Case 05 ／ Shinjuku, Tokyo · a one-building apartment
Because no “kickback” rides on construction costs, they trusted us with management.
Lowering PM/BM fees while recovering the margin through construction costs — a structure that can occur in the industry. NOCOS never becomes the prime contractor: actual-cost pass-through plus competitive bids, and only a pre-agreed referral fee. With structurally no incentive to inflate works, the owner switched management on a building in Shinjuku.
Results at a glance
Results at a glance
Key metrics
Same contractor & scope, estimate gap
≈1.5×inflates when routed via a manager
Markup on construction cost
¥0we never become the prime contractor
NOCOS’s fee
Referral fee onlypre-agreed, independent of construction cost
Post-works pre-move-in check
Every projectour staff report by video
Property type
One-building apartmentShinjuku, Tokyo
Deciding factor
Cost transparencystructurally no conflict of interest
Project profile
Property & project profile
Location
Shinjuku, Tokyo
Type
A one-building apartment
Reason for consulting
Doubts about whether construction costs were fair; an overall review of management
Challenge
Low monthly PM/BM fees, but margin recovered through a markup on construction costs
NOCOS’s proposal
Never the prime contractor — actual-cost pass-through plus competitive bids, fee limited to a pre-agreed referral fee
Quality assurance
After works, our staff run a pre-move-in check (reported by video)
NOCOS role
Property & building management (PM/BM); construction handled as a referral (never the prime contractor)
* Out of consideration for privacy, the location is given only to the ward level.
Background
The management fee is “cheap” — so why doesn’t the net grow?
When comparing management companies, the eye goes to how low the monthly PM (property management) and BM (building management) fees are. But total spending can actually swell behind a cheap management fee. The reason lies in where the fee is sourced from.
In part of the industry, a structure can exist of suppressing monthly management fees while recovering the margin through a markup on construction costs. When a management company becomes the prime contractor itself, or takes a kickback from the construction firm, an incentive kicks in: the more works added, the higher the unit prices, the more they earn.
A low management fee, on its own, is not a basis for judgement. What to look at is “where the fee is sourced from” — from management, or from construction.
01 — The fact
Same contractor, same works — yet the estimate shifts ≈1.5×
Where this structure surfaces is the spread in estimates. In reality, even with the exact same contractor and the exact same scope of works, cases are emerging where an estimate routed through a management company is about 1.5×.
The gap is not the construction cost itself, but the middleman markup added by the management company in between
To the owner it looks like “works at market rate,” so the markup is hard to notice
The management companies chosen for low PM/BM fees can be the very ones doing this recovery through construction costs
In other words, comparing only the monthly management fee can’t tell you which is cheaper overall. Estimate the same works through a different route, and only then does the gap appear.
A 1.5× gap on identical works. That is not a “difference in quality,” but a difference in structure.
02 — Structure
Erase the motive to profit from works — from the structure
NOCOS removes this conflict of interest not through an operational rule of “we’ll be careful,” but through the structure itself.
We never become the prime contractor
NOCOS handles management, but never becomes the prime contractor for works. We never stand between the owner and the construction firm to skim a middleman markup, so inflating construction costs does not become our profit.
Actual-cost pass-through plus competitive bids
Construction costs are passed through at actual cost, with competitive bids taken as needed. Because the basis for the figures is always open to the outside, there is structurally no room to inflate unit prices.
Our fee is a pre-agreed referral fee only
What we receive from works is only a pre-agreed referral fee. It does not grow when the construction amount grows. So the incentive to “add works or raise unit prices” simply never arises.
“Being careful” does not erase a conflict of interest. It is erased structurally only once the fee’s source is severed from construction.
03 — Verification
After works, always a pre-move-in check — the works done, recorded on video
A transparent estimate alone cannot guarantee that the works in the estimate were actually carried out. NOCOS secures this with a post-works pre-move-in check.
