The first step to successful real estate investment is choosing a reliable real estate investment company as your partner. It is no exaggeration to say that the success or failure of your investment depends on which company you choose. In fact, it has been pointed out that “choosing the wrong company as your partner can result in significant losses.” In this article, we will explain the key points to look for when identifying a reliable real estate investment company that beginners can trust to manage their assets. We have compiled a list of 19 important points to consider when searching for the best partner, including common pitfalls and comparisons of different types of companies. By reading this article, you will gain the knowledge you need to confidently choose a real estate investment company.
19 Key Points to Consider When Evaluating a Trustworthy Real Estate Investment Company
There are various types of real estate investment companies, but the most important thing is to check whether the company is trustworthy. Below, we present a checklist of 19 points that beginners should keep in mind. Check each one carefully to identify the real estate investment company that will be the best partner for you.
1. Verify the real estate brokerage license number
The first step in selecting a real estate company is to confirm whether it holds a real estate brokerage license. To operate in the real estate industry, a license issued by the governor of the prefecture or the Minister of Land, Infrastructure, Transport and Tourism is required. The license number can be verified on the company's official website or at its office. The numbers inside the parentheses in the license number indicate the number of renewals, with larger numbers indicating longer operating history. For example, “(3)” means two renewals (approximately 10 years of continuous operation). Companies with longer operating histories tend to have more experience and a proven track record. Be cautious if the license number is unclear or has expired.
2. Check the scale of financial resources such as capital
A company's capital is one of the indicators used to assess the scale and stability of its operations. Generally, companies with larger capital amounts tend to have larger business scales and are expected to operate stably and provide reliable services. Especially in real estate investment, which requires long-term management, it is reassuring to choose a company with a solid financial foundation. However, newly established companies with very small capital may face risks of being unable to provide sufficient support in the future, so it is advisable to also check the financial status (such as the equity ratio or capital amount) if possible.
3. Check the organizational scale, such as the number of employees
Number of employees is also an important point to consider when assessing company size. A larger workforce typically indicates extensive transaction experience and higher profits, suggesting a company that invests in personnel to improve services. In Japan, most real estate companies are small-scale with fewer than 20 employees, and those with over 100 employees are very rare. Companies with a large number of employees are expected to have strong management capabilities and organizational strength, but on the other hand, smaller companies may have a higher workload per employee and may lack adequate support. It is important to check both the capital and the number of employees to select a company with an appropriate scale.
4. Length of company history (number of years in operation)
The number of years since founding or the number of years in operation is also an indicator of reliability. Companies that have been in business for 10 or 20 years have likely gained the support of many customers and accumulated expertise over time. Real estate investment is a long-term endeavor, so a company with a long history is expected to have abundant management and operational expertise and stable operations. Of course, being old alone is not a guarantee of quality, but a well-established company with a track record is generally more reassuring than a newly established one. The company's history and year of establishment are also important points to check.
5. Transparency of performance and objective metrics
It is also important to assess the company's past performance and how much of that information is disclosed (transparency). Specific performance metrics include the following:
- Occupancy rate: A high occupancy rate for managed properties indicates the company's ability to quickly fill vacancies. A company that consistently reports high occupancy rates is likely to have the ability to provide properties that meet demand and appropriate management expertise.
- Number of managed properties: How many properties the company manages. A company with a large number of managed properties is likely to be chosen by many property owners.
- Number of self-developed and sold properties: The number of apartments sold that the company has developed on its own is also a reliable indicator. Companies that have been selling their own brand properties for many years tend to have strong creditworthiness with financial institutions.
Companies that transparently disclose these figures and performance on their official websites or brochures are considered reliable. Companies that provide specific data such as “〇〇 cases of performance” or “〇 years consecutive customer satisfaction ranking of ○” demonstrate confidence in their performance. Conversely, companies with unclear performance records or those that emphasize exaggerated figures should be approached with caution.
6. Types of properties and fields of expertise
Each real estate investment company has its own specialties in terms of property types. For example, some specialize in single-family homes, while others focus on apartments, and within apartments, some specialize in entire buildings or individual units, or in new construction versus existing properties. It is important to choose a company that handles the type of property you wish to invest in. For example, for beginners, companies that handle “newly constructed apartment units” are often considered a good starting point. Ensure that the types of properties the company handles align with your investment objectives (e.g., long-term stable income or high returns).
