![[Case Study] Get a total of 4.3 million yen with late fee exemption and provisional land exchange grant + Star Mica method](/resources/articles/cmdgapfri0000s60qsb27rugy/thumbnails/en_1753297209373.png)
Introduction
In real estate investment, no matter how carefully you simulate, unexpected events will occur.
We want to avoid unexpected negative developments, but on the other hand, everyone would welcome positive, unexpected events.
This time, I'd like to talk about an experience I actually had of "double luck" that felt like I had won the lottery.
The first half will explain "Double Lucky" in an easy-to-understand manner for beginners, and the second half will explain the "Star Mica Method" that was used at the time.
Acquired a family apartment on provisional land
The property in question was a family-type condominium located on a "temporary replacement site."
What is provisional land exchange?
A temporary replacement land is a piece of land designated in a land readjustment project as a temporary replacement for the previous land that can be used and profited from in order to facilitate the smooth use of the land during construction.
Once the land readjustment project is completed, the provisional land will be converted into an official land.
Unanticipated costs and risks
For this property, I had to take over the following overdue debts from the previous owner:
1️⃣Management fees and repair reserve funds: Approximately 4.5 million yen in arrears
2️⃣Late payment penalty: Approximately 2.5 million yen
3️⃣Renovation cost: Initially estimated at about 2 million yen → Actual cost was about 3 million yen (+1 million yen)
Furthermore, the interior was in a state of disrepair and the renovation costs were 1 million yen higher than expected.
As a result, when these costs were added to the property price of 10 million yen, the acquisition cost ballooned to approximately 20 million yen.
Lucky number 1: A significant reduction in the burden
But from here on out, an unexpected turn of events occurs.
After eight months of negotiations with the lawyer representing the management association,
Ultimately, most of the late fees were waived.
→ The burden will be reduced by approximately 2 million yen!
Lucky No. 2 - A grant of 2.3 million yen
Additionally, a surprise notice arrived from the local government.
With the completion of the land readjustment project, owners as of September to November next year will
It was decided that a grant of 2.3 million yen would be paid.
This was a completely unexpected positive factor and truly was a moment when luck was on our side.
Change of policy: Adoption of pseudo-star mica method
Initially, the plan was to sell the property immediately after renovation.
However, once it became clear that the grants would be paid, we decided to make a major change to our policy.
1️⃣ First, rent and operate
2️⃣ Grant payment confirmed (Owned from September to November next year)
3️⃣Then, sell the property after the tenant moves out
We switched to a method that could be called the "pseudo star mica method."
What is the Star Mica method?
The Starmica method is a method for companies listed on the Tokyo Stock Exchange Prime Market to
This is Star Mica Holdings Co., Ltd.'s business model.
The system involves purchasing family apartments that are currently being rented out, renovating them after the tenants move out, and then reselling them to make a profit.
Some real estate investors are using this method.
Starmica business model
Mainly targeting family apartments (condominiums),
"Yield-based pricing" for real estate investment
"Mortgage-based price" for real demand (residential use)
This is a real estate regeneration business model that focuses on this price difference.
Business model flow
1️⃣ Buy a property for rent at a low price
2️⃣ Wait for them to leave
3️⃣ Renovation & Value Improvement
4️⃣ Sold at a high price for real demand
Through this flow,
Buy cheap → Sell high
Capital gains (profits on sale)You can aim for.
The background to this business model is
Real estate prices have two sides: "investment" and "actual use."
The dual nature of price: yield price vs. actual demand price
There are two ways of thinking about property prices:
1️⃣ "Yield price" for investment
The price of a property being rented out is determined by its "gross yield."
Since investors make investment decisions based on "rental income," prices tend to be lower than market rates.
(example)
Annual rent: 1.2 million yen / expected return: 6% = 20 million yen
2️⃣ Real demand "mortgage prices"
People who intend to live in their own home (end users) purchase properties based on the surrounding market price and their ability to pay a mortgage.
If the property is vacant, mortgage financing is available, so the price will be higher than market value.
(example)
If it is rented, it can be sold for 25 million yen → If it is vacant, it can be sold for 30 million yen.
By the way, the apartment next door to the one I lived in was also...
It is owned by Star Mica Holdings Co., Ltd.
After the tenants moved out, the property was renovated and resold.
Reviewing the financial plan - Negotiating with financial institutions
We also took measures in terms of funding. We consulted with financial institutions and requested them to switch from short-term financing to long-term financing. The financial institutions are expected to take the situation into consideration and agree. By stabilizing our fundraising, we will be able to firmly grasp unexpected opportunities.
Switching from short-term financing to long-term financing
Financial institutions also respond smoothly
I feel that this flexibility in financial planning is also key to successful real estate investment.
Conclusion
Real estate investment is not just about knowledge and calculations.
power of action
flexibility
These two are the keys to success.
Even properties that seemed like "no-go" at first,
Negotiations, information gathering, and policy changes can sometimes lead to unexpected improvements. I hope this experience will be helpful for those who want to start investing in real estate.
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