The Path to Real Estate Investor Part 4: Selling (1)

I am a salaryman with a side business.
Following the previous post, I would like to continue
writing about my real estate investment experience
in this article.

This time, it is about selling.
In the previous three parts, I wrote about the process
of how I ended up with a total of 6 condo units
and a debt of over 170 million yen.

This article is something I really want those who, like me,
have ended up owning a large number of condo units as a salaryman
and are worried about what to do,
to read.

Up until the last post, I shared the processes I went through,
such as purchasing, replacing properties,
and refinancing loans.
This time, I will write about the stage of selling
from there.

From the situation in the previous post where I owned 6 units,
some time had passed, and I myself
started to think that this situation might be dangerous.
Should I continue in this situation?
No, this is probably not good, I vaguely thought,
and I consulted with a real estate agent in the area where I lived at the time (a certain prefecture in North Kanto)
whom I met through work.

Thinking about it now, real estate agents also
have differences in region and experience,
so perhaps I should have asked someone else.

That person also did their best,
and we once took the story of refinancing the loan
to a bank in the prefecture, but
because there was a concern about a situation where I would have a monthly deficit
and get a tax refund through a tax return,
it did not lead to refinancing.

In the midst of that, I was transferred,
and I think it was in 2019,
when I had some free time.
I received another talk about a rent review for a sublease.
I think it was for the property in Kachidoki,
which I purchased first.

There was a notification that the rent would go down,
and when I asked a little about it,
they said it was currently vacant.
I also asked if the company could buy it,
and the reply was that they could buy it
if the price was exactly the same as the remaining loan balance.
(This answer itself is strange, isn't it?)

Well, the fact that I asked a dealer to buy it
is already a mistake on my part...

I remember that the day I had that exchange
was the day I was on a business trip to Osaka for a meeting.
On the Shinkansen on the way back, I stared at my smartphone
and searched frantically.

In the first place, I didn't even know what search words to use,
but I think I was searching
with keywords like
'salaryman real estate investment, failure'.

I think it was a search word that was a bit skewed,
even for me.
I think I accepted myself like that and wanted to do something about it.

Among the search results,
one article published in a certain weekly magazine
hit as an article posted on the internet.
It was content that explained the situation
that salarymen tend to fall into with condo investment.

The situation described felt very close to my own situation,
so I took a note of the author who wrote the article,
and looked up the company managed by that author.
(I will call it Company L here.)
Then, I found that the company was managed by the author alone,
and it seemed that they were also accepting consultations from people in my circumstances.

The author himself also started real estate investment
from being a company employee, and now has quit the company,
and is living on the income from real estate,
so in the trendy words of today, he was an FIRE achiever.

Although he was a little younger than me,
he was relatively close, and because of that,
I felt a sense of familiarity and that he might be
sympathetic to my situation.

Actually, at that time,
I had found another company to consult with,
but the other company's website was very beautiful,
and it felt like a company operating on a somewhat large scale.
(This is just an impression.)
I had a premonition that if it were a large-scale company,
I would be treated mechanically,
so I decided to consult with the former, Company L,
first.

I think the next day was a Saturday.
I made up my mind and called the number posted on Company L's website.
Judging by the voice, the representative answered the phone,
and I explained my current situation in some detail over the phone.

And I also talked about the specific properties I currently own,
conveyed that I wanted to consult,
and sent the materials I had listed in Excel or something
by email.

Looking back now, I think this was the beginning of the flow
that led from the sale to today.

At this time, they taught me very carefully about the current situation
and how to handle it going forward.

What I was taught was that
the current situation was not the worst-case scenario.

Fortunately,
the only thing that was good was the timing of the purchase,
so there was a possibility of getting out through a sale.

To that end,
first, check the current tenants and rent,
and for those where the sublease (rent guarantee)
can be removed, remove it,
and for the currently vacant Kachidoki property,
at this timing of review,
it would be best to cancel the sublease,
and proceed with both selling and finding new tenants,
was what they said.

After discussing these matters only through phone calls and emails,
I was introduced to a real estate agent
who could actually take action
to handle the Kachidoki property first.

I decided to go to Tokyo once to meet with that person
in person for an interview.

After that, I coordinated my schedule with the real estate agent,
and on the following Saturday, I met with Company L and the introduced
real estate agent, and we decided to proceed
in the direction we had discussed earlier.

I think that was around the end of May.
Since then, I canceled the sublease for Kachidoki,
and for the other rooms,
I checked the current tenants and rent,
which I had never checked before.
I also checked the contract period
for each sublease.

I wonder now why I hadn't done these things until now,
but for the first time, I learned who was living
in the property I owned.
I also learned the actual rent.
Thinking about it this way, I don't think I had a firm awareness,
and I was approaching it with a naive understanding.
Or rather, it was completely useless, wasn't it?
I really think so.

Under the condition of a sublease,
I left everything to the company that sold me the property,
including the tax return.
It's pathetic that I'm complaining about it later,
isn't it?

If there is anyone who owns a condo unit now,
if they haven't checked the current tenant, rent, or sublease
renewal period, I would like them to at least
check those things immediately.

At most, even the company at the time did not actively
share such information, and only contacted me when it became vacant.
For the company, keeping the sublease attached
might have been convenient
for their subsequent exit strategy.
To put it a bit more bluntly, I think it is convenient in a sense
that the owner is ignorant.
(You can understand this well from the purchase talk I wrote about last time.)

Regarding Kachidoki, since I canceled the sublease while it was vacant,
I started recruiting tenants myself.
Along with that, after checking the remaining debt,
I also started the process of selling.

As for the subsequent flow, in late June, there was an application
for tenancy, and a new tenant was decided.
The rent was also decided at a level that would leave some profit
even after considering monthly repayments and various expenses.
Canceling the sublease and switching to
collection agency (no rent guarantee, but low cost)
was also helpful for improving the balance.

After that, regarding the sale, there was a purchase offer around the end of August,
and I believe the sale at 33.5 million yen
was decided.

After repaying the remaining loan balance at the time,
even taking into account fees and taxes,
it was at a level where a reasonable amount of money
would remain in my hands.

Looking back on it like this,
although various things happened, real estate prices,
condominium prices had not fallen.
I think I was really lucky
to have been blessed with the timing of the purchase.

If that hadn't happened, I would have feared a loss
and wouldn't have been able to sell,
and I don't think I would have reached today's situation.
I can only say I was really lucky.

Ultimately, the property was sold and handed over
at the end of September, the month after the offer came.
It was just the timing between when the required fee for early repayment
changed from 1.5% to 1% as 3 years passed
since the loan I refinanced,
so when I negotiated the timing, the story progressed
by settling early in a form that added the difference
to the price, and the settlement was completed safely.

As this was my first time selling, there were many things I was not used to.
Dealing with everything starting from how to contact the bank,
coordinating with the judicial scrivener,
and canceling fire insurance mid-term,
was a fresh experience for me.
as well.

Above all, I was most worried about whether I would have any proceeds left over
after paying off the remaining loan balance,
so being able to sell it successfully
was a huge relief.

With this as a starting point, I will now move into a flow of selling properties one by one.

I will end this article here,
and I will continue the story
in future articles.

Thank you very much
for reading again this time.
The fact that you read this
makes me truly happy.
Also, if you could read the next one as well,
that would also make me truly happy.