7. Suitability of the company's specialty area (region)
Some real estate companies operate nationwide and handle a wide range of regions, while others are deeply rooted in specific regions. Check each company's “service area,” which reflects their extensive information network, and determine if it aligns with the region where you want to invest. Generally, companies specializing in urban properties are strong at mitigating vacancy risks, and those with many properties in Tokyo's central areas or major cities are suitable for stable operations. On the other hand, companies specializing in rural areas or specific regions have the advantage of being well-versed in the local market trends and landowner networks. If you have a clear target area, choosing a company with a strong presence in that area increases the likelihood of being introduced to properties that align with your goals.
8. Staff with specialized qualifications
Check how many qualified professionals with specialized knowledge are employed within the company. In addition to real estate brokers (Real Estate Broker License holders), having staff with various qualifications related to real estate investment (such as Certified Property Managers, Financial Planners, Mortgage Advisors, and Inheritance Consultants) indicates that the company has a robust system in place to handle a wide range of consultations. Some companies have few qualified staff and focus solely on sales, so the expertise of the staff is an important criterion. Companies with many qualified staff are more likely to provide comprehensive support, including reviewing repayment plans and tax and inheritance consultations, making them a reliable partner for beginners.
9. Post-purchase management system (rental management services)
It is important to consider whether the company will handle post-purchase operations, including rental management. Real estate investment companies can be broadly categorized into two types: those that only handle sales and brokerage, and those that handle everything from purchase to post-purchase rental management. For beginners, we recommend the latter, one-stop service companies. This is because handling tenant recruitment, rent collection, and complaint resolution after purchasing a property can be very time-consuming and stressful for owners, so it is more reassuring to entrust these tasks to professionals. Companies that handle property management can also provide proposals considering future operations at the time of purchase and eliminate the need to search for a separate management company. Check the official website for phrases like “property management for X units” or “tenant recruitment services available,” or ask the sales representative if property management can be included.
10. Comprehensive customer support and after-sales service
The post-purchase support system is also an important checkpoint. After purchasing a property from a real estate investment company, it is common to entrust them with rental management and building maintenance, but this is only the bare minimum. For long-term peace of mind, additional support is essential. Companies that offer the following comprehensive support are reliable:
- Rent adjustment and review proposals: They adjust rent based on surrounding market trends to maximize revenue.
- Regular property maintenance: Conducts regular inspections to maintain asset value, including addressing wear and tear and proposing renovations.
- Consultation on property sale: Provides appropriate advice and brokerage services when considering the sale of a property as part of an exit strategy.
- Owner consultation desk: Offers a dedicated consultation desk or member site where owners can easily seek advice after purchase.
- Expert support: Collaborates with lawyers and tax accountants to handle disputes and hosts tax consultation sessions.
With such support, you can significantly reduce the anxiety and hassle associated with purchasing a property. Check the company's website for service details or ask specific questions about post-purchase support during a seminar.
11. Track record of seminars and individual consultation sessions
Free seminars and individual consultation sessions hosted by the company are particularly beneficial for beginners. Companies that regularly hold seminars on the basics of real estate investment and the latest information are likely to be customer-oriented and reliable. In fact, attending a seminar provides an opportunity to assess the quality of the staff and get a sense of the company's atmosphere. Individual consultation sessions allow you to speak directly with a representative, making them a valuable opportunity to confirm the company's corporate philosophy and specific support services. Companies with a strong track record of hosting seminars or actively accepting online consultations are likely to be a reliable partner for beginners.
12. Customer-centric proposal approach (proposals tailored to needs)
To determine whether a company has a customer-first mindset, specifically assess whether they thoroughly listen to the customer's situation and preferences and propose properties that align with their needs. A reputable real estate investment company will not simply push properties they want to sell but will instead introduce properties that are optimal for each customer's financial situation and objectives. Pay attention to whether they avoid aggressively recommending high-priced properties that do not align with the customer's assets or income, and whether they take the time to listen to the customer's detailed preferences. In the past, there have been reports of malicious cases where customers were pressured into taking on excessive loans that did not match their income (e.g., proposing a loan exceeding 50 million yen for an annual income of 5 million yen). A company that genuinely listens to your concerns, considers your perspective, and makes proposals accordingly is the kind of partner you can trust for the long term.
