BiggerPockets Money Podcast - FI Faster by Making More and Spending Less Using "Geo-Arbitrage"

Episode Date: September 16, 2025

Discover how geo-arbitrage can double your investing power without requiring a raise, career change, or lottery win! In this episode of the BiggerPockets Money Podcast, Mindy Jensen and Scott Trench are joined by Daniel Mills to explore how remote workers can live lavishly on a middle-class salary by strategically leveraging location differences. This isn't just about moving somewhere cheaper - it's about unlocking a completely different financial trajectory through smart geographic choices. Daniel shares his journey to financial independence while living in Japan, breaking down his simplified investment portfolio, dramatically lower cost of living, and the tax strategies that allowed him to write off six-figure incomes. From navigating international investing challenges to discovering unique real estate opportunities, Daniel's story demonstrates how living abroad can accelerate your path to FIRE in ways you might never have imagined. This Episode Will Cover: How geo-arbitrage can double your investment power on the same income Daniel's path from English teacher to international real estate investor Simplified investment strategies that work from abroad Tax advantages and write-off opportunities for expats Real-world cost of living comparisons between Japan and the U.S. Practical challenges of investing internationally and how to overcome them Cultural integration strategies for successful expat living Whether geo-arbitrage is right for your FIRE journey And SO much more! Learn more about your ad choices. Visit megaphone.fm/adchoices

What if I told you that you could double your investing power without getting a raise, changing careers, or winning the lottery? Today, we're diving into geo-arbitrage, the strategy that's helping remote workers live like millionaires on middle-class salaries. Welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen, and with me as always, is my staying stateside co-host, Scott Trench. That's right, Mindy, for me, the United States. See that? You got it. We are so excited to be joined again. by Daniel Mills today. Daniel joined us on the podcast a few years ago to tell his five story and we are so excited to be joined with him once again to talk about the power of

geo arbitrage. Daniel, welcome back to Pickerpockets Money. Thank you so much for having me, guys. I'm really excited to be back on and hoping to see you guys maybe next year when I come out to the U.S. Oh, yes. Absolutely. And thank you for joining us so early your time as well today. Not too bad. It's about eight in the morning here. Oh, nice. Konigua. That's the end of my Japanese. Oh, hiayo-go-zai-so is the morning, but I guess it's khani. Oh, is that good night? I thought that was hello. No, you said, yeah, good afternoon. Clearly, my Japanese needs a little work. So, Daniel, when you joined us before way back in 2021, you weren't quite fine. Where are you on your journey now?

Do you consider yourself financially independent? Yes, I do, especially here in Japan. Maybe I can kind of show where my portfolio is now, and then we can kind of compare it to what we had before or what I had when I came in the first time. My wife and I do a net worth update every month. We put our numbers in a shared spreadsheet, and sometimes we have a little money date about it. And so these are my sort of updated numbers. And I think the big headlines or the difference between what I have now and what I had when I first came on the podcast is that it's a simplified portfolio, and it's also has a lot less leverage. Basically, I have about a $2.1 million net worth right now. Three percent or so of that is in cash. I group my equities, my bonds, and cryptocurrency kind of together. It's about 44% of my

portfolio. Just so you don't get upset, Mindy, my cryptocurrency is still only 1% of my total net worth. Used to be 0.1. Yeah. So I have a paid-off condominium that I'm sitting in right now in Japan. That's about 8% or 9% of my net worth. And then I have a portfolio of residential real estate, mostly single family houses. There's one duplex in there. That's all in the U.S. in Alabama, Idaho, and Tennessee. And now four of the 10 properties are paid all. Okay. So I'm almost half of the portfolio paid off. And then I also include one of my pensions from my job. And the reason I do that is that there's several pensions that I'll probably get when I retire. But this one in particular is specific for tenured professors at my university.

So we get a million yen a year, which currently is about $7,000. Every year gets added to this pension. And the day I leave my job, I get it all in cash. So I sort of consider that as part of my net worth because it's so easy to calculate. Of course, I'll have to pay taxes on it. So that's basically how everything is divided now. The big difference from before is that before I had a couple of commercial real estate properties that I owned with partners, there was a 12-plex, and we also touched on a 20-duplex deal I did in Huntsville, Alabama, which was the bane of my existence then and pretty much all the way until I sold it. And then finally, I also had a number of syndication investments. So during COVID, when all the prices were going up, I was able to sell the commercial real estate.

