The property management decision is one of the most consequential choices a real estate investor makes — and it's not just about cost. A good property manager protects your asset, keeps it occupied, handles legal compliance, and gives you back your time. A bad one can cost you tens of thousands through deferred maintenance, problem tenants, and missed rent. The wrong manager is worse than no manager.
What a Property Manager Actually Does
A full-service property management company handles:
- Marketing and leasing: Listing vacancies, screening applicants (credit, background, income verification), executing leases
- Rent collection: Monthly collection, late notices, and handling partial payments
- Maintenance coordination: 24/7 emergency response, coordinating vendors, managing repairs within an approved threshold (usually $250-$500)
- Tenant relations: Handling complaints, lease renewals, move-in/move-out inspections
- Legal compliance: Fair housing compliance, required disclosures, habitability standards
- Eviction management: Filing, court appearances, coordinating with attorneys
- Accounting and reporting: Monthly owner statements, year-end reports, 1099s
The True Cost of Property Management
The monthly management fee (8-12% of collected rent) is just the beginning. Read the full fee schedule:
- Monthly management fee: 8-12% of gross monthly rent
- Leasing/placement fee: 50-100% of first month's rent when placing a tenant
- Lease renewal fee: $100-$300 per lease renewal
- Maintenance markup: Some PMs mark up vendor invoices 10-20%
- Vacancy fee: Some charge a monthly fee even when the unit is vacant
- Eviction fee: $250-$500+ to manage an eviction (separate from attorney costs)
Total all-in PM cost often runs 15-20% of gross annual rent. Model this in your deal analysis — always. Use the Property Analyzer to compare cash flow with and without PM fees before you buy.
Self-Management Is a Job: Self-managing saves 8-12% per month but costs you time — typically 5-10 hours per property per month. At 4 properties, you're working part-time as a landlord. The real question isn't "can I afford a PM?" It's "what is my time worth, and what else could I do with those 40 hours per month?"
Does Your Deal Cash Flow With a PM?
Run your numbers with 10% management included — deals that only work with self-management are risky at scale.
Open Property Analyzer →How to Find a Good Property Manager
The best property managers come from referrals — other investors in your market who have used them. Ask at local REIA meetings, in BiggerPockets forums, or from your real estate agent who works with investors. When interviewing, look for:
- Licensed property manager in your state (required in most states)
- Experience with your property type and price range
- Maintenance in-house vs. third-party vendors — in-house is usually faster
- Technology platform — online rent payment, maintenance tracking, owner portals
- Portfolio size vs. staff ratio — don't let them be overloaded
- Eviction rate and policy — a PM who never evicts is keeping bad tenants; one who evicts everyone is too aggressive
When to Fire Your Property Manager
Red flags that warrant switching: extended vacancies without explanation, deferred maintenance that becomes expensive, missing owner statements or late payments, lack of communication, and consistently poor tenant quality. Getting out of a PM contract requires reading your agreement — most require 30-60 days written notice. Never fire a PM mid-eviction unless absolutely necessary. See the full portfolio strategy guide for how to systematize PM oversight as your portfolio grows.