13. Adequate explanation of risks and drawbacks
Be cautious of companies that emphasize only the benefits of real estate investment, such as “real estate investment is guaranteed to be profitable,” without adequately explaining the risks. All investments carry risks and drawbacks, and real estate investment is no exception. Risks include vacancy risk, rent default risk, maintenance costs, and interest rate hike risk, among others. A trustworthy company should clearly explain these risks before signing a contract and provide specific countermeasures. For example, they should honestly disclose negative information such as, “This area has low vacancy risk due to its proximity to a university, but there is a possibility of reduced demand if the university relocates.” If a company does not explain risks at all during seminars or meetings, or makes casual statements like “It's absolutely fine,” it is not trustworthy. A company that honestly discusses risks and proposes countermeasures is worthy of trust.
14. Reliability of the representative (knowledge, qualifications, and responsiveness)
Ultimately, the trust you have in the individual representative is also important. In addition to whether the real estate investment company is trustworthy, assess whether the sales representative is a trustworthy person. Specifically, check the following points:
- Does the representative hold a real estate-related qualification (such as a real estate broker license)? Qualified individuals have a certain level of knowledge guaranteed.
- Do they rush you into signing a contract? Be cautious if they pressure you with statements like “You'll lose out if you don't decide quickly.”
- Do they respond honestly to questions and concerns? Do they avoid answering or seem annoyed?
Additionally, companies where the company's management philosophy is deeply ingrained in the workplace tend to have well-trained representatives who provide sincere service. The impression you get during the initial meeting or seminar is also important. Since you will be entrusting your asset management to someone you will work with long-term, take the time to thoroughly assess whether they are trustworthy. If you feel that the representative is not a good fit, do not hesitate to request a change of representative.
15. Compliance with regulations and honest sales practices
Unfortunately, there are some companies in the real estate industry that use illegal or dishonest methods. To determine whether a company is trustworthy, it is important to confirm their attitude toward compliance with laws and regulations. For example, companies that post “bait ads” (illegal advertisements using non-existent properties with attractive conditions to attract customers) are completely unacceptable. A typical example of a bait-and-switch advertisement is when a company responds to an inquiry by saying, “That property has already been sold,” and then tries to sell you a different property. This is illegal and a tactic used by unscrupulous companies. Additionally, whether a company has received administrative penalties in the past or is a member of industry associations (such as the All Japan Real Estate Association or the Real Estate Fair Trade Council) also affects its reliability. Member companies are expected to adhere to certain rules, such as self-regulatory advertising guidelines and training programs. Furthermore, whether the company demonstrates a willingness to listen carefully to customers during sales calls is an indicator of integrity. It is important to choose a company with a strong compliance mindset that avoids aggressive sales tactics or illegal behavior.
16. Detailed explanation of contract terms and important matters
When purchasing a property, you will always receive an “important matters explanation” and a contract document. At this time, it is important to ensure that the contract contents are explained in detail. A trustworthy company will break down technical terms and explain each point clearly to ensure the customer understands and agrees. While important matters explanation documents and contracts contain many legal provisions, it is important to confirm whether the company provides clear answers to any questions. If the explanation is vague or the representative dismisses details with phrases like “the details aren't important,” this should raise concerns. To prevent post-contract disputes, choose a company that leaves no room for ambiguity. For example, ensure that conditions regarding deposits, penalties, and the possibility of canceling the contract are clearly explained. Incomplete contract documents or insufficient explanations directly impact the company's reliability.
17. Customer Reviews and Reputation
Reviews and reputation from actual users who have purchased or managed investment properties through the company can also be helpful. These days, you can find various reviews online or on social media, so try searching for terms like “Company Name Reputation” or “Company Name Investment Reviews.” Of course, reviews are subjective and vary widely, but companies with many satisfied customers are generally more reliable. Especially if a company prominently features “Customer Voices” or interviews on its website, it indicates high customer satisfaction and confidence in their services. On the other hand, it is advisable to avoid companies with a significant number of negative reviews online. While some may be due to beginners' mistakes or lack of knowledge, companies with no notable achievements and only negative reviews should be avoided. Reviews are merely supplementary information, so make a comprehensive judgment by considering factors such as company size and track record.
