For owners of multiple income-producing properties in the 23 wards of Tokyo, property management fees paid monthly are a cost that cannot be ignored. At the same time, the quality of service provided by the management company has a significant impact on profitability. This article explains the structure of property management fees in the 23 wards of Tokyo and market prices by region, the main services offered by management companies and their cost effectiveness, tips and cautions for reviewing and negotiating management fees, and an example of a service (INA & Associates) that combines high-quality management with maximizing owner profit. INA&Associates. Let's take a deep dive to ensure that management fees are appropriate and that service quality is not compromised by easy cost-cutting.
Basic Structure of Rental Property Management Fees: Generally, when the management of a rental property is outsourced to a management company, the management fee is set as "○% of the monthly rent income. In the 23 wards of Tokyo, most management companies charge around 5% of the rent income. For example, for a room with a rent of 100,000 yen, the monthly fee would be around 5,000 yen. The actual rate varies widely, as the upper limit is not set by law, but is freely determined by agreement between the owner and the management company.
Differences in market rates by area: Even within the 23 wards of Tokyo, there are slight differences in management fee rates depending on the location and characteristics of the property. For example, in popular urban areas such as Minato-ku and Shibuya-ku, where rent levels are high and there are many competing management companies, the management fee rate may be set as low as 3-5%. In recent years, some companies have started to offer management fees of 1-3%, flat rates per unit, and even "zero management fees," mainly in central Tokyo and newly built properties. On the other hand, in residential areas such as Nerima Ward, where rent levels are relatively low and the management fee per unit tends to be small, the standard fee is around 5%, or in some cases, depending on the size and age of the property, it may be as high as 7-10%. In fact, management fee rates can vary from 5 to 12%, depending on the scope of services and property conditions. In other words, not only is there a difference in the absolute amount of 5% between a luxury condominium in Minato-ku and an apartment in a suburban area, but there can also be a difference in the rate due to the competitive environment.
Key point: It is important to understand the market rate in your area and determine if the management fee you are currently paying is appropriate. If you are paying a lower rate than in the city center, it is beneficial, but if you are paying a higher-than-standard rate in a suburban area, there may be room for a review. In addition, pay attention not only to the rate, but also to the fee structure (fixed rate or flat rate) of each management company. In any case, the market rate is only a guide, and a comprehensive judgment must be made, including the content of the services described below.
Scope of services provided by a rental management company: A management company can perform a wide range of services on behalf of the owner. The main services offered by a property management company include
Tenant Recruitment and Screening: When a property is vacant, the company will advertise the property through appropriate media, respond to inquiries and previews, and screen applicants. We also handle the contract process on behalf of the client.
Contract management and renewal: We handle all contract-related paperwork, including drafting and executing lease contracts, informing tenants of when their leases are up for renewal, and processing renewal contracts.
Rent collection and arrearage reminders: Collects monthly rent and common service charges from tenants and remits them to the owner. This also includes reminding tenants in the event of nonpayment of rent and cooperating with the guarantee company.
Complaint handling and tenant support: We respond to complaints and inquiries from tenants regarding defective facilities and living conditions 24 hours a day, and arrange for contractors and on-site support as necessary.
Move-out inspection and restoration arrangement: When tenants move out, we attend the site and check for wear and tear in the room. We also arrange and quote for security deposits and restoration work, and confirm completion of the work.
Building Facility Management and Cleaning: We regularly patrol the property, clean common areas, conduct facility and fire inspections, and arrange for specialized contractors. General building maintenance and management, including maintenance of elevators and water supply and drainage systems, and repairs in the event of malfunctions.
While these are typical tasks, the extent to which they are included in the basic management fee varies from one management company to another. For example, some companies charge 3% for a simple management plan that only includes rent collection and a complaint window, while others charge 5% for comprehensive management that includes building cleaning and detailed repair arrangements. It is important not to judge whether the management fee is high or low based on the number alone, but to understand what the company will specifically do for you within that fee. If you get the impression that the fee is relatively high compared to the services offered, such as "5% for rent collection alone," it is worth considering switching to a cheaper company that offers the same level of services, or a company that can handle a wide range of tasks for the same 5% fee.
