What is Property Management (PM)?
Property management is the third-party service of leasing, collecting rent, handling repairs, and managing tenant relationships on a landlord's behalf. Typical cost in 2026: 8-10% of monthly rent collected, plus a leasing fee of 50-100% of one month's rent on new tenants.
Self-management saves the management fee but costs time, mental load, and weekend phone calls. For investors with 1-3 doors close to home, self-management often makes sense. Beyond 5-10 doors, especially out-of-state, professional PM is usually the correct call.
PM quality varies enormously. The best managers screen tenants rigorously (650+ credit, 3x rent income, no prior evictions), respond to maintenance within 24 hours, conduct quarterly drive-by inspections, and produce detailed monthly statements. The worst managers approve any tenant with a deposit, sit on maintenance until it's an emergency, and reconcile statements quarterly if at all.
Always underwrite a rental at 10% PM cost even if you plan to self-manage. The 10% number captures the real opportunity cost of your time and ensures the deal cash flows in a scenario where you eventually delegate.
Concepts that connect.
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a real-estate investing strategy where an investor buys a distressed property cheap, renovates it, rents it out, refinances at the improved appraisal to recover most or all of the original capital, then repeats the process with the recovered capital.
Net Operating Income (NOI) is a rental property's annual gross rental income minus all operating expenses, before debt service and income taxes. NOI is the denominator of cap rate and the numerator of DSCR — it's the most-used number in rental underwriting.
CapEx is the budget set aside for major property components with finite lifespans — roof, HVAC, water heater, appliances, exterior paint. CapEx differs from maintenance (which covers ongoing repairs) and is a critical line in any honest rental underwrite.
Cash-on-cash return is annual pre-tax cash flow divided by the total cash the investor put into the deal (down payment + closing + rehab + reserves). Unlike cap rate, it accounts for financing. The most useful metric for comparing leveraged investments.
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