Choosing the Best Property Management Company: Key Indicators and Tips｜Japan Real Estate

In real estate rental management, the selection of a management company is an important key to success. It is difficult for property owners to manage everything themselves, and today's rental management operations are becoming more specialized and sophisticated. A good management company will provide comprehensive support for everything from vacancy countermeasures to tenant relations and contract procedures, helping to reduce the owner's workload and maximize profits. On the other hand, if you choose the wrong management company, you run the risk of not being able to fill vacancies or being slow to respond to problems.
In order to make good use of "management company rankings," it is important to understand the correct way to look at them and the points to keep in mind. In this article, we will explain the comparative indexes used in management company rankings and how to utilize them, as well as the key to choosing the right company for your property without relying solely on rankings.

What are management company rankings (overview and evaluation indicators)

Various rankings are published as objective indicators to measure the competence of rental management companies. Typical rankings include the number of units under management andsatisfaction ranking.

• Number of units under management ranking: This ranking is based on the number of units under management and provides a sense of the scale of the industry as a whole. For example, according to the latest data published by Zenkoku Rental Housing News, the number one company by number of units managed is Daito Kento Group with over 1.23 million units under management, followed by Sekisui House Group (approximately 690,000 units) in second place and Daiwa Living (approximately 630,000 units) in third. These top-ranked companies manage several hundred thousand to over one million units, indicating that they have abundant experience and large-scale management systems.

• Customer Satisfaction Ranking: This ranking is a measure of service quality based on the aggregated evaluations of owners and tenants. For example, in the "Management Company Satisfaction Survey" conducted by StyleAct, satisfaction is calculated based on a total of 15 evaluation points, including "speed of response," "hospitality," "cost performance," etc. In the 2024 survey, Nomura Real Estate Partners ranked first in overall satisfaction (14th consecutive year in the same survey). Nomura Real Estate Partners was ranked No. 1 for overall satisfaction in the 2024 survey (14th consecutive year in the same survey), and its front desk staff's prompt response and ability to make proposals were highly evaluated. The top companies in the satisfaction ranking are proof of their high reputation in terms of service, including responsiveness and reliability.

To further break down the indicators used in these rankings, the following points are emphasized

• Occupancy Rate: This is an indicator of the percentage of managed properties that are occupied. The higher the occupancy rate, the more stable the owner's rental income. Generally, management companies that handle more prime properties in urban areas tend to have higher occupancy rates, with the national average being around 95%. For example, companies that use the latest technology to determine appropriate rents and shorten vacancy periods have an advantage in improving occupancy rates.

• Response Time: This is the speed of response to tenant inquiries and problems. A slow response can lead to decreased tenant satisfaction and secondary damage, so a quick response is a prerequisite for a reliable management company. In fact, "speed of response" is an important item in satisfaction surveys, and the top companies score highly in this regard; some have a 24/7/365 emergency support desk, making speedy response a key differentiator for each company.

• Number of units under management: As mentioned earlier, the number of units under management indicates a company's size and track record. A company that manages a large number of properties has the advantage of having a wealth of know-how and specialized departments, and can respond efficiently through systemized management. It should be noted, however, that a large number of units does not necessarily mean absolutely high service quality (see below). However, the largest companies in the industry manage over 1 million units, which is an indicator that they are trusted by a large number of owners.

• Customer Satisfaction: Indicates how well the company is received by owners and tenants. It is a difficult indicator to quantify, but it is measured by third-party survey rankings and NPS (Net Promoter Score). Companies with high satisfaction rates have fewer complaints from tenants, higher renewal rates, and more referrals from owners, all of which indicate high service quality. For example, in one survey, companies with high overall ratings, such as "hospitality of the manager," "ability to make proposals," and "cost-consciousness," ranked high.

As described above, the ranking visualizes the competence of management companies based on objective data and surveys. If you understand indicators such as occupancy rates and responsiveness, you will be able to see what you should focus on when entrusting your property. What is important, however, is to properly decipher what is behind these numbers and rankings.

