How to Find and Manage Tenants? Self-Management or Entrusting to a Real Estate Management Company?

Hey friend! You've hit the nail on the head with this question. This is practically one of the first and most crucial decisions anyone becoming a landlord in Japan has to make. Get it right, and being a landlord can be a cushy job where "money rolls in while you sleep." Get it wrong, and it can be a constant headache, more exhausting than a full-time job.

Let me break down the ins and outs for you, keeping it as straightforward as possible.

Step 1: How to Find Tenants? (Tenant Recruitment)

In Japan, it's extremely rare for landlords to put up flyers or post online ads themselves to find tenants. This is quite different from practices in China or Western countries. Japan has a very mature and standardized system.

Essentially, you can't avoid using a "Real Estate Company" (i.e., a property agent).

The typical process goes like this:

Commission an Agent: As the landlord, you find a real estate company and sign a "mediation contract" with them, commissioning them to find tenants for you. This company becomes your "Listing Agent" (Mototsuke).
Listing the Property: Your agent will enter your property information into a system called REINS. This is a massive property listing network accessible only to licensed real estate companies. They will also list the property on public websites like SUUMO, HOMES, at home, etc.
Agents Nationwide Help Find Tenants: Any real estate company, anywhere in Japan, that has a client looking to rent near your property, can see your listing via the REINS system. They will then bring potential tenants to view your property. These agents bringing tenants are called "Tenant Agents" (Kyakuzuke).
Tenant Screening: When a tenant applies, it's not an immediate deal. The real estate company and a guarantor company (more on that later) will screen the tenant. This includes checking their job, annual income, any history of late rent payments, emergency contacts, etc., to ensure they are reliable.
Signing the Lease & Move-in: Only after passing the screening will the formal lease be signed, and the tenant can move in.

In Summary: When finding tenants in Japan, there's not much you can do personally. The core task is choosing a reliable real estate company to act as your point of contact and handle the property promotion. You don't need to worry about advertising yourself.

Step 2: The Core Question – Self-Manage or Hire a Management Company?

This decision impacts your quality of life for years to come. Let's compare the two options to make it clear.

Self-Management

It's like running your own small shop – you have to handle every little detail yourself.

✅ Pros:

Saves Money: This is the biggest advantage. You avoid paying a monthly management fee (around 5%), which adds up to a significant amount over a year.
Direct Communication: You can build a direct relationship with the tenant and be the first to know about any property or tenant issues.

❌ Cons:

Language & Effort: You must be fluent in Japanese to handle all phone calls and paperwork. The tenant will contact you first with any problem.
Constant Hassles:
- Rent Collection: If a tenant pays late, you have to chase them. This is awkward and strains the relationship.
- Handling Complaints: E.g., if the tenant complains about noisy neighbors, or neighbors complain about the tenant, you are stuck mediating.
- Emergency Response: This is the biggest headache! Imagine getting a call at 3 AM saying "The toilet's blocked, the bathroom's flooded!" or "The AC is broken, it's sweltering in here!" You have to immediately find and dispatch a repair person.
- Legal & Administrative Tasks: Signing contracts, renewals, move-out inspections, and deposit settlements (Security Deposit Settlement - Shikikin Seisan) are heavily regulated. Making a mistake can lead to big problems.
- Distance Issue: If you live far from the rental property, or especially if you're overseas, self-management is practically impossible.

Who it's for:

Living very close to the rental property.

Fluent in Japanese communication.

Having ample free time and tolerance for hassle.

Possessing some knowledge of Japanese rental laws.

Good mental fortitude, skilled at handling interpersonal issues and emergencies.

Hiring a Real Estate Management Company (Delegated Management)

It's like investing in a shop and hiring a professional manager to run everything for you.

✅ Pros:

Peace of Mind & Effortless: This is the biggest advantage. You essentially become a "hands-off owner." Your main task is checking your bank account each month to see if the rent arrived.
Professionalism: Management companies have professional teams and processes for everything:
- Rent Collection: They collect rent from the tenant monthly, deduct their fee and any expenses, and deposit the remainder into your account. Many companies offer "Rent Guarantee" (Tainaku Hoshō), meaning they pay you the rent even if the tenant defaults.
- 24/7 Support: Tenants contact the management company directly for any issues (leaks, appliance failures, etc.). The company has contractors on call for quick resolution. You don't lift a finger.
- Dispute Resolution: They mediate conflicts between tenants and neighbors.
- Legal & Administrative Handling: They handle all legal documents and settlements from lease signing to termination, ensuring professionalism and compliance, protecting you from pitfalls.
- Move-Out & Re-letting: After a tenant moves out, they handle the inspection, calculate repair costs from the deposit, and immediately start advertising for the next tenant to minimize vacancy periods.

❌ Cons:

Cost: There's no free lunch. You typically pay a management fee of 5% of the monthly rent (plus consumption tax). For example, on a ¥100,000 rent, you'd pay the management company ¥5,500 per month.

Who it's for:

The vast majority of people!

Living far from the rental property, especially landlords overseas.

Busy people with no time for these tasks.

Those not fluent in Japanese or unfamiliar with Japanese rental laws.

People who want real estate investment for "passive income," not to give themselves a "new job."

My Recommendation

If this is your first time being a landlord in Japan, or you don't live in Japan, or you simply want stable rental income with minimal fuss, I strongly recommend hiring a management company.

Think of that 5% fee as "peace-of-mind insurance." It filters out 99% of the hassles, allowing you to truly enjoy the benefits of property investment without the headaches. The money you save by self-managing might not even cover the "emotional distress fee" and lost productivity from being woken up once in the middle of the night.

How to Choose a Management Company?

Check Reputation & Size: Try to choose a company with a solid reputation and scale.
Review Services: Carefully read the management contract to understand exactly what's included, especially regarding rent guarantee, repair procedures, and costs.
Assess Communication: Find a company with a responsive agent who communicates clearly and answers all your questions satisfactorily.

I hope this helps clarify things so you can make the best choice for yourself. Best of luck with your journey as a landlord in Japan!