00:00:00: of creating a pocket version of me.

00:00:06: So people normally, like I mentioned in the previous presentation, pay us to represent them and do complete due diligence on their behalf which is a few thousand bucks or they hire me individually as consultant with just a few hundred bucks.

00:00:24: Scheduling wise and price-wise that can be pretty expensive.

00:00:27: And a lot of people are not in the market to purchase just yet, but they're testing the waters right?

00:00:32: So if you want look at property investment listing figure out what difference is between it... ...between this one or other listings.

00:00:39: Figure out what's the right investment for them.. ..and there may not be ready to pull trigger or pay large amounts money for that kind advice just yet.

00:00:48: But I do wanna start sampling things.

00:00:50: so We put together or rather Bob, but I helped train an AI system.

00:00:58: It doesn't do everything the child's system over there does.

00:01:02: so Charles has a lot more portfolio related top-level macro view information zoning disaster area maps stuff that we're not doing.

00:01:12: what our system does is simply receives at the moment a tenanted long-term lease, tenanted investment property listings.

00:01:21: The best two websites that we normally use for that are Rakumachi or Kenbia but there a bunch of these listing also available on the more general property website like Sumo and At Homes so forth And we are hoping to also have at least one or two English listing websites that will be including in a not-so distant, I hope future release of the system.

00:01:43: So you won't have to go Japanese property listings and have them translated.

00:01:47: but it does have to be long term lease tenanted investment properties.

00:01:52: so if its owner occupied or vacant the systems can't analyze.

00:01:56: yet In little bit more distant future hopefully provide same level service whereas instead of going off the rental amount that's in the Japanese listing, will... The system will do rent analysis research and let you know what could potentially be charging at this property if your rented out.

00:02:17: But then moment it has to analyze tenanted property listings And there is a bunch other information.

00:02:25: when you log into the system for first time It'll tell you that needs have But generally speaking, it needs to be a tenanted investment property listing.

00:02:32: So the way they normally look on Japanese websites is something like this.

00:02:38: I'll translate into English for convenience.

00:02:43: so This one has nine point four million yen The surface yield which is bit of misleading Japanese term for gross yield, sometimes they call it net-yield.

00:02:54: In any case its not real net yields.

00:02:56: so whatever percentage you see on these websites It doesn't take into account purchase costs ,it takes to account property management cost.

00:03:04: definitely does take in to account insurance costs.

00:03:06: So Take anything that is seen Japanese property listings with a grain of salt.

00:03:13: Supposedly estimated annual income is six hundred and eighty four thousand yen or fifty seven thousand yen per month.

00:03:20: It's in Nakanoko, Tokyo.

00:03:23: so really good location a one bedroom unit built thirty three years ago.

00:03:28: what you would be doing normally is simply copying and pasting this link into our property analyzer and it will take somewhere between, normally somewhere between ten to thirty minutes to analyze the listing for you.

00:03:46: And then it will spit out a very thorough report.

00:03:49: so we'll just briefly look at four different examples of four different property types... ...and hopefully highlight what are trying to analyze here which is things that aren't always evident on first sight.

00:04:03: So There's a bit of an executive summary here, but I'll skip that so i don't spoil the surprises and I'll slowly scroll down to show you first of all what the listing actually says.

00:04:15: So everything we've just mentioned.

00:04:17: um it will tell you how much it will actually cost to purchase including purchase costs And What The Listed Yield Is.

00:04:24: But Then It Will Start Breaking It Down Further.

00:04:28: Firstly We Give You An Investment Score scale of one to ten, should you consider purchasing this property?

00:04:35: Should you avoid it at all costs?

00:04:37: or if this is a highly recommended investment property and then we'll tell you what that is based on.

00:04:43: So for instance the net monthly cash flow is not fifty seven thousand yen once you've calculated the rent management fee and the building fees which are listed in Japanese listing but you're not actually seeing a net price.