After works, our staff always run an on-site pre-move-in check
Results are reported by video, so the owner can confirm the reality of the construction with their own eyes
Whether the estimate line items match the physical reality — “do the works you paid for actually exist” — is made visible
This data works even when an external construction firm did the work. For example, you can later scrutinise whether a defect existed before move-in or arose after, separating out responsibility and needless re-works. In fact, this pre-move-in-check data has itself earned us appreciation.
A transparent estimate (before) and a video pre-move-in check (after). Only with both sides in place does the construction cost become truly transparent.
04 — Result
A “no recovery through works” structure became the deciding factor
To the owner of a one-building apartment in Shinjuku, we explained exactly this structure — never the prime contractor / actual-cost pass-through plus competitive bids / referral fee only / verified afterwards by a pre-move-in check.
As a result, the owner rated very highly that there is structurally no worry of being recovered from through construction costs, and decided to switch management. Not a rent uplift nor a flashy renovation — it was the very structure of “not having to pay extra” that decided it.
The value of defence is hard to see. But “not being taken from” feeds the net just as much as “growing it.”
Takeaways
Structural lessons worth keeping
Choose a management company by where its fee is sourced, not by how cheap the fee is. Whether the fee comes from management or from construction flips the direction of the incentive.
A conflict of interest is not erased by an “operational rule.” Erase it with structure. Never the prime contractor, actual-cost pass-through, referral fee only — only by severing the fee from construction does the motive to inflate works disappear.
Estimate the same works through a different route, and the structural difference shows up in the price. With the same contractor and scope, it can shift ≈1.5× depending on the route.
Secure transparency on both sides — the estimate (before) and the verification (after). A post-works pre-move-in check (video report) makes “were the works done as estimated” visible.
A “can’t be taken from” structure feeds the net as much as a rent uplift. Optimising defence isn’t flashy, but it reliably improves returns.
What NOCOS provides is not a cheap management fee, but the very structure of “not having to pay extra.”
FAQ
Frequently asked about this case
Won’t choosing a management company with low PM/BM fees lower my costs?
Even with low monthly management fees, if a markup rides on construction costs the total spend can actually rise. What matters is less the headline management fee than “where the fee is sourced from.” In this case, we explained NOCOS’s structure — never the prime contractor, actual-cost pass-through, referral fee only — and the owner valued it.
Why does the estimate differ by 1.5× between companies for the same works?
Most of the gap is not the construction cost but the middleman markup added by the management company in between. In reality, even with the same contractor and the same scope, an estimate routed through a management company can be about 1.5×. Estimate the same works through a different route via competitive bids, and the gap finally becomes visible.
Why is NOCOS unable to “pad” construction costs?
Because the fee’s source is severed from construction. NOCOS never becomes the prime contractor; construction costs are passed through at actual cost, with competitive bids as needed. What we receive is only a pre-agreed referral fee, which does not grow when the construction amount grows. So the incentive to “add works or raise unit prices” structurally never arises.
Even with a transparent estimate, what if the work is cut short and I can’t tell?
For exactly that, after works our staff always run a pre-move-in check and report the results by video. The owner can confirm with their own eyes that the estimate line items match the physical reality, making “do the works you paid for actually exist” visible. Even when an external firm did the work, you can later scrutinise whether a defect existed before move-in.
If the rent doesn’t go up, is there any point in switching management?
Yes. In this case the deciding factor was not a rent uplift but the very structure of “not being recovered from through construction costs.” “Not being taken from” feeds the net as much as “growing it.” It isn’t flashy, but erasing the markup that can arise with every single job — at the structural level — becomes a larger return improvement the longer you hold.
If “the PM/BM fees are cheap yet the net doesn’t grow” or “the same works are estimated differently by different firms” rings a bell, talk to us. We’ll apply NOCOS’s structure (never the prime contractor / actual-cost pass-through plus competitive bids / referral fee only / pre-move-in check) to your property and explain it individually.