Cost-benefit: Although the management fee is a cost to the owner, the services provided in return may be worthwhile. For busy owners, a management company is a powerful partner that takes care of all the complicated tasks. For example, if tenant satisfaction improves and long-term occupancy is achieved through thorough tenant care, this will contribute to the owner's profit in the form of reduced vacancy losses. In addition, if the vacancy period can be shortened through appropriate rent setting and recruiting activities , an increase in revenue beyond the management fee can be expected.
On the other hand, it is important to note that there are other costs incurred in addition to the management fee. In general, the aforementioned expenses for restoration work, facility repairs, and legal building inspections are separate from the management fee and are to be borne by the owner. For example, the standard cost of restoring a property to its original condition after a single occupant moves out is said to be around 100,000 to 150,000 yen, but these costs must be borne by the owner even if the property is outsourced to a management company. Depending on the management company, there may be cases in which the management fee is low, but there is a large intermediary margin in remodeling and repair arrangements. Therefore, it is important to consider not only the management fee rate but also the "total cost effectiveness. Even if the management fee is a little high, if the company has few vacancies and is reliable in dealing with problems, overall profitability will improve. On the other hand, even if the management fee is low, if the company is sloppy in dealing with tenants, and tenants move out one after another, income will decrease.
Key point: Make a list of the services offered by the management company and compare them to the time and expertise required if you were to handle the problem yourself. By determining whether the cost is commensurate with the "value of having that work done," you will be able to see the cost-effectiveness of the management fee. Selecting a reliable company by comparing and examining the balance between the scope of services and fees will lead to stable management over the long term.
The more properties an owner owns, the greater the cost savings from reviewing management fees. This section explains how to review current management fees and negotiation points with the management company. However, there are some points to keep in mind when negotiating fees from the perspective of ensuring service quality. 1.
First, check the details of the current management contract and identify the service items included in the management fee and the fees charged separately. Some management companies charge fees in addition to the management fee under the name of "administrative fees," "system usage fees," "advertising fees," and so on. It is essential to grasp the actual expenses, including these hidden costs. Then, check to see if unnecessary services are not included in the management fee, and conversely, check to see if necessary services are treated as options and are relatively expensive. It is also effective to ask the management company to disclose the breakdown of expenses. If the company is transparent, they will provide a detailed breakdown, and if there are many unclear costs, there is room for negotiation and review. 2.
2. compare proposals from multiple companies: To ensure that management fees are appropriate, it is effective to request and compare management plans from other companies. Use a bulk quotation service or referrals from fellow property owners to obtain proposals for rates and services from multiple management companies. By comparing other companies, it will be easier to determine whether the current contract terms are higher than the market rate or whether they are reasonable considering the services provided. By showing the existence of competitors, you can also use this as a bargaining chip to encourage the current management company to improve the terms and conditions of your current contract. For example, by stating specifically that "other companies charge X% including XX%," the current company may be more inclined to compromise. It is worth asking if a volume discount can be applied, especially if you are entrusted with the management of an entire building or multiple buildings. Owners with a large number of properties are also large customers for management companies, so it is possible to negotiate a lower commission rate in exchange for the management of several properties at once. 3.
Negotiate based on actualperformancedata: When negotiating, try to be persuasive by using objective data and actual performance, rather than relying on emotion or intuition. For example, if you are considering switching from self-management to outsourcing, show the "current occupancy rate" and "number of delinquencies and complaints," and discuss how much improvement can be expected if the property is left to a management company. If you are already outsourcing management and want to negotiate a lower fee, it makes sense to say something like, "This property has been fully occupied for a long time, so we don't need to spend much time and effort on it, so would you consider lowering the commission rate? In addition, if you have information on other companies' proposals (service contents and fees) obtained through competitive quotations, present them and negotiate with them, citing specific figures. The management company is also a business, so they are more likely to accept proposals based on reasonable evidence. 4.
4) Confirmation of service quality and responsiveness: When reviewing management fees, it is also necessary to consider the risk of service degradation due to cost reductions. It is dangerous to simply jump on the bandwagon of "I want to switch to a cheaper company" based on cost alone, and be sure to confirm that the quality of management services is adequate. Specifically, carefully examine the prospective management company's ability to respond to tenants (whether or not 24-hour emergency services are available), its leasing ability when vacancies occur, and its property maintenance and management system. If possible, check the management company's track record (number of units managed, occupancy rate, complaint response rating, etc.), and interview the company's staff to determine if they are trustworthy. Even if the cost is low, poor responsiveness may lead to more losses than short-term cost savings (i.e., tenants moving out early or property values declining due to problems left unattended). 5.