00:05:00: You see the gross yield under that stuff that should be deducting from it.

00:05:06: The real net pre-tax rental yield is actually four point three percent when you take purchase costs, monthly cost and property management into account Net weekly, annual net monthly And then we start breaking down the risks.

00:05:26: So let me scroll down a little bit, slightly older property.

00:05:32: so about thirty three years old and we've known anyone who's been listening to Japan Real Estate podcast or any of the other stuff that we regularly put out knows that if it is a condo unit would like to purchase them.

00:05:45: thirty years in younger on-purchase condominium buildings start to accumulate higher and higher maintenance in repair costs.

00:05:59: And that's where investors are buying them from you, who're also thinking about these exact same things will expect a lower price because their yield is shrinking as the building hits about forty years of age.

00:06:11: So medium risk there it just over thirty-years old but that does give only four or five years before you need to start considering potentially reselling if want.

00:06:21: maintain the price as close as possible to what you purchase it for and maintain the yield.

00:06:28: It tells that these fees are going up in the near future, this is a first floor studio unit And if we look at the photo actually go back to listing...it looks lovely but You will notice that they come out.

00:06:49: The first floor is actually balcony accessible or viewable from the street, right?

00:06:56: For single females in Japan this is a major no-no.

00:06:58: So you've instantly... This obviously a singles apartment it's studio so there's only going to be A single person living here and immediately lost fifty percent of your tenant base because its first floor Street view accessible kind of unit.

00:07:12: It will also tell some market, general-market concerns which are not really related.

00:07:19: It will tell you that the net yield is much lower than the seven point three that your seeing on Japanese property listing.

00:07:25: so if happen to miss at four point three percent it's a real net yield.

00:07:29: still four point two percent isn't bad for Tokyo properties considering age of the property and its first floor unit.

00:07:37: Factoring that into the account it gave us an investment score of about six point one.

00:07:42: It also tells up.

00:07:43: The part of these supplemental location data appears inconsistent with the listing meaning, the map pin That's actually put on Google Maps to check whether that property is exactly in that location doesn't exactly sit right With what the listing claims to be distance to station or convenience store, supermarket all of those features that the agents like put into listing.

00:08:09: So it's recommending you confirm before going ahead with this purchase and then also gives a list of actionable recommendations.

00:08:17: so Typical due diligence that we'll want to see on any kind of condo unit in any building, ask for the management association's long-term repair plan.

00:08:25: Any notice of upcoming major works and view current lease terms figure out if tenant is actually a good profile.

00:08:33: it just runs you through this steps of due diligence To help know what to ask can help you know documents you wanna review confirm the exact street exposure.

00:08:43: In this case it's easy, we can see from photos that the balcony is actually easily viewable on the streets.

00:08:47: but in some cases its going to be a walled-off building with a lock where you cant' actually see anything.

00:08:55: so thats might better but confirm how exactly exposed they are and then figure out because of age of buildings assume that your not gonna see any appreciation potentially going to be losing some of your purchase price when you resell it, depending on exactly where you're going to re-sell.

00:09:14: So figure out what exit pricing would be happy with and how long a rental income do expect for before you reselle?

00:09:22: And whether they are still in the green close or red when you re-sale.

00:09:26: if you happen to lose fifteen percent twenty percent and haven't gained that much in rental income over time then obviously not the best investment.

00:09:34: but everybody is different.

00:09:37: And then what do we want to double check?

00:09:40: What you mentioned again, the station reference with the exact actual address on Google Maps doesn't exactly coincide with a distance to Station mentioned in the listing.

00:09:48: So if it says ten-fifteen minutes... If is has two three four minutes mistakes can and will happen.

00:09:55: an agent sometimes slightly exaggerates in favor of making the listing look little bit more attractive.

00:10:02: so you'll want confirm that kind information and of course figure out the long-term repair plan, how much it got collected in reserve funds.

00:10:11: Typical new diligence for a condo unit.

