Matt Ketchum on How to Evaluate Akiya Purchases, Akiya Market Trends, and Much More

We had the pleasure of interviewing Matt Ketchum, a well-known akiya hunter and expert on real estate acquisitions in Japan. He discussed essential points to consider before investing in a property, looking at akiya as a lifestyle investment, and much more. This interview has been edited for length and clarity. 

MailMate: Tell us a little bit about yourself and your akiya service. 

Matt Ketchum: I’ve been doing akiya stuff for about 7 years now and am seen as one of the leaders in this space. Digging into it, it’s a long story that involves a lot of rock and roll. 

For 10 years now, I’ve been databasing independent music across Japan; the same databasing methodology I’ve used to understand what’s happening in the local music scene is the databasing methodology I’ve used to understand akiya. It’s strangely similar. 

I started working on akiya because I saw these similarities between what happens in Japanese rock and roll and what happens in Japanese real estate. It started as a hobby, which I did for 3 years or so. At the time, I was the executive director of the Canadian Chamber of Commerce which is a relatively public and visible position. So when the COVID19 pandemic came around, many people said to me, “I don’t want to leave Japan, but I don’t know where to go.” Little did they know that I had a solution for them—akiya. 

So, I began the first business I was involved with, which I’ve since split with. I did that for a couple of years. Then, starting last September, I began working on Akiyaz. 

Normal real estate in Japan is hard enough to get. But akiya are particularly difficult because real estate agents don’t want to touch them—and for good reason. 

The Japanese business model incentivizes real estate agents to sell as high as possible because they take a 3 percent commission for anything but the cheapest of properties. They don’t get paid for any work they do before that. So it’s absurd to ask realtors to send emails, faxes, drive places, and do all the work that goes into making a sale—which they won’t get paid for unless they make the sale. 

If you’re talking about Ebisu condos or sufficiently expensive real estate, then it’s interesting enough for them to try to help you get it, but that’s for downtown Tokyo. An example I give is Shimoda down in Izu. A lot of the akiya there are managed by an Atami real estate company. So whenever anyone is interested in a Shimoda-area akiya, an Atami-area realtor has to drive down and back just to show off a few thousand-dollar property. [Note: Shimoda is a 90-minute drive from Atami, one way.]

That’s where I come in. We put a price on all of that due diligence, research, visitation, and time and effort spent confirming whether what you were thinking about buying is worthwhile. And by “worthwhile,” that’s not necessarily a finance thing. If you want to make large returns on real estate in Japan, generally akiya are not the way to go. Where we are now, akiya are largely a lifestyle investment. These are new markets we’re breaking open, which are necessarily riskier than established markets, so those that go into this need to understand that they’re essentially trailblazers.

We evaluate whether the akiya has a solid structure. As an Earthquake hotspot, Japan has strict building codes that have changed over time. If you want to make an airbnb out of it, how do we ensure that the zoning is correct? What’s the local community look like? What’s the logistics of the area look like? All the things that go into making sure that if you spend money on the asset, are you going to get enough value out of it. And, again, I’m talking about lifestyle value, not just financial value.

That’s part of what my organization does. We also help auditing platforms to better analyze activity across the real estate market in Japan. I don’t want to talk too granularly about that as we’re still developing the systems. But in the big picture, we want to address the digitalization problem in Japan's real estate scene. 

MM: From working with your clients, what has been the purpose that they have stated for purchasing an akiya in Japan? 

MK: Surprisingly, it's been more about moving their primary residence. Clients wanted to have their primary residence outside of the city and then have an apartment in the city, which is what I do. I rent a spot in Tokyo, and then I can quickly go back and forth between the two. There’s a lot of that. 

Wellness, outdoor recreation, yoga, health, hiking, returning to nature, sort of a digital detox. I work with many IT folks, which some people might find odd. “You want a digital detox but you’re an engineer? How does that work?” Well, yeah, you want to be on when you're on, and you want to be able to easily switch off when you want to. 

MM: You mentioned that these are people who have a residence in the city and then want a place in the country. Are your clients mainly from Japan?

MK: More long-term residents in Japan, but I’ve also worked with Japanese clients, so I'd say 80% or so of my experiences are with non-Japanese clients.

There are roughly four markets for akiya, two of which are very similar. There’s the international market, which is non-Japanese people coming from outside of Japan, which I'm guessing is who MailMate mostly works with.

Then there's the international domestic market, so folks like myself who have residency in Japan who aren't Japanese citizens. 

One that's very similar is Japanese citizens with sufficient international experience. Domestic internationals in Japan go for regular houses, like retreats or pension-style homes, that can host 8 to 20 people.