Reasons why rankings should not be relied upon (cautions and misconceptions)

Although rankings are convenient, you should not take them for granted, thinking that "since it is No. 1, it must be the best for your property. There are several points and misconceptions about the rankings that you should be aware of.

First, understand the different assumptions and evaluation axes of rankings. For example, the number of units under management ranking is a quantitative indicator of size, while the satisfaction ranking reflects qualitative evaluation such as quality of service. The top company in the quantitative evaluation is not necessarily also the top company in the qualitative evaluation, and the rankings may change from year to year. This is because different rankings look at different aspects, and it is necessary to determine "what is being evaluated in the rankings.

It is also necessary to pay attention to the differences in definitions and calculation methods of numerical values. For example, for the occupancy rate mentioned earlier, if the timing of when a property is considered vacant differs from one management company to another, the calculated occupancy rate will also differ (e.g., whether to count a property as vacant immediately after vacating or after a certain period of time has elapsed). In fact, even if a company advertises that it has achieved an "Occupancy Rate of XX%," depending on the calculation method, it may not be possible to make a simple comparison with other companies. When looking at ranking data, it is important to confirm the definitions of the indicators and the conditions behind them.

Furthermore, subjective factors that do not appear in the rankings should not be overlooked. The companies at the top of the rankings are generally excellent, but not necessarily a good fit for all owners and properties. For example, the strength of a large nationwide management company lies in its organizational strength, but at the same time, it may be inferior to a smaller, locally based company in terms of its detailed response to each owner. Even among large companies, the expertise in managing high-end properties varies from department to department, so it is important to determine whether the company is familiar with the type of property you are looking for.

In addition, consider the fact that a high ranking does not necessarily mean the best cost performance for you. While large companies may offer a sense of security, their management fees may be higher than the market rate, and their services may be standardized and inflexible. On the other hand, even if the company is not well-known, if it has dedicated and flexible staff, you may be more satisfied, depending on the compatibility with the owner. In fact, there have been cases in which occupancy rates of properties that had tended to be vacant dramatically improved and rental income increased after changing management companies. In this way, there are companies that achieve results that cannot be measured only by the objective indicators indicated by rankings.

In general, it can be said that rankings are only a reference material. While it is effective to use rankings as a starting point to narrow down the list of candidates, it is necessary to make a comprehensive evaluation in light of your property and needs when making a final decision. It is important to consider "Why is the company highly rated?" and "Are the important points for me included in the evaluation items?

To choose the right company for your property (axis of judgment)

Now, let's look at the axis of judgment for selecting the best management company for your property, taking into account the ranking. By checking the following points, you will be able to determine the best partner from both objective evaluation and subjective needs.

• Suitable experience for your property: Depending on whether your property is a luxury condominium, a family apartment, or a single person property in a rural area, the right management company will vary. It is important to choose a company that specializes in each property type. For example, if the property is a luxury rental property, choose a company that has a track record of servicing wealthy clients. If the property is a detached house in a rural area, choose a company that is locally based and knowledgeable about the local area. Check the management company's past management cases and areas of expertise to determine if they have a track record that matches your property.

• Services and responsiveness: Management companies vary in the scope of services they provide and their stance on these services. The availability of 24-hour service and the system of contact points are also important points of comparison. Be clear about the extent to which you want to be entrusted (or conversely, the extent to which you want to be involved), and choose a company that offers services in line with those desires.

• Fees and cost structure: Management fees are directly related to the owner's income and expenses and should not be ignored. However, you should not judge it only by its low price. The market rate is said to be around 5% of the monthly rent, but if it is extremely low, there is a risk that the scope of services may be limited or the response may be delayed due to understaffing. On the other hand, if the price is high but the occupancy rate remains high, the owner's profit may increase as a result. What is important is cost-effectiveness, and you should comprehensively consider how much service is included in the fee offered, and how much loss of vacancy and time and effort you will save by entrusting the company with your property.