I sold the syndication investments where I didn't sell them, but the sponsors did. I did really well with it. And that's what I used to pay off most of my portfolio and also to get more of an even split between real estate and my equities. So that's kind of where I'm standing now. Just to go through cash flow really quick, the real estate. portfolio after all my expenses, including some buffer there, about 15% for variables, I think I'm pulling in about, well, I have my sheet right here. So it's about $45,000 a year,

of course, pre-tax, but after all the expenses, and with the portfolio of equities that I have, at the 4% rule, that's about $36,000 a year. So I think I'm right around $84,000, including some of my cash that's invested as well at lower interest rates. So here in Japan, that's living like a king. And I can go into a little bit more about that and what the expenses are like here. Yeah, I think that'd be great. And I think people, at least I would imagine, that Japan's very expensive, right? You know, you hear about that when people travel there, how expensive it is. Why is it so inexpensive? And why do you think there's a myth about how expensive it is? I think that myth started during the bubble years in Japan, which is what they used to call it in the 80s

and the 90s. And, you know, people were living large at that time and things were really expensive. I moved here in 2006, and even this is after the bubble burst. And, you know, especially real estate prices had really gone down. Wages have been stagnant. There has been no inflation for the most part until just recently for all of those, those years. So this post-bubble era is nothing like it was in the 80s and 90s. It's always been cheap, probably for the last 20 years. But I think the myth still persists. So if you look at most figures when they compare the countries, Japan is usually seen as about 50% cheaper in general than the U.S. Of course, there's exceptions to that when we're looking at places in Tokyo. There's some really expensive places. I think part of that is that

there are real lower prices on certain things, definitely like housing. Also, it's that there's more variability in what you can choose. So, for example, I don't own a car, but I sometimes walk by a dealership and you can find tons of brand new cars for under $10,000 here. And the reason is that they sell really small cars with very small engines that are not legal in the U.S., but they are in Japan. Near my university, so I, I'm a university professor. I also walk by the real estate office, and there are apartments for students that are $250 a month, $300 a month. This is a very small room that is okay in Japan.

You know, people are used to living sort of a smaller lifestyle. And I actually think that's part of the beauty of it, especially in many places abroad, is that while maybe you don't get as big of a house or some of the comforts that you normally have, this sort of inconvenience actually makes your life better, right? And I think people are discovering that more and more. But, you know, it's something to think about. So we do have more variation. A big one, though, is food and eating out.

There's no tipping here in Japan. It's so much cheaper of an experience to go out. And then finally, what I'll kind of say about that is that I think tourists have a different experience, of course, because they're in certain accommodations, certain areas they're made for tourists that are going to be more expensive, restaurants that cater to foreigners where they're going to be able to speak English, those type of things. But when you're actually living here, I think the experience for most people is much cheaper than the U.S. So I'm hearing it's walkable or at least you don't need a car for much of what you want.

So transportation costs are a tiny fraction of what they are in the U.S. Housing is a tiny fraction of the cost in the U.S., but it may be similar to price per square footage basis. It's just that it's so common to live in very small square footage homes or apartments. And then how about health care? I mean, I think like the rest of the world, except for the U.S., we have a form of socialized health care. Personally, I like a lot. I think it works very well in Japan. And there's going to be some caveats to this. But basically, it's usually paid out in quarterly payments based on your last year's income. So there's a percentage. It's different depending on where you live. So the highest percentage you

may pay is when you live in Tokyo. And I believe that even then it's capped for your premiums, not really, I guess your premiums to the government of under $10,000 a year. That's for like the highest salary. I may be a little bit wrong on that, but it's different for different places, depending on what you earn. And then in Japan, it's not like the UK NHS where everything is covered after that and everything is free. You still pay a 30% copay when you go for health services, unless you're a child where I believe, I don't have kids, but I believe that it's capped at 500 yen per treatment, which is like $3 for children. And then for seniors, there's also a cap. It's just really reasonable. Like a typical doctor's visit, if I went in and I wasn't feeling well,

it's going to be less than $10 with my insurance to go in. And the medicine I get is going to be about $10 for two months. You know, I love the system. I know people that are young, and super healthy that are upset about it because they don't like to spend the money every month for something they don't see that they need. But this covers your medical insurance and your long-term care. And so if you're paying into the system over a number of years, I think it's a great deal. And there's no wait times or any of these things, or at least I haven't experienced anything like that. And then final thing I'll say is there's also a cap on the amount you'll pay every month, if you had a serious disease, let's say you had cancer or something, the cap is about