And then there’s the domestic market, which are mostly looking at land specifically, as well as cabins and properties that require a low level of investment. This market is actually extremely exciting because I think there's a big opportunity for young domestic Japanese to begin experimenting with entrepreneurship at an extremely low level of financial risk. I shouldn't talk about that because it's kind of my own secret. 

All of these segments have valid reasons to be pursuing these. I think the international market can be the most challenging, and I mean this in a good way because my job is to be a dream catcher—someone who has a dream, a vision in their head. My job is to figure out, “Okay, does that exist in the real world? And if not, how close can we get to it?” 

I need to be able to control and manage a client’s expectations in that search and hunting process to get something into their hands that is what they want. That's also why we have multiple levels of engagement and a process associated with them. Because we don't want to immediately run to a real estate agent and say, “Alright, let's get that brokerage process underway. We don’t need to do any due diligence,”—that's a really good way to make a very bad investment. 

If their idea is a castle in the sky, and they come to me, I'm like, “All right, it might exist, but you have to pay me to go figure that out. Because it’s going to take me time and expertise and all this stuff. So they’ll spend $2,000 or so to figure out, “Oh, that thing I want doesn't actually exist.”

MM: How can individuals assess the condition of an akiya before purchasing?

MK: Get an inspector. There's a wide range of what an akiya is. It's not a very well-defined term. A lot of people think that it's just an ancient home that's about to fall down that you can get really cheap. Those exist, but there are also really good akiya too. But you need to know if you're going to buy these—I don't care how much or how cheap—spend ¥80,000 to get a licensed inspector to look the property over. 

Because if you make a mistake, it's not just about you. I'm quite passionate about this point: if you make a bad investment, it's not just bad for you, it's actually bad for the community. Because you’re giving false hope to the neighborhood. The locals will be excited and say, “Oh my god, somebody actually bought it!” Then it turns out to not be good, and then you kind of abandon it again, which also suggests that the area in general isn't great. So [buying too quickly] can actually have cascading bad effects. Do your due diligence. Find someone licensed and knowledgeable about this stuff and take a look at the property.

Also, know what you want. Finding that quintessentially Showa-era, Meiji-era Japanese house is often really far off the beaten path. 

For example, I have a client right now who's interested in starting a sustainable tourism business here. Where we're at is finding that balance. You want that super secluded Japanese experience? Well, there's not going to be supermarkets, or a carpenter, or a bus station. And if you want yuki guni [snow country], what do you do when it snows heavily? Who's going to take care of that? 

We need to balance that desire for quintessential Japanese-ness with the real situation on the ground. For example, if you’re doing an Airbnb, you need to make sure that people can get out there, that it’s accessible, and that it’s safe. 

And if you got all the aesthetics right, but there’s nobody within 50 kilometers, then that's probably not going to work very well.

So do the inspection and do your logistical research as well.

MM: Are there specific legal requirements for foreigners buying akiya?

MK: Not really. I mean, so long as you jump through the hoops. You don’t need to be a citizen of Japan to buy any real estate here. 

That said, this is where the conversation gets funny. Buying it is easy and legal, but managing it is another story, which is where MailMate comes in.

Purchasing the property vs managing the property are two very separate things. And the conversation surrounding management has not yet been sufficiently granularly developed. 

You hear about “Yeah, you can buy real estate in Japan.” So yeah, you can buy it. But that doesn't imply anything but the purchase.  

Bank accounts are a huge thing, being able to pay bills, all those things are not going to happen very easily at all if you don't have a method for that.

MM: Do you help with the renovating aspect of an akiya purchase? 

MK: I give recommendations. Also, part of the due diligence process is determining what local resources are available. 

One problem I’ve encountered is when someone buys something and wants to renovate it. Yes, there’s a good carpenter around, but they're two and a half hours out. If they want to use them, that will incur extra transportation costs and more logistical hassle. So that's another part of the equation that needs balancing. 

MM: I imagine people often don't know whether a construction company is within their local area or the costs associated with that.

MK: This is really the crux of the problem, at least from the buyer’s side. For the buyer’s side, there are so many hoops and question marks and important things to do, but there are so few resources that even tell you what those necessities are so that you can then tick the box. 

My main goal is to have clients make informed decisions about the purchase. If ultimately they determine the purchase isn’t a good idea, I've still done my job. That's still what I get paid for because you're able to make a smart decision with peace of mind. 

If you don't know the resources, if you haven't thought of septic tanks, or, you know, any number of things. For example, say you want to live in Nagano. Well, do you like bugs? Because there are a lot of them there. Most of rural Japan has a lot of bugs. Many of these things aren’t thought of, and that ends up being a surprise. 