00:10:15: I'll just quickly show you few other samples.

00:10:18: so this one is A house in Okayama.

00:10:24: The original listing here This one is twelve point eight million yen supposedly gross yield or Net yield anyway not real net yield of nine point.

00:10:37: thirty seven estimate annual income about a hundred thousand yen per month And and built only twenty four years ago.

00:10:45: So we kind of like this property, but when we dig into it I Kind of cheated now because i translated it to english.

00:10:52: But if you're looking at the original japanese listing If your not A kanji reader It could be a little bit hard To miss.

00:10:58: The fact that This is actually a leasehold Property right.

00:11:02: so This one in particular That's rental house.

00:11:06: Let's look at the executive summary this time detached rental housing okeyama bills, November two thousand.

00:11:10: and to offer that such a price cash flow looks acceptable on paper.

00:11:14: But it is a building only fixed term leasehold asset And the lease ends in February.

00:11:19: twenty fifty three.

00:11:21: so resale liquidity is probably weak.

00:11:24: In twenty-three years, the structure may or not be in good shape but if at least it's not renewed that would depend on what type of lease hold is and whether the landowner actually wants to renew it.

00:11:37: If they do have a choice no too!

00:11:39: But for any reason.

00:11:42: you will then be responsible for demolition and removal costs.

00:11:46: So this might fit with your investment plan.

00:11:49: It won't make sure before pulling trigger.

00:11:56: This one was not recommended at all.

00:11:58: Avoid, because Japanese structures usually lose value as they age and this is leasehold.

00:12:05: so you're not standing to gain any value related the land whatsoever.

00:12:10: So your only purchasing it based on rental income.

00:12:13: that gives you which in reality is seven point five percent Which isn't bad for a house.

00:12:20: but again Lease hold ending in twenty fifty three you're not facing definitely not facing any appreciation.

00:12:31: okay ama if your lucky you might do the value of the land might compensate for the fact that she's not getting as sorry.

00:12:38: The value of their house and rent.

00:12:40: a link.

00:12:40: am I compensated by the fact to know actually keeping the land, But in the vast majority of cases, it's going to be harder to resell.

00:12:48: Leasehold properties are also not going to qualify for a loan.

00:12:54: so you're limited to cash buyers only who are interested in purchasing a leasehold property that may or may not be renewed with a house they might want to keep obviously much weaker resale market.

00:13:06: The age of the property is twenty-four years old, so not too bad yet but it's reaching that age where your typical Japanese wooden structure home would start needing a lot more renovations and repairs on a regular basis something to take into consideration as well But mainly because it's at least sold for us.

00:13:45: Eight point one million, seven point zero eight yield.

00:13:52: Forty-eight thousand yen per month.

00:13:55: built nineteen ninety six or thirty years ago kind of borderline but probably acceptable enough.

00:14:00: what does the analyzer tell us?

00:14:04: That is giving it a five point eight at risk level high.

00:14:10: reasons for that are firstly that its studio unit and that it is in a building, does not state whether there's an elevator.

00:14:24: So the property on the fourth floor of five-floor unit... Again you're losing anybody who can't climb up three flights of stairs.

00:14:33: Japan being Japan we've got a lot of elderly tenants.

00:14:36: obviously this going to be issue for them.

00:14:39: single moms with their baby under shoulders and shopping bags as well are not going to rent anything thats up three flight of stairs something that you want to consider.

00:14:48: The unit is also under a sublease contract, so whatever income your getting from it today may or not be realistic once the sub-lease expires and you need start dealing with tenants directly.

00:15:00: we have had many cases especially during Covid times where sub-lease companies suddenly went bankrupt because they have to keep paying you the rent, whether they're leasing their property or not and then suddenly disappear.

00:15:13: If your renting a property into a commercial entity as opposed an individual it's easier for them just declare bankruptcy and disappear whereas individuals can still be pursued For any debts owed is much more than a company that has been dissolved.

