The Real Estate Specified Joint Business Act is a law aimed at protecting investors in real estate investment. It establishes an environment where ordinary investors can enter real estate investment from small amounts through small-lot real estate investment products. This article explains the origins of the law, characteristics of the business, and 3 investment types.
What Kind of Law Is the Real Estate Specified Joint Business Act?
The Real Estate Specified Joint Business Act is a law to protect investors in transactions involving small-lot real estate investment products. It was enacted in 1991 when the bubble economy collapsed, causing companies with weak financial foundations to go bankrupt and many investors to suffer losses.
Under this law, only operators licensed by the Minister of Land, Infrastructure, Transport and Tourism or prefectural governors can operate real estate specified joint businesses, significantly reducing the risk of investor losses. The entry threshold has also lowered through successive law revisions, and contribution to regional revitalization is also expected.
What Are the Characteristics of Real Estate Specified Joint Business?
- Easy for beginners to enter: Investment possible from small amounts due to small-lot real estate. Ordinary investors can access high-asset-value properties
- Operations can be left to professionals: Everything including resident recruitment and rent collection is handled by the operator. Investors receive distributions just by investing
- No property maintenance required: No maintenance burden since actual real estate is not held
What Are the Differences Between the 3 Investment Types?
Anonymous Partnership Type
The operator conducts real estate business as the principal, and investors only provide cash. Possible from a few tens of thousands of yen per unit, short-term operation also possible, making it the optimal type for beginners.
Voluntary Association Type
A type where multiple investors jointly conduct business. Cash contributions as well as in-kind and labor contributions are possible. Often used to reduce inheritance tax assessed value, with approximately 1 million yen per unit and approximately 10-year operation periods being standard.
Lease Type
A type where the operator manages real estate jointly purchased by investors through a lease agreement. Compared to anonymous partnership and voluntary association types, there are fewer of these and they tend not to be a common choice.
FAQ
Q. What is the difference between real estate specified joint business and REIT?
REITs are financial products traded on stock exchanges, while real estate specified joint business is direct investment in specific real estate projects. REITs have higher liquidity, but the ability to make investment judgments on specific properties is a characteristic of real estate specified joint business.
Q. Is principal guaranteed?
Principal is not guaranteed. There is risk of principal loss due to real estate market fluctuations and operator management conditions. Check the operator's license acquisition status and track record before making investment decisions.
Q. How can I confirm operators licensed under the Real Estate Specified Joint Business Act?
A list of licensed operators is published on the Ministry of Land, Infrastructure, Transport and Tourism website. Always check before investing.
