We are in celebratory mood here at JPI after purchasing our 6th property in just 3 years.
Also somewhat reflective… feeling thankful for how we got here.
Before starting JPI both Sim and I had built our own property portfolio. Small portfolios but enough to get us started and to learn from. Now together in JPI we are building something much larger than we could alone. And at the same time helping others with our knowledge and action to start their portfolios.
But this week it got me thinking, … just what does it take to build your own portfolio. Here are six points to take into consideration if you want to join those that are completely free of their day jobs and in charge of their destiny, read on!
Get started! – easier said than done, right? But you have to move forward and get going. Sim has published about FEAR and the negative effects it has on investors. Do the due diligence but if the numbers stack up, move forward!
Leverage yourself. If you have no access to loans, look for other opportunities to get on the property ladder. Talk to friends and family, see if they will loan you money to get started. Can you find vendor finance for your first property? Or is a service like JPI best for you? We offer low buy-in and great returns to help you save for additional deposits.
Maximise your cash flow. The only way to get to property number 2, number 3… number 10 is to ensure you have positive cash flow from your first and consequent properties. Do the numbers, do they add up now? today? Don’t hope for increased rents, don’t wish for capital appreciation you are looking for growth and that only comes from cash flow.
Increase rents? If or when your tenant moves out can you make low-cost improvements that allow you to raise the rent. A great example, if it costs us ¥30,000 to replace wallpaper but we can raise the rent by ¥5,000, that would pay back in 6 months and from month 7 be all profit, well worth doing.
Manage your properties. Not necessarily fully hands on but ensure your agent is doing their job. If a tenant moves out, turn the place around quickly, start marketing the property as soon as the tenant gives their 30-day notice, ensure the minimum possible void on rental income.
Know when to get out. Not all great properties stay great forever. Situations change, yields can go up or down. So manage your properties. And be brave to sell an apartment that is not producing as well as the rest of your portfolio. Don’t let one property slow your portfolio down.
So just six points to be thinking about as you build your portfolio.
A great article this week in ReThinkTokyo by Mareike Dornhege, well worth your time and I will post the link to the full article at the end of this post.
The article compares housing stock in Japan and China. I learnt there is an astonishing 65 million empty units across China, just phenomenal. By comparison Japan has an estimated 8.5 million as of October 1st 2018. A major difference is of course that the majority of Japan’s empty buildings are old houses in places were few people want to live. In some cases you can pick up a large 3 or 4 bedroom empty house for less than US$20,000. That is great if you are looking for a slower life away from the busy city. However not that many people are.
The continued urbanisation of Japan is exactly why JPI buys apartments where we do in the locations we do. More and more people moving to the city looking for good, clean, affordable accommodation close to the city centre.
It is well know that in the 80s and 90s Japanese economy was the envy of the World, that is until the unsustainable asset property bubble burst so dramatically. Looking at China and real estate investment, it would appear the same is happening there. Young people are buying more and more expensive first apartments. Investors have fueled the bubble by buying property above the actual value. Only time will tell how this ends up.
Back in Japan, land and house prices are rising, slowly, steadily, dare I even say sustainably. Young Japanese and foreigners have access to affordable loans to help them purchase their first home. The results of the Olympic effect will be known in a few years but the upturn is not being attributed to the Olympics as it has in past host cities.
In short, obviously I am biased, Japan is THE place to invest right now. But we investors should remain vigilant and always question opportunities, if they look too good, perhaps they are too good!
If you follow what we do at JPI, this will be no new news. But it is always nice when a reputable news agency agrees with you. This week the Nikkei Asian Review ran a great story on Japanese Property.
As the article confirms land prices are on the up in Tokyo, Osaka and Nagoya and have been so for the past six years in a row. But now we are seeing the increase of land values outside of the traditional investor areas.
