How to Choose a Property Management Company: A Landlord's Checklist

Owning rental property can be rewarding, but managing it takes time: advertising vacancies, screening applicants, collecting rent, handling repairs at inconvenient hours, and keeping up with landlord-tenant law. A property management company can take on much of that work. The right one protects your investment and your relationships with tenants. The wrong one can cost you money, good tenants and legal headaches.

This checklist covers what property managers do, how they usually charge, what to read in the management agreement, and what to ask before you sign. It is general information, not legal advice. Landlord-tenant and licensing rules vary by state and sometimes by city.

What property managers typically do

Services vary by company and by package, so get a written list of what is included. Common services include:

• Marketing and leasing: recommending rent, advertising the unit, showing it and preparing the lease.
• Tenant screening: applications, credit and background checks, and verification of income and rental history. Screening must follow fair housing laws and the rules for using consumer reports.
• Rent collection: collecting rent, applying late fees allowed by the lease and local law, and following up on missed payments.
• Maintenance and repairs: routine upkeep, emergency response, vendor coordination and inspections.
• Move-in and move-out: condition reports, security deposit handling and turnover between tenants.
• Evictions: serving required notices and coordinating with an attorney through the court process when needed.
• Accounting and reporting: monthly owner statements, year-end summaries and the records you need at tax time.

Some companies focus on single-family homes, others on apartment buildings, condos, vacation rentals or commercial property. Choose one that regularly manages properties like yours.

How property management fees are structured

Fees vary widely by market, property type and service level, and many are negotiable. Rather than focusing on one headline number, ask for a complete written fee schedule. Common fees include:

• A monthly management fee, often a percentage of rent collected or a flat monthly amount.
• A leasing or tenant placement fee when a new tenant signs a lease.
• A lease renewal fee when an existing tenant renews.
• A setup or onboarding fee when you start service.
• Maintenance markups or coordination fees added to vendor invoices.
• Eviction or court appearance fees, separate from any attorney fees.
• Vacancy, inspection or early termination fees.

Ask whether the monthly fee is charged on rent that is due or rent that is actually collected, and whether anything is charged while the property sits empty. Two companies with similar monthly fees can cost very different amounts once the extras are added up.

Read the management agreement closely

The management agreement defines your relationship. Read the whole thing before signing, and consider having a real estate attorney review it. Pay special attention to the following terms.

Term and termination

How long is the agreement, and does it renew automatically? How much notice do you need to give to end it, and is there a termination fee? Can the company keep charging fees for the rest of a tenant's lease after you leave? Make sure you understand how you would get back your keys, records, tenant files and security deposits if you part ways.

Maintenance approval limit

Most agreements let the manager approve repairs up to a set dollar amount without asking you first. Choose a limit you are comfortable with, and make sure the agreement defines what counts as an emergency. Ask whether the company uses in-house staff or outside vendors, and whether it adds a markup or receives anything from vendors it hires.

Security deposits and trust accounts

Ask where tenant security deposits and rent payments are held. Many states require property managers to keep client funds and deposits in a separate trust or escrow account rather than mixing them with company operating funds, and states also set rules for how and when deposits are returned. Confirm how the company handles this in your state.

Other terms to check

• When you receive rent each month and how statements are delivered.
• Any reserve the company holds back from your funds for repairs.
• Who decides rent amounts, lease terms and whether to renew a tenant.
• Insurance requirements for you and for the company.
• How decisions about filing an eviction are made and who approves them.

Licensing varies by state

Many states require property management companies to hold a real estate broker license, some have a separate property management license, and a few have little or no licensing requirement. Check with your state's real estate commission or licensing agency, and use its online lookup to confirm that the company or its supervising broker holds an active license. Also ask whether the company carries general liability and errors and omissions insurance.

Questions to ask a property management company

1. How many properties do you manage, and how many are similar to mine and nearby?
2. Who will be my main contact, and how many properties does that person handle?
3. How do you set rent and market vacancies, and how long do vacancies typically last?
4. What are your tenant screening criteria, and how do you make sure they comply with fair housing laws?
5. How do tenants submit maintenance requests, and how do you handle after-hours emergencies?
6. Can I see a sample owner statement and your complete fee schedule?
7. How often do you inspect properties, and do you share photos?
8. How do you handle late rent, and what is your process if an eviction becomes necessary?
9. Where are security deposits held, and how do you handle move-out deductions?
10. What are the terms for ending our agreement?

Ask for references from current owners, and read reviews from tenants too. Tenant complaints about ignored repair requests can be an early sign of how your property and your tenants will be treated. Our guide on how to spot fake online reviews can help you weigh what you read.

Red flags

• A license you cannot verify, in a state that requires one.
• Vague answers about fees, or a fee schedule that does not match the contract.
• Long contracts with steep termination fees or automatic renewals buried in the fine print.
• Unclear answers about where deposits and rent are held.
• Promises that sound too good, such as guaranteed rent or no vacancies, without clear written terms.
• Screening practices that sound discriminatory, such as turning away families with children or applicants based on race, religion, national origin, disability or another protected characteristic.
• Slow responses to your questions before you have even signed.
• Current clients reporting late or missing owner statements.

Find a property manager near you

Browse property management companies on Directory For USA, compare their services and reviews, and interview two or three before deciding. If you are still shopping for a rental property, you can also find real estate agents who know your local rental market.