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Location Location Location
No doubt. Location rules!
When we think real estate in Japan or any other country we think location. When we read books on real estate we read location is paramount. In response the question, “What are the three most important things to consider when making a real estate investment?” We even have the very famous reply, “location, location, location!” Whether it is Japan or anywhere else in the world there is no doubt location is critical maximize real earings on any real estate investment. So there it is, real estate experts around the world shout that location is number one in choice of top real estate investments, question is what makes a good location?
Japan's questions.
Japan offers a broad and often greatly contrasted and therefore often perplexing array of choices when it comes to location for your real estate purchase. One may even find that standard conventions at home seem to be turned completely on their head when we get to Japan. For most newcomers to the market questions prevail, “What do you mean, getting close to a station and all it’s noise and bustle is good?” Or “How can it be, this place has a great view of the river, how can it have such a cheap price?” Once again we need to know that we need professional help. Well in most parts of Australia being too close to a train station with it’s noise, night life, smell and even that element of society that live apart from most of us, is not so good for the value of your land. In Japan it’s great! Well in many cases but not all. In Japan trains are a major form of transport. Residential investment properties boast about how many minutes they are close to the station. So, can I say, the closer to the station the better? Well for the most part yes, in Japan property close to train stations is heavily sort after for residential purposes. However, having said this Japan has its limits as well, just how close to this station is OK? When are we too close or too far away? Is every station sort after or do station vary in popularity? These are all good questions, which in turn beg questions of their own. Perhaps the biggest question now being to whom are we marketing to?
Comparisons.
Let’s take a look at this new question, who are we marketing to? To try and answer this question let’s look at two blocks of land, one in Itami and the other in Kawanishi. Our design architect tells us both blocks will accept a residential building comprising eleven 35 square meter units and remain within national and local zoning requirements. Both will provide a very satisfactory real return of 6.5% yield given that each room can be rented out at JPY66,000 per month with a 90% occupancy average. The Kawanishi block is 12 minutes walk from two major railway stations, Itami a close 4 minutes to it’s own major station. On the surface Itami would appear the best buy. Now we learn a very popular university is a short ride from the Kawanishi property. The same university is a 20 minute ride from the Itami block. This style of unit is very popular with university students and single office ladies. Now we add into the mix that the number of new units completed has surpassed the recent demand by office ladies in this area. We are still OK as a huge business hub close by. Only a short train ride takes us to down town Osaka central station, Umeda. We will appeal to office ladies who want the convenience of a central location but don’t want to be right in the middle of Umeda. Trouble is we will need to ask rental agencies from Umeda to seek clients for us and pay them a commission but will still need a Itami agent to mange the property. Suddenly the Kawanishi property looks a lot better. Let’s take a look at these blocks again. The Itami blocks needs 6 floors to build eleven units, Kawanishi fits them on four floors. Itami needs an elevator and this means running costs. Now let’s look at the neighborhood. Itami has several 12 floor buildings nearby. The Kawanishi block doesn't have even a three-floor building within three hundred meters of the planned four story development. You can bet good money on the odds that there will be a neighborhood action to protest this real estate investment.
Answers.
Location, Location, Location, great words of advise but what is good and what is not. The answers these complex questions is very simple, you need to find a professional and trust that person to find you a location that safely meets your needs and expectations.
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