While interesting it doesn’t impact the JPI strategy, which is to purchase as close to a busy train station as possible, no more than 7 minutes walk to be precise. But what the latest figures do tell us is that investment in land and property is on the up. Not just the mega corporations either, individuals are buying investment properties or second homes and earning great returns.
Low interest rates and tourism are fueling these off the beaten path investing. There is a well documented lack of hotel rooms and an historic high in tourist numbers visiting Japan, meaning places we have never heard of are now investor hot spots.
But JPI will never chase those shiny new investment areas, instead we will continue to focus on our core area in Kansai and our core tenant profile, single, professional or student. These factors have built JPI up slowly and steadily and we look forward to announcing more expansion very soon.
For now though, enjoy the article, it makes solid happy reading. And when you have done reading contact us today to see how you can ‘invest together and grow together’ with us, [email protected]
Sim and I are well aware of the goldmine that is Osaka and Kobe. We will back this up with some big news about a new investment coming up in June. But for now, great to see others getting involved.
As you know, JPI invests in single let apartments, no more than 7 minutes walk from a station. Small, clean, centrally located apartments that appeal to a wide range of good tenants. So why write about hotel investments? Of course, we are a few deals away from being hotel investors. But this week I read an interesting article on direct investment by Best Western Hotels.
Not the only company piling money into Osaka and the Kansai region but an interesting article about the reasons for their decision. In short, Osaka is booming, the World Expo is on its way in 2025. The worst kept Japanese secret is that the first Casino in the country will be built in Osaka. An as more and more tourists repeat visiting Japan their desired locations are spreading, away from Tokyo and Niseko to the more interesting and sometimes more vibrant destinations, Osaka fits that bill.
What does this mean for JPI? Well more tourists, more jobs, more tenants looking for great reasonably priced accommodation. It is a win-win. Contact Sim or I today to find out more;
Another busy week in Japan. The weather is heating up nicely. Soon though it will be too hot to move!
This week I read, with some sadness the decline of Purple Bricks. For those of you reading that live outside the UK, a quick introduction to Purple Bricks. Started in 2012, at the lowest point in the UK property market, this online real estate agent changed the way people in the UK bought and sold property.
After 5 phenomenal years of growth Purple Bricks was floated on the London stock exchange in 2017 with a valuation of £240 million. Purple Bricks went on to expand in Australia, the US, and Canada. This rapid growth, ultimately would bring about the near downfall of the company.
Though never a shareholder, I followed Purple Bricks as the company the founders disrupted a well-established market in the UK. Consumers were desperate for another option when selling their homes and Purple Bricks was the silver bullet. The initial success and growth in the UK lead to overseas expansion which, in the end, the company could not support. Not quite all over for the company but some hard work ahead to pull things around.
Here at JPI we always talk about the slow, low-risk opportunity for wealth creation that property brings. Purple Bricks was in the real estate sector and should have learnt form the product they were selling. Slow down, due diligence first and then proceed slowly. I hope we see Purple Bricks bounce back, they offered an option instead of the expensive high street real estate agents but only time will tell.
You can read the whole article here and find out more about Purple Bricks by googling them.
Many people will come up
with reasons of why they shouldn’t invest. Every year brings its own unique set
of crises and lots of reasons not to invest.
But so many
times the question is asked when is the `right time to invest`? The general answer
When you can afford to do so, rather than trying to time the
The property market rarely has perfect conditions (high capital
growth, low interest rates, high rental yields, plenty of property available;
and, relative ease to borrow money from the bank). In addition, it is nearly
impossible to accurately predict movements in the property market.
Most countries do not have a uniform market, but instead have numerous
markets that operate differently. Even if property price growth for the year is
forecast at zero, some properties might drop by 5-10 per cent, whilst others
might rise by 5-10 per cent giving a net result of no growth.
Delaying your decision to invest can be costly. If you decide to
wait for a potential drop in the market and it doesn’t happen, you could face
more expensive property prices and higher interest rates, making it more
unaffordable to invest.
If you can afford to invest in a property this year, don’t put off
your decision to buy.