• Compatibility and trust with the person in charge: Ultimately, a relationship of trust between people is also important. Before signing a contract, meet with the person in charge and confirm that he or she will listen carefully to you about the property and answer your questions in detail. Because your relationship with the management company will be long-term, it is important to have not only a good reputation as a company, but also the enthusiasm and compatibility of the individual in charge. Even if it is a large company, if you cannot communicate with the person in charge, you will be dissatisfied. On the other hand, even if it is a medium-sized company, if you find a sincere and reliable person in charge, you will be able to entrust your property to them with peace of mind.

• Future expansion and geographic coverage: If you own multiple properties or plan to increase the number of properties in the future, you should also consider the area and network of locations covered by the management company. If you own multiple properties or plan to increase the number of properties in the future, consider the company's geographic coverage and network of offices. A company with a wide geographic reach will have the advantage of being able to handle properties that are located far away from you due to relocation or inheritance.

By comparing several candidates based on the above axes, a "management company that truly meets your needs" will emerge, which could not be seen only from the numbers in the rankings. For example, there was a case in which a local property owner switched from a major management company to a community-based company and was able to fill a vacant unit in a short period of time thanks to the strong network of local brokers in charge of the property. In this way, the success rate of choosing a management company can be dramatically increased by making the right decision for your property and situation.

What is a property management company? Basic Roles and Duties

Definition of a property management company

A property management company is a company that specializes in the management and operation of rental properties on behalf of property owners. If the number of units managed exceeds 200, the company is required to register with the Minister of Land, Infrastructure, Transport and Tourism, increasing transparency and credibility in the industry.

Property management companies are categorized as condominium management companies, building management companies, and rental management companies, but this article will focus mainly on rental management companies. Rental management companies play an important role in supporting stable rental management by providing a living environment that satisfies both owners and tenants.

Main Business Activities

The operations of property management companies can be broadly classified into two categories : rental management operations andbuilding management operations.

Rental Management

Rental management operations are centered on direct relations with tenants. Specifically, these services include the following

In tenant solicitation and customer service, a series of operations are performed, from soliciting tenants when vacancies occur, to handling previews, screening tenants, and concluding lease contracts. Another important part of our work is the planning of effective recruitment strategies and advice on appropriate rent setting.

In the rent management business, we collect monthly rent income on behalf of the owner, remind the owner of delinquent rent, and remit rent to the owner. It also includes liaison with rent guarantee companies and legal responses to delinquent renters.

In the contract management business, we are in charge of lease contract renewal procedures, handling changes to contract terms, attending at the time of contract termination, and settling security deposits.

In tenant relations operations, we respond to tenant inquiries and complaints, resolve neighborhood problems, and handle emergencies 24 hours a day, 365 days a year.

Building Management Operations

Building management operations are designed to maintain and improve the asset value of properties.

Daily management services include periodic cleaning of common areas, inspection and maintenance of facilities, statutory inspections of firefighting equipment, and maintenance inspections of elevators.

In repair work, we provide a wide range of services, from responding to repair requests from tenants, to planned facility renewal, to planning and implementation of large-scale repair work.

In restoration work, we inspect rooms when tenants vacate, arrange for restoration work, and settle construction costs.

Differences from Real Estate Brokerage Companies

Let us clarify the differences from real estate brokerage companies, which are often confused with real estate management companies.

Real estate brokerage firms mainly act as "intermediaries" for sales, purchases, and leases, and do not provide ongoing management services after the conclusion of a contract. On the other hand, property management companies specialize in long-term management services after the conclusion of a contract.

Advantages of Consigning Real Estate Management and Commission Rates

Necessity of Outsourcing Management

Outsourcing to a property management company is essential for real estate investment and rental management. Self-management is an option, but in reality, many owners use a property management company.

Relief from a huge amount of management work

There are more tasks involved in rental management than you can imagine. Starting with recruiting new tenants, the work includes previews, contract procedures, rent collection, handling complaints, resolving facility problems, attending move-outs, and arranging for restoration work.

In particular, emergency services must be available 24 hours a day, 365 days a year. Leakage problems late at night, equipment breakdowns, and neighborhood problems require a quick response, and it is not practical for an owner with a day job to handle these issues on his or her own.

