Terminology that you encounter for the first time when you start real estate investment.There are a lot of kanji and English horizontal characters.There are many similar words, and I think that many people are confused at first because they do not know what they are.From this time, I would like to explain the terminology related to real estate investment in several parts.Please click the word you are interested in from the table of contents.
table of contents
- 1 RMBS
- 2 ROI
- 3 ROA
- 4 Blue return (Aoiro Shinkoku)
- 5 Aoji
- 6 Akaji
- 7 Asbestos
- 8 Asset Management (Asset Manege Mento)
- 9 Asset allocation
- 10 down payment
- 11 UPREIT
- 12 apartment
- 13 apartment loan
- 14 Arranger
- 15 yield gap
- 16 Designated location road
- 17 Bulk Borrowing (Ikka Kakariage)
- 18 General fixed-term land lease
- 19 General Brokerage Agreement (Panbaikaikeyaku)
- 20 Transfer registration
- 21 Inuki
- 22 Illegal building
- 23 income gain
- 24 stamp duty
- 25 throw away
- 26 ALC
- 27 AD
- 28 SRC structure
- 29 Escrow
- 30 Esuzo
- 31 NOI
- 32 NOI rate
- 33 NOI Yield
- 34 NCF
- 35 LTV
- 36 Owner change
- 37 Overlawn
- 38 Summary
RMBS
Mortgage-backed securities are securities issued backed by mortgage receivables. Investors receive interest in exchange for lending money on securities issued by companies, etc.).A well-known example is Flat 35, in which housing loan receivables lent by private financial institutions are purchased by the Japan Housing Finance Agency, securitized, and issued to institutional investors.
ROI
Return on investment refers to the percentage of profit that can be obtained with respect to the capital invested.Cash flow in a real estate investment is the rent minus expenses and loan repayments.
ROI = annual cash flow / total investment
ROA
Return on assets is an index that shows how much the invested assets contributed to the acquisition of profits.
ROA = net income ÷ total assets x 100 or profit margin on sales x total capital turnover ratio
Blue return (Aoiro Shinkoku)
Applied if you have submitted a "notification of opening" and "approval application for blue return" to the tax office, special deduction for blue return (maximum 65 yen) 86 yen (up to 15 yen for relatives over the age of 50) can be used as necessary expenses, the net loss can be carried forward and carried back, and the allowance for bad debts can be recorded.
Aoji
The part painted blue in the "picture map" before it became a public map, indicating waterways and riverbeds that are national land.A public map is a map provided at the registry office, which is made so that the shape of the land and the positional relationship with the adjacent land can be understood at a glance.
Akaji
It is the part painted in red in the days of the "picture map" before it became a public map, and indicates the old roads, footpaths, and farm roads, which are nationally owned land.
Asbestos
About asbestos.It was used as a building material for insulation, heat retention, and fire resistance, but it was found that inhalation of asbestos fibers into the lungs caused lung cancer and mesothelioma. etc. are prohibited (for specific parts for which substitutes have not been established, a grace period is granted only until such time as they are established).
Asset Management (Asset Manege Mento)
It is the business of forming, managing, and maintaining real estate for investment purposes, and the purpose is to improve the value of assets through comprehensive asset management entrusted to them by investors.A similar word, property management, refers to a business that conducts real estate management operations that are closer to the site and are more direct.
Asset allocation
An investment strategy that allocates assets such as real estate to reduce risk in asset management.
By allocating multiple assets, it is expected to be able to flexibly adapt to changes in the market environment.
down payment
When using a loan, paying part of the purchase price with your own funds is called a down payment.
UPREIT
A system in the United States real estate investment trust (REIT) in which the owner of land with a low book value and a high market value acquires shares of the REIT by making an in-kind contribution of the land. The advantage is that you can avoid taxation.
A REIT is an investment product that distributes rental income and real estate sales profits to investors as a result of investing in multiple real estate by an investment corporation that collects funds from investors.
apartment
It refers to a two- or three-story apartment building made of wood or light steel.Since there is no clear distinction between condominiums and condominiums, real estate companies often call condominiums with three stories or less built with wooden or lightweight steel frames as apartments.
apartment loan
It is a loan that can be used when purchasing or building an apartment or condominium for investment, and the source of repayment is expected to be rental income.For loans aimed at purchasing real estate to live in, there is a mortgage loan, and there are mortgage deductions that reduce taxes and provide preferential interest rates, but this is not used for real estate investment. you can't.
Arranger
It is a general term for people who negotiate and coordinate between the people in charge of each stage in order to securitize real estate.
yield gap
Yield gap is an index to measure the leverage effect. If the yield of the property to be purchased is the same, the lower the loan interest rate, the higher the investment efficiency.It is the difference between the interest rate on the loan and the yield on the investment property.
