A real estate management company is a company that handles the operation and management of rental properties on behalf of property owners. Specifically, it performs various tasks necessary to maintain and enhance the asset value of properties and plays a role in creating a living environment that satisfies both property owners and tenants.
What is a real estate management company? Its role and scope of work
The main tasks related to rental property management include the following:
- Tenant recruitment and contract management: Advertising and recruiting tenants for rental properties, screening prospective tenants, and handling lease agreements. Appropriate recruitment activities reduce vacancy periods and lead to stable rental income.
- Rent management: Collecting rent from tenants and handling delinquent payments. Collecting rent on behalf of property owners and coordinating with guarantee companies as necessary.
- Building and facility maintenance: Cleaning common areas, conducting regular inspections, arranging equipment maintenance, and responding to repairs. We maintain the property in good condition to preserve its asset value.
- Tenant support: Handling issues and complaints during tenancy, mediating neighborhood disputes, processing lease renewals, and overseeing move-out settlements. We respond promptly to tenant inquiries to ensure a comfortable living environment.
In this way, real estate management companies reduce the burden on owners by taking on all aspects of rental management, contributing to the efficiency and stability of property operations. Especially for part-time owners and investors with multiple properties, management companies are a reliable partner who can be entrusted with emergency troubleshooting that requires 24-hour response.
In Japan, rental management services were not previously regulated by a licensing system like real estate brokerage. However, with recent regulatory reforms, the “Rental Housing Management Operator Registration System” was established in 2011, requiring operators managing 200 or more units to register with the Ministry of Land, Infrastructure, Transport and Tourism (registration is recommended for those managing fewer than 200 units). Additionally, the Rental Housing Management Act, which came into effect in 2021, has further advanced the establishment of the National Qualification for Rental Property Management Professionals and mandatory registration for operators, aiming to enhance the overall reliability of the industry. Therefore, when selecting a management company, it is advisable to confirm whether the company is registered with the government.
Key Features of an Excellent Property Management Company (Points to Consider When Evaluating a Management Company)
To find a reliable partner among the many management companies available, it is important to understand the common characteristics of excellent management companies. Here, we introduce the main points commonly found in management companies with a proven track record.
- Strong tenant recruitment ability and maintenance of high occupancy rates: The ability to quickly fill vacancies is one of the most important factors when selecting a management company. Companies that maintain an occupancy rate of 95% or higher reduce vacancy risks and directly contribute to maximizing owner revenue. In fact, there are cases where a property with an occupancy rate of 50% or less under another management company was fully occupied within six months. Companies with an extensive tenant recruitment network and marketing capabilities are trustworthy. As a reference point, check the average vacancy period and occupancy rate data published by the company.
- Familiarity with the local market: A company that is knowledgeable about the rental needs and market rates of the area where the managed properties are located can more easily set appropriate recruitment strategies and tenant targets. By understanding the characteristics of the local environment, nearby facilities, and safety, it is possible to effectively attract tenants who match the property. In general, management companies with branches or offices in the target area are likely to have information specific to that area.
- Troubleshooting ability and rapid response system: The ability to respond quickly to tenant complaints or equipment malfunctions is an important evaluation criterion. Companies with a dedicated call center, a network of locations that can respond within an hour in emergencies, and multiple staff members who can assist the responsible person are reliable. Management companies with a proven track record tend to have accumulated know-how and can handle troubles flexibly and accurately. On the other hand, smaller companies with insufficient staff may face risks of delayed responses due to each staff member handling too many properties.
- Appropriate management fees and transparency: The level of management fees is also a concern, but be cautious if the fees are “too low.” Companies offering extremely low fees may charge high fees under other headings, such as restoration costs upon move-out. Generally, management fees are considered appropriate at around 3–5% of rental income. If fees are significantly lower than this, it is advisable to thoroughly review the scope of services and any additional costs. Reliable companies maintain high transparency in terms of costs, clearly explaining the scope of services and fee breakdown during the quotation stage. It is essential to obtain quotes from multiple companies and compare the balance between management content and costs before signing a contract.