I’ve also found that the smaller the surprise the worse it tends to be.. 

Big problems are good to have in a sense because they’re big enough for you to pay attention to. Because you then recognize it as a problem that needs to be fixed. 

But if it’s a tiny nuisance that there’s no fix for and that just annoys them the entire time, that will make it a bad experience. 

MM: Have you been successful in applying for any of the government subsidies around renovating akiya? 

MK: I'm actually applying for a few right now, but I haven't been successful yet as I’m still going through the process. I know of some people who have applied and received X amount. 

There are a whole bunch of programs, and they're really good. I quite support the application for them. But again, there’s a balance because they're pretty time-intensive, and they’re not guaranteed. And even if you are accepted for it, it’s not like a profit or revenue stream. 

If you can spend as little time as possible planting those seeds, and then have the short-term revenue streams while you're waiting for those seeds to grow into trees, and then, you know, six months later or a year later, the subsidies start coming in. That's really good, but I feel like they can also be kind of a distraction. I've seen them be distractions to a number of people.

MM: Are akiya properties good investments? Is that something people think about when they look to make an akiya purchase? 

MK: Again, it's the difference between lifestyle and financial investments. From a financial point of view, I can't say that akiya are good investments. 

What I can say is that it's totally possible to lose money on them, although it’s also possible to have nice little revenue streams. 

But the fact of the matter is that the rural Japan market simply isn't broken into yet. And so if you're going into it from a financial point of view, you need to understand that—this is kind of the exciting part—you're very much like a frontiers person; you are breaking new ground. So that means you're necessarily taking on more risk than anybody else because you're defining new markets. 

You're kind of a hero and brave and adventurous—Indiana Jones kind of stuff. [laughs] And we need those people in order for these markets to become financially more interesting and profitable, which I fully support.

But you do need to understand that [over financial profits], you're doing good for the economy of Japan. 

This is honestly why I suggest approaching it from a more lifestyle investment point of view. That takes the pressure off to make those returns and merely sets up a situation where you've got something trickling in. You can use it when you want, or you can rent it out. But you're also creating models for other people to reuse or at least experiment with, which may trickle into financial investments. 

If you want to make money on real estate in Japan, invest in Tokyo real estate—otherwise, it's not a good idea. 

On the other hand, I'm talking with people about making rural music studios for American musicians to come and have a retreat, be able to compose, and then get back into the tour mode. There are plenty of interesting use cases, such as geothermal stuff. There are all kinds of wacky things that are really, really interesting to play around with, but they're not immediately profitable. 

And you know, being able to mitigate your risk, play around with ideas with low-to-zero risk, maybe make some money off of it, but do it safely as a hobby that you’re also enjoying, that's important. This boils down to expectation management. If you want to make 10% returns, the market hasn't been broken yet, so it's unreasonable to expect that. 

MM: How do local communities typically react to the renovation and occupation of akiya?

MK: It's totally idiosyncratic. I can't say it’s always super great. I won’t name names, but I've definitely heard of pretty wild stories in a bad sense. 

This is one reason why I host retreats (follow to get updates!). If a client or potential client is interested in a certain lifestyle and has identified a place that they think is good for that, even before you spend the big money on conducting the research, I suggest they go out for a weekend and stay in a nice hotel or Airbnb nearby. Go check out the bar and talk to the local people. Maybe do that 2 or 3 times over the course of half a year so you get a good feel for not just the property itself but also the vibe of the area. That's just as important as finding a good property, because if you find your dream house, but you're surrounded by a bunch of jerks, that sucks, right? You don’t want to buy that. I also release travel itineraries via my Substack.

One of my next retreats is in Nebukawa. We'll be camping, scuba diving, touring some akiya down there, and having a good time in Nebukawa so that people can literally and figuratively dip their toes into the water.

MM: I think that's a perfect place to end. Anything else you’d like to add?

MK: Financing isn't really a good thing to pursue. It's just too much work. Unless there's a really expensive akiya. 

Cash purchases are absolutely the way to go. And if you don't have $50,000 in cash lying around, don't try. 

Something that rubs me the wrong way about the emphasis on cheap akiya is that it gives many folks who don't have that kind of cash a pretty large dose of false hope. 

If you don't have cash on hand, you won’t be able to do it. It's still a money game. You still need to have liquid cash that you can potentially burn lying around. So it's not the cheapest thing. The fact of the matter is, it's real estate and it’s going to be kind of expensive, even if it’s not super expensive. 

I do try to point that out from the start. Akiya are much, much cheaper than LA properties, but they're still a large-ish investment.

Connect with Matt Ketchum on LinkedIn or learn more about his services at Akiyaz.