Avoid excessive negotiation and maintain a good relationship: It is important to negotiate management fees within an appropriate range and not to damage the relationship of trust with the management company. If you demand too large a reduction, you may give the impression that you are an owner who cannot make a profit for the amount of work you put in, and the management company may lower your priority. In fact, management companies are businesses, and if their profits are cut too much, the quality of their services may be affected. When negotiating, it is important to find a compromise that benefits both parties. It is best to make a proposal that takes into account the maintenance of the relationship in the future, such as, "We want to entrust you with our services on a long-term basis, so we would like you to lower the rate to 0%. After negotiating, be sure to formally reflect the new conditions in the contract in writing to avoid any misunderstandings.
One way to both reduce management fees and maintain service quality is to choose a management service with a non-traditional concept. INA&Associates is a next-generation management company that has emerged in recent years and is attracting attention for its efficiency and transparency. INA&Associates' rental management is characterized by the use of the latest technology and professional know-how to achieve high quality management at reasonable costs.
The most notable feature of INA&Associates is its innovative fee structure. Instead of the usual "X% of the rent," INA&Associates offers a highly transparent flat fee starting at 1,000 yen per room per month. By reviewing the structure of conventional management companies, streamlining payment management operations, and reducing labor costs through the use of IT technology, we have achieved the lowest prices in the industry while maintaining the same level of quality as major management companies. This flat-rate system makes it more affordable for properties with higher rents, which is a significant cost advantage for owners who outsource multiple properties. In fact, one of our service philosophies is to contribute to owners' profitability through cost optimization.
Low prices do not mean that service quality has been sacrificed; INA&Associates has achieved high occupancy rates through optimal rent setting using AI-based market big data analysis and strategic recruitment marketing for each property, thereby maximizing owner profits by shortening vacancy periods. This enables us to maximize the owner's profit by shortening the vacancy period. In addition, we have a 24/7/365 tenant support system in place, and our professional staff responds promptly to complaints and emergency problems, providing reliable management quality. We have also introduced a centralized cloud-based management system for everything from contract documents to repair history, allowing owners to monitor the status of their properties and income and expenses in real time from anywhere in the world. By combining technology and human services in this way, INA&Associates is able to achieve both efficient management and thorough information disclosure, which is one of its major strengths.
Strengths of INA&Associates' Services: INA&Associates offers the following services
Low flat-rate fees: With clear accounting from 1,000 yen per room per month, fair and low costs regardless of high or low rents. Multiple properties can benefit from the scale of the service.
Utilization of the latest technology: AI-based rent proposals and cloud management systems dramatically improve vacancy countermeasures and operational efficiency. Reduced human resource costs ensure high quality at a low cost.
24/7/365 support: 24/7 support to respond immediately to water leaks and noise problems in the middle of the night. Reporting to owners is also systematized, timely, and accurate.
Transparency and reliability: Repair work is performed at a fair price, eliminating middle-margins as much as possible. High transparency: The owner can confirm the entire process from the estimate to the completion of construction.
As described above, INA&Associates is a service that embodies both a significant reduction in management fees and the maintenance of service quality. INA&Associates is a strong option for owners who are considering reviewing their management fees. We encourage you to ask for specific proposals to see if they match the size of your property and your needs.
We have explained the market rate of management fees and points to reduce them for owners who manage multiple properties in the 23 wards of Tokyo. The standard management fee rate is around 5%, but there is a wide range depending on the area and services offered, with lower rates in high-end central Tokyo areas and standard to slightly higher rates in suburban areas. It is important not to judge only by the high or low rates, but rather to assess the range and quality of services provided by the management company and verify whether the value for money is being obtained.
When reviewing management fees, it is a good idea to understand the details of the contract, compare multiple companies to confirm market rates, and negotiate based on this data. When negotiating, maintain a relationship of trust with the current management company and try to make proposals that are beneficial to both the owner and the management company. Neglecting service quality will ultimately result in a loss for the owner, so it is essential to seek a balance between reasonable costs and high quality.
New management services that combine low cost and high quality through the use of technology, such as INA&Associates introduced in the last section, are also emerging. By choosing a reliable partner that is not bound by conventional wisdom, you will be able to maximize owner profits while keeping management fees at an appropriate level. We encourage you to use the information in this article to review the best management strategy for your real estate portfolio.