- Extensive management experience and organizational strength: Companies with a large number of managed properties and years of experience tend to have accumulated expertise and higher reliability. For example, using 10,000 managed properties as a benchmark, scale advantages can lead to cost reductions in maintenance expenses, and accurate problem-solving based on past cases can be expected. Of course, a large number of properties does not necessarily guarantee quality, but it can serve as one indicator. Additionally, industry reputation and credibility should not be overlooked. A high number of referrals from existing owners, a good local reputation, and high trust within industry associations are all factors that indicate a company's credibility.
- Quality of staff, including the manager: Finally, since this is a service industry where people provide services, the quality of the staff, including the manager, is crucial in determining the excellence of a property management company. Companies with well-trained employees who demonstrate proper manners, professional knowledge, and the ability to make proposals tend to receive higher satisfaction ratings from property owners. Companies with a high number of licensed real estate agents or certified property managers, low turnover rates, and honest and prompt responses from staff also pay attention to these details. As mentioned later, “people” are the greatest asset (human capital) in property management, and companies that prioritize talent development are the most reliable partners.
How to find a property management company (compiling a list of candidates)
Once you have a general idea of what makes a good management company, the next step is to find specific candidates. Here are some common ways to find a reliable management company.
- Internet search and comparison sites: The easiest way is to search online using keywords such as “rental management” and your area name. In particular, comparison sites allow you to request information and consultations from multiple management companies at once. For example, sites like “Rakumachi: Landlords' Ally,” “Mansion Rent.com,” and “HOME4U” allow you to input property information and simultaneously contact 3–5 companies that can handle your request, enabling you to compare each company's services. By using such portals, you can efficiently compile a list of candidates and take the first step in selecting a management company.
- Recommendations from financial institutions or experts: Another effective method is to consult the financial institution that provided the loan for the property purchase and ask them to recommend a management company. Banks may know high-quality management companies because they want to ensure stable property operations for their loan recipients. Recommendations from banks can reduce the risk of encountering unscrupulous companies and provide a certain level of trust. Additionally, you may receive recommendations from real estate brokerage companies or professionals in the real estate industry, such as tax accountants or lawyers. Such third-party recommendations offer peace of mind because you can verify the reputation and capabilities of the management company in advance.
- Word of mouth and networking among fellow owners: It is also useful to attend meetings or seminars for owners or landlords you know who are already engaged in rental management to hear their opinions. You can obtain valuable information for your decision-making by hearing their honest opinions about the management companies they use, including their satisfaction and dissatisfaction. You may also hear specific recommendations, such as “Company X is good for property management in the Y area.” These days, there are also social media and online communities where investors exchange information, so make use of such “owner networking platforms” to gather information about reliable management companies.
Once you have identified multiple candidate management companies through the above methods, compare and evaluate their services, fees, and track records to narrow down your options. Check the official websites of the candidate companies for their management track records and customer feedback, and contact them directly to clarify any unclear points. In recent years, many companies have been highlighting their strengths and unique features on their websites, but they may not mention any drawbacks. It is also advisable to refer to third-party evaluations (such as ratings on review sites or awards received) and make your final decision based on the checkpoints outlined in the next section.
Checkpoints for selecting a management company
Once you have narrowed down your candidates to a few companies, evaluate them based on specific selection criteria and decide on the most suitable one. Here, we will outline the main checkpoints to confirm before signing a contract.
- Clarity and comprehensiveness of the contract: Carefully review the contents of the management contract provided. It is important to confirm not only the monthly fee amount but also whether the scope of services included in the fee is clearly stated. For example, does “cleaning” include specific areas and frequencies? Are advertising costs for tenant recruitment or expenses for restoring the property to its original condition upon move-out included? If conditions vary between companies, it is necessary to standardize the items and frequencies for comparison. Additionally, termination conditions and contract duration must be checked. Confirm that the contract clearly stipulates the notice period for termination, the presence or absence of liquidated damages, and the handover procedures during management transition. If any terms are unclear, ask for clarification to ensure everything is clear. If the contract terms are clear and align with the owner's preferences, this will help prevent future disputes and allow the owner to entrust the management with peace of mind.
