Real estate investment involves investing millions to billions of dollars and requires long-term management spanning at least several years, and in some cases, decades. Unfortunately, the real estate industry also includes its share of questionable companies. While selecting properties is important, choosing the right investment company as a partner is equally, if not more, critical to the success or failure of your investment. Real estate investment companies provide ongoing support for property management and leasing operations even after the purchase, and the quality of their after-sales service plays a decisive role in the success of real estate investments. If you can find a trustworthy company, you will be able to manage the risks of real estate investment appropriately and achieve stable returns. On the other hand, choosing the wrong company may result in unexpected vacancies or issues after purchase, and in the worst case, significant losses.
In this article, we will introduce 19 key points to consider when selecting a real estate investment company to avoid mistakes, especially for beginners. We will explain specific points in each category, from the company's reliability and track record to the characteristics of the properties they handle, important points to note in the contract, support systems, and the attitude of the sales representatives. By understanding and implementing each of these checkpoints, you will be able to identify a reliable partner and gain the confidence to proceed with real estate investment.
19 Key Points to Avoid Mistakes
Checkpoints related to the reliability and track record of the company
- Business history (number of years in business): The business history of a real estate investment company is a basic indicator of its reliability. There are more than 120,000 real estate companies in Japan, which is said to be more than the number of convenience stores, but many of them are young companies that have only recently been established. The fact that a company has been in business for many years is in itself a sign of reliability. As a general rule, companies with more than 10 years of experience are considered reliable. In real estate investment, which is based on long-term management, it is also important to consider whether the company will continue to exist in the future. Check the company's establishment date on its website or other official documents.
- Capital: The amount of a company's capital is another objective factor for evaluating its performance and operational stability. Generally, companies with larger capital are presumed to have a larger business scale and stronger operational capacity. Since real estate investment is a long-term endeavor spanning over 10 years, companies with ample capital and a solid financial foundation are more reliable. Conversely, companies with extremely small capital may pose risks of operational failure or insufficient service provision. Check the capital section in the company profile and, if possible, choose a company with capital of several million yen or more.
- Scale (Number of Employees): The number of employees is also a benchmark for assessing company size and stability. In fact, approximately 84% of real estate companies nationwide are small businesses with five or fewer employees, while only about 2% have over 100 employees. Of course, there are excellent small companies, but larger companies with more employees tend to have the financial strength to cover labor costs and invest in employee development and service improvement. Companies with 100 or more employees are likely to have a solid business foundation and a wealth of transaction experience. Check the number of employees on the company profile page and use it as one of your decision-making criteria.
- Transaction history (number of sales, number of properties managed, etc.): The company's track record of real estate transactions is also an important factor in assessing its reliability. For example, check the cumulative number of properties sold or the number of rental properties managed if the company discloses such information. The higher these numbers, the more likely the company has accumulated extensive expertise in real estate investment. If the company also manages rental properties, the occupancy rate of those properties is also an important indicator. A high occupancy rate indicates that the company handles properties in prime locations with high demand or has the know-how to maintain profitability through timely renovations. Companies with a strong track record are also expected to have the ability to handle risks after purchase, so it is advisable to choose companies with a rich transaction history whenever possible.
- Customer reviews and reputation: In addition to performance, it is important to check the company's reputation. First, check the content of any “customer reviews” or case interviews posted on the official website. Hearing the voices of actual purchasers can help you visualize the company's response and the situation after investment, and the fact that customers are willing to cooperate in interviews also serves as evidence that satisfied users exist. Online reviews and ratings are also useful references. Research actual user feedback on social media or forums, and avoid companies with an overwhelmingly negative reputation. However, keep in mind that reviews are subjective opinions, so use them as supplementary information and make a comprehensive judgment by also researching the company's publicly available information.
- Track record with financial institutions: In real estate investment, financing from banks is often a prerequisite, so the number of financial institutions a company partners with is also an indicator of reliability. A company with multiple partner banks (3–5 or more) is likely to be highly regarded by financial institutions. Having more partner banks also provides investors with more options to compare interest rates and loan products, making it easier to secure favorable terms. On the other hand, if a company has partnerships with only one financial institution, the options for financing conditions may be limited, so caution is advised. Check the company brochure or seminar materials for information such as “partner financial institutions: X companies.”
