When you decide to start real estate investment, the difficult part is deciding who to consult first. A search will yield countless free consultations and seminars from real estate investment companies, but some people may feel uneasy about learning about investment from a company, receiving property proposals from that same company, and then making a purchase decision based on that.
I have met with six real estate investment companies so far and purchased six units from three of them. What I found helpful during that process was getting a ‘second opinion’ from a third party separate from the sales company.
However, now that I have bought six units, I believe it is better to use a second opinion ‘twice,’ not just after being proposed a property.
The first time is before consulting with a real estate company.
In real estate investment, you need to consider not only property prices and rent, but also financing, management fees, repair reserve funds, vacancies, interest rates, and even the final sale. If you listen to a sales representative without knowing these basic mechanisms, you won’t be able to judge for yourself whether their explanations—such as ‘this property has high asset value’ or ‘these loan terms are fine’—are reasonable.
Of course, there is nothing wrong with listening to a real estate company’s sales representative. I myself learned many things only after actually meeting with them. However, a real estate company is a sales company as much as it is a consultant.
That is precisely why you should first have a third party teach you the mechanisms and risks of real estate investment, and understand ‘what you should check’ before listening to the sales company. I think this order makes it much easier to understand the sales representative’s explanation.
And the second time is after a specific property has been proposed to you.
This time, instead of general study, you have them look specifically at that property. Is the selling price reasonable? How does the rent compare to the surrounding market? Are the loan terms appropriate? What is the balance including management fees and repair reserve funds? Furthermore, you check risks such as interest rate hikes and vacancies, as well as the exit strategy for when you sell in the future.
The reason I think using a second opinion was good is not because someone decided whether I should ‘buy or not buy.’ It is because by hearing opinions from a perspective different from the sales company, I gained more material to make my own judgment.
When I actually met with six companies, the proposals were quite different even for the same studio apartment investment. Everything from the property, area, price, discounts, interest rates, financial institutions, to management conditions was different. If I had only known the first company, I might have thought those conditions were ‘normal for real estate investment.’
So, if I were to start real estate investment now, I would proceed in this order: ‘Consult a third party to understand the basics → Listen to a real estate company → Get a specific property proposal → Take it home to think about it → Consult a third party about that property again.’
Finally, I do not consider the second opinion to be the absolute truth either. I confirm what was pointed out with the sales company, and after hearing both sides, I make a decision that I am satisfied with myself.
Since you are buying real estate worth tens of millions of yen, I believe the most important thing is to create a state where you can judge for yourself, rather than buying because ‘this person said it was okay.’
In this blog post, based on my actual experience using a second opinion, I have summarized in detail ‘why twice,’ ‘what specifically to check,’ and ‘what order to proceed in if starting now.’
If you are planning to start real estate investment, or if you have already been proposed a property and are wondering, ‘Is it okay to buy this as is?’, please use this as a reference.
