Today we're going to look at each investor's individual investment case.
First of all, the investor in this case is a citizen of a country whose passport is in Europe, whose residence is in Asia, and who owns one property in Japan.
The investment target is a remodeled Kyo-Machiya house, an attached house located in Higashiyama-ku, Kyoto City. The reason for investing is that they come to Japan regularly for work, love Kyoto, and want to have a vacation house in Kyoto to enjoy a relaxing time after retiring the work.
The property in which they invested was a Kyo-Machiya house built in 1927 and renovated in 2019, a four-minute walk from Tofukuji. The investment method is for long-term leasing, they plan to use it as their own second home in the future when they retire from the company.
In this case, the married couple registered 50% ownership of the property each, and the family owned the property. After purchasing the property, they signed a building management contract with us, and we began offering rentals immediately afterwards. The acquisition tax and property tax of the real estate are paid from the rental income, and the deposited rent is kept and managed by management company until instructed by the owner.
The monthly balance report is shared in a folder on the cloud, and the monthly balance and deposit information are also shared.
For the tenant recruitment, we will share the information with each agency and conduct business activities to find tenants. The management company takes photographs, draws up floor plans, assesses rents, and sets detailed conditions when recruiting. Once the details are finalized, we use the network system of real estate agents to register the information and recruit tenants through e-mails, faxes, and websites. Once we receive an offer for rent, we work with the guarantee company to screen the tenants, and take care of the necessary procedures such as the contract, fire insurance and other necessary procedures on owners behalf.
Before the tenants moving in, we will make sure that the room is cleaned and free of defects, change the locks and make sure it is ready to move in and hand the keys to the new tenant. The management company will take care of any inquiries or requests after tenants move in, and the owner basically does not do any work for management.
We also provide information to owner's tax accountant and pay the income tax via owner's tax accountant.
Therefore, after signing the management contract, there is no problem if owner leaves the various tasks to the management company.
Case 1: Gross yield 6.04%, Net yield 5.28%
*Management fee, fire insurance and property annual fixed asset tax included
When canceling the lease contract and moving out, tenants first contact the management company. Generally, it is necessary to notify one to two months in advance, and it is possible to cancel before the expiration of the contract period. When the management company receive the notice of the cancellation of the contract, we will start listing for rental first with "vacant schedule" in order to find the next tenant.
The busiest period for renting in Japan is moving to April and planning for international students to go to university from October. If the time is missed, the demand for moving will drop significantly, so we will continue to seek rent until the next high season.
Another problem all over the world is the decrease in rent due to the decrease in sales and income due to Covid-19. In the case of commercial real estate, sales have been affected significantly, and because the Japanese government has not yet completed payment of special benefits, there are many calls for a reduction in rent and a grace period. With the demand for new rentals being extremely low, having tenants continue to move in will make landlords to receive more rent throughout the year.
With regard to residential rentals, the number of people requesting a reduction in rent has increased due to a decrease in income. Those who are doing business as individuals are in a very difficult situation with a decrease in sales and a decrease in income. When such a contact is received, we will immediately report it to the landlord, consider the best measures and take the best way for both parties.
We sincerely hope that the situation will improve soon.
After purchasing real estate for investment by our clients, we may offer or manage rentals. Today, we would like to introduce the questions, requests, and inquiries from tenants.
Inquiries from new occupants include garbage problems, building equipment problems, rent problems, and other issues related to moving out.
The first thing we will be asked about is date and the location of the garbage collection . When renting a detached house, we will have to dispose of the garbage at the collection place according to the collection date in the area. Regarding the collection place, the place often differs depending on the type of garbage, and the garbage will be discharged according to the rules in the town. Also, there is a fixed time to dispose of garbage, and most of them will be disposed of at designated places from early morning until 8 am.
The collection place may change every year, and we will comply with the local regulations and dispose of the garbage. By the way, Kyoto City has its own garbage bag, so we can purchase it at a convenience store and put out the garbage in the designated bag.
In the case of condominiums, there is a dedicated garbage collection box on the premises of the condominium, so we can just put it out on a fixed day.
Building facilities include equipment malfunctions, internet usage, and television viewing. If the period of unoccupied house is long, the new tenants may be able to discover the defect by using the equipment. In that case, if it is the equipment of the building, and if the landlord has a duty to repair it, we will make a repair arrangement as soon as possible to eliminate the malfunction of the equipment.
In the case of condominiums, there is a common antenna for watching TV, so we can watch it simply by connecting a cable. In the case of a detached house, there are cases where the antenna is not installed, so we ask to use a cable TV etc. to watch TV.
Arrows International Realty Corp.