The simulation which is the basis of the yield of the real estate agent is sweet

• The income and expenditure simulation of the newly built house maker has calculated the rent setting itself high and raised the yield on the surface
• Furthermore ,,, Because there is a newly built premium in Japan (constant demand to live in a newly built house not yet moved) You can be moved higher than the market rent but once you move out, it will become a used property and the falling rent starts

In general, advertisement on the real estate portal site in Japan does not display real yields like the United States and displays the yield on the surface. It is not a problem to mention such cost

• As a common case in a used second-hand property in rural areas, the cost of hiding behind looks like high yield (surface yield). For example ...
  ・Water supply pump, elevator electricity bill and statutory maintenance and inspection fee, large family type type large current status recovery fee, condominium management fee & reserve fund, taxes

Depending on the type of property and the economic trend, let's simulate the cash flow tree by setting the exit in 3 to 8 years.

Cash flow tree

2. Is it true that "If the city center, near the station surely profitable" is true?

In general the person who wants to invest high risk high returns is recommended by local cities, and those who like investment in low risk low return are better for properties in Tokyo. However, the risk of the property is not necessarily determined only by the location. It depends on the age of building, the state of maintenance maintenance of the building, the building specification, the update situation of the facility, and so on. For example, in wooden apartments building more than 30 years in Tokyo, investment risk is high. In such a property, there may be sufficient patterns in which yields are reversed with newly constructed properties in local cities.

It is not an easy thing to say because it is central in the city because it is good and it is rural, and judging by "whether there is a balance between demand and supply of rent" which is important for area selection ❗️

• There are areas where the rent falls are large even in the downtown area due to the fact that the competition is intense and the building years go by because the city center supplies a lot. On the contrary, there are places where there are few apartments around the country and there is always a place where you can fully manage your room.
• The property in Tokyo is low in vacancy risk and rent decline risk, but because it is popular, price is high and yield is low, not everyone can buy it, you must be able to run lease with low yield.
• Although professional asset managers invest in properties in the core city center, there is circumstance that they are forced to purchase properties in local cities to maintain the yield of the entire REIT. There are individual investors who purchase properties in local cities only by having a high yield, but there are also many people watching crying as being a "good duck" by realtors!
• Even if it goes to a bite with local people, it is various. Toyota and other large enterprise factories are in stable areas where demand is stable and subscribers can also operate a stable lease management. Meanwhile, when companies and universities relocate, it may happen that full-room management changes from fully occupied management. Regional individual market research is essential!

Other things to keep in mind! Not necessarily determined by location alone. Different also depending on the age of building, the situation of building maintenance management, building specifications, equipment update status, etc.

• In 1981 it is to choose the property after the "New Seismic Design Law" enforcement. The new earthquake resistance of the property since 1981, before that is distinguished as the old earthquake.
• In the Great Hanshin-Awaji earthquake that occurred in 1995, half of the buildings designed based on the old earthquake-resistant standards suffered more damage than "Nakayoshi" which required large-scale repair. In contrast, three quarters of the buildings designed with the new earthquake resistant findings show minor damage or no damage
• The new earthquake resistance method is based on the premise that it will not collapse even with an earthquake with a seismic intensity of more than 6, and in the event of a large earthquake, even in the case of the property of the new earthquake-resistant design law and the property not so, the damage suffered greatly.
• Even when selling it assuming an exit, it is getting hard to sell the old earthquake-resistant property.

• The yield is relatively high if the age is old, but on the other hand, there are many cases where the bus and the toilet are installed together, there are no auto locks, the kitchen etc is old and weak in terms of facilities.
• On the other hand, if it is a property with a short age, there are disadvantages such as lower yields, because the property prices are fulfilling but the property prices are high.
• Regardless of the age of building, it is important to confirm the status of building management firmly in advance.
• Whether large repair work is being done systematically, whether the repair history remains, the repair reserve fund is properly accumulated, whether management fee is not delinquent, etc. The appearance of the building is wonderful Attention is necessary because management situation has sloppy property.
• Do not forget to check the large repair history!

Repair cycle and equipment useful life

3. "Real estate is an asset" is true in Japan?

There was a shocking article in the Nikkei business in February 2016. Title is

"House life spans 20 years, 500 trillion yen disappeared"

""Housing is an asset." There is data that overturns that assumption easily. Since 1969, housing assets of more than 500 trillion yen have quietly disappeared. In this country, houses are merely consumer goods in reality. Unique industry practices that rapidly decline in value from immediately after purchasing new birth brought an irritated second-hand market that does not recognize the value of housing quality. The day will come when you will be able to call yourself the biggest shopping in life and call it 'asset'"

（Excerpt from 2016 Nikkei Business）

This is the result of the Ministry of Land, Infrastructure and Transport investigating the difference between domestic housing accumulated investment and housing asset value.

