Civil Servants x Side Hustles = Real Estate Investment! A Real Story of Increasing Income and Retiring in Your 50s

In this article, I write about side hustles that even civil servants can practice, based on my own experience.

I have decided to retire from my civil service job, but I don't think I would have been able to choose to retire in my 50s if I hadn't had a side hustle.

That said, the income I can expect from my side hustle is about 1 to 2 million yen per year, so even after I retire from the civil service, I will likely end up working somewhere else. (This is not a retirement in a perfect state of affairs.)

The side hustle I have been practicing is mainly "real estate investment," which started when I bought a single used studio apartment at the age of 39.

After that, I continued to buy more studio apartments, and a few years later I became the owner of four units, but the pre-tax cash flow was only about 800,000 yen per year even when all four units were fully occupied.

800,000 yen a year is roughly the amount of a full national pension, so one could view this as "not bad," but since my goal was to be able to live on real estate income alone, I sold all my studio apartments about seven years ago and shifted to used apartment buildings.

And finally, I have reached the point where I own three used apartment buildings (28 units), one detached house (inherited), and two solar power plants.
Also, in my case, I have received "permission for concurrent employment" regarding the above side hustle.

Some of you reading this may be interested in real estate investment.

I imagine some of you are spending your days with anxieties, such as "Is it okay for a civil servant to file a blue tax return?" or "Can civil servants only own properties if they are below the business scale (5 buildings, 10 units)?"

Based on my experience, I plan to write articles step-by-step, covering everything from purchasing used studio apartments to filing tax returns, owning properties at a business scale, applying for permission for concurrent employment, and how to reduce fixed costs after purchasing properties.

I hope this will be of some help to active civil servants who want to practice real estate investment and those who want to start real estate investment as preparation for retirement.

The trigger for thinking about a side hustle

Basically, side hustles for civil servants are prohibited, but I imagine there are many people who get permission to do side hustles by helping out with their family business.

It was in my 30s that I started thinking seriously about side hustles.
At my request, my wife was a full-time housewife.
It was clear even to someone with my low academic background that if we assumed our three sons would go to university, our household finances would become strained and we would no longer be able to save money.

Also, around this time, various allowances at my workplace were cut, and there were more instances of being made to work for free, so I remember feeling a vague anxiety about the future, even as a civil servant. (This was over 15 years ago.)

In my case, I grew up in a typical salaryman household, so there was no "family business," and since I wasn't a landowner, there was no way to increase my income other than finding some legal side hustle on my own.

I thought that the only legal side hustle for a civil servant was "investment-related activities," so I practiced stock investment, which is a staple of investing, but in the end, I lost over 1 million yen due to the Lehman Shock.

There was a time when I tried FX a little bit, but I had no sense for it and it ended without any profit...

The trigger for real estate investment

It was right around this time that I became interested in real estate investment.

I had purchased a small detached house as a new build when I was 25, but after my third son was born, the house became too small, and the whole thing started when I thought, "Let's buy a new home!"

Since only about 11 years had passed since I first bought this house, there was still a remaining loan balance of about 20 million yen.

I thought that even if I sold it, it would only fetch around 15 million yen, so I considered adding the 5 million yen shortfall to a new property and taking out a new mortgage.

However, at that time, my father said, "I'll buy it for 20 million yen," so I ended up selling it to my father, a parent-child transaction.

At the time, my father had successfully finished his career as a salaryman and had a certain amount of assets, including his retirement money.

"There is nothing more grateful than one's parents"I remember feeling that way.

That allowed me to take out a new mortgage and purchase my current home.

Since my father lived in the home he bought for himself with my mother, he put the small detached house he bought from me on the rental market.

At the time, no one in our family, including my parents, had any knowledge of real estate management, so we were full of anxiety, wondering, "How much can this small house be rented for?" but my father decided to entrust the management to a local management company.

As a result, we were able to rent it out for 85,000 yen per month, and after deducting management fees, about 80,000 yen began to be remitted to my father every month.

I also felt very sorry for having used my father's important retirement funds, so I was very relieved when a tenant was found.

This event became the catalyst for me to start real estate investment, and at that time, I learned the very obvious fact that "every property has a fair market rent, and there are borrowers."

At this time, I was 36 years old, my eldest son was in his 6th year of elementary school, my second son was in his 3rd year of elementary school, and my third son was 3 years old.

I felt a vague longing for earning rental income, so I decided to buy books on real estate investment and study.

It was also around this time that I read the book "Rich Dad Poor Dad," and I realized that my method of buying my own home was basically a failure.
(I feel that buying a newly built detached house first was a mistake)

As many of you may know, in "Rich Dad Poor Dad," things that "put money into your pocket" are basically defined asassetsand things that "take money out of your pocket" are defined asliabilitiesand even now, I think, "Yes, that's exactly right!"

Of course, there is no doubt that a "home" is "something special" that is not just about profit and loss, and I basically support owning a home.

However, I think it is necessary to have the mindset that a home is a "liability" from which money only flows out. (An incomplete asset)

For the next few years, I spent my time repeatedly buying and reading books related to real estate investment.

At the time, I had just repurchased my home and had almost no funds on hand, so I was anxious about "borrowing," which is inherent to real estate investment."borrowing"I also had a sense of fear: with a mortgage of over 30 million yen, would it be okay to take on another large debt!?

I also worried about the type of property, whether a "detached house," "condominium unit," or "entire apartment building" would be better. I couldn't consult about this at work, and I knew that if I consulted my parents, they would oppose it.

For those reasons, it took nearly four years to purchase the first unit. (I also needed to save up my own funds)

The first property

After worrying about various things, the first property I purchased was a used one-room condominium.

The overview of the property is as follows

• Purchase date: January 2010 (Heisei 22)

• Location: Shiratae-cho, Minami-ku, Yokohama City, Kanagawa Prefecture

• Property name: Garden Plaza XXX (One unit on the 5th floor of an 11-story condominium)

• Exclusive area 28.1㎡ (Registered area 24.94㎡)

• Year built: 1993

• Price: 10.9 million yen

• Total cost: 11.4 million yen

• Own funds: 1.6 million yen

• Down payment: 1.1 million yen

• Miscellaneous expenses: 500,000 yen

• Rent: 71,000 yen (monthly)

• Gross yield: 7.82%

• Loan amount: 9.8 million yen

• Loan repayment: approx. 40,000 yen (monthly)

• Interest rate: 2.9160%

• Repayment period: 30 years

• Cash flow: approx. 210,000 (annually)

• Lender: JACCS

It is a slightly spacious studio apartment, and even after excluding expenses such as loan repayments, property taxes, and management fees, it is expected to generate approximately 200,000 yen per year.

Since I purchased it while still carrying my entire home mortgage (about 30 million yen), I remember feeling quite stressed at the time about adding another 10 million yen in debt.

However, after purchasing the first unit, I felt that 'it seems like it might go surprisingly well!', and I ended up purchasing the second unit soon after...

That is all for this time.

*As of 2023, the real estate market is seeing soaring property prices, and I believe the gross yield for even used studio apartments will end up being around 3-4%.

Thank you for reading until the end.

Next time, I plan to write about what happened from the second property purchase onwards.


👇Please be sure to read the continuation

👇I see an era of tangible assets coming