- Presence of experts and qualified professionals: Real estate investment involves not only purchasing properties but also a wide range of knowledge, such as reviewing loan plans, tax strategies, and future sales or inheritance. Therefore, it is important to assess how many employees within the company possess specialized knowledge in these areas. Some companies have few or no employees with qualifications such as real estate broker licenses (Takken), and may focus solely on sales. For long-term investments, it is reassuring to choose a company that has not only real estate brokers but also, if necessary, rental property management specialists, financial planners (FP), tax accountants, or lawyers on staff or as consultants. Companies with many qualified professionals often disclose staff profiles and the number of qualified professionals on their official websites or have experts serve as lecturers at seminars. Please check these points as well.
- Checkpoints for properties handled and services provided
- Types of properties handled: Each investment company has its own specialties in terms of the types of properties it handles. Even within real estate investment, there are various types of properties, such as single-building apartments, condominium units, detached houses, and new or used properties. The required capital, risk, and return characteristics vary depending on the type of property handled. It is important to determine whether the company handles properties that are appropriate for your financial situation and objectives. You can confirm the categories of properties handled (condominiums, apartments, single-family homes, new construction, used, etc.) in the “Property Information” section of the company's provided materials or website.
- Property Areas: Property areas also vary by company. Many real estate investment companies tend to source properties primarily in the areas surrounding their headquarters. Location is often considered the most critical factor in real estate investment, as it directly impacts vacancy risk. Generally, the more populous and high-demand urban areas are, the easier it is to find tenants and the lower the vacancy risk. For example, properties in major urban areas like Tokyo, Kanagawa, and Osaka tend to have shorter periods between tenants moving out and new tenants moving in. On the other hand, in rural or overly suburban areas, even if the properties appear to offer high yields, there is a higher risk of no tenants and zero rental income. It is advisable to research which areas the company primarily handles and choose one that specializes in areas with high population growth and strong demand. You can analyze area trends by reviewing property listings and case studies on the company's official website.
- Availability of off-market properties: High-quality investment property information is not always publicly available on portal sites. In fact, the better the property, the more likely it is to be offered exclusively to existing clients or through limited channels. Information listed on general property search sites (such as Rakumachi or REINS) is a mix of good and bad, and even if a property with good conditions is listed, it is often quickly snapped up by other companies. Therefore, it is important to check whether the company has access to information on unlisted properties. If the company can provide limited information obtained through its own network, the likelihood of finding a good property increases. Some companies highlight “X% of properties are unlisted” on their websites or offer unlisted information exclusively to seminar participants. Check if they have such strengths.
- Seller or broker (transaction type): There are two main types of real estate investment property sales: companies that purchase and own properties themselves (seller companies) and companies that act as intermediaries, introducing properties owned by other sellers (brokerage companies). For beginners, we actually recommend seller companies. With brokers, you rely on information provided by the seller, so there is a disadvantage in that it is difficult to obtain detailed information about the property in advance, such as whether there are leaks or delinquent tenants. On the other hand, companies that purchase properties and resell them themselves have a better understanding of the property's condition, so information disclosure is relatively smooth. Especially when purchasing a used property, it is safer to purchase from a seller company. One important point to check is whether the “transaction type” section of the property documents provided lists “seller.” However, in the case of seller-brokerage firms, the price will be higher as it includes the real estate company's profit margin.
- One-stop service provision (rental management, etc.): The availability of post-purchase rental management services is also important. Real estate investment does not end with purchasing the property; the actual operation begins when the property is rented out and rental income is generated. Of course, various tasks such as tenant communication, building maintenance, and restoring the property to its original condition upon move-out will arise, and it can be challenging for beginners to handle these on their own. Therefore, choosing a company that can handle property management all in one place provides greater peace of mind. There are real estate companies that specialize solely in sales and brokerage, and others that handle post-purchase rental management within their own group. It is generally safer to choose the latter. A company that offers one-stop service for rental management can provide advice from the property proposal stage that takes future operations into account, and you won't have to go through the hassle of finding a separate management company after purchase. For example, if a company handles tasks such as rent collection, equipment troubleshooting, and complaint handling in-house, the owner's burden is significantly reduced. Before signing a contract, it's a good idea to ask, “Can your company handle management?” and inquire about the specifics of their after-sales service. Key points to check in the contract
- Transparency of fees and expenses: When dealing with a real estate investment company, make sure to thoroughly check the contract to see what other fees and expenses may arise in addition to the property price. Brokerage fees apply when using a brokerage company, as mentioned earlier, and there are various other expenses after acquiring the property, such as property management fees, loan arrangement fees, and fire insurance premiums. To avoid issues with unclear fees being charged later, it is important to carefully read the contract and important terms and conditions, and ask questions about any unclear points. A reputable company should provide a detailed breakdown of all fees. In particular, brokerage fees are legally capped at 3% of the sales price plus 60,000 yen, so it is advisable to confirm that no additional charges are being added. If you feel any lack of transparency during the contract stage, it is best to proceed with caution.