00:15:27: so thats added risk.

00:15:31: This is again sitting at the age where building will start needing more regular renovations and repairs soon still borderline.

00:15:38: So we place that one as a medium risk, but concerned our main concern Is that the elevator status?

00:15:46: It's not this cloth Monkey Building fee plus into reduce the rental income sharply to four point.

00:15:53: One is the actual net rental yield.

00:15:56: right.

00:15:56: so Three percent off what the listing price actually suggests considering The added risk of building not having an elevator and your tenant base being severely limited.

00:16:09: We were probably Not recommending this property or at least not recommending it with flying colors.

00:16:16: And lastly give you one more example.

00:16:27: So, This is a small building.

00:16:31: Yeah, oh city.

00:16:32: I think all second prefecture for memory is the old city.

00:16:35: Yep forty three point seven million yen.

00:16:38: so really cheap building Generating what seems to be six percent on paper and when in case of buildings where there are no monthly owner union cost And so forth.

00:16:47: it could actually be pretty close to reality Seemingly a good property And this one also came under consider, so not exactly recommended but a horrible case as far our system is concerned.

00:17:04: The real net rental yield was actually four point seven percent.

00:17:07: once you take all purchase costs and the reserve funds that we want to put aside into consideration... ...and risk factors in these cases are built in nineteen ninety eight.

00:17:20: So nineteen ninety-eight puts it at twenty eight years of age.

00:17:25: The distance to the station is eleven minutes, not a huge deal but it's over-the-golden ten minute walk to a station that many tenants are looking for.

00:17:34: and while they might consider anything thats longer when actually search for properties to rent often put in ten minutes or less as criteria.

00:17:41: so your listing doesnt even gonna come up uh...in many cases when you're listening into rental.

00:17:47: But more importantly Yau City is in slight population decline Right, so even though it's within Osaka Prefecture doesn't exactly enjoy the same sort of fundamentals that Osaka City does.

00:17:58: It is not too far from Osaka city and we only have data up to twenty-twenty.

00:18:02: so far We haven't seen population census for twenty-five yet So things might turn around but in Japan this isn't a very common thing.

00:18:10: Usually cities that are declining will continue to remain stagnant or decline.

00:18:17: So we're not really thrilled with the potential tenant base for this one as well.

00:18:23: And listing's own area yield chart suggests nearby whole building assets generally traded a higher yield, so it could be interesting if you maybe managed to negotiate the price down little bit and increase your yielded little bit.

00:18:37: but as its stands at four point seven percent in Yao City specifically.

00:18:42: Sure consider it, but we've seen better deals out.

00:18:45: there is what the system.

00:18:46: Is basically telling us.

00:18:48: And so that's if this wasn't meant to be like a real long anything.

00:18:52: But if you got any questions feel free to ask now.

00:18:54: I'm sure Bob will be the one to answer most of them.

00:18:59: Can i get the mic?

00:19:16: Thanks for the presentation and wonderful tool.

00:19:19: It's not really on The platform itself, but it's more of a rental yield.

00:19:24: you were saying this is now bad for Tokyo?

00:19:26: For example Sorry if he was already known But what would be a good rental year?

00:19:31: full tokyon?

00:19:32: And are there any other cities that actually Are looking more promising in terms of these percentage?

00:19:41: yeah so generally speaking Tokyo probably the worst yield kind of area that we see in Japan.

00:19:51: I know a lot of people here swear by Tokyo, it's definitely the biggest city in Japan and the tenant base here is huge.

00:19:56: but if we see a good deal in Tokyo then we would consider buying normally will be four percent at best.

00:20:03: so four point something very good for Tokyo major cities with normal investing or recommending to our clients And the top seven with a caveat that up in Hokkaido you want to factor for slightly higher yield because winter does have a bearing on your maintenance costs and vacancy expenses.