Appropriate response with expertise

Property management also requires legal knowledge. Without specialized knowledge, it is difficult to properly respond to issues such as drafting lease agreements, handling security deposits and key money, classifying the burden of restoration costs, and legal procedures for collecting delinquent rent.

Management companies have staff with extensive experience and expertise to handle these matters, enabling them to properly manage the property while avoiding legal risks.

Efficient expansion of investment scale

Self-management is physically impossible when owning multiple properties or investing in distant properties. By outsourcing to a management company, you can expand your investment area without geographical constraints.

Management Fee Rates and Breakdown

General commission rates

The typical commission rate for property management is approximately 3-5% of rent income. It varies depending on the age of the property, its location, and the degree of difficulty of management.

Specific example of commission calculation

Using a property with a monthly rent of 500,000 yen as an example, let's compare the difference in management fees.

In the case of 5% management fee

Monthly management fee: 500,000 yen x 5% = 25,000 yen

Annual management fee: 25,000 yen x 12 months = 300,000 yen

In the case of a 3% management fee

Monthly management fee: 500,000 yen x 3% = 15,000 yen

Annual management fee: 15,000 yen x 12 months = 180,000 yen

Although there is a difference of 120,000 yen per year, it is important to make a comprehensive judgment of management quality and service content.

Scope of services included in the fee

Standard services included in the management fee are as follows

Basic management services

Rent collection and remittance, handling of tenants and complaints, contract renewal procedures, witnessing tenants moving out and settling security deposits

Building management services

Daily cleaning and inspection duties, arrangement of minor repairs (up to a certain amount), arrangement of statutory inspections

However, it is important to clarify the scope of work before signing a contract, as there are often separate costs for large-scale repair work, facility renewal, advertising, and restoration work.

Concept of Cost Performance

Although management fees are a definite cost, they are not an expensive investment when the benefits of choosing the right management company are taken into consideration.

A good management company will maintain high occupancy rates and maximize profitability through appropriate rent setting. They also maintain the property's asset value through systematic maintenance, ensuring long-term stability of income.

It is important not to choose a management company based solely on low fees, but to evaluate the quality of services provided and their contribution to profitability in a comprehensive manner.

How to Select a Management Company without Failure｜7 Important Points

It is no exaggeration to say that successful rental management depends on the selection of an appropriate management company. The profitability of the same property can vary greatly depending on the management company. Here, we will explain in detail the important points to consider when selecting a management company based on our practical experience.

1. Occupancy rate of managed properties must be 95% or higher

The occupancy rate is the most important indicator of a management company's ability. A good management company always maintains a high occupancy rate of 95% or more.

The basic method of checking the occupancy rate is to contact the management company directly, but the following points should also be noted.

Confirm the method used to calculate the occupancy rate.

Ratio of occupied units to total units, point of calculation (annual average, end of month, etc.), range of properties covered (all properties, specific area, etc.)

Confirm the reasons for the high occupancy rate

Availability of effective recruitment strategies, ability to set appropriate rents, ability to make proposals that maximize the attractiveness of the property, efforts to improve tenant satisfaction

Management companies with occupancy rates below 90% are likely to have problems with their ability to attract customers, and should be carefully considered.

2. Specific proposals for vacancy countermeasures

It is important to select a management company that can propose concrete measures to be taken when vacancies occur. Choose a company that can present concrete improvement measures based on data, rather than just an abstract "we'll do our best" response.

Examples of excellent management company proposals

Proposals for appropriate rents based on market research, strategies for differentiation from competing properties, proposals for interior remodeling and facility updates, changes in recruitment strategies based on target demographics, and optimization of Internet advertising.

Examples of questions to check

What should we do if the vacancy period exceeds three months? What should we do if the rent is higher than the market rate in the neighborhood? What are the measures to be taken when a property is older than its age?

A management company that can provide concrete and feasible answers to these questions can be expected to provide actual vacancy countermeasures.

3. Number of units under management must be 10,000 or more.

The number of units managed is an important indicator of a company's stability and track record; a company that has managed more than 10,000 units has accumulated a wealth of experience and know-how, and is considered highly capable of handling various problems.

