[Real estate investment] Risk of property aging.Regular checks and renovations are important to keep the value

One of the risks associated with real estate investment is the aging risk of the property.There are three specific aging risks: lower occupancy rate, lower rent, and lower value at the time of sale, all of which are linked like a chain.Specifically, if the number of tenants decreases due to aging, the occupancy rate will decrease, so the rent will have to be lowered to recruit tenants. Flow.

As a result of neglecting maintenance over many years, there are places that need to be repaired here and there, and properties that have fallen in value and become unpopular are difficult to attract tenants. becomes.It won't deteriorate quickly, so if you think it's still okay and leave the repairs unattended, it may be too late when you realize it.The occupancy rate will drop, and you will have to lower the rent to attract tenants, and lowering the rent will lead to lowering the value of the property, so the value at the time of sale will also drop.How can we maintain the value without losing it as much as possible so that it does not happen?

Aging is inevitable.For this reason, the repair expenses are accumulated on a daily basis.

Rental properties deteriorate over time.As this is unavoidable, the best option is to set aside monthly repair costs.Some indoor facilities must be replaced every 10 or 20 years, while some outdoor facilities, such as roofs and outer walls, are expensive.It is common to set aside a small amount from the rent income, and then add about 3% to 5% annually from there so that it will not be too late for large-scale repairs or rebuilding when you realize it.

Specifically, the following repair costs are required.

• Repair for less than 1 yen per time

Keep in mind that minor repairs are often necessary.For example, adjustment of doorknobs/entrance doors, replacement of locks, water leaks in water pipes, failure of ventilation fans, etc.These include things that can be improved with minor repairs, such as water heaters, air conditioners, and bathroom equipment.There is also a real estate investment method where you can directly contract with a construction company or carpenter who can easily ask for repairs, or leave everything to a management company and ask for general repairs.

• Tenant renewal cost

Wallpaper, cushion floors, tatami mats and shoji screens are often replaced every time.In addition, the kitchen, washbasin, air conditioner, lubricator, and flooring will be replaced with a new one every 20 to 30 years. Keep in mind that at least 1 yen per project will be required, and an additional 10 yen will be required for the renewal of expensive facilities such as kitchens.

• cost for building maintenance

Roofs and walls are very expensive.Repainting and caulking of siding (boards used for the outer walls of buildings) are performed every 10 years, and replacement of the roof and siding is performed about once every 25 to 30 years.Rather than doing maintenance all at once after it becomes old, frequent maintenance will make the building last longer, and as a result, the total cost will be lower.

• outside cost

Maintenance of the surrounding area, such as tree selection and weeding costs, is also costly.If you can do it yourself, it's free, but if you ask a contractor, you should prepare at least 3 yen per year.If the exterior is rough, it will be difficult for new tenants to enter, so let's manage it properly for real estate investment.

By asking a cleaning company to clean the sewage pipes once every two to three years, you can reduce the trouble of clogged water pipes and costly repair costs.If the sewage pipe is damaged, it will start from digging up, which can cost as much as 2 million yen.In the case of areas buried in snow in winter in rural areas, it often costs more.

Rent can be increased by adding value through renovation

If it starts to feel like it's going to be outdated and unpopular, remodeling is an option.

Second-hand apartments require less initial investment, so depending on the condition, there is also a strategy to renovate and reborn to make it a more profitable property.There are many properties where structures and pillars can still be used, so we can consider ways to increase profits by changing to modern construction.

The market price of the old rent will be lower, but you can raise the rent by renovating.For example, if you use renovation, you can leave only the structure of the building and change the interior and floor plan entirely, so you can set up a higher rent even for a used one.For example, if the room was rented for 5 yen, it is possible to upgrade it to 6 yen by renovation.In order to raise the rent, the trick is to decide the target and renovate it to suit that person.If you are targeting young people in an area with many universities, you can look stylish just by replacing the flooring with modern flooring or replacing the entire kitchen.For the elderly, there are methods such as making the design barrier-free and bringing the bedroom, bathroom, toilet, and other wet areas closer together.

The needs of rental housing change year by year, so it is difficult to find tenants for second-hand apartments that are 20 or 30 years old because they do not meet modern needs.In order to survive in the midst of many competing owners, even in the same area, simply adopting modern floor plans and facilities can completely change profitability.For example, in the past, properties with a large number of rooms and small sections were popular.Nowadays, it is popular to have a large floor plan with a living room and dining room, and a separate bedroom.The point is to take a spacious living room where the family can relax, such as remodeling to a 1DK if it was previously a 2DK floor plan.

