1. Key Takeaways
A hybrid of short‑term and monthly lets small city units smooth cash flow. Use short‑term for peak tourist demand and monthly contracts for off‑season. Decisions hinge on location, regulatory fit, and operational quality.
2. Regulatory Basics
Under Japan’s Minpaku Act, the annual cap is 180 days. For year‑round operations, consider a hotel/inn license or special zones where applicable. In condominiums, verify HOA bylaws and zoning first. Put house rules for noise, waste, and queueing into writing to protect neighbor relations.
3. Location and Unit Design
Target within 10 minutes on foot to major stations and near demand drivers like hospitals and project sites. Units 20 m²+ with separate vanity and laundry lift satisfaction. If using self check‑in, enforce ID verification, guest registry, and key control without exception.
4. Sample Financials
Assume 28 m² unit, price ¥24,000,000, equity 30%, LTV 70%, rate 1.2%, tenor 35 years.
Average ADR ¥14,000, 70% occupancy gives 21 nights monthly. Gross ¥294,000, minus 15% platform fee = ¥249,900. Cleaning ¥4,000 × ~7 = ¥28,000, utilities ¥15,000, linen ¥8,000, HOA ¥10,000, insurance ¥2,000, lodging tax ¥1,000, property tax ¥10,000, reserves ¥5,000. NOI ¥170,900/month or ¥2,050,800/year, implying ~8.5% cap on price. Debt service about ¥49,000/month, yielding pre‑tax cash flow ~¥121,900/month. With total equity roughly ¥8,880,000, projected CoC(Cash on Cash) ~16.5%. Figures are illustrative and will vary by micro‑market and execution.
5. Operating Essentials
Maintain 4.7+ review scores via sub‑48‑hour fixes, fast messaging, and pro cleaning. Use dynamic pricing with event calendars and weekday multipliers, then backfill low season with 30‑night+ stays. During acquisition, check eviction/turnover history, noise exposure, and bylaw amendment precedents.
6. Risks and Exit
Stress‑test for regulatory shifts, fee changes, and FX. Keep at least three exits: long‑term lease, sale to operators, or self‑use, and pre‑define a breakeven so that even at 60% occupancy you remain above water.