- Verify the terms of the sublease agreement (rent guarantee): Sublease agreements (where the property is leased in bulk with a rent guarantee) are sometimes proposed as a method to reduce vacancy risk for beginners. While subleasing itself offers the advantage of stable income, rushing into it without fully understanding the contract terms can lead to unexpected failures. Common failure patterns include cases where the initially set guaranteed rent is significantly reduced after a few years, leading to deteriorating cash flow; cases where the owner cannot terminate the contract during the contract period, leaving them unable to take action; and even cases where the sublease company's financial situation deteriorates, resulting in rent payments ceasing. These issues stem from insufficient verification of the contract terms (rent adjustment conditions, termination clauses) and the financial status of the sublease company. When considering a sublease proposal, thoroughly check the following: whether rent adjustment clauses exist and their conditions, whether early termination is permitted, and the financial soundness of the contracting party. If you have concerns about understanding the contract, consulting a third-party expert is also effective. Evaluate risks and returns from a long-term perspective and only enter into a contract if you are fully satisfied.
- Compliance with laws and ethics (whether they make illegal proposals): Be wary of unscrupulous companies that prioritize their own short-term profits over the long-term interests of investors. For example, companies that use illegal “bait ads” to attract customers are out of the question. These companies advertise non-existent “high-quality properties” to attract customers, and when inquiries come in, they respond with “that property has already been sold” and try to sell another property. This is a clear violation of the law. Avoid companies that engage in illegal activities or make gray-area solicitations. Companies that rush you into contracts or use sweet talk like “only available now” or “guaranteed profits” without mentioning risks are also untrustworthy. A reputable company will comply with laws and regulations and never make proposals that betray investors' trust. If you feel even the slightest suspicion, it is wise to keep your distance from that company. Checkpoints for Support Systems and Sales Attitude
- Conduct of seminars and individual consultations: For beginners who are not yet well-versed in real estate investment, we recommend attending free seminars or individual consultation sessions hosted by the company. Seminars not only provide foundational knowledge about real estate investment and the latest market trends but also offer insights into the knowledge level of the staff conducting the sessions and the company's overall direction. By meeting face-to-face, you can gain a sense of the company's atmosphere and attitude, which may not be apparent from its website alone. A good company should be transparent and provide various information. Many companies offer individual consultations after seminars, so it is a good idea to ask questions about anything you are unsure of and receive specific proposals.
- Customer-oriented proposals and reliable representatives: When choosing a real estate investment company, it is important to consider not only the reliability of the company as a whole but also the trustworthiness of the individual sales representative who will be assigned to you. A reputable company will propose properties that are optimal for each customer based on their financial situation and future prospects. During consultations, confirm whether the representative listens carefully to your preferences and concerns and provides proposals that align with your goals. For example, be cautious of representatives who only recommend high-priced properties that do not match your annual income or available funds, or those who try to push properties based solely on the company's inventory needs. Additionally, pay attention to the representative's qualifications and communication skills. Check whether the representative holds real estate-related qualifications such as a real estate broker license, answers questions honestly and accurately, and does not rush you into signing a contract. It is also desirable to choose a company where you can thoroughly discuss matters with the representative and proceed with the contract only after reaching mutual understanding, and where there is a flexible system in place to accommodate changes if there is a mismatch in compatibility.
- Thorough explanation including risks: As with any investment, there are not only benefits but also risks and drawbacks. A reputable real estate investment company should explain these points clearly and ensure you understand them. Be wary of salespeople who only use sweet-sounding phrases like “This property is absolutely safe” or “You will definitely make a profit” and fail to disclose any unfavorable information. For example, there are numerous risk factors that even beginners should be aware of, such as vacancy risks, rent declines, and increased repayment burdens due to rising interest rates. It is important to assess whether the company can explain in detail the specific measures they have in place to address such anticipated risks. If there is no risk explanation, it is recommended not to make a decision based solely on the company's seminars or materials, but to compare and evaluate other companies as well. A company that provides transparent explanations, including disadvantages, is one that can be trusted as a long-term partner.
- Comprehensive after-sales support: Finally, it is essential to check whether the company offers comprehensive support after the purchase of the property. In real estate investment, the real work begins after the purchase, with rental management and building maintenance. No matter how good a property is at the time of purchase, if it is not properly managed and operated during the operational phase, it will not generate a steady income. To determine whether you can entrust the company with long-term management with peace of mind, check the following after-sales support services. In addition, check for services such as tax consultation, introduction to legal experts for litigation issues, and the availability of a dedicated contact window for property owners. A company that can build a relationship where you can consult them immediately when you encounter issues is a reliable partner, especially for beginners.