$500 a month. So it will never go above that, even if the expenses really go through the roof. How easy is it to move to Japan? Not easy. Because I just paid $16 for 10 days of meds, which is still like nothing. That was with the discount cards and it would have been like way more expensive. All right, we are going to take a quick ad break, but more from Daniel when we're back. is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal

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This Japan thing sounds pretty interesting. You just said it's not easy to move to Japan. How does one move to Japan? So the easy answer is get married to a Japanese person. I think that's probably the easiest way you can do it. Well, that might have worked for you, but Scott and I are already married to other people. Yeah, I should have a service, though, like some sort of... I think that's pronounced illegal.

Japan is notoriously, I mean, you know, since the 1800s or before, is not a lot of... very open to immigration, right? It's been like that for a long time. Part of it is that, you know, it's a very unique culture. And I think currently there's only about 3% non-Japanese living in Japan at this time. The problem that we have in Japan is that there is what they call, I think, the demographic cliff. So the population is getting older. People are not having babies. And so the population is shrinking. And so a lot of these things I'm talking about, like healthcare that are so great, how is this going to survive in the future if there's not young people working and paying for it? And this is the big problem for Japan. So slowly,

over the last couple of years, especially since COVID, a lot of things changed. I think I may have said on my first podcast visit that Japan is surprisingly analog. Everything, especially before COVID was done by paper, you have a little name seal that you have to put on any document. It's sort of a nightmare as a foreigner because you have to read everything in Japanese. When COVID happened, there was almost a digital revolution. We started having some online classes, forms could be filled online. So a lot of change like that. And then they slowly started changing the immigration rules.

So there was a number of visas that were introduced. And one of the most popular was a business manager visa. And the way that worked, I don't know all the details exactly, but with a $20,000 investment in Japan, and a lot of people did this with real estate. You could make an investment. You could put in an application that I'm going to manage real estate. This is my plan. And it wasn't too difficult to get a visa to stay here for a year or up to three years

to manage your real estate or your business, whatever you were creating. And we may talk a little bit more about this later, but all over the world, you're starting to see a bit of a backlash, I think, against immigrants coming into a lot of countries. And Japan is no different. And I think that what really set it off here was the tourism. So tourism exploded. And so it became really visual if you live in Kyoto or Tokyo or something like that, that it's just crowded all the time, full of non-Japanese. And so there was a backlash. So several months ago, there was an election where the Japan first party won a lot of seats. And they very quickly started rolling back a lot of these immigration policies. So now you need a $300,000

investment or $200,000 investment to get a business manager visa. They're putting a lot of other restrictions on it. So it is difficult to come here, especially for like if you're fire and you just want to live here. But there are other ways. One of the best ones is to go to language school. You can get a student visa pretty easily here. Another one is if you don't mind working full time and teaching English, there are a lot of jobs out here for English teachers. If you're young enough, there's even something called the Jet Program, which is done by the Japanese government, that can bring you out here to teach in the public school system. And so there are some other ways to do it. But it definitely is not like one of these countries like Spain or Portugal that have

early retiree visas and these type of things. But it is still possible. We talked about this earlier. You had very low housing cost, paid off house. You know, very low transportation costs. You have no health care costs. Eating out is cheap. This sounds like a wonderful place to retire. What do you spend your money on? I think like many people, like Mindy has talked about many times, it's hard to spend money when you've been saving it for so long, right? So that's part of it. But what my wife and I, I think we spend our money on is things like travel and food, because we're more about those experiences. We do have a paid off condo now. So our housing is even lower than it was before. It's it's probably about $150 a month for homeowners and insurance and taxes or something like that.

