The Path to Real Estate Investing Part 5: Sales Edition (2)

Hello everyone.
I am a part-time salaryman investor.
Continuing from last time, this is a story about selling off the large number of condominium units I owned.
I have posted links to the articles from the beginning below,
so I think it will be easier to understand the background so far if you read them in order.

Last time, I talked about the sale of the first condominium I purchased in Kachidoki.
Since it was the first property I decided to sell and successfully sold, I remember feeling excited and a bit moved, feeling like I had taken the first step out of a difficult situation.

Starting from there, I tried to sell them one by one, but honestly, due to the issue of the remaining loan balance, things did not go smoothly.
things did not go smoothly.

Next, for the properties I had acquired a long time ago, the Nakanobu property in Shinagawa Ward and the Meidaimae property, I first applied to cancel the sublease agreements.

The Kachidoki unit from last time happened to be at the timing for a sublease review, so it was cancelled easily, but for these next two, I had to start by giving notice that I wanted to cancel them after six months in accordance with the contract terms.

I didn't know this at the time either, but there are conditions for cancelling a sublease; you either pay six months' worth of rent to cancel immediately, or you give notice in advance to cancel after six months and wait for that period, so one of these two responses is required.

I think most people choose the latter, but even if you apply for cancellation after six months, in reality, the other party may cite Article 28 of the Act on Land and Building Leases and refuse the cancellation.

It wasn't this time, but I have also been refused before.

If that happens, you cannot cancel unless it is at the time of contract renewal, and in the worst case, you may have to wait two to three years.

Because of that, if you are currently under a sublease contract, you should at least check how much the current rent is (and of course, who is living there), compare that rent with the sublease, and see what percentage level it is at.
In addition to that, it is very important to firmly confirm the contract period and when the renewal time is.
I recommend that you check and grasp these details yourself thoroughly.

Returning to the story, at this time, although I tried to put the properties on the market while proceeding with the cancellation talks, due to the relationship with the remaining loan balance, the asking price was at a certain level, so there were few inquiries and things did not progress easily.

In reality, I was working on the sublease cancellation process in parallel from the time I put the Kachidoki property on the market, but there was almost no market reaction to the condition that the sublease would be cancelled, and it was in a stagnant state.

Since it was my first time, I didn't know what was normal, so I often felt anxious and depressed.

The only salvation was that the person from the company I was introduced to and who was in charge of me taught me many things very carefully.
I am truly, truly grateful.

Once, the Shinagawa deal almost moved forward, but it didn't come together because it was pointed out that the status of the condominium management association's repair reserve fund was quite poor and there was great anxiety about the future.

It's all embarrassing, but I learned that for the first time as well.

With this background, I myself was driven by anxiety that they might never sell.

The Meidaimae property had a higher unit price compared to the other properties, so a situation where there were almost no concrete talks continued for a long time.

I consulted with the person in charge, and they advised me that it leaves a bad impression to have it listed for a long time on REINS (public information that only real estate agents can see), (it is not very good to have the impression of being an unpopular property that has been left unsold for a long time), so we decided to stop the sale for a while and see how things go.

Like that, it was a situation that didn't move forward easily.
As for the Shinagawa property, my worries were increasing due to the repair reserve fund issue, so I thought that even if it was effectively a loss when taxes and various expenses were added, it couldn't be helped, and I kept it listed for sale while taking the form of lowering the asking price slightly and re-listing it.

At the same time, I decided that it would be good to move forward by removing the sublease
for one of the two Tokiwadai properties
that was close to the station,
so I submitted a request to cancel the sublease
and began to move forward.

While doing all this,
the year turned, and at the end of January, four months after the sale in Kachidoki,
I received a purchase offer for Shinagawa.
Unlike Kachidoki, the amount
was such that after paying off the remaining loan balance and fees,
I would be left with a very slight loss.

As I wrote above, Shinagawa had strong
anxiety factors regarding the repair reserve fund,
so I prioritized the sale above all else,
decided to sell it anyway, and completed the sale at the end of March.
There may be various opinions on this, but
personally, I think it was the right thing to do.

From there,
stagnation continued for a while longer.
For one of the Meidaimae and Tokiwadai properties,
I proceeded with the listing while carefully considering the price,
but buyers did not appear immediately,
and the status quo continued for a while.

What was lucky at this time was that
by removing the sublease, the earnings had improved slightly,
and I was in a state where there was at least a small amount of cash remaining each month,
and it was stable with no vacancies during this period.

After all, if vacancies occurred,
at that time, a large loss would have occurred in a single month,
so the fact that I was able to wait for the sale
without that happening was very significant,
and during that time, there was a renewal of the rental period,
and receiving the renewal fee meant that
I was not plagued by financial anxiety,
which I think was truly fortunate.

In the meantime, there were small troubles,
such as the bathroom dryer at the Tokiwadai property breaking and needing replacement,
but I was able to handle them with the full cooperation of the management company.

In fact, I had never experienced such detailed responses
when I was under a sublease,
so I felt like I was actually managing real estate.
That is what I think.

With that, almost a year after the sale of the Shinagawa property,
I received purchase offers for Meidaimae and one of the Tokiwadai properties
at almost the same time.

Both were at a level where I could secure some cash,
and since the settlement for Meidaimae was a little further off,
the repayment would progress during that time,
allowing for a slightly higher level of cash remaining than Tokiwadai,
so I decided to sell and proceeded with the procedures.

Thus, the Tokiwadai property was sold in March,
and the Meidaimae property was sold with settlement at the end of June.
From a state of owning 6 rooms,
it took about two years from when I started thinking about selling to sell 4 rooms,
leaving 2 rooms remaining.

At this stage, the remaining debt also decreased from 170 million to just over 40 million,
and with the remaining 2 rooms, Tokiwadai and Itabashi-kuyakusho-mae,
I was able to manage the situation barely without incurring a large loss.

At this point, compared to when I owned the most,
my anxiety had decreased considerably,
and I felt that my own situation was improving.

At one time, it was nothing but anxiety,
but moving forward little by little, gaining cash,
and feeling that the situation was improving
was truly calming, or rather, a state where I could be composed,
and I felt like I had finally made it this far.

From here, I started the sales process for the other Tokiwadai room
and started the process of removing the sublease.

However, the flow from here on will be to start moving toward acquiring a whole building
at the same time as selling the remaining two rooms,
and these will proceed in parallel.

It has become long, so I will continue next time.

Looking back and writing like this again,
I have regrets about blindly recommending the purchase,
and about the fact that I started to find a way forward by acting because I thought the situation was bad,
but I also feel like I was able to find and create my own path.

Above all, looking back now, I think that being able to accumulate these experiences
was a truly good experience.

If there is anyone in a similar situation,
if you find someone you can trust, just as I did,
and take the time to deal with it,
I think a path will open up somehow.

I hope this account of my experience is
of some help to you.

Well then, I would be
happy to see you next time.
Thank you so much
for reading this far.
I would be very happy if you would read the continuation as well.