With the future of the public pension system unclear, it doesn't hurt to start getting your retirement funds ready early. If you're able to acquire an income-producing property, you receive rental as a cash income every month, which serves as a kind of private pension fund to help relieve the concerns of old age.
When taking out a loan at the time of property purchase for investment, you will be subscribed to the group credit life insurance at the same time. In the case that you die or become incapacitated before the loan is paid off, the remaining amount of the loan will be paid by insurance. Your remaining family debt's will be paid off, allowing them to obtain a monthly rental income.
Taxes on income from real estate investments (such as building depreciation, loan interest, fixed asset tax, urban planning tax etc.) are recognized as necessary expenses. By declaring these on your tax returns, there is a tax saving effect for income tax and resident tax.
Real estate investments are valued at market value at time of purchase (the building part is valued at 50% of acquisition price, while the land part is valued at 80% of market value). Since the land and building also receive a 20-30 % decrease in valuation during the rental period, this is an effective measure against inheritance tax
During times of inflation, cash (such as bank deposits) declines in value as an asset, but the value of real estate increases. Since you can expect that rent revenue will also increase at such times, this is an effective measure against inflation.
Rental demand is always high in Tokyo, regardless of recession, and there is growing rental demand from businesspeople, local students, and international students.
Of course, as the owner, you can always live in part of the building yourself. After buying the whole building, since rental income is secured, you can start robust asset management.
When buying a property, although all-cash purchases are most welcome, our customers generally use loans from financial institutions with accompanying life insurance
In the case of the main owner's death, the loan balance will zero out, enabling remaining family members to inherit the property as is, which ensures continued rental income.
In short, it is possible to obtain a leverage effect with minimal funds of your own. This leverage effect allows you to aim for larger revenue, since you can obtain greater economic benefits than with funds you actually possess, by using a loan rather than money in hand.
You could say that real estate management, as its operational objective, passes along real estate and raises revenue. There is an income gain (from renting properties to tenants and thus receiving rental income), as well as a capital gain from selling at a higher price than was paid to purchase the property.
Debating whether to maintain ownership after buying or to resell? Either is fine if profitable, but we recommend long-term investment. You should aim for investments that afford a comfortable margin, allowing you to divest with the best timing.
Ultimately, when aiming to purchase and operate real estate for the purpose of obtaining rent, resale profits are considered a secondary element. This is the general method of investment.
By buying and renting out high-value real estate property with many users as your own asset, you receive regular rental income and can recover the funds invested.
Risks accompany every investment
Even if spending an identical amount of time and money, it's not guaranteed that you'll gain the same effect without fail. Conversely, please keep it mind that it's possible you'll suffer a loss rather than profit.
You should always try to keep in firmly in mind that results are uncertain, just as with stocks or FX investments. However, it is possible to avoid at least some risks, and you are advised to minimize those as far as possible.
Even with low-risk, low-return investments, such as depositing money in financial institutions, risks will still arise. The risks of inflation or bankruptcy of financial institutions are still present. Additionally, even depositing cash carries some risk, such as losses due to exchange rate fluctuations.
Equity investment is, of course, high-risk and high-return. In the case of bankruptcy, the return will be zero. But it’s popular because people often expect great performance and unbelievable increases in value.
As opposed to these extremes, investing in real estate can be said to represent middle risk and middle return.
Investment can be roughly divided into low, middle, and high risk categories, based on the likelihood of the assets owned being reduced to zero. Although real estate does carry the risk that a property turns out less profitable than expected, since it remains as an asset, it can be categorized as a middle risk factor.