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This time, it was distributed on CONSPIRIT's official channel on YOUTUBE.Episode 34: Boost your quality of life with real estate management!I would like to send you the contents.

Today, as part of the "Salespeople Say..." series, I'd like to talk about "Salespeople Say: 'Real estate is a great way to save on your pension in retirement.'"
I'll try to dig deeper.

The true meaning of the phrase "It will help with pensions"

The phrase "it will help with your pension" is straightforward, so it's perfectly fine to interpret it as meaning that if you purchase real estate and earn rental income, you will have additional income on top of your pension.

So, what exactly do we want to dig deeper into? Why do we choose to address "preparing for pensions in old age" so far into the future?

The key point here is that the basic premise is that "once the loan is paid off."
In other words, to be precise, they are saying, "Once you pay off the loan, you will have an additional income in addition to your retirement pension."

On the other hand, this is also synonymous with saying, "Cash flow won't be generated immediately."

In the first place, if you receive cash immediately after purchasing, there is no need to use expressions such as "preparation for pension in old age."
In particular, in the case of condominium condominiums, the majority of the purchase price is covered by a loan, allowing you to approach the transaction with zero or as close to zero of your own funds.

If you purchase at a sales price that is not consistent with the market, the loan amount will be proportionally larger.
No matter how low the interest rate is, the monthly repayment amount will be large, so your monthly income and expenditure will inevitably be slightly positive, break even, or even negative, or even negative.

And despite claiming to be an investment, the phrase "plans for pension security in old age" is used to divert attention from the structure in which there is no cash flow.

Cash flow is negative = not an investment

Recently, we often see this on YouTube videos of real estate investors, but it all comes down to a fundamental idea: "Anything that results in a negative monthly cash flow is not an investment."

The ability to obtain financing to purchase is undoubtedly a strong point of real estate.
However, to be honest, I am not happy with the fact that full repayment is a prerequisite for generating cash flow, and that it will take a long time to complete repayment.

Over such a long period of time, fluctuations are bound to occur in market conditions and cash flow factors such as rent and maintenance costs, so it is unknown whether the expected results will be achieved 30 or 35 years from now.

Examples of useful loan usage

On the other hand, one example of a customer who showed a useful way to use a loan is someone who purchased a newly built condominium unit with a loan for a 10-year period.After deducting operating and maintenance costs and loan repayments from the monthly rent, they were able to get a cash out of just over 80,000 yen each month.

At first glance, the cash out seems large, but the person said, "It's unlikely that I'll lose my salary within 10 years of purchasing the property, so I can withstand a cash out of up to 100,000 yen per month within that period.
On the other hand, the disadvantage is that the full repayment date will be 30 years from now, which is unpredictable.
So, if we can achieve a debt-free situation in 10 years' time when management fees and repair reserve funds have not increased significantly and rents have not fallen significantly, I don't think that this cash out for 10 years is a waste."

In terms of results,
80,000 yen cash out per month x 12 months x 10 years = 9.6 million yen
Ten years' worth of fixed property tax is about 500,000 yen.
Restoration costs over a 10-year period will be approximately 300,000 yen.
A total of about 10.4 million yen in cash
You are purchasing an apartment that is 10 years old.

It can also be used as joint collateral when taking out further loans in the future, and since the property is 10 years old and still worth around 20 million yen, it can be converted into cash immediately when capital is needed.

The development can be read in a number of different ways.

As can be seen from this case, it is important to think carefully for yourself, not just because a salesperson says so, but considering your current age, purpose of purchase, and financial plan, is it really okay to purchase a property based only on a vague roadmap of "savings for your pension in retirement" 35 years from now?

Please make effective use of your limited budget and time.

Learn about real estate management

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