Advantages of having a large number of units under management

Appropriate response based on a wealth of experience, cost efficiency due to economies of scale, establishment of an organized work system, and stability of financial base

However, if the number of units managed is too large, it is important to check the number of units managed per staff member, as this may result in neglect in responding to individual properties.

4. Prompt response system in the event of problems

Trouble can occur unexpectedly in rental management, and it is important to choose a management company that has a 24-hour, 365-day emergency response system in place.

Response system to check

Emergency contact system (24-hour response or not), scope of problems that can be handled, network of partner companies, estimated response time, and clear cost burden.

Common emergency problems

Water leakage/leakage accidents, malfunctions of electrical and gas facilities, lost keys/lockouts, neighborhood problems/noise problems, problems between tenants

Check in advance whether the company has a system in place to respond promptly and appropriately to these problems.

5. Quality of response and expertise of the person in charge

The quality of the person in charge is directly related to the quality of management. It is important to choose a management company with knowledgeable and responsive staff.

Characteristics of a good representative

Possession of real estate-related qualifications (e.g., licensed real estate contractor, certified rental property manager), abundant practical experience, prompt and courteous communication, ability to make proposals and solve problems, owner's point of view

How to evaluate your staff member

Quality of response during initial interview, accuracy of answers to questions, specificity of proposals, speed and accuracy of communication

Compatibility with the person in charge is also an important factor. As a partner in building a long-term relationship, choose a company with a reliable contact person.

6. Confirm customer satisfaction and track record

Satisfaction of existing customers is an important indicator of a management company's ability. If possible, check actual customer testimonials and reputation.

How to Confirm Satisfaction

Results of customer satisfaction surveys, referrals/recommendations from existing clients, word of mouth/reputations on the Internet, and evaluations/awards in the industry.

Achievements to be confirmed

Management retention rate (low cancellation rate), occupancy rate trends, rent delinquency rate, satisfaction with complaint handling

A management company that maintains a high level of customer satisfaction is considered to be continuously providing high quality services.

7. Appropriate management fees

Be wary of extremely low management fees. If the fee is significantly lower than the market price, there may be a problem with the quality of service.

Risks of too low fees

Necessary work is omitted, emergency response is delayed, the person in charge lacks experience, and the company's financial base is unstable.

Selecting a management company that provides solid services with reasonable fees will lead to stable earnings over the long term.

Checklist for Selecting a Management Company

Use the checklist below to comprehensively evaluate a management company.

By selecting a management company that meets all the criteria, you can entrust your rental management with peace of mind.

Should you choose a large management company or a smaller one?

Choose the management company that best fits the scale of your property and the characteristics of the area.

How can you build a good relationship with your management company?

• Maintain regular communication
• Share the property strategy and long-term plan
• Provide prompt feedback on reports
• Do not postpone important matters such as repair decisions

Three Often-Overlooked Criteria

1. Speed of Response in Emergencies

When equipment failures or tenant complaints occur at night or on weekends, how quickly and properly the management company responds directly affects tenant satisfaction—and ultimately, occupancy rates. Before signing a contract, specifically ask about response systems: "What is your response time for nighttime inquiries?" and "Do you have an after-hours contact system?"

2. Transparency in Cost Proposals

Some management companies propose unnecessarily high repair costs, padding profits on contractor work. When repair costs arise, it is important to check whether multiple quotes were obtained and whether the process is transparent. A company that can explain the basis for repair proposals specifically and in understandable terms is trustworthy.

3. Quality of Reporting and Communication

Even if management is conducted properly, if reporting to the owner is infrequent or unclear, problems may be discovered too late. Monthly reports and prompt reporting on issues are basic requirements. Regular communication that includes proactive suggestions for vacancy countermeasures and market trend information demonstrates the management company's depth of commitment.