But I think we're also still, while we're fire in Japan, we're not quite fire in other parts of the world. Since we still love our jobs and have decided to continue to work for at least a while longer, we are still saving and investing at this point because we want to have optionality in retirement. And I think that's a really important thing if people do decide to geo-arbitrage and kind of move to another country, because while it can be great, you also could have, I don't know, it's not the middle-class trap, but like the geo-arbitrage trap, right? Like, you could save and invest enough money to live great in Thailand. But what happens if you ever have to move home? And then you're older and maybe don't have a way to make as much money. So in our cases,

while we're double what we'd need or even more than that to live a great life here in Japan, we're still moving forward a little bit with our investments so that we can get to a point that we could move back to the U.S. if that became an option for us. Okay, the second part of my question. I believe that the Japanese economy, you know, was pretty stagnant for a while, right? Like from, I think that I looked at the index, the NICA, is that how you pronounce it? NICA, yeah. You know, in 1989, it famously peaked at like 35,000.

and it didn't get back to 35,000 until 2024, 2023, right? I went down, down, down, down. And finally it's going back up. But you've been, I imagine, investing or at least participating to some degree in the U.S. economy while building towards your financial independence. So has that been as helpful as it would seem to a layman in your journey? How would you describe that? Yeah, definitely.

I mean, I think that, you know, obviously the U.S. economy during that time period has done fantastic. And I am in my index funds. I'm mostly skewed towards U.S. equities. I do have some international and some emerging market exposure. And then also all of my real estate that I own besides my house is in the U.S. And, you know, I talked about this, I think on my first podcast, but the Japanese real estate market is unique. You know, because of some of these demographic issues, but also culturally, Japanese people tend to prefer new.

and there's very few zoning laws that you have in Japan. So it's easy to build new properties, right? And so for the most part, land can keep value and it can increase in value, especially in central Tokyo. But for the most part, the structure value just decreases over time. And if you own something that has rents, those rents could go down over time because people just say, well, there's a new apartment right down the street. Why am I going to stay in the older one, right?

Because we can easily build it. And that's one of the reasons that it keeps costs down. So investing in U.S. property where I'm not only getting good yields from my properties, but also the equity buildup and then having the access to do cash out refinances, which you can't do in Japan, has really helped. So, you know, there's a saying in Japan that Japanese people say that the ultimate life for most people is an American house, a Japanese wife, and Chinese food. I think, you know, you can kind of get the best of both worlds, even if you're not living in that American house, you can build equity that you wouldn't build here in Japan. So I have some friends that are all Japan, right, especially if you're a non-American citizen and you have more access to the market. And we'll talk about that, I guess, when we talk about taxes. But they may have all their money here.

They own a house here. Maybe they have rental properties here. But they're not participating in that equity buildup and stuff that we had in the U.S., I think. So that's really helped me to build wealth. And now as somebody who's kind of collecting on it, I feel like I'm doing a much better than if I was only in the Japanese market. We know that you are based in Japan. And I've got a friend who's currently in Portugal. I've got two more friends who are moving to Portugal in the next couple of weeks.

You also mentioned Spain as being like Portugal and Spain being more friendly to immigrants. And Japan is less friendly to immigrants. Do you have any other tips for countries that are more friendly to immigrants? Because Japan sounds awesome, but I think I'm just going to be able to come visit. I don't think I'm going to be able to live there. Yeah, I would say when we talk about friendly, I'm mainly talking about the visas. Yes, that's what I mean. Of course, Japanese people are very friendly, but yeah, the visas are difficult to go.

A lot of the same anti-immigrant, anti-what's the word, like a tourism, things are going on in Spain in Portugal. I don't know if you've seen on the news, but there's in Spain, like in Barcelona, they're like spraying tourists with water as they come into the area because they're not very happy

with the rising prices and the overcrowding. So I think this is, you know, this is going on all over the place. So I'll kind of say two things about that. First of all, if you're looking for a place, my number one advice is first start with the culture.

Because, None of the money and visa stuff is going to matter if you can't fit into the culture. For example, I have some friends who are actually in the Phi community, which you probably know, who came and visited Japan. And they are very free spirits. And when they were here, they were like, we don't really like it. You know, there's too many rules. People are telling us what to do.