- Response speed and reporting system: The speed of initial response to inquiries or issues directly impacts management quality. Ask potential companies specific examples such as, “How would you handle a late-night water leak report from a tenant?” and confirm whether they offer 24/7 support and their emergency response procedures. A swift response system can reduce secondary complaints from tenants and the risk of them moving out. Additionally, the reporting and communication system with the owner is crucial. Reliable companies will send regular (e.g., monthly) income and expense reports and promptly report any issues that arise. Companies that provide frequent updates and communication from their staff will help property owners stay informed and reduce anxiety. On the other hand, companies with poor reporting may cause stress for property owners who have to follow up to get updates. Be sure to check the speed of responses and the thoroughness of reports.
- Compatibility and trust with the responsible party: When entrusting management, it is important to consider not only the company's overall evaluation but also the compatibility with the individual responsible party. After signing the contract, a dedicated responsible party is typically assigned to each property, and their response can significantly impact satisfaction. During the initial meeting and subsequent communications, assess whether they listen carefully to your needs, provide proposals, offer answers backed by expertise and experience, and demonstrate a pleasant personality and communication skills. A representative with a pleasant demeanor and quick response times will be easier to consult with and can be expected to provide detailed reports and updates. In reality, we often hear complaints from owners such as “the representative doesn't take any action” or “communication is slow,” but even within the same company, service quality can vary depending on the individual representative. It is important to assess whether the representative is trustworthy and choose a company with a representative you can rely on.
- Track record and customer satisfaction: The management company's own published performance data and customer feedback can also be used as criteria for evaluation. In addition to the aforementioned occupancy rates and number of managed properties, the length of time the company has been in business and the variety of properties it manages (apartments, commercial buildings, etc.) are also indicators of experience. Furthermore, the satisfaction of owners who currently entrust their properties to the company is also important. Referring to “customer reviews” posted on the company's website or brochures can also be helpful (of course, negative reviews are not posted, but you can gauge the level of enthusiasm based on the number of reviews and whether faces are shown). Additionally, if you have the opportunity to speak directly with existing property owners, verifying their reputation can provide peace of mind. Select a company that you feel confident in after comprehensively evaluating all factors.
After considering all of the above points, make your final decision on which company to entrust with management. If you are unsure, compare companies based on whether they seem likely to contribute to maximizing profits and whether you can build a long-term relationship of trust.
The Importance of “Human Resources” in Rental Management
When discussing real estate management companies, one aspect that cannot be overlooked is the importance of “human resources,” or people. In fact, the success or failure of rental management is said to ultimately depend on the capabilities of the people working on-site. As mentioned earlier, “who manages the property” is far more important than the property itself.
The essence of real estate management lies in managing “people,” not “properties.” A good rental business and living environment can only be maintained when the three parties—the owner, the tenant, and the management company—build a trusting relationship. In reality, for property owners, the presence of a trustworthy management company and dedicated staff provides an unparalleled sense of security. A competent manager can smoothly handle complex management tasks, prevent issues before they arise, and respond swiftly and effectively if problems do occur. This allows property owners to entrust their assets with peace of mind. As a result, tenant satisfaction increases, the property's reputation improves, and this creates a positive cycle that positively impacts long-term operational performance.
In other words, the quality of human resources is the key to the success or failure of rental property management, even more so than the quality of the building or its facilities. On-site interactions occur daily, and the decisions and actions of staff directly impact tenant satisfaction. It is often said that “tenant satisfaction depends on the response of the management company (staff),” and it is not uncommon to hear stories of complaints improving and tenant evaluations rising immediately after changing management companies. Indeed, “the quality of management staff equals the quality of service itself.”
Therefore, reputable management companies place a strong emphasis on recruitment and training. The industry faces chronic labor shortages, making it increasingly difficult to secure and retain talented staff. This is why companies are now required to cultivate a corporate culture that views each employee as “human capital”—a valuable asset—and nurtures them accordingly. Specifically, initiatives include supporting employees in obtaining qualifications such as Certified Property Management Professionals, providing training programs to enhance specialized knowledge, and gaining on-the-job experience to develop problem-solving skills. Ultimately, it is people who interact with property owners and tenants on-site. Reliable staff protect asset value and directly contribute to investors' peace of mind—keeping this “human capital” perspective in mind when selecting a property management company is the key to successful rental property management.
Perspective for ultra-high-net-worth individuals: Long-term asset strategy and privacy considerations
Finally, we will touch on the perspective that ultra-high-net-worth real estate investors seek from management companies. For owners with large asset portfolios or those handling high-value properties, longer-term and more sophisticated services are expected.
