1. Station and micro-location mismatches
If the marketing material emphasises a famous station but the actual "home" station is different or significantly further away, pause. The same applies when the walk route is materially less attractive than the raw minutes suggest: steep hills, poor lighting, unpleasant surroundings.
In a station-centric market, any ambiguity around real access to the network is a priority red flag.
2. Rent assumptions that exceed local reality
When projected rents in the brochure sit well above local station-level benchmarks for similar units, you are effectively underwriting growth just to reach today’s asking price. This is rarely a good starting point.
Verify achieved rents for comparable units, not only asking rents, and be very cautious when the pitch relies on "you can raise rents after purchase" without solid justification.
3. Inconsistent or incomplete building documentation
Missing minutes from owners’ meetings, unclear reserve fund status, unresolved structural questions or vague answers about past works should all trigger deeper investigation. In a well-run building, documentation may not be perfect, but it is rarely opaque.
Foreign investors sometimes underestimate the long-term impact of weak governance and underfunded reserves on both risk and exit value.
4. Overly complex or unusual deal structures
Unusual legal structures, partial rights, complicated co-ownership situations or unclear land/building relationships can all be reasons for local buyers to demand a discount – or to avoid the deal entirely. Complexity is not automatically bad, but it must be compensated by price and understood in detail.
If you do not fully understand the structure, the default answer should be "no", not "I will figure it out later".
5. Broker behaviour that signals pressure
Aggressive time pressure, reluctance to provide documentation, inconsistent statements about rent or tenant status, and emotional language about "once in a lifetime" deals are behavioural red flags. Professional brokers working with serious investors expect and support a structured underwriting process.
If the process feels like you are being rushed instead of accompanied, step back.
6. Numbers that only work in a single optimistic scenario
If your model only looks acceptable in one narrow, optimistic case – high rent, low vacancy, minimal capex, smooth exit – you are not investing, you are hoping. A robust deal should remain acceptable under more conservative assumptions.
This is where scenario analysis and clear downside thinking become non-negotiable.
7. Integrating red flags into your playbook
Red flags are not a separate checklist; they are integrated into every step of the process: screening, underwriting and due diligence. The main guide "How to Analyze a Deal in Japan" shows how to embed this mindset into a full acquisition playbook, so that you can scale your activity without diluting your standards.