I'll let you guess later on who it is. It just didn't fit with them, right? So they would never fit in here. They fit in much better in, like, say, Latin America. where there's less of that. When you ask elderly people in Japan, what's one of their main concerns about foreigners moving to Japan? The number one concern that you hear is they don't know how to separate their garbage correctly. So little things like this are so important in Japan. And so you need to know about that culture first. And then you can move on to whether there's a good

visa environment. And for some people who love Japan, even though it's hard, they'll figure out way, probably not divorcing their current spouse and getting remarried, but they'll figure out a way to do it. And there are a number of ways. So I would say that there are a lot of groups now. Like for example, Choose Fi has an expat group. I know they have a, I belong to their expat group on Facebook. And so there's a lot of groups right now that are sort of helping people retire or even for part of the year in a foreign country. So you can get a lot of information and find out things, but you definitely. need to visit and make sure it's right for you before you go. And then one last thing I'll add, I think with a lot of the sort of anti-immigrant sentiment that's going on in the world, the main thing I believe that you can do is make sure that you're actually integrating more into the culture. I think that's where many of the problems occur. If you're coming here and you're going to come to a country, you need to understand what the rules are. especially in Japan, they give a lot of leeway to non-Japanese people. They understand that it's a difficult

culture to get into. But learning the language, learning some of the basics of the culture, you know, trying to be polite about that, I think goes a long way. So I think that that can can really help in the long term. Does this bring up an ethical dilemma about moving, like, for geo-arbitrash? I think it does. It's really hard when we ask sort of those big questions, because, you know, there's probably an ethical dilemma to almost everything we do. And, you know, there's a point where you just have to say, listen, I'm an individual and I'm going to try to reduce my impact as much as possible. I can't solve all of the world's problems. You know, if I didn't move to Japan, I wouldn't have met my wife. I think I contribute quite a lot to society here. I'm a university professor. I speak the language.

You know, I think you can just do the best you can do, but in the end, you have to make your own decisions. You know, you can't base it on some sort of big impact you're going to have on the world all the time. I think your philosophy and the answer to that is spot out. Love it. I love everything that you just said there and completely agree with it and think that that's the right way to approach, right? You're going to move to another culture? You should adopt that culture as much as you can very respectfully for all the people around you. It sounds like you've done a wonderful job and really applied yourself to that over the year.

So awesome. And Japan is lucky to have you. Thank you. This is going to be our final ad break, but you're going to sashimi in a moment when we get back after this. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact.

Because the goal isn't just to look backward. It's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch's subscription with the code pockets.

What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in a needle. Achieve your financial goals for good with Monarch, the all-in-one tool. that makes money management simple. Use the code Pockets at monarch.com for half off your first year. That's 50% off at monarch.com code pockets. You just realized your business needed to hire someone yesterday.

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if I recall correctly from our last conversation, that you can play with respect to taxes as a expat in Japan investing in U.S. real estate. Could you give us an overview, crash course in this? I'll get into the real estate in a second, but basically one of the problems, is that there's a little bit of a double whammy with living in Japan as a UXXBat.

And I'll start with the U.S. side of it. If you open the back of your passport, a lot of people don't know this, but right in the back, it says, no matter where you live in the world, you must file your taxes if you're required to file taxes in the U.S. Most countries are not like that. If you live in the U.K. and you move to Japan, you go to the tax office and you say, I'm moving, and they take you off the NHS, they take you off everything. you don't need to continue filing taxes until you move back. So this creates some opportunities,

and it also creates challenges. The biggest challenge you have is, first of all, filing those taxes and the amount of money it costs. I'm at a point where I have a U.S. CPA and I have a Japanese CPA, and I pay up to $8,000 a year for my two filings with all my properties and everything like that, you know, combined. So there's a big cost. At this point, it's worth it to me. But when I first moved here, and I still had to pay $500 for a CPA to file those taxes to make sure they got right, that was a lot of money at the time. So that's one thing is that you do have to file these taxes. Japan, on the other side, and most countries are not like this, once you've lived here for five of the last 10 years, you're considered a tax resident. And after that, they tax worldwide income and assets. So there's a

Japanese-U.S. tax agreement that makes sure you don't get double tax, but you end up always paying the higher tax in Japan. One example is I can't 1031 exchange. I can 1031 exchange in the U.S. But Japan doesn't recognize it. So Japan will just tax me the entire amount, capital gains. It will tax me from my recapture, everything. And you have to report everything. Your U.S. properties, the Japanese government, who know who my tenants are and see the lease agreements. You know, this is part of the system.

