Under the Nomura Research Institute classification, households with net financial assets of 50 million yen or more and less than 100 million yen are referred to as the "quasi-affluent" segment. Compared with the affluent segment (100 million yen or more) and the ultra-affluent segment (500 million yen or more), the quasi-affluent segment is a level that many salaried investors can realistically target. In this article, we explain the definition of the quasi-affluent segment and seven points for getting closer to 50 million yen in assets through real estate investment.
What qualifies as quasi-affluent?
Net financial assets of 50 million yen to less than 100 million yen
The quasi-affluent segment refers to households with net financial assets, meaning the amount remaining after liabilities are subtracted from financial assets, of at least 50 million yen and less than 100 million yen. According to research by Nomura Research Institute, this group expanded from approximately 2.8 million households in 2005 to approximately 3.41 million households in 2019, showing steady growth as more people made use of investing in an era of extremely low interest rates.
Common professions and characteristics of the quasi-affluent
This segment often includes professionals such as lawyers and certified public accountants, senior executives at foreign-affiliated companies, and specialists in finance, IT, and management consulting. There has also been an increase in high-household-income families with dual earners and ordinary company employees who expanded their assets through investment management.
What are the seven key points for reaching the quasi-affluent segment through real estate investment?
1. Be thorough in gathering information
The amount of accurate information you have is directly linked to avoiding fraud and substandard properties. Do not accept information presented by real estate companies at face value. Conduct your own market research and property due diligence. Investors who are well informed can reduce selection mistakes.
2. Find a real estate company you can trust
Speak with multiple companies and choose a company that matches your investment style, such as long-term holding or prioritizing higher yields. It is important to compare several firms rather than relying on only one.
3. Assess location and purchase timing carefully
Properties in central urban areas and near stations tend to have lower vacancy rates and greater stability, but yields are lower. Suburban properties tend to offer higher yields, but they can be more difficult to fill with tenants. Make your timing decisions while monitoring the right balance between yield and price, along with price trend movements.
4. Place strong emphasis on building age
Newer properties have lower repair costs, but purchase prices are higher. Properties that are 20 to 30 years old and compliant with the current seismic standards tend to have lower downside risk and stable cost performance.
5. Always think about your exit strategy
If the location is strong, you can still expect to sell at a favorable price even as the building ages. By designing your exit from the time of purchase, including when and for how much you will sell, reaching the quasi-affluent segment by retirement becomes more realistic.
6. Set stop-loss rules
Real estate prices tend to move gradually, which creates the risk of noticing a downturn too late. Setting a stop-loss line and a response policy in advance helps you avoid major losses.
7. Spread risk through geographic diversification
Holding multiple properties in different regions allows you to offset land price declines or natural disaster risks in one area with properties in other areas. Staggering purchase timing is also effective.
Recommended Reading
- How can you achieve FIRE or semi-retirement in your 30s? An explanation of a strategy for using real estate investment as an income source
- Four essential rules to avoid overpaying in real estate investment | From proper rent evaluation to understanding leasing costs
- Mitigate risk with a second opinion on real estate investment | How to use expert guidance to prevent mistakes
Frequently Asked Questions (FAQ)
Q. What does quasi-affluent mean?
A. The quasi-affluent segment refers to households with net financial assets of 50 million yen or more and less than 100 million yen. Under the Nomura Research Institute classification, approximately 3.41 million households fell into this segment as of 2019.
Q. Can an ordinary salaried employee become quasi-affluent?
A. Yes. Even if it is difficult to reach that level through annual income alone, there are many cases in which people built net assets of 50 million yen by continuing long-term asset management through vehicles such as real estate investment.
Q. What is the biggest risk when aiming for the quasi-affluent segment through real estate investment?
A. The main risks are vacancy risk, price decline risk, and unexpected increases in repair costs. These risks can be reduced through information gathering, location selection, and clear stop-loss rules.
Q. Why is geographic diversification effective?
A. Because it allows income from properties in other areas to offset land price declines or natural disaster risks in a specific region. Staggering purchase timing also helps smooth acquisition costs.
Q. What type of property should you buy first as an entry point to the quasi-affluent segment?
A. A pre-owned condominium in a central area, near a station, and compliant with current seismic standards is a suitable starting point. That is because repair cost risk is lower and vacancy risk is also easier to manage.