Designated location road
Among private roads, private roads that have been designated by a specific administrative agency are position-designated roads.When building a building, it is necessary to be in contact with the road at least 2m under the Building Standards Act, so if you divide a large piece of land and build a building, you may not be able to meet the obligation to connect to the road in the back of the site. It is possible to fulfill the road contact obligation by establishing a position designated road.
Bulk Borrowing (Ikka Kakariage)
It is a contract that allows you to entrust all work related to rental management to the management company, from property management to tenant recruitment, tenant screening, and rent collection.
General fixed-term land lease
A general fixed-term land lease is one of the three types of fixed-term land lease based on the Land and House Lease Law.A land lease whose duration is 3 years or longer, and whose contract cannot be renewed even after that period expires.
General Brokerage Agreement (Panbaikaikeyaku)
A general brokerage contract is a contract that allows you to request brokerage from multiple real estate companies, unlike an exclusive full-time brokerage contract and a full-time brokerage contract.
Transfer registration
When the ownership of real estate is transferred from the seller to the buyer, the transfer of ownership is not permitted unless the transfer of ownership is registered with the Legal Affairs Bureau (registration office).This is called transfer registration.
Inuki
It refers to selling or renting out the facilities, furniture, furnishings, etc. of the previous tenant, such as a store or factory.
Illegal building
We have to comply with various building-related laws and regulations such as the Building Standards Law, the City Planning Law, and local government ordinances, but it was built in a state that does not conform to these restrictions.Buildings that were legal at the time of construction but no longer comply with the current laws and regulations due to later revisions to the law are called existing unqualified buildings.
income gain
It is rental income obtained by leasing.
stamp duty
The purpose is to clarify and stabilize the facts and legal relationships of high-value transactions.Purchase revenue stamps, paste them on tax documents, and postmark them.
throw away
It is the value after deducting the width of the good pillar from the inside to the inside (distance).
ALC
It is a lightweight aerated concrete that is a kind of building material.In addition to the merits of high durability, excellent heat insulation and fire resistance, light weight and high sound insulation, it has many joints and is said to be more expensive than other exterior wall materials with low waterproofness.
AD
It is an advertising fee paid by the owner of the property to the real estate company, separate from the brokerage fee, when the tenant is brokered and the lease contract is concluded.
SRC structure
A combination of steel (S) and reinforced concrete (RC) is called steel reinforced concrete.Due to its high strength and excellent earthquake resistance, fire resistance, and water resistance, SRC construction methods and structures are used for high-rise buildings such as high-rise apartments, and the statutory useful life of SRC houses is 47 years.
Escrow
It is a mechanism that guarantees the safety of transactions by intermediating a neutral third party that can be trusted between the seller and the buyer at the time of the transaction.
Esuzo
It is a construction method and structure that uses iron and steel members for the frame of the building.It is classified into heavy steel frame construction and light steel frame construction according to the thickness of the members used.
NOI
In the sense of net operating income, it is the full rent minus the non-consumable expenses such as vacancy loss, operation and management expenses, and taxes.It is an index with a high utilization rate because it can measure the profit level in line with the actual situation.
NOI rate
In the sense of net operating profit margin, what percentage of NOI will be to the full rent after deducting unpaid rent?is an index that represents
NOI rate = 100% (100% assuming full occupancy) - (vacancy rate + operating cost rate)
Operating income (NOI) is calculated by multiplying the NOI rate by the full rent, and the NOI yield is calculated by multiplying the NOI rate by the surface yield.
NOI Yield
It is a yield that is closer to the actual situation than the nominal yield because it is the amount after deducting non-consumable expenses such as vacancy loss, operation and management expenses, and taxes.
NOI Yield (%) = NOI (annual rental income - annual real estate operating costs - loss due to vacancies) / acquisition price (real estate price + miscellaneous expenses incurred at the time of purchase) x 100
NCF
It is the net cash flow that is the difference between cash deposits and withdrawals, which is the amount after deducting capital expenditures from cash flow income obtained from real estate. The higher the NCF (Net Cash Flow), the higher the financial soundness.
LTV
The ratio of interest-bearing debt to total assets refers to the ratio of debt to the asset value of the property owned (debt ratio), and is an indicator for assessing the degree of dependence on debt from the perspective of the property as a whole.
LTV = borrowing amount / real estate price
Owner change
By selling the house with tenants still in it, the owner of the rental house takes over the right to receive the rent from the lessee and the obligation to return the security deposit when the lessee moves out.By the way, if the room is vacant and there are no tenants at all, it cannot be called an owner change.
Overlawn
An over-loan is a loan that exceeds the purchase price. If you can get a loan of more than 5000 million yen (5000 million yen) for a 6000 million yen property, it will be an over loan, and if you receive a loan of the same amount as the property, it will be a full loan.Even if you have a small amount of your own funds, you can receive a loan from a financial institution with the purchased property itself as collateral, and you can get a large asset and increase your income. .
Summary
We have introduced the technical term "a" related to real estate investment.
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.
