The reality is that almost no residents want to actively live in properties where suicides or murders have occurred in the past.If you accidentally buy an accident property... What if your own property becomes an accident property?There are many cases where the rent has fallen and you are worried about the accident property.
However, the investor who dares to choose should have a certain strategy.Is accident property really not suitable for real estate investment?Accident properties are always controversial and should not be selected basically, but depending on how you choose, it may not necessarily fail.
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What is an accident property in the first place?
An accident property is a property with a psychological defect.There is no legal definition of psychological defect, but it corresponds to the murder of the previous tenant, suicide, fire death, etc. However, there are cases where it is not treated as an accident property due to the cause of death. , and its criteria are not clearly defined.It is ambiguous whether so-called natural deaths such as solitary deaths or deaths from illness are treated as accident properties. Not a thing.
If you include all properties with incidents, some tenants will avoid properties in areas where many people died in ancient battlefields and large-scale earthquakes in the past.Therefore, there is no clear standard for how many years ago the accident property should be applicable, and it is often the source of trouble.
Risk of investing in accident property
Accident properties are generally judged to be high risk.First of all, when selling, the owner must explain the cause of the accident to the purchaser (obligation of disclosure).Failure to do so may result in cancellation of the contract or compensation for damages as liability for defects.What's more, the rent of accident properties often falls by 1% to 5% compared to general rents, and even if the rent is lowered, it is possible that tenants will not be found and the rooms will remain vacant for a long time.Even in the case of a lonely death of an elderly person who has just been discovered, the neighbors are aware of the fact, so it is not uncommon for them to move out as soon as rumors start.
Even if you don't hear the rumors, there are now websites that deal with accident properties on the Internet, so the tenants themselves may discover the fact.The accident property site has nothing to do with the fact that there were tenants in between, so there is a high possibility that past information that has been posted will continue to be posted for a long time.Some investors think that it is naive to think that people are emotionally driven and that things will work out just by giving consideration to them.It takes time and effort to recruit tenants, and it is doubtful whether it is worth holding even if it costs more than necessary renovation.
Why some investors choose accident properties in real estate investment
Even if the value of the property falls due to psychological defects, there is a big difference depending on the situation.In the case of natural death such as lonely death or disease death, it is often reduced by about 1%.Suicide is said to be 2-3%, and murder scene is said to be 3-5%.
For example, if a resident suddenly dies in the room and is discovered by the family the next day and is dealt with immediately, the room will not become dirty or smelly due to decomposition, so the next occupancy will be possible with cleaning or simple renovation. Is possible.However, even in such a property, there are cases where the neighbors scrutinize the property and move out immediately even if there are tenants.Therefore, in general, you have to lower the rent in advance and start recruiting.
In addition, if a person who dies during a hot season such as summer is left for a long time, it will cost a lot of money to repair it.Even if you spend a considerable amount of money to fully renovate, there is a problem with the smell that is difficult to remove, so you may not be able to lend it immediately until it disappears.
However, there are people who want to move into such a property if they can lower the rent.Properties with high convenience, such as being close to a terminal station and having many facilities necessary for living, are popular even if they become an accident property unless there is a serious problem.
Some veteran investors are making profits because they can get high yields as long as they have tenants because they can buy cheaply.
For example, for families who want to move in for a short period of time until they build a new house, the rent is cheaper than usual, and because they move out in a short period of time, there are many cases where they don't care much about past accidents.In addition, there is a demand for accident properties so that there are real estate agents that specialize in accident properties.If the property has little risk of psychological defects such as natural death, it may be a bargain.
Summary
An accident property is a property with a psychological defect.There is no legal definition of psychological defects, but it includes cases where the previous tenant was killed, committed suicide, or died in a fire.
There is a difference between psychological defects.Natural deaths such as solitary deaths and deaths from illness are lower hurdles for residents than suicides and murders.
It is said that the loss of property value due to psychological defects is 1% for natural deaths such as solitary deaths and deaths from illness, 2-3% for suicides, and 3-5% for murder scenes.
When selling an accident property, it is necessary for the owner to explain the cause of the accident property to the purchaser.
Properties with high convenience, such as being close to a terminal station and having many facilities necessary for living, are popular even if they become an accident property unless there is a serious problem.
At Rich Road Co., Ltd., we will consistently support all aspects of investment real estate, from complete beginners to experienced people, from a wide range of real estate selection, loan consultations, post-purchase management, and renovations.