One of the advantages that I talked about in the last podcast is a loophole that unfortunately has been closed, but there's still some room here. And what that loophole was was you could depreciate your real estate anywhere in the world against your earned salary. And they did this unique depreciation system. And this is partly because Japanese real estate is not worth as much as the U.S. So it doesn't really affect Japanese real estate because after 20 years, you have almost no value in the structure. But in the U.S. you do.

So they were allowing you to do a depreciation of 25% of the structure value against your earned income every year. So for about a decade, I paid no income taxes, very low taxes in terms of insurance and they have something called the citizens tax. All of this was really low. Rightly so, they closed the loophole a couple of years ago because there's no benefit to Japan to allow them to do it. And this is why a lot of Japanese were buying properties like, say, in Hawaii, right? If you could buy a wood structure over 20 years old, you could get these incredible deductions. Those deductions still exist. for business. So if you own a business here in Japan, let's say you have a English school in Japan, you have an LLC, there's a different sort of structure here that's set up, you can make a subsidiary

LLC in the U.S. that buys the properties and you can use those deductions against your business income. So those still exist, but not for the individual anymore. But those are kind of the basics of some of the things. I guess one more thing I'll add on the, the U.S. side, while we all complain saying expats all complain about having to pay our taxes every year, the good point is that we can still get loans in the U.S. for properties, which if you're from a country that doesn't file taxes every year is probably going to be impossible. So I'm still able to get the same loans that you guys get for conventional mortgages for my rental properties, and I can use my Japanese income for those loans. And there's no problem because they have my tax returns.

Oh, that's interesting. It sounds like you began de-leveraging your portfolio in the recent past, and that's looked like letting some loans amortized and some of you're just prepay outright. I imagine a part of that has to do with the closure of this loophole, right? If that was still there, you'd probably be buying more properties to you could depreciate it against your income and continue to play the tax situation. But I imagine another part of it is also just a different position in life and general goals. Can you walk me through how close to that hypothesis is? and what specifically you've begun doing in your rental property portfolio in the last few years? I think you're pretty spot on.

Part of it is getting older. You know, I'm close to 50. And I started to think, you know, what do I want my portfolio to look like in retirement? What headaches do I want to remove from my life? That was a big part of it. I've always been a big fan of leverage, you know, to a certain extent, because you can see just on paper mathematically, it's the right decision to make. But I wanted to reduce those headaches and give myself optionality.

I really like my job, but, you know, things can change overnight, depending on what's going on in your work or a situation in a country. And so I think my wife and I sort of reached a point where we'd spent the last almost 20 years building these portfolios and everything. And we wanted to start enjoying it and worrying less about everything. And it really has been less of a worry. We have so much more cash flow coming in that when something goes wrong at a property, we don't worry about it that much anymore because the cash flow usually covers most expenses that we have. And so I think that was a big part of it. The change in the law was another part of it.

I'm not fully done, but I think I look at it almost like cycles. We're at a cycle right now where we're sort of taking a step back and de-leveraging the port portfolio, seeing how everything goes, we're sort of test running what retirement might look like because we can see what sort of cash flow is coming in. We're still reinvesting all of our money, basically, that's coming in because our expenses here are so low and we still have full-time jobs, right? So we're able to cover those expenses. But what I'm looking at, I think, in the future, what we would like to do is to expand our real estate portfolio a little bit more. We'd love to have a few more properties, probably bought in cash, especially with these high interest rates. And something that I've

never done is looking into buying a few cash flowing rentals here in Japan. And the reason is, is that we love the idea of having almost like two economies going on. When I first came to Japan, the currency was great for an earner in Japan. It was 75 yen per dollar. Even though I had a low salary, I was able to earn quite well and send that money home and invest. Now it's about 140 to 150 yen per dollar. So you've lost, what, 30% or more of your power. And so many of my friends that don't invest and don't have money back in their home country, they're really struggling to even take a vacation home because it's so expensive for them.

