Professional and appropriate management is essential for successful real estate rental management. For property owners and those considering selecting a property management company, this article explains the basic operations of property management and provides concrete explanations of important points to maintain and improve asset value over the long term. We will also explain how basic operations such as rent collection, building maintenance, complaint handling, contract management, and periodic inspections lead to stable occupancy rates and revenues, as well as points to consider when selecting a reliable management company.
What are the basic operations of property management?
Property management companies (property management companies) are responsible for the overall operation and management of rental properties on behalf of their owners. Their work is diverse, and can be broadly divided into work related to tenant relations andwork related to the management of the building itself. Let's take a look at the typical basic operations in order below.
Rent collection (rent collection) and revenue management
Rent collection is the owner's main source of income, and the foundation of rental management is to collect rent without delay every month. The management company collects rent from tenants and remits it to the owner. In particular, in the event of nonpayment, the company first ascertains the reason for the nonpayment and then takes action. For example, if the delinquency is due to a simple failure to pay, we will contact the tenant immediately to encourage payment; if the delinquency is due to financial difficulties, we will work with the tenant's guarantor or guarantee company to resolve the problem as soon as possible. Such prompt and appropriate rent management will maintain a stable cash flow. Ensuring rent collection protects the owner's earnings and stabilizes overall real estate management.
Building Maintenance and Periodic Inspections
Building and facility maintenance and management are also extremely important in maintaining real estate value. Failure to perform daily cleaning and inspections and repairs of facilities can lead to property deterioration and a decline in asset value. In order to maintain the asset value of real estate, it is vital to continue to perform planned maintenance without fail. Specifically, periodic inspections andnecessary repairs are the basics. The management company conducts periodic inspections of the building and facilities to detect and address any defects or deteriorated areas as early as possible. Legal inspections of firefighting equipment, elevators, etc., which are required by law, are also carried out in cooperation with specialized companies, and repair work is arranged based on the results of these inspections. By repairing even small defects at an early stage, we can reduce the cost of large-scale repairs in the future and extend the life of the building. Daily cleaning and maintaining the beauty of common areas are also important roles of the management company. Properties with well-maintained buildings are more likely to be chosen by tenants, resulting in lower vacancy risk and maintaining asset value.
Tenant Relations (handling complaints and troubleshooting)
Responding to tenant inquiries and complaints is also a core management task. Tenant complaints vary from noise problems, equipment malfunctions, problems with neighbors, etc., and a prompt and sincere response is required. If complaints are left unaddressed, resident satisfaction will decline, leading to worsening relations with surrounding residents and an increase in vacancies, making long-term stable management difficult. Therefore, the first step is to accurately confirm the facts, listen carefully to the resident's story, and promptly implement necessary repairs or remedial measures. For example, it is important to quickly address emergency problems such as water leaks and equipment malfunctions, and to alleviate tenants' concerns as soon as possible. Some management companies are available 24 hours a day, 365 days a year to receive calls from tenants, and some have a support system that can respond immediately to water leaks, etc., in the middle of the night. For example, INA & Associates, Inc. has professional staff available 24 hours a day to respond to tenants and provide full support to minimize the occurrence of problems. By earning the trust of tenants through appropriate complaint handling, we can expect stable income through long-term occupancy, which in turn stabilizes the owner's revenue.
Contract management (lease contract, renewal, cancellation procedures, etc.)
Managing a series of procedures related to lease contracts is another important task. From tenant recruitment to contract signing, renewal, and move-out, proper contract management at each stage will prevent problems before they occur. Specifically, we prepare a contract and an explanation of important matters as part of the contract signing process at the time of moving in, and fully explain the contents of the contract to the tenants. We also ensure that the contract is executed in accordance with laws and regulations, including the handover of keys, and the acceptance of security deposits and security deposits. We also notify tenants in advance when the contract is about to expire, and proceed with renewal procedures and revisions to the terms and conditions. It is also the role of the management company to review the rent appropriately at the time of contract renewal, and they make proposals to the owner based on market trends and surrounding market prices. Furthermore, in dealing with tenants when they move out, after receiving a request from the tenant to terminate the lease, the management company handles the precise process of adjusting the move-out date, confirming the scope of restoration to the original condition, and settling the security deposit. In witnessing the move-out, our expertly trained staff checks for areas of wear and tear and promptly makes arrangements for necessary cleaning and repairs. Thorough contract management ensures smooth rental operations from move-in to move-out, and maintains the trust of both owners and tenants. By preventing problems related to contracts (breach of contract, security deposit problems, etc.), unnecessary costs and vacancy periods are reduced, contributing to stable management.
