🏢 What is a Property Management Company in Real Estate Investing?

A Property Management Company is a third-party business hired by real estate investors or landlords to handle the day-to-day operations of rental properties. Their responsibilities typically include tenant communication, rent collection, property maintenance, and handling evictions.

📌 When and Why It’s Used in Real Estate

Investors typically hire property managers when:

• They own multiple properties and lack the time to manage them
  
• They live far from their investment properties
  
• They want to outsource operations to save time and reduce stress
  

It’s especially common among passive investors and those scaling their portfolios beyond a few units.

🧮 How It’s Calculated or Applied

Property management companies usually charge a percentage of the monthly rental income, along with potential fees for leasing, maintenance, and evictions. A typical range is 8–12% of collected rent.

Here’s a formula to estimate monthly management cost:

Example: If rent is $2,000 and the fee is 10%, the monthly fee is $200.

✅ Pros

• Saves time for busy or remote investors
  
• Brings professional expertise to tenant screening and maintenance
  
• Can reduce tenant turnover with better service
  
• Helps investors scale without operational overwhelm
  

⚠️ Cons

• Adds a recurring expense to operating costs
  
• Quality varies between companies — poor management hurts ROI
  
• Investors may lose some control over tenant interactions and repairs
  
• Additional fees (e.g. lease-up, maintenance markup) can add up