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Episode 23: Boost your quality of life with real estate management!I would like to send you the contents.

The theme of this Conspi Channel is "Understanding the new construction premium"is.
Real estate investment books etc.
The term "new construction premium" is one that you often see.
For those who are planning to start a rental property business
This is basic knowledge that you should remember.

So let's get started!

As the name suggests, "New Construction Premium" is
This can be rephrased as "the rare value that only exists in newly built properties."

It is said that Japanese people especially tend to value "newness."
The same can be said for real estate as well as automobiles.

"No one has used it yet"
Value...meaning it has a price.

By the way, in real estateDefinition of "New Construction"but,
In general"It has not even been a year since the building was completed.
And it's a property that nobody is using yet.This refers to the following.

That means,
Even if it hasn't been a year since completion,
Once someone lives there,
At that point, the item will immediately be considered "used."
On the other hand, even if no one has lived in the property yet,
One year after construction
It is also treated as a "used" item,
The description says "Built in month/year, unoccupied property!"
It would be something like this.

What is New Construction Premium?
At the point when it goes from being a new building to being treated as a used building
This refers to the part of the price that falls.
For example, if you purchase a new apartment for 40 million yen,
For some reason, I sold it immediately.
The sale price was 36 million yen...
In that case, the result is
4 million yen was the new construction premium.
This can be seen as:

So far,
"It's no longer a new building, so it's gone down in value."
It seems that this is the way it is viewed,
That understanding is a bit rough.

To be precise, the value has decreased because it is old.
Or rather, the disappearance of the new construction premium
It would be more reasonable to think of it as being "averaged to market value."

Why does this happen?
First of all, new construction and second-hand,
The pricing process is completely differentis.

The majority of sellers of used real estate are individuals.
You are free to sell it for any amount,
In the end, you can only sell it at the market price in that area,
The price will stabilize at a certain level.

On the other hand, new construction is not in line with the surrounding market price,
The cost of construction and sales is
The prices are being determined by the accumulation.

for example,
Land acquisition costs, construction costs, advertising costs,
Salesperson incentive budgets,
And the seller's (=developer's) profit,
Something like that.

In addition to land acquisition and construction costs
With so many costs being passed on,
Once the price is adjusted to the used market price,
This part disappears as a new construction premium.
"It looks like it's gone down in value."
It makes more sense to think of it that way.

In short, the expression "return to market price"
Should be appropriate.

So far, we have been talking about buying and selling.
The "new construction premium" also applies to rent.
It definitely exists.

From rental sales
"The rent is high because it's a new building."
I'm sure there are people who have been told this, right?

"Oh, I see... it's a new building so it's expensive."
We are inclined to agree with this, but...
In this explanation, the fact that it is a new building is expensive
No rational explanation has been given.

Setting the rent for this new building,
Of course, new construction is rare in that area, so it's expensive.
There is another reason for this.
However, in the case of a new investment apartment,
First, there is the purchase price,
To get a loan for the property,
The rent is decided based on the yield.
There is a reason too.

for example,Property for sale for 30 million yenThere are
To get a bank loan,
Must ensure a 5% return
will do.

In that case,
30 million yen x 5% = 1.5 million yen
Annual rent is required.
therefore
The monthly rent is 1.5 million yen ÷ 12 months = 125,000 yen
This is how the rent is determined.will be done.

Even if this is higher than the surrounding market price,
In the new building, "The rent is higher because it's a new building."
is acceptable.

However, if the new tenants move out,
The difference is calculated based on the market rent.
It will disappear as a new construction premium.

This is why rents are lower than when the property was newly built.
It is one of the mechanisms.
From the owner's point of view,
Net rental income will fall
So you need to be quite careful.

Well, this time, we will look at the purchase price and rent.
Regarding each new construction premium
I have explained it.

Currently investing in new apartments
If you have any thoughts,
Please keep this explanation in mind,
Please consider this carefully.

I'll talk about how to avoid this in another video.
I would like to talk to you.

Learn about real estate management

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