- Long-term asset preservation and management proposals: For ultra-high-net-worth individuals, real estate is not just a short-term source of income but also part of a long-term strategy for passing on family assets to future generations. Therefore, management companies are required to go beyond simply maintaining the status quo and provide support for asset formation with an eye toward the future. Specifically, it is important for management companies to take a stance as real estate experts who serve as business partners to owners, offering proposals for maintaining and enhancing value through long-term building maintenance plans and regular renovations, advice on asset restructuring based on area development trends, and consulting from an inheritance planning perspective. In services for ultra-high-net-worth individuals, there is a growing trend toward comprehensive support akin to a family office, with a focus on the long-term prosperity of the entire family. Management companies that can provide advice leading to the long-term growth and preservation of assets will gain trust.
- High-value-added services and premium offerings: Wealthy property owners demand more personalized services as their asset size increases. Therefore, management companies are expected to provide not only standard management services but also high-value-added, customized solutions. For example, this may include attracting and managing wealthy tenants appropriate for high-end properties (such as luxury rentals for corporate executives), providing multilingual support and concierge services, coordinating with portfolio management that oversees the entire asset portfolio, and even managing art and furnishings or enhancing home security. Some ultra-high-net-worth owners have established family offices (dedicated asset management teams for their families), and management companies must collaborate with such expert teams to provide high-quality services aligned with the owners' preferences. In other words, the flexibility and expertise to provide “solutions tailored to each individual customer” are indispensable for managing properties for high-net-worth individuals.
- Privacy protection and strict adherence to trust: For ultra-high-net-worth individuals, ensuring privacy is a matter of life and death. It is absolutely essential to prevent asset details and residential information from being leaked to the outside world, and management companies are subject to strict confidentiality obligations. In the management of high-value properties, there are cases where the residents are celebrities or the properties themselves attract social attention, but in any case, it is essential to thoroughly manage customer information and prevent it from being leaked to the outside world. Specific measures include limiting access to contract documents and lease information to authorized personnel, avoiding unnecessary sharing with others, and taking care to ensure that property locations or owner names are not disclosed in advertisements or to business partners. Ultra-high-net-worth owners often entrust their asset management to multiple specialists (tax, legal, financial advisors, etc.), but at their core, they prefer to have a small, trusted team manage all information centrally. Management companies must also act as part of this trust circle, striving to maintain confidentiality and strong trust relationships.
From this perspective, owners with larger asset sizes tend to prioritize “people” and “service quality” and carefully select management companies with whom they can build long-term relationships. Management companies also strive to maintain trust by assigning dedicated staff and providing team support to sustain relationships over the long term. In fact, it has been reported that the larger the asset size of a client, the greater the level of care expected from each staff member, making highly customized services essential for serving ultra-high-net-worth individuals. When selecting a management company, high-net-worth owners prioritize service content and reliability over fees, and tend to entrust their assets to companies with a proven track record and credibility, even if the costs are slightly higher. In essence, a high-level partnership commensurate with the scale of the assets is required.
Selecting a management company that prioritizes people leads to peace of mind and success
For real estate investors, selecting a management company to entrust with property management is a decision as important as purchasing the property itself. An excellent management company does more than just manage properties; it acts as a good business partner for owners, supporting them in maximizing profits and maintaining asset value. To identify such a company, it is important to start by understanding the roles and responsibilities mentioned here, then compare performance and characteristics, refine your search methods, and conduct specific selection checks in a step-by-step process.
What we particularly emphasize is the importance of always placing the “human resources” perspective at the center. While contract terms and numerical data are important, it is crucial not to forget that it is ultimately the people who will protect and nurture the property. A management company that can connect you with trustworthy staff is the true partner you can rely on for the long term. A management company that values its people will sincerely engage with both tenants and owners, creating a positive cycle that enhances satisfaction for both parties.
While there is no “absolute guarantee of safety” in rental property management, by working hand in hand with a trustworthy management company, you can control many risks and achieve stable asset management. We hope this article will help you identify reputable real estate management companies that value “human capital.” We wish you the best of luck in making your rental property management more successful.
