Table of ContentsWhen starting real estate investment, many people may prefer properties near a station. While it is true that properties near stations offer advantages for real estate investment, there are also some disadvantages to consider. In this article, we will explain the advantages and disadvantages of real estate investment in properties near stations, as well as provide points to consider when choosing such properties.Call or email us here >>Advantages of Real Estate Investment in Properties Near StationsHighly convenientThe greatest advantage of properties near stations is their high level of convenience. This is attractive not only to real estate investors but also to potential tenants. Convenience goes beyond the proximity to the station itself. The presence of convenience stores, supermarkets, and medical institutions nearby also enhances the overall convenience factor. When these facilities are easily accessible, residents are likely to stay for a longer duration due to the lack of inconvenience.Low Vacancy RiskThe second advantage is the reduced vacancy risk. One of the risks associated with real estate investment is the potential interruption of rental income due to vacancies. A property without tenants means zero income, which can adversely affect cash flow, especially if you have taken a loan for the investment. However, properties near stations are highly convenient and in high demand. Once tenants move in, they are more likely to stay for an extended period, and even if they do move out, finding a new resident quickly is relatively easier.High Asset Value and Favorable Selling ProspectsThe third advantage is the high asset value and favorable prospects for selling the property. In real estate investment, apart from rental income, the sale of the property itself generates income. Anticipating the future sale of the property and planning an exit strategy is crucial. Generally, the value of real estate tends to decrease over time as the building ages, making it challenging to sell at the same price as the initial purchase. However, properties near stations often maintain a certain level of demand, allowing for the sale of the property while preserving its asset value to some extent. Being able to sell the property relatively quickly and at a higher price is a significant advantage.Disadvantages of Investing in Real Estate Near StationsHigh Purchase PriceThe first disadvantage is the higher cost associated with purchasing a property near a station. While properties near stations offer advantages such as high demand and asset value, they often come with a price premium compared to the market average. The evaluation of real estate investment depends on calculating the income-to-purchase price ratio, also known as the yield. A higher purchase price reduces this yield, which is why it is generally considered unwise to buy a property above market value. Lowering the purchase price as much as possible is an essential principle in real estate investment.Increased CompetitionThe second disadvantage is the presence of intense competition in the area near the station. You may have observed numerous similar apartments lined up in front of the station. As the demand for properties near the station is significant, many developers are actively seeking land and constructing new properties. With more similar properties available, differentiation becomes challenging. In some cases, rent competition arises, leading to a decrease in yield due to lowered rental rates. While it is almost impossible to avoid competing properties near a station, you can consider measures such as interior design changes and enhanced common facilities to differentiate your property.Environmental IssuesThe third disadvantage is the significant impact of environmental issues. For instance, noise from trains can be a concern if the property is in close proximity to the station. The sound and vibrations caused by passing trains can affect the quality of living. Although soundproof windows are available, they may have limitations in completely eliminating the noise. Additionally, if the property is close to downtown areas, there might be concerns about safety or noise disturbances until late at night. While such issues are common in areas with high population density, it's essential to be aware of these drawbacks. It's recommended to listen to the train noise near the property you are considering or take a walk around the downtown area at night to assess the situation to some extent.Points and Tips When Choosing a Property Near the StationNow, let's discuss some essential points to consider when selecting a property near a station for real estate investment:Review Development PlansIt's crucial to check the development plans for the area in advance. Look for areas where population growth is projected. With an increasing population, the demand for rentals is likely to rise, potentially leading to higher rental prices. Owning a property in such an area may result in increased asset value when selling it later. Development plans are often available on the city's website, so make sure to check them.Conduct Site VisitsAs mentioned earlier, it's recommended to conduct on-site visits before purchasing a property. While you can gather a lot of information online, experiencing the location firsthand is invaluable. Shifting your visit time, such as visiting during the day and night, may reveal different aspects of the property and its surroundings.Focus on Terminal StationsWhen searching for properties near stations, prioritize those located near terminal stations where rapid and express trains stop. Terminal stations tend to have a higher number of passengers, indicating higher demand for housing. However, it's worth noting that properties near terminal stations may come with a higher price tag. If affordability is a concern, consider exploring smaller stations with good access to terminal stations. You may discover hidden gems in unexpected places.Target Areas with Growing PopulationsConsider including areas with a growing population in your property search. Despite Japan's declining birthrate and aging population, there are still areas experiencing population growth. These areas hold significant value due to the demand for rentals. Population growth is a key indicator of rental demand, so it's essential to factor it into your decision-making process.Keep Purchase Amount LowStrive to keep the purchase amount as low as possible. While it can be challenging to find inexpensive properties near stations where market prices are already high, reducing the purchase amount can increase the yield and make it easier to generate profits when selling. Terminal stations aren't the only option; adjust your target stations based on your budget and desired yield. Research and compare the market prices of properties near different stations to establish a solid basis for property selection.SummaryIn this article, we have explored the advantages and disadvantages of choosing a property near a station for real estate investment. While properties near stations offer advantages such as convenience, reduced vacancy risk, and high asset value, they also come with drawbacks, including high purchase prices, increased competition, and potential environmental issues. To mitigate these disadvantages, it's essential to consider key points such as reviewing development plans, conducting site visits, focusing on terminal stations, targeting areas with population growth, and keeping the purchase amount as low as possible.