Hello everyone. My name is Hitomi Kato and I run a 27-year-old rental apartment in Gifu Prefecture. When I started investing in real estate in 2019, both my wife and I were salaried workers. I have now quit my job and run a landlord business as the representative of a company. Here, I would like to write about the various problems and solutions we faced as we became owners of a rental apartment, as a typical dual-income, child-rearing generation with no special skills or knowledge.
For those who are thinking about investing in real estate, or adding another property to their collection, I will share with you information from my own experience and fellow landlords. I hope that this article will be particularly useful for salaried workers like my wife and I who are still raising children, as it will make real estate investment more accessible and give you the sense that it could become a new source of income. I will provide easy-to-understand explanations on everything from property searches to how to purchase and how to manage a property after purchase. I hope that this article will help you take your first steps into real estate investment by giving you the skills necessary for real estate investment and hints on the investment style that suits you.
This time, I will talk about "What motivated me to start real estate investment" and "The specific steps I took when looking for a property."
I started thinking about rental property management when I was 38 years old.
Overwork at work
Marital problems
The eldest son's incurable disease was discovered
They faced three problems. They strongly felt that they could not work until retirement and that they had to find a different way to earn money, and that they needed a stable income for the future of their eldest son, who was suffering from a serious illness. While searching for a new path to overcome these difficulties, they came across a certain book. There, they learned about real estate investment for the first time and saw its potential. They thought that real estate investment would be an ideal source of income, with a high degree of repeatability and the possibility of a stable income, and they would not have to worry about physical fatigue. They immediately attended a study group on real estate investment and acquired basic knowledge. They then began looking for a property to put what they had learned into practice.
Property Search
Search for properties from information sites
When searching for properties, I practiced the following every day:
Use sites such as "Rakumachi," "Kenbiya," and "Rains"
Enter your search criteria to find the property you want.
From the next day onwards, check if there are any new listings
Each site had roughly three or four new pieces of information posted each day.
Decide in advance what type of property you want
Properties for real estate investment are called "income properties." I think it is important to decide in advance "what kind of property you want to buy" from among the income properties. There is an endless amount of property information on information sites, and the types and prices vary. For example, when buying a used car, you narrow down the candidates based on your preferences. In the same way, I decided on the conditions based on my situation.
Property condition 1: Good accessibility
Both the couple thought it was important to be able to go to the site whenever they wanted after purchasing the property. Some people may think that it's fine to leave it to the management company. However, by actually going to see the property, you can often notice the situation of rival properties and changes in the surrounding environment.
Property condition 2: Yield of 12% or more
Being busy with my day job, I thought that not having to worry about finding a tenant after purchasing the property and being able to make a profit immediately were important factors when choosing a property. Initially, I thought that the surface yield should be about 10% or more. The reason for this is that when considering operating expenses such as property management fees and repair costs, loan repayments, and the risk of vacancy, a stable profit can be secured. With a surface yield of 10% or more, even if converted into an actual yield, a profit of about 6 to 8% can be expected, so I thought that I could expect a stable income while reducing investment risk. Being cautious, we decided to start looking for a property with a yield of 12% or more in order to get a more stable profit. My husband and I decided that if there were not many properties we wanted, we would change the yield to 10% or more and start searching again.
Property search conditions on information sites
Based on the above, the search criteria were set as follows:
Narrow down to the prefecture near your home and the surrounding prefectures (total of 3 prefectures)
Within 90 minutes from home (travel via toll roads is OK)
Used property
House or apartment
Surface yield is 12% or more
By the way, initially I didn't consider the following four points to be very important.
Age of building
Distance from the nearest station
Building structure
price
The better the conditions, the worse the return on investment will be for the "age of the building," "distance from the nearest station," and "building structure." The worse the return on investment, the less money you have left after deducting loan repayments and various expenses. If I had a low income, I would worry about whether I could repay the loan, which I thought could have a negative impact on my main business. As for the "price," I didn't particularly care about it at first, as I just wanted to get the loan I wanted.
When a property that interests me comes up, I request information, and what is important to me at that time
When we found a property that interested us in our daily searches, we requested information. At this time, we placed importance on the fact that the information source was a local real estate company. This is because we thought that a local office would be easy to visit and would have knowledge of the area where the property we wanted was located.
After requesting information, visit a real estate company
After you request information, the real estate agent will send you information about the property.
Property overview (including land and building size, structure, address, and yield)
Certified copy (contains detailed information on the land and building. You can also see the history of ownership up to the present day)
Public tax certificate (including the assessed value of land, buildings, etc.)
Rent roll (lists the current occupancy status and rent of the property)
Land area survey maps, residential maps, etc.
The materials provided vary depending on the time. When we received the materials, we thanked them for the information and asked if we could visit their office. My husband used to work in sales, so he placed great importance on the quality of the response. If the real estate company refused our visit, we were planning to stop further communication, but fortunately, there were no companies that refused. By the way, the time it takes for the materials to arrive after requesting them also varies greatly depending on the company. If the company is too slow to respond, it may be better not to do business with them, considering future consequences.
Points to check when visiting a real estate agency
When visiting a real estate agency, check the following points:
Response from sales representative
Response from administrative staff
Cleanliness of the office toilets
The overall atmosphere of the company
I have experience in sales of corporate development. At that time, I had the impression that companies with clean offices and friendly employees, both in administrative and sales, value the products they handle and are highly trusted by customers. After-sales support is also polite. In fact, I think that real estate companies with a good atmosphere have a lot of good property information. Also, I think that it's not over after purchasing a property, but you can build a good relationship after that.
We are now learning about and practicing real estate investment in order to escape from the triple hardships we faced at the time. From property searches to building relationships with real estate companies, we believe that by steadily taking action every day, we will be better prepared to find our ideal property. In our next post, we would like to talk in detail about the process from meeting our fateful property to actually purchasing it. Please look forward to it!