18. Number of Partner Financial Institutions (Loan Support)
Since real estate investment often involves obtaining loans from financial institutions, it is important to check how many financial institutions the company has partnerships with. Companies with multiple partnership banks (3–5 or more) are evidence of high evaluation from financial institutions. Having more partnership banks expands loan condition options, making it easier to choose terms such as interest rates and group insurance (cancer coverage, etc.) that suit your needs. Additionally, some major real estate investment companies may offer preferential interest rates through their partnered banks. During a consultation, ask, “Which financial institutions do you partner with for loans?” If multiple names are mentioned, this can be a reassuring factor. Conversely, if the number of partnered institutions is extremely limited, loan conditions may be restricted, potentially leading to unrealistic plans. Companies with a wide range of financing options offer greater flexibility in funding plans and are recommended.
19. Compare multiple real estate investment companies
Finally, it is important not to make a decision based on a single company but to compare multiple companies. As pointed out, “First, select multiple real estate companies and thoroughly compare their strengths and weaknesses.” By considering multiple candidates, you can identify each company's strengths and weaknesses. For example, one company may have a wealth of property information but lack support, while another may offer excellent support but handle a limited range of properties. By contacting multiple companies, you can also clarify the type of company that suits you best. Additionally, by comparing the information you receive from the first company with that from the second, you can make a more objective judgment. Seek a second opinion by consulting multiple companies and choose the best partner overall.
Common mistakes made by beginners and how to avoid them
Here are some common mistakes made by beginners in real estate investment when choosing a partner, along with ways to avoid them. Knowing these in advance can help you avoid making the same mistakes.
- Mistake 1: Taking sales pitches at face value. Believing sweet words like “This is a limited-time offer!” or “This is a great deal only available here!” and signing a contract without thorough consideration. For example, some have reported rushing into a purchase after being pressured with claims like, “This is a rare high-quality property in the city center.” Prevention: Do not take salespeople's words at face value. Research the property and market on your own. Be wary of sales pitches that rush you into a contract. If you have any concerns, say, “I'll take it home and think about it,” and seek opinions from other experts or different real estate companies.
- Failure Example 2: Falling for aggressive solicitation or bait-and-switch ads. This involves being lured in by persistent phone calls or ads for properties that don't actually exist. Be wary of agents who pressure you into signing a contract without conducting a proper consultation over the phone, or ads that say, “The property you inquired about is already sold, but we have a better one...” This is a typical tactic used by unscrupulous operators and is also illegal. Prevention: Have the courage to firmly refuse aggressive sales tactics. Also, do not act on advertisements alone; it is important to check the company's license number and reputation in advance. If you feel that the offer sounds too good to be true, take a step back and consult a third party with a clear mind.
- Failure Example 3: Believing only the benefits and overlooking risks. This is a case where one is swayed by sales pitches highlighting high returns or prime locations and becomes convinced that “this will definitely succeed.” Later, unexpected risks such as vacant units or rent declines emerge, leading to regret with statements like “I wasn't told about that…” For example, one might purchase a property after being told it's near a university with few vacant units, only to find years later that the university has relocated, causing demand to plummet. Preventive measures: Always ask about the drawbacks yourself. Pose detailed questions such as, “What happens in the worst-case scenario?” or “What are the risks of rent declines or repairs?” A reputable company should provide concrete data in their responses. Develop the habit of making decisions after thoroughly understanding both the benefits and risks.
- Failure Example 4: Not thoroughly comparing and evaluating companies. This includes cases where someone “signed a contract with the first company they requested information from” or “didn't compare other companies and just followed the salesperson's advice.” By not hearing from multiple companies, you may overlook the company's weaknesses (such as inadequate support or high fees) and end up regretting your decision later, thinking, “I could have gotten better terms with another company.” Preventive Measures: Make it a habit to compare multiple companies. At minimum, meet with 2–3 companies and compare their proposals, fees, and support scope. Utilize services like bulk information requests effectively and thoroughly compare other companies until you're satisfied—this is the key to avoiding mistakes.
