is rent out your own properties and earn rent.
(However, if you are renting out real estate owned by another company or person, you must obtain a “Real Estate Transaction Business” license or permit.)

It should also be noted that the rights and laws of lessees differ from country to country, and in Japan, the lessee of a building has the right of occupancy. In this　business model, you should familiarize yourself with the Japanese Civil Code, Land and House Lease Law, etc., and the rights of tenants, and properly manage the property to maintain a stable source of income.

In addition, since the Business Management Visa requires that the business be of sufficient size, multiple rental properties may be necessary, and it may be difficult for foreign nationals without permanent residency to obtain bank financing, which may be a financial hurdle for the applicant.

For example, it is difficult to obtain a “Business Management Visa” in a case where the applicant only intends to earn real estate income by purchasing a single detached house property or a room in an apartment building, etc., and does not engage in any other business.

This is because in order to obtain a “Business Management Visa” as a business that only invests in real estate,
In order to obtain a ” Business Management Visa” as a business that only invests in real estate, the rental income from real estate investment properties must be sufficient to cover all business expenses (director’s fees, real estate acquisition costs, office space, etc.), and the business must be profitable.

The scale of this real estate investment business is not small.
Assuming that Japanese real estate yields are around 4-5%, a real estate investment business would require the ownership of rental properties with a minimum value of 150-200 million yen in many cases.
In addition, if the property is old, it may require a large sum of money for repairs, etc., or it may be difficult to find tenants, and the risk is even higher if the number of real estate properties owned is small.

In addition, from the perspective of obtaining or renewing a business management visa, the business must, in principle, be profitable (net profit) in terms of both “accounting income/expenses” and “cash flow.

Therefore, the purchase price of real estate is not recorded as a lump-sum expense in the accounting process, but is subject to depreciation (see the example in the figure below), and the repayment of loans, etc., will differ from the cash flow (movement of cash and deposits) in the accounting process. Therefore, you need to plan your business carefully.

Therefore, when obtaining a Business Management Visa for real estate investment, it is advisable to consult with an administrative scrivener who is experienced in real estate and taxation.

Summary

The path to obtaining a Business Management Visa for real estate investment is complicated, but there is a good chance that you will be able to obtain one.
It requires a well-developed business plan, compliance with local laws, and a clear demonstration of your contribution to the Japanese economy.
Whether it is private lodging or a long-term rental business, the important thing is that the real estate investment leads to sustainable and legitimate business operations.
If you are considering this route, we recommend that you consult with an experienced Business Management Visa specialist to help you successfully complete the application process to meet the strict requirements of the Immigration Bureau.

The Yanagi Group is a professional group excelling in real estate matters, having been involved in several thousand real estate name change procedures each year as a registered judicial scrivener for a major listed real estate company.
We can provide one-stop services for foreign business owners, including visa acquisition, company establishment, tax office procedures, social insurance procedures, purchase and management of private lodging properties, application for permission on your behalf, and brokerage of real estate transactions.

Please refer to our previous article.

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We are Yanagi Group, which have offices in Osaka (Abeno and Tennoji), and our affiliated offices in Tokyo (Shibuya and Ebisu) are also available for an on-site consultation. We have handled many applications for permanent residence permits, naturalization permits, work visas, college student visas, management visas, etc., as well as visa renewal procedures related to the status of residence with the Immigration Bureau (Immigration Bureau) as a one-stop service. Our experienced administrative scriveners are also available to help you with any problems you may have.

We also have staff members who can speak each of the native languages and can assist you in obtaining a visa.

※If you wish to be consulted in Nepali or Bengali, please inform us in advance via our website or social media, and the translator will contact you ahead of time.

Please feel free to contact us if you have any questions about your status of residence or visa, even if they are trivial.

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