What is Property Management?

What Is Property Management?

By Matthew Frankel, CFP – Updated Dec 13, 2024 at 11:38 AM

Key Points

Property managers handle daily operations like rent collection and maintenance, especially important for busy owners.
Fees for property management typically range from 8-10% of rent for long-term rentals and 25-40% for short-term.
Choosing a property manager can lead to passive income, while self-managing maximizes cash flow but increases activity.

Property management is an important issue for real estate investors. A good property manager can be well worth the cost and can provide a worry-free investment experience. In this article, we’ll discuss what property managers do, how much they cost, and whether you should hire a property manager or manage your own rental properties.

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An older apartment building. — Source: Getty Images

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So property management isn’t cheap. If you buy a duplex that brings in $3,000 in monthly rent and hire a property manager who charges 10%, you’ll pay as much as $3,600 per year for their services. However, this can be well worth the cost for many investors since property managers typically perform several services that would be time-consuming if you were to do them yourself, including:

Finding tenants: Property managers will market your property and screen tenants.
Handle money: Property managers collect rent and security deposits and can pay expenses such as utilities and HOA dues for you.
Market knowledge: A good property manager will have a good grasp of current market conditions and will know how much rent to charge. In some situations, this alone could justify the cost.
Handle problems: Property managers will deal with repairs, coordinate maintenance, handle tenant disputes, and evict tenants if needed.

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Rent to Own

Rent-to-own homebuying combines a lease with a purchase option.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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