As for the bathroom, there were many properties in which the bathroom, washroom, and toilet were integrated.Nowadays, it's common to have separate baths and toilets, but it's also popular to stick to storage in the washroom if you have room.Western-style rooms are more popular than Japanese-style rooms with flooring, and closets and walk-in closets are popular for storage.The more storage you have, the more popular it becomes, so there are ideas for installing shoe cupboards, living room storage, kitchen storage, hanger pipes, and food storage.Changing the lighting to downlights makes the space look more modern and stylish.Even if you just change the lighting, the impression of the night will be greatly improved, so let's incorporate it.

Be careful when making a pet-friendly property.In some cases, there is a possibility of damaging the property.

We talked about adding value above.In recent years, there has been a pet boom, so pet-friendly properties are popular with pet owners.Therefore, there are owners who allow pets in properties where tenants have not been able to gather until now and recruit tenants.

However, as a real estate investor, you must also know that there is a risk in allowing pets.

Pet-friendly properties have their drawbacks.If you keep pets indoors, there are many cases where the odor is ingrained in the wallpaper, etc., and it is necessary to replace all the wallpaper when recruiting new residents.In the case of cats, the walls and pillars may be damaged, and in the case of dogs the flooring may be damaged.It's still good if it's just replacing the wallpaper, but if you replace the pillars and flooring, the cost will be high and it will put an extra burden on the property itself.

It is necessary to devise floor plans and interior materials that are comfortable for pets to live in, such as using non-slip flooring for households with dogs and choosing wallpaper that is resistant to stains and odors.Households with cats enjoy installing cat towers on walls and ceilings, but keep in mind that once installed, it will be difficult to rent to households other than those with cats.

When tenants change, it is not necessary to renovate everything, but at the very least it is necessary to include house cleaning.Many people are wondering whether or not to allow pets in order to increase the occupancy rate, but there is also the risk of accelerating the deterioration of the property like the cormorant above.

Be careful when remodeling.Risk when making it a designer's property

Let's raise the rent by renovating the dilapidated property into a popular designer's property!We tend to think that, but it is dangerous to decide easily.Compared to general properties, the appearance is stylish, and the interior has a sophisticated impression, so it is popular with a wide range of people.However, designer properties are expensive to refurbish, so there is no choice but to cover the cost by raising the rent.When the average rent in the area is 10 yen, how many people would pay 15 yen for a designer apartment?It may be successful in Tokyo, but in the suburbs, the rent will only increase to the extent that it adds color to the market price, and it will take years to recover the added renovation costs, and during that period, similar repairs will not be made. It is possible that it will disappear.

How much will the refurbishment cost?

What is the approximate cost of remodeling?Generally, one year's rent is a guideline. If it is 1 yen per month, it is 1 yen x 10 months = 10 yen.If you don't want to spend too much, it's easier to understand if you think about 12 years. If you think about 120 months with a rent of 0.5 yen, the cost will be 10 yen.However, in a dilapidated apartment, it is not possible to say that it will look different in 0.5 years because the age of the exterior also affects it.

For example, if you want to replace the kitchen, it costs at least 70 yen. For the bathroom, unit baths are popular, so 60 yen or more.If you replace the entire plumbing, you have to think about 10 million to 200 million yen.

Recently, properties that allow tenants to make DIY renovations have become popular.Nowadays, there is an environment where you can easily DIY using building materials from IKEA and home centers, and there is an increasing need for tenants to renovate as they like.In addition, there is also a customized rental method in which the cost is paid by the landlord, the lessee presents the conditions of their choice, and the owner renovates.

Aging is inevitable when investing in real estate.However, by systematically accumulating repair costs and renovating, tenants will want to live there, and profitability will increase, so please consider doing so.If you are a good owner, you can buy a second-hand property cheaply and renovate it into a stylish renovated property, and there are people who are making a big profit.

Summary

• Aging is inevitable.For this reason, the repair expenses are accumulated on a daily basis.
• Be careful when making a pet-friendly property.May damage property
• There is also a strategy to renovate used apartments with a small initial investment amount to make them even more profitable.
• The cost of renovation is generally about one year's rent.

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