How much does it cost to start a property management company?

A property management company costs just $5,000 to $50,000 to start, making it one of the most affordable professional services businesses. The main costs are licensing ($500-$3,000), property management software ($50-$400/month), insurance ($1,500-$5,000/year), and marketing. Many property managers start from a home office managing a handful of properties and scale up.

How much do property managers charge?

Property managers charge 8 to 12 percent of monthly rent for residential properties plus a tenant placement fee of 50 to 100 percent of one month's rent. A manager handling 50 properties averaging $1,500/month rent earns $6,000 to $9,000 monthly in management fees alone. Commercial property management fees run 4 to 8 percent of gross rents.

Do you need a license to manage rental properties?

Most states require a real estate broker license or specific property management license to manage properties for others. Some states allow unlicensed property management if you manage fewer than a certain number of units or if the owner is a family member. Check your state's real estate commission requirements before starting. The licensing process typically involves coursework, an exam, and background check.

Property Management Company Startup Cost Comparison

Sioux Falls, SD vs Houston, TX

Sioux Falls, SD

$5,000 - $30,000

COL Index: 92.5

Houston, TX

$7,000 - $38,000

COL Index: 96.5

Detailed Cost Comparison

Expense	Sioux Falls, SD	Houston, TX	Difference
Licensing & Registration	$1,000 - $5,000	$1,900 - $6,200	-26%
Property Management Software	$500 - $3,000	$500 - $3,000	Same
Office Setup	$400 - $7,800	$700 - $13,700	-43%
Insurance (Annual)	$1,500 - $5,000	$1,500 - $5,000	Same
Marketing & Client Acquisition	$1,000 - $5,000	$1,000 - $5,000	Same
Working Capital (2 Months)	$900 - $4,600	$1,000 - $4,800	-5%
Total Estimated Cost	$5,000 - $30,000	$7,000 - $38,000	-22%

Local Market Factors

Factor	Sioux Falls	Houston
Cost of Living Index	92.5	96.5
Commercial Rent ($/sqft/yr)	$12 - $24	$18 - $45
Labor Rate Index	0.9	0.92
Sales Tax	6.5%	8.25%
Minimum Wage	$11.20/hr	$7.25/hr
LLC Filing Fee	$150	$300

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