• Normally in the US and Europe the asset value will rise, but in Japan it will not be subject to the evaluation, so the asset value of the house will plummet from the point of purchase. Especially in the case of wooden detached houses, there is a distorted industry practice that the fastest falling speed is uniform and 20 years and the value is regarded as zero.
• The reason is that the wooden service life stipulated by the Ministry of Finance is decided as 22 years (47 years useful life in RC construction)
• In Europe and the US it is the cause that the useful life is reset when doing large scale remodeling but it is not reset in Japan.
• In other words, since the market price is an impression that "life expectancy of building" is merely a number for depreciation determined on the basis of taxation = tax depreciation, the value of the building has a statutory useful life As soon as it exceeds the land fee.
• And land prices in Japan will not rise any longer since the land myths collapse so market prices will eventually settle down to land fee.

• As a result, in other countries, the second-hand housing is subject to investment is just "consumable goods" in Japan is present
• In addition, if it is a detached house, it remains as the value of the land fee, but the second-hand condominium occupies less of the building of the land and the value further falls. (Carefully purchase a condominium apartment)
• Older used condominiums are in a situation where it is difficult to make large-scale repairs and it is difficult to form consensus on repair with other residents and it is becoming a serious social problem

Even in second-hand condominiums in the 23 wards of Tokyo, 10% are vacant, this condition is getting worse.

4.Is "Reassurance because it is a major real estate agent" true?

If you are a major real estate agent you will have plenty of information, you will be able to trade with confidence, it is a lie. This is because bilateral transactions (transactions becoming agents of both buyer and seller) prohibited in the real estate industry such as the United States are not banned in Japan

• Commission fee for real estate brokerage brokerage is 3% from seller side and buyer side respectively. "One hand" (3%) to obtain a fee only from either the seller or the buyer in an industry term and "two-handed" (6%) to get a commission from both the seller and buyer.
• The big real estate agent is getting to do two-hand transactions to hold more information.
• In fact, the commission rate disclosed by major real estate agents is around 5%. This shows that two-handed mediation is performed frequently.
• what does this mean? How are two-handed transactions carried out? Let's see the reality.

5. Is "okay if you leave it to a management company" is true?

"Management fee is cheap," "can be afforded", and "We will raise the asset value of the property by the investor's perspective" should be chosen! The best management company has nothing to do with the scale of the company

The amount owing the administrative expenses minus the rent income remains in the hands of the owner. The market price of real estate management expenses is roughly 5% of rent income (gross monthly total).

Relation to residents

First of all it is related to residents. This will be a response service to those living in real estate.

• Recovering rent
• Dunning to delinquent
• Responding to complaints from residents
• Correspondence when insurance event occurs
• Witness at the time of departure
• Request for recovery costs
• Renewal of lease contract

Customer related correspondence

Next, it is customer related correspondence relation. This is the work done to attach a new resident to the vacant room.

• Advertising activities
• Correspondence correspondence
• Conclusion of lease agreement
• Conclusion of fire insurance contract
• Passing keys

Building correspondence relation

The third one is related to building correspondence. Maintaining and maintaining the quality of the building itself so that the owner's building keeps generating profitable firmly.

• Building maintenance
• Implementation of construction
• Current situation restoration work
• Periodic inspection
• Regular cleaning
• Response at the occurrence of accident such as water leak

Owner response

The last is owner compliance work. Basically, getting reports and permission to the owner is the main business content.

• Proposal of recruitment condition
• Proposal on renovation content
• Remittance of rent
• Report on trouble occurrence

Flow of real estate investment start

Acquisition of rental property information Inquiries on the Internet Introduction from Real Estate Agent

Examination of property · Housing housing diagnosis, seismic diagnosis (charged) Site check such as location conditions · convenience Check and simulate income and expenditure

Negotiation of trading conditions · Financial institution loan consultation Submitting / negotiating purchase application form Required documents submitted to financial institutions · loan consultation

Conclusion of intermediation agreement Agreement concluded with Real Estate Brokerage Company

Important matter explanation Explanation of important matters from the chief of land and building building trading before contract Confirmation of contents stated in the register, confirmation of restrictions by each law Confirmation of cancellation due to lack of loan or contract cancellation

Sales contract Conclusion of sales contract Brokerage · brokerage commission · contract Payment of stamp duties etc.

Contract with a financial institution for financing Preparation / submission of examination documents

Selection of management company Request for management quotation Investigation · Hearing on whether management can be given

Financial institution loan decision / loan agreement Signed a loan agreement with a financial institution

settlement Payment for remaining payment, transfer of ownership transfer, payment of various settlement money Transfer of rights relationship Conclusion of management contract