How to start a property management company, the short answer from SealedFolio: (1) check whether your state requires a real estate broker license to manage rentals for other people, (2) form an LLC or corporation and get a free EIN from the IRS, (3) open an operating account plus a separate trust account for owner and tenant money, (4) buy errors and omissions and general liability insurance, (5) write a management agreement, (6) set your fees, commonly a monthly percentage of rent plus a leasing fee, (7) choose software that can hold other owners' money and send owner statements, and (8) sign your first owners from the people you already know. The rest of this SealedFolio guide gives the evidence behind each step.
A property management company runs rentals for owners who do not want to: finding and screening tenants, collecting rent, arranging repairs, handling move-outs, and reporting the numbers back to the owner each month. Starting one is cheap compared with most businesses. The hard parts are the license, the client money, and finding owners who will trust you with both.
This SealedFolio guide follows the order you actually have to do things in. Where a number comes from a state agency or a ranking competitor's guide, the source is named in the same paragraph so you can check it yourself.
Step 1: Check the property management license rules in your state
Licensing is the first gate for a property management company, and SealedFolio found it varies more by state than any other step. In many states, managing rentals for someone else for pay counts as real estate brokerage, so you need a broker license, or you work under a licensed broker. Managing your own rentals is a different matter.
- Texas: The Texas Real Estate Commission says a license is required if the manager is paid to show or lease the property for the owner, and also for anyone who controls the acceptance or deposit of rent from a tenant of a single-family rental (TREC FAQ, citing TRELA §1101.002 and Rule 535.4(h)).
- Idaho: The Idaho Real Estate Commission's consumer FAQ states that property management (leasing) is not regulated in Idaho. One of the ranking Idaho guides says the opposite, so read the commission page, not a blog.
- Colorado: Buildium's Colorado guide reports that you need an active real estate broker license to manage property for owners, with 168 hours of pre-licensing education, and that an owner managing their own property is exempt.
- Florida: Florida's Department of Business and Professional Regulation requires a community association manager license when you are paid to manage associations with more than 10 units or a budget over $100,000, and says a real estate license alone does not cover that work.
Propertyware's guide counted 41 states requiring a real estate broker license for property management as of 2018, with six states (Idaho, Kansas, Maine, Maryland, Massachusetts and Vermont) requiring no license of any kind. That count is eight years old, so treat it as a starting point and confirm with your own state's real estate commission before you sign an owner. If you plan to manage HOAs or condo associations, check for a separate association manager license too, as Florida shows.
Step 2: Form the business entity, get an EIN and open a trust account
A property management company usually starts as an LLC or a corporation, so business debts and claims stay separate from your personal assets. Propertyware's guide puts document preparation at about $150 to $200 and state registration fees anywhere from $10 to several hundred dollars, depending on the state. SealedFolio suggests asking a local attorney or CPA which entity suits your state's tax rules before you file.
Next, get an Employer Identification Number. The IRS issues EINs online for free and says plainly that you never have to pay a fee for one, so skip any website that charges. You need the EIN to open business bank accounts and to hire.
Then open two kinds of bank account. One is your operating account for the company's own income and costs. The other is a trust or escrow account for money that belongs to owners and tenants: rent you collect, security deposits, and repair reserves. Buildium's Colorado guide notes that Colorado brokers must hold these funds in a trust account under Commission Rule CP-27, and TREC ties licensing in Texas to who controls the deposit of tenant rent. Keeping client money apart from your own is exactly what those trust account rules exist to enforce, so separate the two from day one.
Step 3: Insure the property management company
Insurance protects a property management company from the two claims it is most likely to face: a mistake that costs an owner money, and an injury or damage claim. SealedFolio's read of the ranking guides points to three policies:
- Errors and omissions (E&O): covers professional mistakes, such as a missed lease clause or a botched deposit return. Buildium reports that Colorado requires every active real estate licensee to carry E&O with limits of at least $1,000,000 per claim.
- General liability: covers bodily injury and property damage claims tied to your business.
- Workers' compensation: Buildium notes Colorado requires it once you hire even one employee. Check your own state's rule before your first hire.
Some owners will also ask to be named on your policy or ask you to be named on theirs. Price the policies before you set your fees, because the premiums come straight out of your margin.
Step 4: Choose your niche and write the management agreement
A new property management company does better picking one type of rental first: single-family homes, small multifamily, short-term rentals, HOAs, or commercial space. SealedFolio suggests starting where you already have experience or contacts. Each niche has different fees, laws and software. Short-term rental management, for example, involves guest turnover and booking platforms that long-term management does not.
Then write the management agreement every owner signs. Upkeep Media's guide gives the agreement its own step, and for good reason: it is the document you will point to in every dispute. At a minimum it should spell out your duties, every fee and when it is charged, how much you can spend on a repair without the owner's approval, how rent and deposits are held and paid out, the contract term, and how either side can end it. Have a local attorney review it once. It is cheaper than one lawsuit.