Structure to stabilize occupancy rate and revenue through proper management
Proper execution of the above basic operations will help stabilize the occupancy rate of properties and the owner's earnings. The following is an explanation of this mechanism in several points.
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Maintaining property value directly leads to higher occupancy rates: Maintaining the good condition of the building through periodic inspections and appropriate repairs maintains the property's attractiveness. Properties with fewer negative factors such as poor facilities and deterioration are more likely to be chosen by tenants, and as a result, maintain a high occupancy rate. In fact, even properties in the same area and condition vary greatly in property value and popularity depending on the state of maintenance. Proper management can minimize the decline in appreciation due to the age of the property and, in fact, can add value.
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Secure quality tenants and retain them for the long term: Careful selection of tenants by the management company and careful care after they move in will improve tenant satisfaction. Prompt response to facility problems and attentive communication with tenants will increase the number of tenants who want to continue to live here, and stable income can be generated through long-term occupancy. Long-term tenants tend to take good care of the property, which leads to the maintenance of the property's condition. As a result, fewer tenants move out and vacancy periods shorten, stabilizing occupancy rates and revenues.
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Market-appropriate ren ts: Setting the right rents is the key to maintaining high occupancy rates and maximizing income. Setting rents that are too high, ignoring the surrounding market and demand trends, will result in unfilled vacancies and missed profit opportunities. On the other hand, setting rents that are too low will result in a loss of profit. An experienced management company can analyze accumulated market data and propose an appropriate rent for the property, thereby preventing vacancies and ensuring profitability. Recently, there are management companies that utilize AI and big data to analyze hundreds to thousands of contracted rents in the surrounding area and set rents with precision. For example, INA & Associates, Inc. assesses rents based on more than 10 billion pieces of market data and proposes strategic recruitment plans according to property characteristics in order to achieve high occupancy rates. This scientific approach ensures that appropriate rents are maintained, shortening vacancy periods and maximizing revenues at the same time.
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Vacancy Prevention and Leasing Capability: The ability to recruit tenants (leasing capability) is also directly related to occupancy rates. If the management company fills vacancies through aggressive advertising and a network of real estate brokers, vacancy periods can be minimized. If you outsource to a management company with strong customer acquisition capabilities, you can expect to quickly sign a contract with the next tenant, thereby reducing the risk of management shakeouts. Some management companies may operate their own tenant recruiting websites or create attractive property photos and introductory materials to attract more tenants. Shortening the vacancy period directly leads to stable earnings, so the support of a management company that is strong in tenant recruitment is a great advantage.
As described above, proper rental management will help maintain high occupancy rates andstable revenues by increasing the value of the property and enhancing tenant satisfaction. Conversely, a property that is not well managed can lead to a vicious cycle of vacancies and declining rental income due to a succession of evictions caused by inadequate facilities and poor response. In addition, prolonged vacancy not only causes loss of rental income, but also reduces the attractiveness of the property, and in some cases, the rent may have to be lowered compared to the surrounding market rate. This is a serious risk that could affect the future sale price (asset value). Therefore, it is an important strategy for property owners to entrust a reliable property management company to properly manage their properties with the help of professionals, which directly leads to the maintenance and improvement of long-term asset value and stable management.
Key Points for Selecting a Reliable Property Management Company
Finally, we will explain the key points to consider when choosing a property management company to entrust your property. The quality of service, policies, and cost structure vary from management company to management company. In selecting a partner to entrust your valuable asset, check the following points.
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Track record (occupancy rate and number of units managed) and ability to make proposals: First, check the level of experience and expertise of the management company in filling properties. If the company has maintained high occupancy rates in other managed properties, you can expect to see a strong ability to keep vacancy periods short. Companies with extensive management experience are also familiar with market trends and tend to be able to offer concrete suggestions for improvement from the owner's perspective, such as setting appropriate rents or proposing renovations. For example, if vacancies persist, a company that proactively proposes rent revisions and renovation proposals based on an analysis of the surrounding market, rather than simply observing the situation, is a reliable presence.
