You're running numbers on a rental property and you've hit the property management line item. You type in 10% and watch your cash flow drop by $150/month. That's $1,800 a year. On a four-unit building, that's $7,200. You start thinking: I could just manage it myself.
This is where most investors make the decision emotionally rather than mathematically. Let's fix that.
What Property Managers Actually Charge
The [National Association of Residential Property Managers](https://www.narpm.org/) tracks industry fee structures. The typical range is 8-12% of collected rent for residential properties. But that percentage is just the starting point.
Common fee structures:
| Fee Type | Typical Range | What It Covers |
|---|---|---|
| Monthly management | 8-12% of rent | Day-to-day operations, rent collection, tenant communication |
| Leasing fee | 50-100% of first month's rent | Advertising, showings, screening, lease execution |
| Renewal fee | $150-300 | Lease renewal paperwork |
| Maintenance markup | 10-20% | Coordination fee on repairs |
| Vacancy fee | $0-50/month | Some charge during vacancies |
On a $1,500/month rental, a 10% management fee is $150/month. But if your tenant turns over annually, add another $1,500 for the leasing fee. A few maintenance calls with a 15% markup add another $200-400 over the year. Your actual cost is closer to $3,400, not $1,800.
That's 19% of gross rent, not 10%.
The Real Cost of Self-Managing
Self-managing isn't free. It costs time, and time has a value. The question is whether you're accounting for it honestly.
Time Requirements by Task
Here's what I've tracked across my own properties:
Monthly ongoing (per door):
Annual tasks (per door):
Turnover (when it happens):
For a single property with annual turnover, you're looking at 50-70 hours per year. With no turnover, it's more like 25-35 hours.
Putting a Dollar Value on Your Time
This is where people get uncomfortable. If you make $75/hour at your job, is your "landlording" time worth $75/hour? Maybe. Maybe not.
I think about it differently. What else would I do with those hours?
If the answer is "work overtime" or "take on consulting," then yes, use your professional rate. If the answer is "watch Netflix," your opportunity cost is lower.
But be honest. Those 10pm maintenance calls, the Saturday morning showing, the Tuesday afternoon court appearance for an eviction. That's not leisure time you're sacrificing.
> Cost of self-managing = Hours spent × Your honest hourly rate
At $50/hour and 50 hours/year, self-managing costs you $2,500. At $75/hour and 70 hours/year, it's $5,250.
A Worked Example: Four-Unit Building
Let's compare both options on a real deal.
Property details:
Option A: Property Manager
| Cost Item | Annual Amount |
|---|---|
| Monthly management (10%) | $5,760 |
| Leasing fee (1 turnover at 75% of month) | $900 |
| Maintenance markup (15% on $2,400) | $360 |
| **Total PM Cost** | **$7,020** |
Per-door cost: $1,755/year or $146/month
Option B: Self-Managing
| Cost Item | Annual Amount |
|---|---|
| Time: 4 units × 8 hours/year ongoing | 32 hours |
| Time: 1 turnover × 20 hours | 20 hours |
| Time: Annual tasks × 4 | 16 hours |
| **Total hours** | **68 hours** |
| At $60/hour | **$4,080** |
Per-door cost: $1,020/year or $85/month
The Difference
Self-managing saves $2,940/year on this building. That's $735 per door annually.
But here's what the math doesn't capture: the 11pm water heater call, the tenant who texts you during your kid's soccer game, the mental overhead of always being "on."
For some people, that $2,940 buys freedom. For others, $2,940 isn't enough to deal with the hassle.
When Self-Managing Makes Sense
You should probably self-manage if:
When a Property Manager Makes Sense
You should probably hire a PM if:
Common Mistakes in This Analysis
Mistake 1: Ignoring the Leasing Fee
Investors see "10% management fee" and think that's the whole cost. But the leasing fee on turnover is often 50-100% of one month's rent. With average tenant stays of 2-3 years, you're paying this fee regularly.
On a $1,400/month unit with turnover every 2 years, that leasing fee averages $700/year, adding another 4% to your effective management cost.
Mistake 2: Undervaluing Your Time at Zero
Free is not zero-cost. Your time has value. The investor who self-manages 10 properties is working a part-time job. If that time could generate income elsewhere (or simply preserve your sanity), it has a cost.
Mistake 3: Not Accounting for Mistakes
A good property manager knows local landlord-tenant law. They know what you can and can't put in a lease. They know how to properly document for an eviction.
Your first self-managed eviction might cost you an extra $2,000 in legal fees and lost rent because you served the wrong notice. That's a real cost that belongs in the analysis.
The Break-Even Formula
Here's how to find your personal break-even point:
> Break-even hourly rate = Annual PM cost ÷ Annual hours self-managing
Using the four-unit example:
$7,020 ÷ 68 hours = $103/hour
If your time is worth more than $103/hour, hire the PM. If it's worth less, self-manage.
For a single $1,500/month rental:
For many professionals, $68/hour is close to their effective W2 rate. The decision becomes less about math and more about preference.
What Most People Get Wrong
The biggest mistake isn't miscalculating the costs. It's treating this as a permanent decision.
I self-managed my first three properties. I learned how to screen tenants, handle maintenance calls, and run a turnover. When I hit seven units, I hired a property manager. The knowledge I gained from self-managing helped me evaluate PMs, catch their mistakes, and hold them accountable.
Then I fired that PM and self-managed again when I had more schedule flexibility. Now I'm back with a different PM as my portfolio has grown.
Your answer today doesn't have to be your answer forever.
Running Your Own Numbers
The math depends on your specific situation: your hourly rate, your property's rent, your tenant stability, and your distance from the property.
Before you default to 10% in your underwriting, run both scenarios. Calculate the true PM cost (including leasing fees and markups). Calculate the true self-managing cost (including your honest time value). Compare them.
The [single-family rental calculator](/tools/single-family) lets you model both scenarios. Run your deal with and without management fees, and see how it affects your cash-on-cash return. Sometimes the difference is $50/month. Sometimes it's $200. Know your number before you make the call.