Apr 2018

A Thursday rant – WHY investors???

Really, a rant… are you serious?

Here at Japan Property Investments, we tend to keep the posts light, fun, and informative.  Why?  Because life is hard and you don’t need to read any more bad news.  Also, successful people have a positive growth mindset like us.  But for today allow me a little rant.

First, the background.

What is “Smart Days”  and why should I care?  Well, for many investors Smart Days was a progressive property company based in Tokyo that had an interesting investment strategy.  The company sourced, purchased and managed women only ‘shared houses’, a very new concept for the Japanese market.  Smart Days also guaranteed a fixed monthly income to investors.   In recent years the UK market has seen an explosion of HMOs, (House of Multi Occupancy) which offers quality accommodation and a low price.  Basically a room in a house with a shared kitchen and bathroom, sometimes with an en-suite option.  The UK HMO strategy is a win-win, lower rent for tenants and great returns for investors and they continue to be popular.  Where the two models differ was that Smart Days investors purchased the property and had to agree to Smart Days managing the property.

I see where this is going

Savvy investors out there will already have seen the problem.  The selling agent and the managing agent is the same = conflict.  Early on in my investment days, I made the same mistake.  However after 6 months, I sacked the agent and put in a new one, I have never looked back with that agent.  Smart Days investors signed agreements that locked them into management contracts with ONLY Smart Days.  It would appear Smart Days were more focused on attracting investors and selling property then filling up those rooms.  So in January, this year investors were informed that they would not receive rent for the month.  Of course, the investors still have to pay their loans.  A terrible situation to be involved in.

So who is to blame?

Well, it is easy to blame Smart Days, surely the mislead investors.  Or they overestimated what they could/could not afford to pay back.  Perhaps they grew too quickly and overstretched.  Only they will know and the story is not completely over so I should not speculate.

But what of the investors?  A key goal of JPPI is education, learning about property strategies, the risks, and the returns.  Smart Days investors need to take some responsibility.  If an investment is too good to be true, it usually is.  Do your due diligence, read books, listen to podcasts, attend events – ASK QUESTIONS!  and learn all there is to know about your chosen field of investment.

The story is not over and for all involved, I hope there is a positive outcome and people can move forward but this story really brought home to me the importance of property education. If it is too good to be true, it probably is!

Let me know your views on this topic, but for now, rant over!  kevin@japanpropertyinvestments.com