What Is Property Management?

What Property Management Actually Involves

When people think of property management, they usually think of collecting rent and fixing toilets. But the reality is much broader. Effective property management covers six core areas, and dropping the ball on any of them costs you money.

Tenant acquisition. Marketing vacant units, showing the property, processing applications, running background checks, and executing lease agreements. This is where your income starts.

Rent collection. Ensuring every tenant pays the right amount, on time, every month. Tracking payments, applying late fees, and following up on missed payments before they become serious delinquencies.

Maintenance and repairs. Handling maintenance requests, coordinating contractors, performing preventive maintenance, and managing emergency repairs. This is usually the most time-consuming part of property management.

Financial management. Tracking income and expenses, maintaining your rent roll, budgeting for capital expenditures, and preparing financial reports for tax time.

Tenant relations. Handling complaints, enforcing lease terms, managing renewals, and dealing with lease violations. Good tenant communication prevents most problems from escalating.

Legal compliance. Staying current on landlord-tenant law, fair housing requirements, and local regulations. This includes proper eviction procedures when necessary.

Self-Management vs. Professional PM Company

The question every landlord faces: do I manage this myself or hire someone?

Self-management makes sense when:

• You have fewer than 10-15 units
• Your properties are within 30 minutes of where you live
• You have time (expect 3-5 hours per unit per month on average)
• You want to learn the business from the ground up
• You want to keep the 8-12% management fee as profit

A PM company makes sense when:

• You have more units than you can handle alone
• Your properties are far away (different city or state)
• You have a full-time job and limited availability
• You do not want to deal with tenant calls at 2 AM
• The management fee is worth the time you get back

Real Example: Self-Management Cost Savings

You own 6 units averaging $1,400/month rent ($8,400/month total). A property management company quotes you 10% of collected rent plus a $1,000 tenant placement fee per vacancy.

Annual management fees: $8,400 x 10% x 12 = $10,080. Average 1.5 turnovers per year: 1.5 x $1,000 = $1,500. Total annual PM cost: $11,580.

If you self-manage and spend 4 hours per unit per month (24 hours total), that works out to $11,580 ÷ (24 x 12) = $40.21/hour for your time. If your day job or other business earns you more than $40/hour, a PM company might make financial sense. If not, self-management is the better deal.

Most landlords with fewer than 10 units find that self-management is worth it, especially with good systems in place. Check out our guide on how many units before you need a property manager.

How to Self-Manage Effectively

Step 1: Build systems. Create standard operating procedures for everything: tenant screening, move-in, rent collection, maintenance handling, move-out. Systems prevent things from falling through the cracks.

Step 2: Use the right tools. At minimum, you need a spreadsheet for financial tracking, a way to accept rent payments, a system for maintenance requests, and organized file storage for leases and documents. Read our comparison of spreadsheets vs PM software.

Step 3: Build a contractor network. Have a plumber, electrician, HVAC tech, handyman, and cleaning crew on speed dial before you need them. Getting quotes when something is actively broken is stressful and expensive.

Step 4: Set boundaries. Publish your business hours for non-emergency issues. Give tenants a clear way to submit maintenance requests. Do not give out your personal cell phone to tenants if you can avoid it.

Step 5: Stay organized. Track everything. Every rent payment, every maintenance request, every communication. If it is not documented, it did not happen.

Common Mistakes

Not treating it like a business. Rental property is a business. It requires time, attention, and professional behavior. Treating it casually leads to missed payments, deferred maintenance, and legal problems.

Hiring the cheapest PM company. A property manager who charges 6% but does not screen tenants well, ignores maintenance requests, and causes high turnover will cost you far more than a good manager at 10%. Check references and reviews before signing.

Not having a backup plan. If you self-manage and go on vacation, get sick, or are unavailable for a week, who handles emergencies? Have a trusted person who can step in.

Trying to do everything yourself. Self-managing does not mean you personally fix every leaky faucet. It means you manage the process. Hire contractors for skilled work and focus your time on the management and financial side.

Frequently Asked Questions

How much does property management cost?

Professional property management typically costs 8-12% of monthly collected rent, plus tenant placement fees (50-100% of first month's rent), lease renewal fees ($100-$300), and sometimes maintenance coordination markups. For a $1,500/month unit, expect $120-$180/month in management fees.

What should I look for in a property management company?

Look for local market knowledge, a clear fee structure with no hidden charges, good online reviews, responsive communication, a solid tenant screening process, and experience with properties similar to yours. Ask for references from other property owners.

Is property management tax deductible?

Yes. Property management fees are a deductible operating expense. Whether you pay a PM company or deduct expenses related to self-management (mileage, home office, etc.), these costs reduce your taxable rental income.