Many people wonder, “I want to use a traditional Japanese house (kominka) to make money through vacation rentals” or “What should I be careful about when running a vacation rental?” There are several key points to keep in mind when starting a vacation rental business in a kominka. For example, choosing the right property is crucial. If you fail to select an appropriate property, your initial costs can balloon, increasing the risk that your business will ultimately fail. In this article, we’ll explain in detail the key points for successfully running a vacation rental business using a kominka. Please use this as a reference.

Steps to Starting a Vacation Rental Business in a Kominka

The basic flow of running a vacation rental business using a kominka is as follows:

1. Find a property that allows vacation rentals (in the case of a rental property)
2. Meet fire safety equipment requirements
3. Contract with a registered residential lodging management business (if not managing it yourself)
4. Submit the necessary vacation rental registration/notification
5. Furnish the property with furniture, appliances, and amenities
6. Hire a professional photographer for photos
7. List the property on booking sites and begin accepting reservations

The basic process is the same for any type of house, not just kominka. Since some of these steps are legally required, be sure to research thoroughly as you proceed. For a detailed explanation of how to get started with vacation rentals, please see the article below.

[Blog] How to Start a Vacation Rental Business: Steps, Keys to Success, and Precautions to Avoid Failure

2 Key Points for Succeeding with Vacation Rental Management in a Kominka

Here are three key points to keep in mind for succeeding with vacation rental management using a kominka.

1. Carefully consider your location strategy
2. Don’t rush into purchasing the kominka

1. Carefully Consider Your Location Strategy

Location strategy is extremely important for succeeding in vacation rental management using a kominka. Since running a vacation rental business is also a form of real estate business, it’s no exaggeration to say that the property’s location determines its success. A location strategy involves analyzing the surrounding environment and appeal of a property, and building your management approach based on that analysis. Specifically, you need to consider the following points:

・Choose an area guests would want to stay in
・Choose a property near tourist attractions
・Choose a location with historical background or a sense of Japanese culture
・Choose an area with high foot traffic

Choose an Area Guests Would Want to Stay In

For kominka vacation rentals, the appeal of the area itself directly affects guest acquisition. Once you purchase or lease a property, it’s not easy to change, so be sure to check carefully when selecting one. In tourist destinations or highly convenient areas, demand for accommodation will naturally arise, making stable management possible. In addition to these external factors, offering a unique guest experience through creative interior design and services is also key to success.

For example, by offering “an experience you can only have here” or “a photogenic space,” you can successfully attract guests even in areas with few tourist attractions. By leveraging social media and creating differentiated content, you can draw in guests. Even without any notable tourist attractions nearby, it’s possible to succeed in guest acquisition by creating an original, distinctive vacation rental.

Choose a Property Near Tourist Attractions

When selecting a kominka property for vacation rental use, also check whether there are tourist attractions nearby. For example, areas like Izu, Hayama, and Kujukuri are well-known tourist destinations where you can expect a 100% occupancy rate during long holiday periods. Properties located near tourist attractions tend to attract more bookings.

Even if a location isn’t a major tourist destination, a property near hot springs, large parks, or historic townscapes can be a significant strength. By leveraging these tourism resources, you can achieve stable guest acquisition.

Choose a Location with Historical Background or a Sense of Japanese Culture

Being in a location with “historical background” is also a major advantage. Many travelers want to experience Japan’s unique culture and traditions, and areas where you can feel local history or that retain a nostalgic, atmospheric landscape are popular.

Examples include areas in Kyoto that retain traditional townscapes, castle towns dating back to the Edo period, or areas that preserve the charm of the Taisho and Showa eras. In such locations, you can differentiate your property from other accommodations by offering “an experience unique to that region.”

When renovating a kominka, it’s a good idea to adopt a design that incorporates the local traditions and characteristics of the area, so that guests can truly feel the history and culture of the place.

Choose an Area with High Foot Traffic

Properties located near major metropolitan areas frequented by foreign tourists, such as Shinjuku or Shibuya, offer significant advantages.

Since hotel prices in urban areas tend to be higher than in rural areas, vacation rentals become an attractive option for travelers who prioritize cost performance. Additionally, areas with heavy foot traffic tend to have high accommodation demand, so if the location is good, it’s often possible to maintain a solid occupancy rate even if other conditions are slightly less favorable.

If the interior design and amenities are well-developed, a kominka vacation rental in a major metropolitan area can be particularly competitive. In highly convenient locations, you can also cater to the needs of business travelers and short-term visitors.

2. Thoroughly Check Building Codes and Plumbing

Once you’ve decided on the property’s location, the next step is to thoroughly check the condition of building codes, plumbing, and other structural elements. Even if a kominka looks great on the outside, it may have hidden structural issues. By checking the following points, you can prevent unnecessary repair costs and management troubles before they occur.

