Trouble Cases with Rental Management Companies and How to Choose a Reliable One

A property management company supports the complex administrative work involved in rental property operations, but problems between the company and the owner are more common than many people expect.

In this article, we explainthe role and scope of work of management companies, the problems that commonly arise, and how to choose a trustworthy company.

What kinds of problems arise in rental property management?

Vacancies remain unfilled

It is necessary to identify the causes and take appropriate measures, such as low property awareness, rent-setting issues, or disadvantages related to location and management conditions.

Handling rent delinquency

If delinquency becomes routine, an eviction order may also need to be considered, but if the process is handled incorrectly, it can develop intolegal trouble.

Problems between tenants

Disputes between tenants caused by noise or rule violations can lead good tenants to move out if the response is delayed.

Disputes over restoration costs

To prevent disputes over cost-sharing at move-out, it is important to accurately understand and properly explain the cases in which the landlord and the departing tenant each bear the cost.

How can you prevent problems by outsourcing to a management company?

Main tasks of rental management

• Tenant recruitment: Shortening vacancy periods through sales capability and know-how
• Contract procedures: End-to-end support from property viewings and explanation of important matters to key handover
• Rent collection and follow-up: Securing stable income in coordination with rent guarantee companies
• Complaint handling: Preventing secondary complaints through appropriate knowledge and know-how
• Move-out inspection and settlement: Properly handling security deposit refunds and calculation of restoration costs

Main tasks of building management

• Building maintenance: Regular inspections and repairs of exterior walls and common areas
• Equipment maintenance: Statutory inspections (fire protection equipment, water systems, septic tanks, etc.) and optional inspections
• Cleaning services: Maintaining the property’s appearance through daily and periodic cleaning
• Long-term repair planning: Preparing a repair schedule covering 10 to 30 years

What types of contract arrangements are there with management companies?

Brokerage contract

You can engage multiple management companies. There are full-outsourcing arrangements, in which all tasks are entrusted, and partial-outsourcing arrangements, in which only some tasks are entrusted. Tenant selection is left to the landlord’s judgment.

Agency contract

You can contract with only one company, but you can delegate everything from tenant screening to contract execution, which significantly reduces the owner’s workload. It is important to clearly communicate your desired conditions in advance.

What problems commonly arise between management companies and owners?

Problems related to building management

Delays in responding to equipment failures often develop into secondary complaints. It is important to build a system that allows repair decisions to be made quickly.

Problems related to response and communication

Frustration over being unable to reach the person in charge or receiving slow responses directly leads to higher tenant move-out rates. When selecting a management company, confirm how quickly it responds.

What should you look for when choosing a trustworthy management company?

• Track record of occupancy rates: Choose a company that maintains a high occupancy rate
• Trouble-response capability: Emergency contact structure and response speed
• Clarity of the service scope: Review the scope of work in detail in the management contract
• Reporting frequency: Whether monthly reports are provided and how substantial they are
• Reasonableness of fees: Compare with the market standard (around 5% of rent)

Frequently Asked Questions (FAQ)

What is the difference between a brokerage contract and an agency contract with a management company?

Under a brokerage contract, you can contract with multiple companies, and the owner decides on tenant selection. Under an agency contract, you are limited to one company, but you can delegate everything from tenant screening to contract execution, which greatly reduces the workload.

If you have trouble with a management company, can you change companies?

Yes, you can. However, if you are still within the contract term, check the cancellation conditions. You also need to consider the handover period to the new management company.

If a management company is slow to respond, how should you ask for improvement?

First, communicate specific improvement requests to the person in charge. If no improvement is seen, consider speaking with that person’s supervisor at the management company or changing management companies.

How often are cleaning services performed?

Daily cleaning is commonly performed anywhere from every day to once every two days, and periodic cleaning is generally conducted about once a month. The management company also arranges post-move-out house cleaning.