Living in Japan with LH

6 Steps to Purchasing an Apartment

There are six main steps involved in purchasing and managing an apartment. Here’s an overview of each step, along with key points to keep in mind.

1. Property Search

Unless you already own land and plan to construct a new apartment building on it, you will typically purchase either a newly built or pre-owned apartment. Therefore, the first step is finding the right property.

The most important factor in apartment management is minimizing vacancy risk. When searching for a property, don’t just consider the price—also take into account the location and rental demand in the area.

Newer properties tend to be more appealing to potential tenants. Older apartments may require significant renovations or repairs in the near future, such as wall maintenance or plumbing upgrades. Make sure you understand the current condition of the property and factor in additional costs beyond the purchase price.

2. Submitting a Purchase Offer

Desirable properties are in high demand. A purchase offer is a way to show your intent to buy to the current owner through a real estate agency like Land Housing and prevent others from purchasing it first.

Since popular properties sell quickly, it’s important to clearly define your criteria—such as budget, number of units, and location—in advance so you can act promptly when a suitable listing becomes available.
 

3. Preliminary Loan Screening

Just as homebuyers typically use a mortgage, it is common to finance apartment purchases through a loan from a financial institution—commonly known as an apartment loan. After submitting your purchase offer, the next step is to apply for preliminary loan screening.

Screening criteria vary by financial institution, so if you’re rejected once, don’t give up—consider consulting another lender. We can also introduce you to trusted financial institutions.

Apartment loan terms are usually set within the remaining useful life of the building. Older properties may be cheaper but could result in shorter repayment periods.

Additionally, apartment loans tend to have higher interest rates than home loans, often around 2–4% for variable-rate plans. Since interest rates differ significantly between institutions, be sure to compare them.

As apartment management is considered a business, your business plan will also be a key factor in the loan screening. Land Housing can support you in creating a well-structured business plan.
 

4. Sales Contract and Earnest Money Deposit

Once the sales contract is signed, you will need to pay an earnest money deposit to the property owner. This deposit helps ensure that neither party cancels the agreement while waiting for loan approval.

If your loan is approved, the earnest money is applied toward the down payment. It must be prepared in cash, with 5–10% of the purchase price being standard.

If the seller cancels the contract, you will receive your deposit plus an additional amount as compensation. However, if the loan is denied and the buyer must cancel, the deposit is typically non-refundable.

To avoid losing your deposit, we recommend including a loan contingency clause in the contract stating that if your loan application is rejected, the contract will be voided and your deposit returned.

5. Choosing a Property Management Company

To manage your apartment, you’ll need a property management company that handles tasks such as tenant recruitment, maintenance, rent collection, and dealing with tenant issues.

Even if you live nearby and plan to self-manage, a reliable real estate agency is essential for tasks like tenant screening and lease agreements. We recommend choosing a management company at this stage, assuming your loan will be approved.

Land Housing’s rental management division provides detailed guidance on tenant recruitment and property management.

6. Final Loan Approval, Payment, and Handover

Once your loan is officially approved, payment and property handover will take place. After the handover, you'll need to register the property to officially prove ownership.

We can introduce you to a judicial scrivener to assist with this registration process.