But we don't have that problem. We just got back from almost a month in the U.S. and we never brought any money from Japan. We just lived off of our cash flow from our rentals during that time. So creating that peace of mind has been really big, and we'd love to, in the future, while I don't think it's the best strategy to build wealth, I like the idea of having a couple of paid-off rentals here in Japan as well, that at least cover our expenses. So no matter which way the currency goes, in the future, we can change countries at will, and we

never have to worry about where we're bringing money. I think there's a lot of really good stuff in there. And I think that there's both a strategy, and I imagine you'd agree, a luck component to the journey here where you've benefited so greatly from exactly that, earning in Japanese yen and investing in U.S. SaaS sets that have been appreciating for a long time. Now those ratios are very high in the other way. I would imagine there's a little fear or optimism that things might at least come back a little bit in the other direction where you're going to see the Japanese end appreciate relative to the dollar perhaps. some of those assets. And so there's a little bit of feel and macroeconomic geopolitical analysis going on, I think in your portfolio, in addition to where you're at from a portfolio perspective. And I think it's really smart what you're doing. Yeah. Thank you. You said that you were visiting America and you never

brought money over from Japan. Do you have two different banks? Like your American money stays in your American bank account and your Japanese money stays in your Japanese bank account? I'll break down sort of how what my structure looks like now. I actually have a blog post about it. So if people want extra information, you can see. But here in Japan, we have bank accounts. They don't earn any interest in Japan. It's like a 0.005% interest that you enter to Japanese bank accounts. But it's still, I think, important to have some money here because we need it to access for emergencies. My wife has something that's like the Roth IRA. It's called a NISA. This is one of the problems as an American. I cannot invest in that because it's Japanese mutual funds and there is a punitive tax against what they call PFICs, passive foreign income

companies. Other countries, you're from the UK, you can invest. U.S. person can't really invest. There's some little loopholes. But my wife does that. I have a 401K for my work that I can invest in. It's called a DC plan. And then I have a taxable brokerage here in Japan that is interactive brokers that allows you to invest

in U.S. domiciled ETFs. So that's okay for U.S. investors to do. So we keep all the money that comes in from our salaries that is left over goes into Japan. We don't move it around. We used to, but not anymore, especially with the current currency. And then in the U.S., I have a Vanguard taxable brokerage account. If you're living abroad, this is one problem. You don't have really access to a 401K unless you're working for American company abroad.

And unless you have earned income, not real estate income, earned income in the U.S., you can't do things like a Roth IRA. So you're limited on your access to a lot of these retirement accounts, especially as an American living abroad. But I have a taxable account in the U.S. I have bank accounts. I use ally and then USAA for those needs. And basically everything runs through that. So we do have them connected in certain ways so I can send money back and forth if I need to. And of course, with credit cards, you can spend in different countries and it will pull, of course, the monthly payment from your bank in that country. So we kind of have, as I said, almost like two economies.

I don't know if that's the right way to say it. But two things going on in both countries that are completely separated but also have some connection. When you complete your portfolio, is there any tax ramification for transferring money from one account to the other? Or is that pretty seamless here? Do you pay taxes no matter what on the income earned in the currency in that given year for whatever's going on in those businesses? Yeah. So it depends on your tax residency status in Japan. Before those first five years, you're not a tax resident. So they don't tax anything worldwide. And you would only get taxed on money that you bring into Japan. So there is a tax. But for me, as a permanent resident, someone has lived here almost 20 years, I have to report all of that anyway in Japan. And I always have to pay the different. So, you know, if there's a 15% dividend tax in the U.S. and 20% in Japan, I'll pay my 15% in the U.S. And then Japan will tax me that extra 5%. They make up for it anywhere that it goes.

So, you know, tax strategies are really hard, especially with the Japan side. Not all countries are like that. So we're basically reporting everything on both tax documents. So in the U.S., there's a reporting of all your foreign accounts. In Japan, there's a reporting of all your foreign accounts. So everybody knows what's going on. There's no escaping the tax man in either country. But still, we can make it work, right? I mean, I've still built a $2 million net worth, even without these tax-advantaged accounts. I think that says something, too, because a lot of people worry about that, especially

when they live abroad. I meet a lot of Americans that say, oh, I don't invest because I can't access, you know, the NISA, which is the tax advantage account here in Japan. But you can still do it. You just might have to use a different strategy. I just popped on Facebook to look up this expats group. It's one of the choose five groups that I am not part of. And there's 17,000 members.