00:20:23: Nagoya City is also another big city where we want higher yields, it's more industrial.

00:20:30: so we do have occasional Middle East terminations and late payments.

00:20:36: but other cities aside from Tokyo Other major cities aside from Tokyo and central Osaka would normally trade it up to five six percent net before tax.

00:20:46: Tokyo is usually up to four at best.

00:20:48: Usually less than that.

00:20:52: Anything else?

00:20:53: any questions?

00:20:54: Any hands?

00:20:54: yes, just what.

00:21:00: I'm Just wondering if there's any

00:21:01: cost associated with this tool right now or isn't a free tool?

00:21:05: And does you get one free analysis to check it out If you want?

00:21:09: and then the pricing is Up to ten analysis per month for thirty dollars.

00:21:22: fifty analysis four hundred dollars or if you're really doing the Doing the analysis work three hundred per month For three hundred dollar.

00:21:30: so it's basically Three-dollar per analysis, or two dollar or one dollar per analysis.

00:21:36: with those plans at The moment we are.

00:21:38: anyone who has been at the summit can Fill in this summit survey and get one month free use.

00:21:52: Thank you.

00:21:54: What are cities would actually be considering other than Nagoya, for example?

00:22:00: I do like Nagoya and Sapporo as well.

00:22:02: but of the top seven cities...I just want to see higher yields there.

00:22:09: But other major metropolitan centers, though we normally are active in our Fukuoka city Kyoto if you can see a deal out of there.

00:22:16: There's not that many of them and they're not short-term state hospitality properties.

00:22:20: but If We do See A long-Term Property Auto Kyoto will Grab it.

00:22:24: a Kobe City even Though It's declining or stagnant In Population?

00:22:29: If Its Central to Kobe its Still Very Attractive Central Or Semi-Central Yokohama Saitama City, Chiba city to a degree again as close as I can get the central Kuma Motocity.

00:22:45: we see quite a few good deals in There's bunch of them.

00:22:49: I mean The first thing would look is the population graph See if the population has increasing stagnant or declining and then We'd look at stuff like distance-to-station If it's a condo unit due diligence on the building all other stuff that will plan for but location wise It depends on I guess what the rest of your portfolio looks like, right?

00:23:09: So if most of your existing portfolio whether it's in Japan or overseas is more safe and stable low yield then you might want to be a bit more adventurous with potentially higher yields than smaller cities as long there again population stable.

00:23:21: And If most of their portfolio is speculated Then you may wanna go for something better cash flow.

00:23:27: It really depends on each investor What they're rest of that portfolio look like.

00:23:32: So that's the conversations we have before we start recommending properties.

00:23:38: Thank you, thank you.

00:23:41: Anybody else?

00:23:50: Yeah so I think it looks like a pretty cool tool and this is very useful for people looking to analyze properties or To acquire.

00:23:59: does it have any functionality That might help somebody decide if It's the right time to sell Or somebody who was already owning a property can use it to analyze figuring out what sales price would be?

00:24:12: That divestment related functionality.

00:24:18: Not if you don't have a Japanese property listing that's already active, but If You Have Advertised Your Property For Sale And Your Agent Gave You A Link To An Actual Listing That The System Can Analyze.

00:24:30: Then Yes It'll Tell You From An Investor's Perspective Whether Somebody Would Consider Buying it Or Not In Exactly The Same Way.

00:24:35: Yeah But That Something Interesting Though We Can Maybe Look At.

00:24:38: Yeah Anybody Else?

00:24:43: Ah yeah, we got one from the chat.

00:24:48: Ah they said is this offer also for online viewers?

00:24:53: I assume... Yes if they fill in a pre-survey that was sent to everybody via email before the event In their e-mail inbox They should have a pre survey That i think Tracy send it to everyone who purchased The Ticket.

00:25:07: If they filled all of those emails Of people filling out the Pre Event Survey will get an offer.

00:25:14: All right.

00:25:16: Thank you.