Introduction of INA&Associates (Strengths, Philosophy, Track Record, and Services)

INA&Associates ("INA") is a full-service real estate company that provides high-end leasing, sales, and commercial real estate brokerage services in a wide range of areas, including the Tokyo metropolitan area (Tokyo, Kanagawa, Chiba, Saitama) and the Kansai area (Osaka). The company has also achieved rapid growth in the rental management business in recent years, and since its launch in 2021, many owners have entrusted INA with the management of their properties, starting with the central Tokyo area. Currently, INA is expanding its service area not only to the Kanto region but also to the Kansai region, and the number of owners who have adopted INA's management system is steadily increasing.

The strengths of INA's rental management services can be broadly divided into the following points.

(1) High occupancy rates and efficient operations through the use of the latest technology: As a real estate tech company, INA has introduced a proprietary cloud-based integrated management system. In addition to online contracting procedures and rent remittance, INA uses AI and big data analysis to set rents and calculate appropriate rents in line with market trends, thereby shortening vacancy periods and achieving high occupancy rates. In fact, by analyzing the surrounding market based on a vast amount of data on more than 10 billion properties and developing a strategic recruitment plan according to the characteristics of the property, we have been able to fill a long unfilled vacancy in a short period of time and raise the monthly rent from 120,000 yen to 170,000 yen in one case. This next-generation rental management service, which combines technology and expertise, supports owners in maximizing profits and stress-free operations.

INA's efficient business design and systemization have enabled us to realize flat fees from 1,000 yen per room per month, providing a significant cost advantage. INA has been able to provide significant cost advantages by designing and systemizing efficient operations. The call center and its professional staff respond promptly to late-night trouble calls from tenants. This high level of responsiveness allows owners to leave their properties in the hands of the company in times of emergency, leading to increased tenant satisfaction.

(3) High-quality services supported by ultra-high-net-worth owners: INA is also strong in the real estate business for ultra-high-net-worth individuals, and has earned the trust of high-net-worth owners. INA has a dedicated team to provide property management services to these ultra-high net worth ( UHNW) clients. INA is unique in that our dedicated property management team provides meticulous support to these ultra-high-net-worth clients. INA provides one-stop support for everything from tenant selection to contract management and regular maintenance arrangements, thereby saving the owner time and effort while maintaining and enhancing the property's value. Even in high-net-worth projects that require a high degree of privacy protection and confidentiality, INA's sophisticated approach to providing services has been highly evaluated, and we have received comments such as "I can trust this company with my property.

INA's corporate motto is "human resources" and we invest generously in employee training . This is backed by the belief that "excellent people produce excellent services," and we have established an in-house technology department to create a culture in which on-site feedback is immediately incorporated into system improvements, and we are working to improve employee skills by enhancing our training programs. In fact, data shows that organizations with high employee engagement (motivation to work) are 21% more profitable, and INA's investment in people is directly linked to improved service quality and corporate growth. The professional staff nurtured by this human resource strategy enables us to provide personalized and attentive service to each and every owner.

As described above, INA & Associates is a management company that has achieved an excellent balance between objective performance indicators (occupancy rate, management efficiency, etc.) and subjective service quality. INA&Associates is considered a model case of next-generation rental management, combining technology with the power of human resources. Conclusion (Wise use of the service and inquiries to your company)

Conclusion (Wise use of the information and a lead to your company's inquiry)

Property management company rankings are a very useful tool in identifying reliable companies from a vast pool of candidates. However, rankings and figures are only indicators, and in the end, it is important to make a judgment based on the owner's own property situation and sense of value. While referring to objective data such as occupancy rates and responsiveness, you will be able to make a choice without regret by adding a subjective viewpoint such as "what is necessary for my property" and "can I have a long-term relationship with this company?

In this regard, INA&Associates provides flexible and attentive services tailored to each owner's circumstances while meeting the objective indicators emphasized in the ranking (high occupancy rate, prompt response, reasonable cost, etc.). INA is always available for individual consultation and explanation of our services, and our professional staff will be happy to answer any questions you may have. Please feel free to contact INA & Associates as part of your selection of a partner with whom you can entrust your valuable assets with peace of mind. INA's proven track record and passion for the business will support you in your efforts to achieve success in your rental business.