Types of real estate investment companies: Local vs. national, brokerage vs. development
Real estate investment companies can be categorized into several types based on their scale and business structure. Here, we will compare the differences between “locally focused” and “nationwide” companies, as well as “brokerage companies” and “development (developer) companies,” and explain their respective characteristics. Use this information to help you choose the type of company that best suits your needs.
Differences between locally focused and nationwide companies
【Locally focused (mostly small and medium-sized companies)】 and 【Nationwide (mostly large companies)】 have the following characteristics:
- Advantages of Local-Focused Companies: They have extensive knowledge of properties within their service area and are well-versed in local rental demand and market trends. When searching for high-yield properties in a specific area, their local expertise may help you find properties that closely match your ideal criteria. Additionally, sales representatives often have more discretion, making it easier to negotiate commission fees. They may also offer flexible services such as visiting your home for contract signings.
- Disadvantages of locally focused companies: Since they can only handle properties in a limited area, they cannot handle properties in other regions. For example, a company specializing in Tokyo's 23 wards may find it difficult to introduce properties in other prefectures, and you may need to use a different company if you are looking for properties in multiple cities. Additionally, due to their smaller size, they may lack the brand recognition and financial strength of larger companies.
- Advantages of nationwide companies: With branches nationwide, the ability to choose investment properties from a wide range of regions is their biggest strength. For example, if an investor in Tokyo is looking for a property in Osaka, they can collaborate with the Osaka branch while staying in their local area to receive property recommendations, making remote investing smooth. Additionally, with a nationwide customer base, when selling a property, the company can solicit buyers from investors across the country, making it easier to sell. Contract procedures can be handled at branches in various regions, and even for properties in distant areas, contracts can be signed at a nearby branch, offering high convenience. The company's large scale and high social credibility provide a sense of security, even for first-time investors.
- Disadvantages of nationwide expansion: Due to the large size of the organization, it can be rigid and inflexible in some cases. For example, it is difficult for agents to negotiate discounts on brokerage fees on their own, and many cases result in “it is not possible according to regulations.” Additionally, while the company covers a wide area, it may lack the depth of information in a specific region compared to locally rooted companies. There are also reports that follow-up may become standardized when sales representatives change.
- Since properties are scattered nationwide, it may be difficult to find niche high-yield properties specialized in specific areas.
Which is better depends on your investment strategy. For those who want to search widely without limiting the area or prefer new construction properties, nationwide companies are suitable. On the other hand, for those who have a specific investment area and target high-yield used properties, locally focused companies are more suitable as they can gather information more effectively. Choosing the one that aligns with your strategy is key.
The difference between brokerage companies and development (developer) companies
Real estate investment companies can be broadly categorized into brokerage companies and development/sales companies (developers) based on their business models.
- Brokerage companies: These companies act as intermediaries between property sellers and buyers. They do not hold their own inventory and instead mediate between customers and properties listed on the market, such as new and used properties, to find properties that match the customers' preferences.
- Brokerage companies can handle a wide variety of property types and price ranges, offering the advantage of a broad selection, from high-yield used properties to affordable apartments. However, they often do not handle post-purchase rental management (or may refer clients to a separate management company), so they may not provide a one-stop service. When choosing a brokerage company, it is important to consider how post-purchase management will be handled.
- Development/Developer Companies: These companies plan, develop, and sell investment properties (primarily condominiums and apartments). Since they handle newly constructed properties developed in-house, their products often have unique features in terms of quality and specifications. Developer companies are also characterized by their ability to handle the entire process from development to sales and management through their group companies.
- Newly constructed properties have fewer concerns about initial repairs, and since they are company-owned, post-purchase support tends to be more comprehensive. On the other hand, since the properties handled are limited to those developed in-house, the options are narrower compared to brokerage companies. Price ranges are also centered on newly constructed properties, so initial costs tend to be higher than used properties. However, companies with extensive development experience often have stronger external credibility and may be able to offer favorable terms such as partnered loans.
