When Should a Landlord Hire a Property Management Company?

The right property management company can make being a landlord easier—and maybe even more profitable.

Updated by , Attorney UC Berkeley School of Law
Updated 5/25/2023

One of the biggest decisions you'll make as a landlord is whether you should hire a property management company. Many landlords manage properties on their own or with the help of an employee, such as a resident manager. But sometimes landlords need more help, and that's when hiring a professional property management agency might make sense.

Property management companies can be a huge asset to your business, but they don't come cheap. And there are other reasons why you might not want or need one. Here are some things to consider when hiring a property management company.

What Does a Property Management Company Do?

Most rental property management companies deal with the whole range of landlord activities, including:

Plus, a good management company brings its know-how and experience to your property, giving you the peace of mind that comes with knowing your investment is in good hands.

When Should You Hire a Property Management Company?

Although hiring a property management company has many advantages, using one can be expensive. And, even apart from the cost, relying on a property management company is not for everyone.

Consider hiring a property management company if:

  • You have lots of properties or rental units. The more rental properties you own and the more units they contain, the more you're likely to benefit from a management company.
  • You don't live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar. If you live out of state, check the state's laws—you might even be required to hire an in-state management company.
  • You're not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if your rental property is solely an investment, and you want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.
  • Your time is limited. Even if you enjoy hands-on management, you might not have much time to devote to your business, especially if landlording isn't your day job. And, if you prefer to spend your time growing your business by searching for new properties, arranging financing for renovations, or changing your business structure, then a management company might be a good way to spend your money.
  • You can afford the cost. Hiring a property management company is an attractive option if you can afford the fees. When interviewing companies, expect to hear quotes ranging between 5% and 10% of what you collect in rent revenue. If it's a down market and you're able to manage things yourself (or with the help of a resident manager or other employees), you might want to keep doing so until the market turns around.
  • You're suddenly inundated with management tasks. If your business is growing, at some point you might find that you need a substantial amount of help to manage everything properly. At that point, it might make sense to hire a management company.
  • You don't want to be an employer. If you hire a resident manager or other employees to help with your property, you become an employer. You'll have to handle payroll and deal with a host of other legal requirements and considerations. But, because a property management company isn't your employee (it's an independent contractor), and neither are the people who work for the company, by using one you avoid the hassles of being an employer.
  • Your property is part of an affordable housing program. If you participate in an affordable housing program, things can get complicated. Usually, in these programs the landlord receives financial assistance, which might be in the form of a grant, low-interest loan, or tax credits, in return for agreeing to rent at least part of the property to tenants earning below a certain income level. In order to continue receiving the assistance, the landlord must comply with a complicated set of rules. With so much at stake, it's often worth hiring a property management company that has expertise and experience with the particular housing program in question.

How to Find a Good Property Management Company

If you decide to hire a property management company, use caution in selecting one. Here's how:

How Much Do Property Management Companies Cost?

When you interview potential property managers, one of the topics you're sure to discuss will be cost. How property management companies get paid can vary depending on the market rate in your area and the services the company provides.

Most property management companies will charge a percentage of the monthly rent—typically anywhere from 5-20%. Be sure to ask the company what services the charge includes, and whether the amount is based on the amount of rent charged or the amount of rent actually collected. Find out what the company's policy is when a tenant fails to pay rent or breaks the lease.

You'll also want to ask whether the company offers flat rate services. For example, do they charge separately for preparing and serving a notice to quit when a tenant violates a term of the lease?

When you find a management company that you feel comfortable working with, be sure to get your agreement in writing. The management agreement should at the very minimum contain details about how and when you'll pay for the services and how the agreement can be ended (usually it's with 30 days' written notice by either party).

Other Resources

To learn more about protecting yourself when hiring a management company and to get help with other risks facing landlords, read Nolo's Every Landlord's Guide to Managing Property.

Other great books for landlords include:

Nolo's Landlord page also contains a wide-ranging library of free articles for landlords looking to learn more about screening tenants, handling security deposits, dealing with repairs and maintenance, evictions, and much more.

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