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Responsiveness and communication of the person in charge: Whether or not the person in charge of the management company is polite and prompt is an important factor in determining a good management company. The speed with which inquiries are responded to reflects the company's operational efficiency and service attitude. Check the time it takes to receive a response after contacting the company and the initial response in case of an emergency. Also, check if the company offers suggestions from the owner's perspective. If the person in charge is able to stand in the owner's shoes and present specific measures to maximize profits, you can say that the management company has a high level of expertise and understanding of owners. In addition, ease of communication is also important. Check to see if they answer questions accurately in day-to-day communication, if their explanations are easy to understand, and if their responses are sincere. A trustworthy company will place importance on communication with the owner, and will carefully answer any concerns or questions you may have.
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Scope of Services and Support: The scope of services offered by each management company varies. In addition to basic rent control and complaint handling, companies that offer a wider range of services such as regular building cleaning, facility inspections, renovation proposals, and 24-hour emergency response will greatly reduce the time and effort required by owners. Especially for owners who live far away or have a large number of properties, a management company that can provide comprehensive services, including troubleshooting and periodic inspections, will provide peace of mind. Also, IT-based management systems are also a focus of attention. Some management companies nowadays centrally manage property information, contract documents, and income and expenditure reports on the cloud, allowing owners to check progress 24 hours a day, 7 days a week. For example, INA & Associates, Inc. digitally manages all information from contract documents to repair history and inspection reports, and shares them with owners in real time. A company with such transparent information disclosure and a full support system is worthy of trust.
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Transparency and appropriateness of cost structure: Make sure to check the commission and cost structure of outsourced management. Generally, the management fee is said to be around 5% of the rental income, but each company has a different fee structure. If the fee is extremely high, it will put pressure on the owner's earnings. On the other hand, if the fee is unreasonably low, there is a risk that inadequate services will not be provided. As a rule of thumb, make sure that the management fee is within the range of 3-5% of the rent, or if it is a fixed fee, make sure that the service is commensurate with the cost. It is also important that the company provides a clear breakdown of the estimate and the conditions under which fees will be incurred before signing a contract. A reliable company will explain the fees and specific management services and methods in writing before you sign a contract. INA&Associates offers the industry's lowest flat-rate management fees (from 1,000 yen per room per month), while providing the same high quality service as the major companies. INA&Associates offers the industry's lowest flat-rate management fees (from ³,000/month per room) while providing the same high quality service as major companies. A company with such an excellent balance between fee transparency and service content will ensure a long-term relationship with you.
It is important to comprehensively check the above points and select a management company that best suits your property and management policy. As mentioned in the previous section, by working with a reliable rental management company, you can not only entrust them with complicated tasks, but also receive professional suggestions for improvement. In particular, it is worthwhile to ask for a professional's opinion if you are a property owner who is not able to manage your property on your own. As mentioned above, a management company that combines the hospitality of its employees with a high level of expertise, such as INA&Associates, can be trusted with your valuable assets. By working with a partner that enhances the value of the property while staying close to the owner's point of view, long-term maintenance and improvement of asset value and stable rental management will be realized.
Conclusion
Each of the basic operations of property management, such as rent collection, building maintenance, complaint handling, contract management, and periodic inspections, is essential to protect the asset value of the property and stabilize the occupancy rate and income. Performing each of these tasks with expertise and a sense of responsibility maintains the property's attractiveness and benefits both the owner and the tenants. If proper management can create "properties that people want to live in for a long time" and "properties that are chosen", rental management will be on a stable track.
For this reason, it is important to have a reliable property management company. By choosing a company that will not simply outsource the work, but one that will approach you intimately as a partner in asset management, the burden on the owner will be greatly reduced. By partnering with a property management company that can contribute to maximizing the value of the owner's assets with the latest technology and a sincere service attitude, you will be able to maximize the value of your valuable real estate. INA&Associates, Inc. and other management companies that help owners maximize the value of their assets with the latest technology and a sincere service attitude. Properly managed properties will be a strong ally for property owners in building future wealth if asset values are protected and revenues are stabilized. Please make good use of the power of professionals to realize secure and stable rental management.
