How do you think about 'exit strategy' in real estate investment?

Do you know the word "exit strategy"? In the field of investment, it is used in the sense that it means "method of finally determining profit and calculation", but this "exit strategy" is also important for real estate investment. In the case of my home, I may continue to have permanent residence for the rest of my life, but in case of investment property there is always "sale". Because the profit will not be finalized unless it finally "sells". The property you purchased with great pains will eventually become obsolete. As it is, the repair cost and the vacancy rate rise, there is a risk that the cash flow will be minus. Even if I try to sell it after that, I can not find a buyer quite easily. Even if it is to be rebuilt, there is a possibility that residents may not be able to undertake rebuilding for many years or pay a lot of expenses for leaving without getting consent to leave. In order to avoid such a situation, we need to consider the exit strategy of real estate investment from a long-term perspective. Also, it is a matter of inheritance that can not be separated from the exit strategy.

Four exit strategies

Exit strategy in rental property management is "to sell the property and determine the profit and loss". There is also an exit called "inheritance". We need to think about "strategy" which monetizes property up to that point, FrontDoor will support in the long term. There are four options in the exit strategy of the rental property: renovation, rebuilding, replacement, sale and withdrawal.

Renovation

Renovation is a method of rebuilding an aged apartment by a large scale renovation work. By renewing the roof and the exterior wall while leaving the framework, new equipment will be reborn as a newly built property by renewing facilities, interior decorations and fittings. We will lead the newly-rented apartment once again to a fully-occupied management, and if it is a good profitable real estate, negotiations will proceed under favorable conditions in the case of selling. Also, if you inherit the building after renovation, you can reduce the cost of the building from the asset, so it will be the inheritance tax countermeasure. Moreover, the value of the building will rise with renovation, but the point that it is unlikely that the appraisal value under the tax law will rise is unlikely. However, if there is a tenant, let us notice eviction problems. If only one room can not be accepted according to eviction, construction can not be undertaken for many years, there is also the possibility of keeping the red letters dripping. In order to avoid this situation, when setting the timing of renovation, not a so-called "lease contract" but a "regular leasehold contract" (a contract that can automatically ask for leaving when the contract deadline is reached) We recommend that you prepare in advance so that you can surely withdraw from residents as you finish. In FrontDoor in particular, this renovation has its own ideas, know-how and achievements, so it can support strongly.

Rebuilding

It is a way to dismantle an old building and build it on the same land. A newly built property can be expected to provide stable management over the next several decades and it is effective for inheritance tax countermeasures since building costs can be reduced from inherited property. However, as evolutionary problems arise as well as renovation, planned business operations are required. Also, unlike renovation, the appraisal value of the building on the tax law rises from before the rebuilding. Still it is one of the exit strategies to consider as it is able to receive far more benefits than cash inheritance. As with renovation, FrontDoor has many know-how and achievements, so it can support strongly.

Replacement

It is a method to sell an old property for each land, add a new borrowing money to the gain of the sale, and construct a new property in another place. Because another owner will purchase the property that he owned, it is unnecessary for the tenant to leave. It is not necessary to negotiate troublesome eviction negotiations. It is a recommended method for those who want to continue to operate rental property at a better condition than now and those who want to leave good properties as heirs from now. The front of FrontDoor will be demonstrated for sale / purchase.

Sale / withdrawal

It is a method to sell the property and to remove the hand from the rental management itself. You can leave cash in hand at hand. The gains on sale can be devoted to the living expenses of old age, it can also be used for overseas travel and food for walking. In addition, it can be switched to operation of financial products such as stocks, mutual funds, government bonds, FX and so on. However, after the property becomes too old, the value of the building will be zero and it will be judged only by the value of the land. When you sell, you need to make a detailed plan of business whether you can sell the highest, and make sure you do not mistake the time. Also, from the viewpoint of inheritance, if you own multiple real estate properties, their profitability and asset value will fall apart, so you may settle for inheritance. In order to avoid such inconveniences, there is a method of selling real estate, switching to cash or another financial asset and equally inheriting it, but because cash and financial assets are parity tax inheritance tax valuation, a large amount Your inheritance tax will rise as well. It is necessary to pay attention to that point. It is said that "inheritance tax is cheaper than land rather than cash". For example, if you own cash of 100 million yen, the property value will be 100 million yen. On the other hand, if you own land with a market price of 100 million yen, basically it will not be 100 million yen property valuation. In general, inheritance tax of land is evaluated by route price method. In this case, the price of the land will be about 70% to 80% of the market price. Therefore, if the market price of the land is 100 million yen it will be the property valuation of about 70 million yen to 80 million yen. In other words, the estate appraisal value becomes much cheaper inheritance tax on the land. Route value is revised every year, but the market price has always changed, so the route price may be higher than market price in some cases. In this case, it will be higher inheritance tax if you have land with a market value of 100 million yen than cash of 100 million yen. Because FrontDoor has prepared an unparalleled advanced system for these property evaluations, not only the appropriate sale time of owned real estate but also inheritance and second inheritance is taken into consideration in the long term We will do support.

To not make it "heritage strife" ...

In considering the exit strategy of rental management, the problem of inheritance and inheritance tax can not be separated. If you continue to operate leasing without thinking about inheritance at all, in the worst case, you will be pressing "negative heritage" to children. There is no shortage of breaking the relationship between brothers and sisters. In order to avoid troubles, exit strategies for rental management are necessary. The exit strategy for that depends on each family. In the end, it is a point to talk with your spouse, son, and daughter in advance before you pass away in advance. However, more importantly, it is important to grasp the valuation value of the real estate you own. In the face of inheritance, what most of the property owner lacks is property assessment owned by you. In this regard, FrontDoor will support it in the long term. If your spouse or son wants to inherit leasing management, renovation and rebuilding will be exit strategies. If it means that you can build a new loan, rebuilding and replacement are also an option. Also, if you need a set of funds such as my home funds and educational expenses, you may choose the option of selling or withdrawing. Ultimately, it is also related to the future of heirs who will take over your assets, so we encourage you to have the opportunity to consider together. All of them will be comprehensively supported by FrontDoor from a total perspective. 　

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