Real Estate Self Management vs. Hiring a Property Manager

Real Estate Self Management vs. Hiring a Property Manager

Being a landlord can feel like (and indeed be) a full-time job. But if you already have a full-time job and other responsibilities in your life, your rental property might be taking up more of your time than you want.

Between advertising units, screening for good tenants, getting your tenants to pay rent on time, maintenance issues, and paying the bills, you might be feeling a little overwhelmed.

To take the pressure off, many landlords outsource the busy work to a property management company. Property managers can take care of everything for you, from finding tenants to unclogging the sink.

In exchange for their service, the property manager charges you, the landlord, a percentage of the monthly rent plus expenses.

But is a property manager worth the investment? Or are you better off self-managing your property?

In this article, we’ll weigh the advantages and disadvantages of hiring a property manager vs. real estate self-management.

What are the Advantages of Real Estate Self Management?

Let’s start with the virtues of doing things yourself. When you manage your rental properties, you retain complete control over how your property is maintained and how your tenants are managed. Some of the benefits of a DIY approach include:

Self-Management is (Usually) Cheaper

The obvious benefit to not hiring a property management company is not having to pay a property management company. For many landlords, it can make the difference between positive and negative cash flow.

Get Things Done the Way You Want

Property managers can get the job done, but things may not be to your standard. The apartment you’ve poured your savings and soul into is just another item on your property manager’s to-do list, and they’re unlikely to baby your home the way you would.

Own the Tenant Relationship

When you self-manage your property, you own the relationship with the tenant and can exercise greater influence over how likely they are to stay long-term and how well they take care of your home.

What are the Advantages of Hiring a Property Manager?

If your inner control freak is willing to let go of the reins, hiring a property manager can transform being a landlord into a truly hands-off experience. When you hire a property manager, some benefits include:

You Can Be “Off-Duty”

When you self-manage your property, you’re always on call – and you can guarantee something will go wrong the minute you go on vacation. With a property manager looking after things, you can step away from your property and know everything is being looked after.

Things Get Done

Especially if you’re a casual landlord with only one or two units, you might not always know where to start. Property managers have seen it all, and whether you need a plumber, electrician, or a very specific part for your 20-year old discontinued air conditioner, they know who to call.

You’re Shielded From Your Tenants

Property managers can take care of the ugly side of the job, too. When there are complaints or the rent is late, it’s the property manager’s job to look after it.

The Money’s Looked After

Property management companies can also help out with your rental property finances, making sure the bills get paid and the bookkeeping gets done.

The Cost is Tax-Deductible

Property management services are a tax-deductible Schedule E expense, lowering the amount of tax you owe on your rental property income.

How Much Does It Cost to Hire a Property Manager?

As with many things in life, you “get what you pay for” when hiring a property manager. The cost to hire a property manager depends on the level of service they provide, their relevant experience, and the number of properties in their portfolio.

Typical property management fees fall into a few categories:

Setup Fee

It’s not uncommon for property management companies to charge a setup fee of up to a few hundred dollars to cover their cost of onboarding you as a client.

Tenant Placement Fee

When you need to find a new tenant for your rental property, the property management company will charge a fee to advertise, show, and lease the unit.

Tenant placement fees are either a flat fee or commission, up to the equivalent of a full month’s rent.

Monthly Fee

Property managers typically base their monthly fee on the rent being collected. The ongoing fee for a property manager ranges between 8% to 12% of the rent, due monthly. Make sure the property manager’s fee is based on rent received rather than rent due, so they’re incentivized to make sure the rent is paid.

Eviction Fees

Evictions aren’t usually included in your property management contract and have an extra cost associated.

Maintenance Requests and Repair Expenses

On top of all this, you’ll still pay for materials and labor on maintenance and repair jobs. Many rental property management companies will be willing to negotiate what kinds of jobs are and aren’t included in their monthly fee and require your approval for spending above a certain threshold.

How Much Does It Cost to Use Property Management Software?

While hiring a property manager can make sense for some landlords and real estate investors, the thought of handing over 12% or more of your rental income every month might make you cringe. Especially if your margins are tight, it just might not make financial sense.

To make things easier without the expense of hiring a property manager, many small landlords are turning to property management software that performs many of the same services.

There are many software services available to help you advertise an available unit, screen tenants, and onboard them. There are also lots of options out there to manage tenant communications and things like work orders.

Property management software can also help you manage your rental property finances. Baselane, for example, lets landlords open bank accounts for their rental properties, automates rent collection, and takes care of many of the rental property bookkeeping tasks a property manager might do.

While property management software can’t automatically dispatch an emergency plumber when the dishwasher overflows (yet), it can automate many of the tasks traditionally done by property managers at a much lower cost.

Baselane, for example, offers its core services to landlords for free so that everyone who rents out their property can spend less time and money managing their rental property finances.

Final Thoughts

For a harried landlord, hiring a property manager is an enticing idea. Property managers can take over all of the work associated with renting out a property so you can feel less like a landlord and more like a real estate investor. Their services come with a cost, however, siphoning 10% or more of the rent each month as well as one-time fees for things like finding a new tenant when necessary.

Luckily, self-management is becoming easier thanks to rental property management software. Many of the things traditionally done by property managers, like managing rental property finances, handling rent collection, and managing tenant communications can be automated using free online software like Baselane.

When hiring a property manager doesn’t make financial sense, property management software can ease the load without putting a dent in your cash flow. In fact, the right software can help you become more efficient with your finances and earn more money from your rentals.

If you’re considering hiring a property management company to take care of your rental properties, consider trying software first. You will likely find that it’s able to automate many of your most time-consuming tasks and give you the freedom you’re looking for without requiring a large investment and long-term commitment.

If the software doesn’t free up as much time as you need, you can then move forward with hiring a property manager knowing that they’re worth the investment.


Is property management software free?

While property managers can be one of a landlord’s biggest expenses, property management software is often very affordable. Baselane offers its core property management software features to landlords for free, including landlord banking, bookkeeping, automated rent collection, and rental property analytics.

How much do property managers charge?

Property management companies typically charge a monthly fee of around 10% of the rent, plus expenses, to manage a property. They may also charge additional fees to set up your account, bring in a new tenant, evict a tenant, or perform work not covered by your contract. As with many things in life, the less you spend on a property manager, the less you can expect to get out of the deal.

I only rent out one unit. Do I need to hire a property manager?

Many small landlords choose not to hire a property manager and do the work themselves. If you choose not to hire a property manager, you can automate some of the work they would do using property management software.

Core property management services like rent collection, bookkeeping, and tenant communications can be automated with easy-to-use software available for free online.

In this article:
Baselane Banking is now offering 4.19% APY interest

Automated and free Rent Collection, without the stress

Avatar photo
Financial Technology, Real Estate Investing, and Property Management, Accounting and Tax, Finance
Saad started his career as a Certified Public Accountant (CPA) working for a top-tier accounting firm. He was responsible for helping audit alternative investment funds. He later worked at a hedge fund where he was responsible for preparing financial statements and implementing new technology. He also ran a successful private tax practice for five years.

After completing his MBA at Duke, Saad joined The Boston Consulting Group to do management consulting. At BCG his experience spanned several industries and growth projects across Pharma, Retail, and Technology companies. His passion for democratizing finances led him to Plaid, a fintech, where he worked with large Banks and Financial Institutions to make finances and money easier for all.
Real Estate Self Management vs. Hiring a Property Manager
Real Estate Self Management vs. Hiring a Property Manager