There is a wonderful phrase that comes in very useful living here in Japan and it is “猿も木から落ちる” which translates to “even monkeys fall out of trees”. But what does that even mean??? Basically, even those that have the knowledge and experience make mistakes.
And so this week I read with interest at a story out of Leopalace 21, a major player in the rental apartment market here in Japan with over 30,000 apartments. Leopalace 21 has been growing slowly since the 1970s by building cheap apartment buildings of over 15 units in locations slightly out of the downtown regions. Cheaper land, cheaper construction techniques means Leopalace 21 are able to rent to people cheaply and fill up the apartments. The price and quality of the apartments often mean that people will rent short-term in an area before moving on. To continue attracting tenants, Leopalace 21 will often offer zero key money, 1st month free and pay for reasonable moving fees. They have good market share and are very well know. Salarymen or women on a short term project away from their home base will often “Leopalace” as in the west emlpoyees might “AirBNB”. They are that well know.
So the people running Leopalace 21 certainly have experience, almost 50 years of experience! This week it appears they had problems with 1,324 sites meaning they will pay to move 14,000 tenants out and fix the problems. Leopalace will book a ¥36 billion loss this fiscal year and will need to work hard to rebuild trust and reputation. You can read more about this story on the Japan Times here.
So what can we, as investors learn from this large and costly mistake? There are a few things, don’t grow too quickly, don’t over stretch what you are capable of taking care of, ensure you know your suppliers and what they can/can’t do, take care of your business!
If you are looking for an investment that you can trust, look no further than Japan Property Investments, we are in the journey with you. You are not just an investor but a friend and someone we want to grow with.
So visit the website now, www.japanpropertyinvestments.com to find out more.