When choosing a company, it is recommended that beginners opt for a development-oriented company (self-owned property sales company) that can handle everything from purchase to management. On the other hand, once you become familiar with the real estate market, it can be effective to use a brokerage company to find hidden gems among used properties. When evaluating new construction developers, it is advisable to look at the number of buildings and units they have developed in the past, occupancy rates, and management performance.
For used property brokerage companies, “annual brokerage transactions” and “number of managed properties” are key indicators of their capabilities. Choose a company that specializes in the type of property you are seeking.
Simple explanations of specialized terms
We provide easy-to-understand explanations of specialized terms related to real estate investment and selecting real estate companies that appear in the main text.
- Real Estate Brokerage License Number: This is the license number that real estate companies must obtain to operate as real estate brokers. It is issued by the governor of the prefecture or the Minister of Land, Infrastructure, Transport and Tourism, and is denoted as “Tokyo Metropolitan Government (3) No. XX.” The number in parentheses indicates the number of license renewals, with (3) meaning two renewals (the initial issuance is counted as the first renewal). A larger number indicates that the company has been in operation for a longer period. The license number can be confirmed on the company's website or on signs displayed at its office.
- Real Estate Broker (Real Estate Agent): A nationally certified professional with specialized knowledge in real estate transactions. Real Estate Agents are qualified to provide important explanations during real estate purchase contracts and are legally required to be employed in a certain number per office at real estate companies. Sales representatives with this qualification possess specialized knowledge in real estate transactions.
- Certified Property Manager: A qualified professional with specialized knowledge in the management and operation of rental properties. This qualification specializes in rental management operations (such as rent collection, building maintenance, and handling complaints) and became a national qualification in 2021. If a real estate investment company has staff with this qualification, you can expect specialized advice on rental management after purchasing a property.
- Sublease Agreement: A system where a real estate company leases a property from the owner and subleases it to a third party. This is commonly referred to as a “rent guarantee system,” where the real estate company (sublease operator) guarantees a certain amount of rent to the property owner in exchange for collecting rent from actual tenants. While this system reduces the risk of vacancies, rent adjustments (reductions) are often made every few years, and even if a “30-year rent guarantee” is advertised, rent adjustment clauses are typically included in the contract. When using a sublease contract, it is important to thoroughly review past rent adjustment examples and conditions.
- Important Matters Explanation: This refers to the explanation provided by a real estate broker to the parties to a real estate purchase or lease contract (buyer or tenant) regarding important matters related to the property and transaction conditions, as well as the written document (Important Matters Explanation Document) containing such information. In real estate transactions, this explanation must be provided in person before the contract is signed, and the contract becomes effective only after the parties have understood and agreed to the contents. The Important Matters Explanation covers a wide range of issues, including property rights, legal restrictions, the condition of facilities, and agreements regarding deposits and liquidated damages. It is important to listen carefully to this explanation and ask questions about any unclear points when purchasing.
- Bait-and-Switch Advertising: This is an illegal advertising method that uses fictional property information to lure customers with the promise of a deal that cannot actually be contracted. It is a prohibited unfair representation in the real estate industry, such as: “Inquiries flooding in! Guaranteed return of ○%!” and similar enticing phrases to attract customers. Once inquiries are received, they claim the property is no longer available and instead recommend another property. This is a typical fraudulent tactic. Companies that use bait advertising cannot be trusted, so do not make a decision based solely on the advertisement content. Always verify the company's license and actual operations.
Summary
For beginners in real estate investment, selecting a trustworthy real estate investment company is the first and most critical hurdle. However, by utilizing the checklist in this article, you should be able to confidently identify a reliable partner. By comprehensively evaluating objective indicators such as capital and track record, as well as the character of the staff and after-sales support systems, you will be able to identify the company you can entrust with your investment. In fact, it is often said that “choosing a reliable real estate investment company is more important than selecting properties,” highlighting the importance of partner selection. Take your time to compare multiple companies, clarify any doubts, and find the best real estate investment company to partner with. By working hand in hand with the right company, you will be well on your way to achieving success in real estate investment. We hope that your first step will lead to a stable income in the future.