Check for Problems with the House’s Foundation

Even if a property is appealing on the outside, if there are problems with the foundation, significant costs may arise down the road. Even if the purchase price is low, if a full-scale skeleton renovation or major repairs become necessary, the total cost could end up being comparable to purchasing a new-build property. Be sure to check the following points:

・Building tilt: If the building is tilted, the risk of collapse during earthquakes or typhoons increases.
・Condition of the foundation: If the foundation is cracked or deteriorating, there may be serious structural defects.
・Presence of termite damage: Wood eaten away by termites can significantly reduce the overall durability of the house.
・Condition of other facilities: Also check the electrical wiring, insulation, and gaps around windows and doors.

If problems are found with the foundation, large-scale renovations may become necessary. Additionally, if fixtures such as the bathroom or kitchen are old, this can also affect your ability to secure bookings, so caution is needed.

Check the Condition of the Plumbing

Since plumbing fixtures in kominka are often aging, it’s essential to carefully check the condition of the pipes and drainage. Older properties frequently use narrow 13mm pipes, which have weaker water pressure compared to the 20mm pipes commonly used today. This can lead to the following issues:

・It takes a long time for the bathtub to fill with water
・Weak shower water pressure
・Poor toilet flushing

If the water pressure is insufficient, you may not be able to install a tankless toilet even if you wanted to, which could lead to complaints from guests. Check for these issues and plan renovations if necessary.

Improve the Property’s Appearance

As the name “kominka” (old private house) suggests, these properties have been around for many years, so the exterior is often aging. Since the exterior is a key factor in forming guests’ first impression of a property, it’s important to renovate the exterior walls to enhance cleanliness and appeal. Consider the following methods:

・Repainting: Apply a fresh coat of paint to the exterior walls to refresh the color and texture.
・Re-cladding: Remove the existing exterior wall material and replace it with new material. This is a large-scale renovation, but it can result in a dramatically improved appearance.
・Covering method: Attach new exterior wall material over the existing walls. This can improve the appearance while keeping costs relatively low.

4 Attractive Benefits of Kominka Vacation Rental Management

Running a vacation rental business using a kominka is packed with many appealing benefits. By understanding the following points, you can maximize its potential.

1. Automation is possible even with a small investment
2. Extremely high return on investment
3. A growing market driven by inbound demand
4. Contributes to solving the vacant house problem

Let’s look at each of these benefits in detail.

1. Automation Is Possible Even with a Small Investment

One of the major advantages of running a vacation rental business in a kominka is that you can get started with a relatively low-cost investment, and automation is also within reach. It’s true that kominka often require renovation or remodeling, but if you follow proper selection criteria and choose the right property, you can significantly reduce your initial costs.

Furthermore, by using a vacation rental management company, you can efficiently outsource day-to-day tasks such as cleaning and reservation handling. This allows owners to minimize the time and effort spent on management while running a highly profitable business. Proper property selection and an effective initial strategy are the keys to success.

2. Extremely High Return on Investment

Kominka vacation rental management can be expected to deliver higher yields compared to typical real estate investments. While ordinary real estate investments typically yield around 5%, vacation rental management can achieve returns of 10-20%, and depending on the property, even 30-50%.

By leveraging kominka properties that allow for lower initial costs, you can further improve your investment efficiency. Rather than taking on the risk of investing a large sum of money all at once, the ability to start with low costs while realistically pursuing high returns is one of the major appeals of kominka vacation rentals.

3. A Growing Market Driven by Inbound Demand

With the relaxation of COVID-19 restrictions, inbound demand is rapidly recovering, and the vacation rental market is once again booming. Even before the pandemic, vacation rentals were drawing attention as a growth market, but when restrictions began, many operators withdrew, causing a temporary decline in the number of market players.

Now that restrictions have eased, opportunities for overseas travelers to visit Japan are increasing. For travelers who place particular value on regional character and cultural experiences, kominka hold great appeal. In this kind of market environment, kominka vacation rental management can be described as a business model with strong growth potential, capable of capturing inbound demand.

4. Contributes to Solving the Vacant House Problem

In Japan, the problem of vacant houses is becoming increasingly serious due to the declining birthrate and aging population. Using a kominka as a vacation rental is a meaningful business endeavor that contributes to solving this social issue.

Abandoned vacant houses not only continue to deteriorate but also negatively affect the landscape and safety of the entire community. Revitalizing these properties through kominka vacation rentals and effectively utilizing them as tourism resources and accommodation facilities also contributes to regional revitalization.

Additionally, engaging in a business with social significance can also boost the owner’s own motivation. For those who want to “contribute to society” or “help solve local problems,” kominka vacation rental management is an ideal choice.

[In Conclusion] If You’re Considering Vacation Rental Management in a Kominka, Consult Stay Buddy!

Kominka vacation rental management is an appealing business model that not only allows you to start with low costs, but also combines high yields with genuine social significance. Now, as inbound demand continues to grow, is truly a great opportunity to embark on a vacation rental business using a kominka. Take your first step toward success by carefully selecting the right property and building a solid strategy.

At Stay Buddy, we handle everything from proposing kominka renovations and vacation rental registration/applications, to ongoing operational support after launch. If you’re considering converting a kominka into a vacation rental, please feel free to reach out to us for a consultation. Let’s work together to create the vacation rental property of your dreams.