- Rent adjustment proposals: Does the company provide appropriate advice on rent setting based on market trends and surrounding property values? A company that proposes rent reductions or other measures when vacancies persist is reassuring.
- Regular property maintenance: Does the company provide follow-up services to maintain or enhance asset value, such as measures against aging deterioration or renovation proposals?
- Exit strategy support: If you wish to sell the property in the future, does the company offer consultation on selling or suggest appropriate timing?
Common mistakes and how to avoid them
What mistakes can arise from choosing the wrong real estate investment company? Finally, we will introduce several common mistakes made by beginners and how to avoid them. We will also look at how to use checkpoints to avoid repeating the same mistakes.
- Case 1: Jumping into a high-yield property and failing … This is a case where someone purchased a used property in the suburbs based solely on the “yield of X%” figure, only to find that no tenants were found and rental income remained zero. As mentioned earlier, properties with high surface yields are often overlooked for risks such as vacancy rates and maintenance costs. As a preventive measure, it is crucial not to rely solely on yield but to prioritize location conditions and demand trends (Checkpoints 8 and 9). Verify the property's age and condition, and if necessary, commission a professional investigation. Additionally, conduct income and expense simulations under pessimistic assumptions and establish a plan that can withstand prolonged vacancies without causing irreparable damage.
- Case 2: Purchasing a problematic property by blindly trusting the agent … This is an example where a contract was signed based on the sales representative's claim that the property is “absolutely recommended,” only to later discover critical defects or a lack of tenants. Unscrupulous agents may emphasize only the benefits without disclosing risks and attempt to push properties that are advantageous to their company. To avoid this mistake, it is effective to consult multiple companies and compare their proposals. Do not blindly trust information from a single company; instead, listen to proposals and opinions from other companies to avoid biased decisions. Additionally, before signing a contract, thoroughly ask about negative information regarding the property (such as vacancy history, accident history, or issues with the surrounding environment) and determine whether the company is willing to disclose disadvantages (Checkpoint 18). If any doubts remain, do not rush into signing the contract; take the time to conduct your own research.
- Case 3: Unexpected deterioration of income and expenses under a sublease contract ... In this case, the tenant thought they were safe because the contract included rent guarantee, but a few years later, the guaranteed rent was unilaterally reduced, leading to a loss-making operation. There have also been reports of cases where the tenant could not terminate the contract due to contractual terms and had no choice but to accept the conditions. Such failures in subleasing are caused by an inability to assess risks at the contract stage. As a countermeasure, it is most important to thoroughly review and understand the terms of the contract (Checkpoint 14). Specifically, clarify in advance the conditions and frequency of rent adjustments, rules for termination or renewal of the contract, and measures to be taken if the guarantee company goes bankrupt. If you have any questions, ask them before signing the contract, and if you cannot obtain clear answers, it is also important to have the courage not to sign the contract. Additionally, investigate the financial condition and creditworthiness of the company providing the sublease, and avoid companies with extremely unstable operations (Checkpoints 1 and 2). For long-term stable operations, fairness in the contract and the reliability of the company are essential, not just short-term reassurance.
In addition to the above, there are various failure patterns in real estate investment, such as “loans with lenient repayment plans leading to cash flow problems during vacancies” and “failure to consider an exit strategy, resulting in difficulties selling the property.” However, what is common to all of these is that lack of prior knowledge and preparation lead to failure. As a countermeasure, it is important not only to choose a reliable real estate investment company but also for the owner to acquire basic knowledge. By utilizing the checkpoints in this article and continuing to study on your own, you will be able to control risks and move closer to success.
Summary: Choose the right partner for you
We have covered the key points that beginners should keep in mind when choosing a real estate investment company. While all 19 checkpoints are important, the most crucial factor is whether the company aligns with your investment style and goals. For example, if your goal is to generate additional income as a salaried employee, a company that offers comprehensive management services and support would be suitable. On the other hand, if your objective is to expand your asset base, a company with access to a wealth of off-market property information would be an ideal partner. First, clarify your investment objectives and goals, then use the checklist in this article as a reference to compare and evaluate multiple candidate companies.
There is no need to rush into a decision. By attending seminars or having individual consultations with representatives, you should be able to find a company you feel you can trust. At that point, revisit the points mentioned in this article to ensure they are met and make a comprehensive judgment. Finding a reliable real estate investment company—the best partner—will bring you significantly closer to success in real estate investment. Address any concerns one by one and proceed with selecting the best partner for you.