How to Start Real Estate Investment

 [How to Start Real Estate Investment]

Real estate investment is an investment method that many people are starting, aiming for stable rental income and asset building.

However, unlike stocks and investment trusts, it requires a "substantial initial investment" and "management effort," so thorough preparation and strategy are crucial.

Below, we summarize the basic steps for starting real estate investment in an easy-to-understand way 👇

🏡 1. Clarify your investment objectives

Even within real estate investment, the strategy varies greatly depending on the objective.

Rental income (income gain) objective → For those who want to obtain stable income through long-term ownership

Capital gain objective → Short- and medium-term investment aiming for appreciation in property value

Tax saving objective → Used for income tax and inheritance tax planning

👉 First, clarify "why you want to invest in real estate."

💰 2. Understand your financial capacity

Since real estate properties are expensive, ranging from several million to tens of millions of yen, self-funding and financing plans are important.

目安 of self-funding: 10-30% of the property price + miscellaneous expenses (5-10%)

If using financing, the loan amount is determined by annual income and credit information

Miscellaneous expenses include brokerage fees, registration fees, fire insurance, and repair reserves.

👉 First, clarify "how much you can invest."

🏙 3. Selecting the investment area and property

Location is crucial for real estate investment.

Areas near train stations, areas with increasing or stable populations

Areas with high rental demand such as universities, companies, and commercial facilities

Check the risk of repairs and vacancy rates

Typical investment properties:

Condominium units (easy to start with one unit)

Apartment buildings (high yield but also high risk)

Detached houses (sometimes cheaper to buy in the suburbs)

👉 Many beginners start with "used condominium units (studio apartments)."

📊 4. Conduct a profit and loss simulation

Before buying a property, always calculate its profitability. Rental income (monthly)

Management fees and repair reserve fund

Loan repayment amount

Property tax and insurance premiums

Vacancy risk and repair costs

**A net yield (annual net profit ÷ property price) of 5% or more is generally considered relatively stable (depending on the area).**

📝 5. Funding and Purchase Procedures

Negotiate with real estate companies and banks and undergo pre-approval for financing

Sales contract → Loan approval → Settlement and handover

Registration and insurance enrollment proceed simultaneously

👉 Choosing a trustworthy real estate company is extremely important.

🏢 6. Starting Rental Management

Entrust to a management company or self-manage

Tenant recruitment, contracts, rent collection, repair management, etc.

Efforts are needed to minimize vacancy periods

👉 Beginners should entrust management to a management company for peace of mind.

📈 7. Continuous Revenue Management and Asset Expansion

Improve profitability by reviewing rent, planning repairs, and refinancing loans

Many people use the experience gained from their first property to expand to a second and third property

Regularly check real estate market trends

⚠️ Precautions for Real Estate Investment

Vacancy and rent reduction risks

Unexpected repair expenses

Increased repayment amount due to rising interest rates

Market fluctuations

👉 Be wary of sweet talk about "making money quickly."

✨ Examples of common starting methods for beginners

Style Characteristics Suitable for

Condominium investment Low risk, easy to start, can be left to a management company Office workers who want to earn supplementary income

House renovation investment Buy cheaply, renovate, and rent out; higher yield People interested in DIY and real estate

Apartment building investment Large scale and high yield, but also high risk Intermediate to advanced investors with a certain amount of capital

Airbnb and other short-term rental investments Can aim for high profits, but requires permits and operational effort People who want to actively manage their properties