I think that I am going to send our listeners to, it's just called choose five expats. If you're looking for information about different countries to live in, obviously this episode is very Japanese heavy because we're speaking to someone who lives in Japan. What do you know about living in Portugal? Probably not much. Have you ever lived there? No, never. So this one is the Japanese episode, but if you're interested in learning more about the expat

process, definitely go check out the Choose Fy Expat's group. And I think that this is a small but growing population, and I think the problems are going to be relatively unique. Like, how are we possibly going to be able to cover the intricacies of U.S.-Japan tax code here on the Bigger Pockets podcast? You're going to have to hope to meet somebody who's figured this out. And if you've got something interesting, like a particular type of business, you're going have to go and figure that on your own. And that's going to be one of the challenges of being an

expect, but the benefits are there as well. I mean, you heard it in the overall cost structure of Daniel's life. It's just amazing what he gets relative to what you can get in the U.S. Yeah, and I think one thing that's important to note is that you don't need to do this full time to get the benefits. In retirement, especially if you live in, say, a high cost of living area and you can't make it work or it's going to be a tight squeeze to be there year round, you know, you could do a six-month time in another country. And a lot of times that's even easier because you don't have to worry about some of the visa issues.

In Japan, you can come here for three months as a tourist. There'd be no restriction on that. And I do have some friends, also five friends, that do this almost year-round. They travel the world. They have kids and they do it with them. They just go to different countries. They spent three months in Japan. And they can really reduce the cost for those three months or six.

six months if they're in another country for their overall, you know, FI number. So I think that's also a great strategy. You don't have to think about doing this as a full-time gig where you're moving to another country and living there full-time. You can do it part-time. Do you think you're going to continue to live in Japan forever? Do you see yourself coming back to America anytime? You know, in my case, because I'm married to a Japanese woman with the Japanese passport, which she doesn't want to give up, we're always going to be really connected to Japan. So I don't see a point where we sell our house and we move out to the U.S. But I think in the future, you know, once we retire, we do want to spend more time in

the U.S. and maybe split our time, kind of like I'm talking about, as well as some other countries. So I think it's going to be more of a 50-50 situation in the future. For right now, though, we love it here. So, and definitely come out and visit. I know a lot of people are visiting. I am now even more excited to visit Japan at some time in the future. I still have a sophomore in high school, so it'll be a little bit.

But Japan has always been on my list. I just think it's really, really beautiful. Well, Daniel, thank you so much for coming back on being so open and transparent about your numbers, the shift in your strategy, well played your overall investment approach here. It's been fantastic following that. Thank you for all you do for the Bigger Pockets Money community and for giving back here on the show today. It's really, really a pleasure to know you and look forward to meet you in person soon. Great. Well, thank you so much.

Yeah, this was a great opportunity. I really like talking to you guys. So I hope I can continue to add value to the community in the future. Daniel, where can people find you online? Well, I have a website called thefiprof.com. It is specifically for U.S. expats in Japan because as you heard from our conversation, there's a lot of difficulties of navigating that process. But I think it would be educational for anybody who's interested in doing the geo-arbitrise strategy.

The Phi-P-R-O-F, Prof, like professor. defyproff.com. Awesome. Daniel, again, thank you so much for your time today, and we'll talk to you soon. All right, Scott, that was Daniel Mills. And if his name sounds familiar, it's because he's all over our Facebook group. Scott, what did you think about his little peek into Japanese expat life? I love it. It sounds wonderful what he's set up. He teaches at university. He has a bunch of great benefits there. They have great rugby, really important. He's got very low housing costs, low health care costs, slow travel expenses, he's owned a car. I mean, what a wonderful situation he's got here, $45,000 in rental income, two salaries, big stock and bond portfolio that can spit off another $36,000 a year.

This guy, I mean, he played the hand here really, really well in, I think life in general and investing across all of these things. He's clearly an expert on the subject, and he gives back to our community. It's just wonderful, wonderful to see his journey and to see him thriving. Yeah, I am super excited to continue talking to him in our Facebook group. He always has some really interesting insights and really great conversations. So if you are not a member of our Facebook group, change that by going to Facebook.com slash groups slash BP Money and join in our chat. All right, Scott, should we get out of here?

Let's do it. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Mindy Jensen saying swish, swish jellyfish. I practiced that a lot because that was hard.