The 3 Major Pitfalls of Property Management in Japan—and How to Avoid Them
As interest in overseas property investment continues to grow among Taiwanese investors, Japanese real estate has become a popular choice for asset allocation. Areas like Minato-ku, Minami Aoyama, Shinagawa, and Shinjuku in Tokyo are especially attractive due to their high value retention and stable rental demand, drawing in a large number of international buyers.
To save time and effort, many investors opt for property management or guaranteed rental services. But did you know? There's a risk even more difficult to guard against than tenants defaulting on rent—property management companies failing to transfer rental income.
This article explores real-life cases to uncover the source of this risk and offers practical strategies to help you invest in Japanese real estate with confidence and peace of mind.
Real Case: Tokyo Landlord Misses Three Months of Rent—Was the Management Company to Blame?
A Taiwanese investor purchased a 1LDK apartment in Tokyo through a well-known company and signed a guaranteed rental management contract. The agreement clearly stated the monthly rent and service details. The property was quickly rented out at a decent rate, but one month passed, then two... and the bank account remained empty.
When the investor contacted the management company, they cited “system updates” and “financial process delays” as reasons for the holdup. By the third month, unable to wait any longer, the investor reached out directly to the tenant in Japan—only to discover that the tenant had been paying rent on time every month!
The issue wasn’t with the tenant, but with the management company, which had been misusing the rent and delaying payments. Unfortunately, such cases are not uncommon in the overseas property market. For landlords managing properties remotely and unable to visit frequently, this poses a significant risk.
How to Identify Untrustworthy Property Management Companies in Japan: 3 Warning Signs You Must Know
1. Unclear Financial Reports
A professional property management company should be able to regularly provide detailed documents such as rental income and expense statements, repair quotations, and even summaries including tax withholding information.
Warning Signs:
• Refuses to provide rental income statements, only offers vague numerical summaries
• Fails to attach receipts for irregular expenses, making it difficult to verify accounts
• Inconsistent rental deposit dates and amounts, with unclear explanations from the company
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2. Refusal to Transfer Monthly Rent, Using High Fees as an Excuse
Some companies claim that “international transfer fees are too high” or that “funds will only be transferred every six months.” In reality, this is a tactic to shift cash flow pressure onto the property owner.
Warning Signs:
• No clear specification of transfer schedule or mechanism (e.g., fixed monthly transfer by the 20th)
• When the owner requests a transfer, the company delays with excuses like “please wait a few months,” indicating possible misuse of rental income
• Refuses to provide a clear timeline for fund transfers
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3. Frequent Staff Changes and Poor Communication
Stable customer service and contact personnel are basic requirements for property management services. If you notice frequent changes in contact persons, difficulty reaching someone, or long response times, it may indicate internal disorder—or that your property is not being properly managed.
Warning Signs:
• A different contact person every time, with no one familiar with past records
• Customer service only available in Japanese, with no Chinese or English support
• No one takes responsibility when issues arise, and you're passed around
What to Do If Your Property Management Company Doesn’t Transfer Rent: 3 Steps to Clarify and Minimize Losses
Step 1: Identify the Source of the Problem—Is It the Tenant or the Management Company?
If you haven’t received rent regularly, request the management company to provide a complete “income and expense statement” and “fund transfer proof.” If they fail to provide reasonable documentation, show a dismissive attitude, or are unreachable, it’s recommended to find a new management company to ensure your property’s safety.
You can request a “rental income statement” from the Japanese side—this is an important proof document for rent collection in Japan.
Step 2: Confirm the Management Company Is at Fault? Replace Them Immediately!
According to the contract terms, terminate the agreement in writing (email with saved records is acceptable), and prepare the following documents for the new management company:
• Copy of the lease agreement
• Property registration certificate
• Tenant information (including a copy of the residence card and contact details)
• Property photos and key records
Also, keep screenshots and email records of delayed payments as evidence for future claims.
Step 3: Include Protective Clauses When Signing a New Contract
When choosing a new management company, make sure the contract includes the following key protections:
• Fixed monthly transfer date (e.g., by the 20th of each month)
• Late payment penalty clause (e.g., compensation for overdue transfers)
Be cautious of vague arrangements like “settlement every six months”—these are high-risk indicators!
What Is a Rent Guarantee Company? A Deep Dive into Its Mechanism and Benefits
What Should Overseas Property Owners Do If Rental Income Has Already Been Lost?
If you’ve encountered a property management company that maliciously delays rent payments or suddenly cuts off communication, how can you minimize losses and seek compensation? Here are three practical legal paths:
1. Civil Compensation: Claim Damages Based on Breach of Contract
Under Article 415 of the Japanese Civil Code, if one party breaches a contract and causes damage to the other party, they are generally liable for compensation.
If a property management company fails to transfer rental income or neglects to notify the landlord of a tenant’s departure, this constitutes non-performance of obligations. You may file a lawsuit and claim damages based on the company’s failure to fulfill its contractual duty to remit rent monthly or its unauthorized use of rental funds.
Additionally, under Article 644 of the Civil Code, property managers are considered entrusted agents and are obligated to act with the care of a prudent manager. This includes timely rent transfers and notifying landlords of important matters. Breaching this duty may also result in liability for damages.
If the company intentionally misappropriates rental income, it may also constitute a tort under Article 709 of the Civil Code, which allows claims for damages caused by unlawful acts.
Japanese Civil Code Article 415 – Breach of Contract
What to Prepare:
• Contract agreement
• All communication records (email, LINE, WhatsApp, etc.)
• Proof of unpaid rent (comparison between rental records and actual bank deposits)
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2. Seek Legal Assistance: Get Support from Legal and Consumer Resources
You can consider the following three resources:
a. Tokyo Bar Association
Offers free legal consultation days specifically for foreigners
Conclusion: Buying Property Is Just the Beginning—Finding a Trustworthy Manager Is the Key to Protecting Your Assets
For many overseas landlords, purchasing real estate in Japan may be a carefully planned investment. But what truly ensures long-term value isn’t just the property title—it’s whether you’ve chosen the right long-term partner.
Property management services act as your representative, handling every rent payment, repair, and tenant interaction on your behalf. If this link breaks down, even the best property can become a sunk cost.
Minami Aoyama Real Estate offers end-to-end services from property purchase and renovation to rental management—ensuring not only that your property gets rented, but that you receive your rental income reliably.
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