Is the introduced property really a good one? How to think about real estate investment without being swayed by off-market or under-the-table deals.

Introduction

When investing in real estate, there's a phrase you've probably heard at least once.

Unlisted properties
"Under-the-radar projects"
Member-only deals
Referral case

I imagine many investors feel a sense of exclusivity when they hear words like these.

Actually, when I talk to investors,

Do you have any unlisted properties?
I would like to be introduced to investment properties that are not publicly available.

We often receive inquiries like this.

Certainly, if a property isn't on the market yet, it creates the impression that there would be less competition, making it easier to purchase.

However, there is one thing I would like you to consider calmly.

Are referral or unlisted properties really good ones?

In this article, I’d like to discuss the reality of referral deals in real estate investment from the perspective of someone who deals with the buying and selling of income-generating properties on a daily basis.

Misconception that unlisted properties are good properties

Why do investors seek referral deals?

The reason why referral properties and off-market properties are popular is very simple.

Many investors are

"Since it's not publicly available, it must be a good property."

This is because we believe that

That's certainly not wrong in principle.

If there is a profitable property that anyone would find attractive, real estate companies may introduce it to their existing clients before spending money on advertising to recruit widely.

As a result, it is not uncommon for deals to be closed without ever being made public.

However, that's only part of the story.

Just because a property is unlisted doesn't make it a good property; rather, good properties can just be sold without being listed.

This difference is very important.

There isn't just one reason why it's not being released.

When people hear the term "off-market property," many imagine it to be an "exceptional deal."

However, in reality, there are various reasons for them to remain unpublished.

For example, there are cases where the seller wants to avoid advertising.

This is the case when you don't want the tenant to know about the sale, or when you don't want business partners to know about the sale.

Additionally, inheritance cases and voluntary sale cases can also proceed under the surface.

Therefore, the reason for being unlisted does not necessarily correspond to the pros and cons of the property.

As an investor, the key is not to assume that a property is good simply because it is off-market, but to determine whether the property itself has investment value.

Actually, there are different types of referral cases.

Good opportunities aren't the only ones that come by referral.

Having been in this industry for many years, I've come to feel there are broadly three patterns of referral cases.

This first one is a really good case.

This is a case where we introduce to existing customers first because the product sells out as soon as it hits the market.

The second one is a normal project, neither good nor bad.

The price is in line with the market, there are no special attractions, and no major drawbacks.

And third, there are deals that are hard to sell.

There are also cases where a product is initially introduced on a trial basis to gauge market reaction due to concerns about a poor response.

In other words, just the term "referral property" doesn't tell you which category the property falls into.

Judging solely by the title "referred case" is extremely dangerous.

"Buying because it was recommended" is a dangerous way of thinking.

A common characteristic of investors who actually fail is

"I feel relieved because I was introduced."
It has value because it's unreleased.

That's the way of thinking.

Normally, I should have checked,

Location
Rental demand
Cumulative valuation
Loan terms
Exit strategy

There are times when people purchase without fully considering important points like these.

Real estate investment is strictly a business.

No matter how special the route through which information is obtained, it is meaningless if it cannot be established as an investment.

It's important to have a stance of evaluating properties themselves, rather than seeking a sense of security in them being referral cases.

High-quality income-generating properties can be found among publicly listed real estate.

Good properties are often listed.

Some investors are exclusively pursuing off-market properties.

However, in reality, there are many good properties available on the open market.

Because real estate companies have different sales methods.

Some companies release broadly to the market first, while others introduce them exclusively to members.

Depending on the seller's intentions, there are also cases where advertising is assumed from the beginning.

This doesn't mean the property is undesirable just because it's publicly listed.

What's important isn't whether it's public or private, but whether the price is appropriate.

Good properties sell quickly once they are listed.

When actually dealing with income-generating real estate,

This property will go fast.

There's a property I'm thinking about.

Even if such properties are listed, they tend to receive a lot of interest and are almost always sold in a short period of time.

Conversely, properties that remain on the market for a long time often have issues with price, location, profitability, or other factors.

So what you really need to look at isn't whether it's unreleased.

It's how the property is being valued by the market.

What Investors Who Only Chase Referral Deals Are Missing

When I talk to investors looking for off-market or referral properties, there are things I consistently notice.

This is a case where "finding a property" has become the objective.

Originally, the purpose of real estate investment is to purchase good properties and lead to stable profits and asset formation.

But before I knew it

Finding unlisted properties

"To be introduced to a confidential/under-the-table case"

Some people have made it their goal.

Of course, gathering information is important.

However, no matter how many referral cases you gather, they are meaningless if a purchase decision cannot be made.

Even if a really good property comes up,

I'll think about it a little more.

There might be other good opportunities.

I've seen many cases where other investors buy up opportunities while decisions are being postponed.

Clarifying your own investment criteria is more important than chasing紹介案件 (referred deals).

Which area would you buy in?

What level of return would you consider?

What are the acceptable loan terms?

Investors with clear criteria like these can make quick decisions when they find good properties.

As a result, you are also more likely to purchase a good deal.

Common traits of investors who receive good referral deals

Another thing I'd like to tell you is that there are commonalities among investors who attract truly good referral opportunities.

That it's trusted by real estate companies.

For example, I send materials and get absolutely no response.

Every time, they only ask detailed questions but don't end up purchasing.

They only negotiate prices.

In such cases, it becomes difficult for the real estate company to prioritize sending you information.

On the other hand,

They will properly inform me of the results of their review.

The conditions for purchase are clearly stated.

He makes quick decisions.

Investors like these naturally find it easier to gather information.

This is not special treatment.

This is because both real estate agencies and sellers want to show properties to buyers they can trust.

If you're looking for good referral opportunities, isn't it also important to first become an "investor worth referring"?

What's truly important is the speed of information and trust.

The best investors value relationships.

People who have enjoyed long-term success in real estate investing have something in common.

It’s that we prioritize building relationships with people over simply finding properties.

That's because good information tends to pop up out of the blue.

Some projects haven't even hit the market yet.

Some projects receive applications the moment they are posted.

Whether you have an established relationship where you can receive information at that time.

This is where the big difference lies.

I, too, sometimes reach out to existing customers first.

That’s not special treatment.

Because we have a long-standing relationship and understand each other's way of thinking.

Real estate investment is a battle of information

Real estate investment is often described as a battle of information.

However, quite a few people misunderstand what that means.

Information warfare isn't about possessing special classified information.

To create an environment where we can make decisions faster than anyone else when good information becomes available.

Build a relationship with a real estate agency you can trust, and establish clear criteria for making a purchase decision.

It is this consistent effort that ultimately leads to finding the right property.

Don't judge solely based on the term "off-market property."

Referral listings and off-market properties certainly have their appeal.

There are also high-quality income properties that are sold before they are even listed publicly.

However, just because a property isn't listed doesn't mean it's a good one.

The key question is whether the property is a sound investment.

What about the location?

Is there demand for rental housing?

Will I be able to get a loan?

Is it possible to sell it in the future?

It is most important to confirm these essential parts.

The more successful people are in real estate investing, the less they focus on the term "referral" and the more they look at the actual details of the property.

We handle a wide variety of investment property listings on a daily basis.

While there are some properties we can showcase before they are publicly listed, what matters most to us is not whether a property is off-market, but whether it truly offers value to our investors.

If you are considering purchasing income-generating properties, please feel free to register as a member or contact us.