Your Key To Japanese Real Estate

Guide To Property Management In Japan

Japanese real estate property managers

overseas property manager tokyoImagine that you have just bought investment real estate, a condominium, in Ginza. The condo looks down on the beautiful Imperial Palace, built in the 17th century, and there are parks and East Higashi-Gyoen Garden nearby. This area is prime real estate, so you know that, once tenanted, the condo will rent for an astronomical amount of money. You worked hard, saved, and invested your money, and at long last this condo is yours. The passive income from it will help fund your new, financially-independent life.

Of course, the purpose of passive income is to receive money without doing any further work. You already spent decades working hard. First, you spent tens or even hundreds of millions of yen on the condo. Then you have to spend hours and hours every week managing the investment? Is it really passive income anymore? Or has it become a job, the very thing from which you worked so hard to escape?

This is where Property Managers (PMs) come in. The Japanese phrase is “chintai-kanri-shi” (賃貸管理士). They work at property management companies called chintai-kanri-gyō (賃貸管理業) or kanri-gaisha (管理会社). They may also work at regular real estate agencies. Many real estate agencies take care of property management functions. PMs help with or take care of setting the rent, introducing the owner to insurance companies, helping to place tenants, providing customer service to current tenants, corresponding with management companies, taking care of repair work, being there for facility inspections, taking care of maintenance, sending you your money, and being there for things such as the handover of the property when you, the owner, would otherwise have to be there. That way, it is a true investment, not a job—that is, the income from it is as passive as possible, and you can enjoy your financial independence.

What do property managers do?

A PM helps you set the rent.

Of course, the rent that you charge is up to you, but a PM gives you the data you need to make an informed choice, based on his or her market research, which involves finding out the rent for comparable units—similar location, size, etc., maybe even in the same building. You also decide whether the rent check the PM writes to you is Guaranteed Rent or Pass-Through. Guaranteed Rent is the same for you every month, regardless of whether the unit has a tenant or is vacant. Pass-Through means that if the unit is empty, you get nothing, and if the unit has a tenant, you get a larger amount than the Guaranteed Rent would have been. Which choice is better for you depends on how you feel about risk.

property manager tokyoInsurance

You will probably need fire and earthquake insurance before you start renting out. Property managers can introduce you to a reputable company and help you get the policy/policies you need.

Placing Tenants

Property managers help place tenants. They use advertising through local real estate agents, advertising on websites such as Suumo and HOMEs, and putting your property on Reins, which is the national Japanese real estate database, similar to MLS (Multiple Listing Service) in the US. Once a PM has found a tenant, you can sit back and enjoy the passive income, because the average tenancy lasts 3.5 years.

Customer Service Such as Repairs

They also take care of customer service for current tenants. One example of this is repairs. Late one January night, when Mr. Satō is lying on his warm futon bundled up in several layers of blankets and quilts, the utility closet nearby is not nearly as toasty as his sleeping area, and the pipes freeze and burst. Now, there is water all over the floor in the hallway. Who is going to take care of calling a plumber and overseeing the repair, you? You are on a beach in Maui. That’s right, this is the kind of thing property managers handle.

Are you fluent in Japanese? Can you deal with every question or complaint from a tenant in Japanese, keeping cultural norms in mind at the same time? Even if you can, a PM can save you time in dealing with the tenants, and if not, a PM could be invaluable to communicate with them properly.


PMs do the necessary taxes. Master Lease Withholding Tax, with tax forms filled with difficult kanji? The PM has it under control.

Transferring the Money to You

When it is time to get paid, the PM puts the money into your Japanese bank account. However, some overseas investors do not have a Japanese bank account, which requires a foreigner to have been resident in Japan. If this is the case, the PM will transfer the money to you overseas. To save on transfer fees, four times a year is typical.

Being There When You Cannot Be

There are various times when the owner should be there, but you really do not want to be there, because you are taking surfing lessons and attending a party that day. Instead, it is your PM who goes during the apartment inspection (to find any new damage that has occurred during the tenancy), and any other events that would normally require your presence.

How much do property managers charge?

PMs usually charge 5-8% of the gross rent. It is also normal for them to charge you one month’s rent for finding you a tenant, and half the renewal fee if the tenant stays on for another lease.

You are renting out a luxury property for ¥300,000 per month. Over the course of a typical 3.5-year tenancy, how much money will you pay the PM, and what percentage of your gross income from that property will that be? Let’s assume the PM charges a 6% fee:

Gross income = ¥300,000 per month × 12 months in a year × 3.5 years + ¥300,000 key money + ¥300,000 renewal fee


Gross income = ¥13,200,000


PM’s fees = ¥300,000 (one month’s rent to find a tenant) + ¥300,000 (one month’s rent for the renewal fee) ÷ 2 because PMs usually only charge half the renewal fee + 6% × ¥300,000 rent a month × 12 months in a year × 3.5 years


PM’s fees = ¥1,206,000 (which is 9.14% of the gross income from that property over the 3.5-year period)

Property Managers’ Licensing

real estate agent japan overseas investor agentWith real estate agents, a license is required. It is illegal to call oneself a real estate agent without being in a licensed real estate brokerage. However, PMs are not required to be licensed, though voluntary licensure exists.

It is recommended that you only use a licensed PM. The licensing system started in 2011. On September 30, 2011, the Ministry of Land, Infrastructure and Transport announced that they would implement a new system for PMs, and they began doing so on December 1 of the same year. You can tell if a PM is licensed by looking at his or her metal plaque, which reads Chintai-Kanri-Gyōsha-Hyō (“賃貸管理業者票”). The number of licensed PMs grew and grew, and by March 22, 2015, there were 3,636 licensed PMs. You can find them in the public registry system or ask your broker.


After investing millions, perhaps even billions of yen into a real estate investment, you want it to be truly passive income, not just another job. The fees charged by PMs, typically 5~8% of gross rent plus one month’s rent to find a tenant and half the renewal fee at renewal time, in exchange for taking care of the various labor-intensive parts of property management, are well worth it. They are worth it because they save you your most valuable asset, time.

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Does Japanese Real Estate Decrease In Value?

Should I Buy Or Rent In Japan?

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