Many owners who manage their own rental properties may feel that they are saving on management costs. However, many of them realize how difficult it is to manage a property only when they are faced with situations that require expertise, such as dealing with actual problems, determining legal responsibility, and negotiating with tenants. In this article, we will explain in detail the limitations of self-management and the advantages of outsourcing to a management company through actual cases of mold problems that INA & Associates has encountered (some parts have been changed to protect personal information).
The following is a case study of Owner A (company employee), who independently manages a family-oriented condominium in Tokyo that has been newly built three years ago, and who received a complaint from a family of four that has been living in the property for one and a half years: "There is a lot of mold in the bedroom closet and on the bathroom wall. The property is nearly new, so why do these problems occur? I want you to take immediate action." We received a call on Saturday night.
Owner A checked the site the next day and was puzzled by the following situation:
Situation identified during on-site inspection:
Owner A felt that there was "clearly a problem with the resident's lifestyle," but was at a loss to decide how to explain this to the resident and to what extent he should be required to bear the costs. The tenant also made the following objection:
Problems faced by Owner A in this case:
| Troubling Situation | Specific details | Required expertise |
|---|---|---|
| Determination of responsibility classification | Determination of whether it is the tenant's responsibility or a building problem | Architectural and legal knowledge |
| Explanation of legal basis | Explanation of duty of care and duty of notice | Expertise in civil law |
| Negotiation of cost sharing | Proposal of appropriate cost sharing | Knowledge of precedents and negotiation skills |
| Response to health damage | Determination of medical causation | Medical knowledge, legal responsibility |
| Suggestion of preventive measures | Guidance on future mold remediation | Expertise in building and equipment |
| Written records | Creation of legally valid records | Legal knowledge |
As a result, Owner A decided that he was unable to take appropriate measures on his own, and he urgently considered outsourcing to us.
The most important aspect of rental management is to make appropriate legal decisions when problems occur. Even for a single mold problem, the following complex judgments are required:
Civil law liability classifications:
Judgment based on precedents:
Consideration of the Rental Housing Management Business Law:
The following professional skills are required to deal with problems with tenants:
| Required Skills | Contents | Degree of difficulty in self-management |
|---|---|---|
| Ability to provide legal explanations | Persuasive explanation with evidence of laws and regulations | ★★★★★ |
| Negotiation skills | Proposing a solution that is acceptable to both parties | ★★★★☆ |
| Technical knowledge | Expert explanations about buildings and equipment | ★★★★★ |
| Records and documentation | Creation and retention of legally valid records | ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ |
| Emergency response | 24 hours a day, 365 days a year | ★★★★★ |
| Preventive Guidance | Guidance to prevent future problems | ★★★★☆ |
Self-managed owners often overlook the time and emotional cost:
The greatest benefit of outsourcing to a management company is the ability to make sound decisions based on a wealth of experience and expertise:
Legal basis:
Technical expertise:
Negotiation and coordination skills:
The true value of a management company lies not only in responding to problems after they occur, but also in preventive management:
| Preventive management items | Self-management | Outsourcing to a management company |
|---|---|---|
| Explanation at move-in | General information only | Detailed explanation according to property characteristics |
| Periodic inspections | Irregular, superficial | Professional and systematic inspections |
| Early detection | Waiting to hear from resident | Periodic checks |
| Preventive guidance | After-the-fact response only | Seasonal reminders |
| Record keeping | Personal notes only | Legally valid record keeping |
| Legal compliance | Depends on personal study | Always up-to-date with the latest information |
Outsourcing to a management company can significantly reduce the burden on the owner:
Elimination of time burden:
Reduction of mental burden:
Reduction of financial risk:
Important points when selecting a management company:
Legal responsiveness:
Technical expertise:
Response system:
It is important to evaluate management fees as an "investment" rather than a "cost:
| Investment Effectiveness | Annual value (approximate) | Remarks |
|---|---|---|
| Time value | 500,000-1,000,000 yen | 10 hours per month x 5,000 yen per hour x 12 months |
| Mental value | Difficult to quantify | Stress reduction, family time secured |
| Risk reduction | 1-5 million yen | Litigation risk, prevention of property value decline |
| Expertise value | 300,000-500,000 yen | Damage prevention through proper judgment |
| Opportunity profit | Varies from person to person | Focus on core business, new investment opportunities |
Compared to typical management commissions (5-10% of rent), the cost-effectiveness is well worth it.
INA&Associates provides appropriate legal support for complex issues such as mold problems:
We focus on protecting asset value not only by responding to problems after they occur, but also through preventative management:
Self-management of rental properties may seem at first glance to save on management costs, but it entails many risks and burdens when considering how to respond to actual problems that may arise. In particular , complex issues such as mold problems require multifaceted expertise, including legal knowledge, technical expertise, and negotiation skills.
If, like Owner A in this case study, you look for a management company only after you feel that you are unable to take appropriate action yourself, the problem may have already escalated. It is important to consider outsourcing to a management company from a preventive perspective in order to ensure stable rental management and to maintain and improve asset value.
Management fees are not a "cost," but rather an "investment" that reduces the owner's time, mental burden, and financial risk. By outsourcing to a professional management company, you can expect to increase long-term profitability by improving tenant satisfaction, lowering vacancy rates, and maintaining asset values.
We encourage you to reaffirm the importance of management in your rental business and to build a partnership with a trustworthy management company.
A1: In the short term, there is a cost associated with the outsourced management fee, but in the long term, outsourced management is more economical. Considering the time cost of dealing with problems, errors in judgment due to lack of expertise, risk of lawsuits, risk of decline in asset value, etc., it can be said that the management fee is an investment that is fully recoverable. In addition, proper management improves tenant satisfaction, and can be expected to lower vacancy rates and maintain rents.
A2: It is true that the owner has the ultimate responsibility as the owner of the property, but the management company is responsible for the day-to-day management of the property and its associated responsibilities according to the management consignment contract with the management company. By entering into an appropriate management consignment agreement, the owner's risk can be significantly reduced. In addition, the professional response of the management company will enable early resolution of problems and determination of appropriate responsibility classifications.
A3: Of course it is possible. In fact, it is precisely because problems are already occurring that you need the support of a management company that can handle the situation professionally. We offer comprehensive support, from resolving existing problems to establishing a new management system. Please let us know the details of your current problem situation and we will propose the best solution.
A4: You should choose your management company carefully. If the company is registered as a rental housing management company, there are certain guarantees regarding the appropriateness of their work. In addition , you can check the management company's response by clarifying the scope of responsibility in the management consignment contract and by establishing regular reporting requirements. We emphasize transparent management reporting and regular communication with owners.
A5: Smaller properties are the ones that benefit the most from outsourcing to a management company. In addition, if the owner handles the problem on his/her own, the relationship with the tenants may easily deteriorate, and there is a risk that the tenants may move out. The professional response of a management company can be expected to improve tenant satisfaction and promote long-term occupancy.
If you are an owner having trouble managing your rental property, please contact us for a free consultation. INA&Associates' experienced management staff will propose the best management plan for your property. We will help you manage your rental property with peace of mind by providing comprehensive support ranging from handling tenant issues including mold problems to proposing facility improvements to increase asset value. Please feel free to contact us.