Step 5: Set your fees (how property management companies get paid)
A property management company earns most of its money from a monthly management fee, with smaller fees around leasing and renewals. The ranges below come from the ranking guides SealedFolio read on 12 October 2026, and they disagree at the edges, which tells you fees vary by market:
| Fee | Typical range reported | Source |
|---|---|---|
| Monthly management fee | 3% to 10% of monthly rent; 8% to 12% for long-term residential in 2025 data | Propertyware, Upkeep Media; RentalReady |
| Short-term rental management | 15% to 35% of rental revenue | RentalReady |
| Leasing fee | One month's rent, or 50% to 75% of it | Propertyware |
| Setup fee | About $300 or less; $200 to $300 | Propertyware; Upkeep Media |
| Lease renewal fee | Around $200 or less | Propertyware |
| Maintenance markup | 10% to 20% on repair invoices | Propertyware |
Work out your own fee from the bottom up. Add your insurance, software, licensing and marketing costs, divide by the number of doors you expect in year one, and check the result against local competitors' published fees. A percentage fee grows with rent; a flat fee per unit is easier for owners to compare. Buildium's Colorado guide notes both models are common. To see what your fee does to an owner's return, run a sample property through SealedFolio's free rental cash flow calculator with and without the management line.
Step 6: Choose property management software that can hold client money
Software for a property management company has to do more than track your own rentals, and this is where SealedFolio is honest about its limits. Once you manage for other owners, you need trust accounting, owner statements, and usually online rent collection and an owner portal. SealedFolio does not do those things. It is local property management software for owners, built for people tracking rentals they own, with records in an encrypted vault on their own Mac or Windows computer.
For third-party management, SealedFolio's own price research, from vendor pricing pages read on 29 September 2026, found:
- Buildium: published starting prices of $62, $192 and $400 a month for its Essential, Growth and Premium plans.
- Yardi Breeze: $1 per unit per month with a $100 monthly minimum for residential. Both Breeze and Breeze Premier include an owner portal; Premier has a $400 monthly minimum.
- AppFolio: a 50-unit minimum with quote-only pricing, so it is not an option for most new companies.
Where SealedFolio does fit a new property management company is the rentals you own yourself. Many managers start with their own units, and SealedFolio Pro at $19 a month or $179 a year (up to 3 properties) or Portfolio at $39 a month or $297 a year (unlimited properties) keeps those books, depreciation and Schedule E reports separate from client accounts. Every SealedFolio plan is paid at checkout with a 30-day money-back guarantee. For a fuller list of cloud platforms built for managers, see SealedFolio's comparison of AppFolio alternatives with published prices.
Step 7: Find your first property owners
The first owners are the hardest part of starting a property management company, and SealedFolio's read of the ranking guides lands on the same few channels. Upkeep Media recommends a clear website, simple marketing material, and local networking. Propertyware stresses building a local network and adding property management certifications to show you know the work.
- Start with who you know. Friends and family who own a rental, landlords from your local real estate investor group, and agents who get asked "do you know a good property manager?"
- Accidental landlords. People who moved and kept their old house, or inherited a property, often want someone else to run it.
- A plain website with your fees on it. A page that shows your management fee, leasing fee and service area saves an owner a phone call and filters out owners outside your area.
- Vendors. Plumbers, handymen and cleaners who work for landlords hear first when an owner is unhappy with their manager.
Keep your first owners close to home. Driving distance to every property keeps inspections, showings and emergencies manageable while you are still the only employee.
How much it costs to start a property management company
Startup cost for a property management company is low compared with most businesses, and the main variable is licensing. Mashvisor's guide puts the startup cost at between $2,000 and $10,000. SealedFolio's breakdown of where that money goes, using figures already cited in this guide:
- Entity formation: about $150 to $200 in documents plus $10 to several hundred dollars in state fees (Propertyware).
- EIN: $0 from the IRS.
- Licensing: pre-licensing education, exam and license fees if your state requires a broker license. Colorado's pathway alone involves 168 hours of coursework (Buildium).
- Insurance: E&O and general liability premiums, quoted for your state and coverage limits.
- Software: Buildium publishes a starting price of $62 a month. Yardi Breeze includes an owner portal and has a $100 monthly minimum for residential portfolios; Breeze Premier also includes the portal and has a $400 monthly minimum.
- Marketing: website, signs and business cards.
Is starting a property management company worth it?
Whether a property management company is worth starting comes down to margin and patience. The National Association of Residential Property Managers' 2022 guide reports an average profit margin of 11% in 2021, with the top quarter of companies reaching about 30% that year. These are historical results, not current benchmarks. Revenue builds one door at a time, so the first year is mostly about signing owners and keeping them.
It suits you if you already handle tenants calmly, like local real estate, and can answer the phone at night when a pipe bursts. It does not suit you if you want passive income; managing other people's rentals is a service job. If you are still deciding between buying rentals and managing them, SealedFolio's guide to buying your first rental property covers the owner side of the same business.
Legal rules that apply to every property management company
Beyond the license, a property management company is bound by federal fair housing law and by state landlord-tenant law. SealedFolio is not a law firm, so treat this as a checklist to raise with your attorney:
- Fair Housing Act: HUD's overview says the federal Fair Housing Act prohibits discrimination in housing because of race, color, national origin, religion, sex, familial status and disability. Apply the same written screening criteria to every applicant.
- Security deposits: limits, holding rules and return deadlines are set by each state, and they are a common source of disputes.
- Local rental licensing: some cities license the rental itself. Buildium notes Denver requires all rental properties to be licensed.
- Trust account rules: where your state licenses managers, it usually also sets rules for how client funds are held and recorded, as in Colorado's Rule CP-27.
How to start a property management company: FAQ
How do I start my own property management company?
Check your state's license rules first, because many states treat managing rentals for others as real estate brokerage. Then form an LLC or corporation, get a free EIN from the IRS, open an operating account and a separate trust account, buy errors and omissions and general liability insurance, write a management agreement, set your fees, choose software with trust accounting, and sign your first owners from your local network.
Do I need a license to start a property management company?
It depends on the state. Texas requires a license when you are paid to show or lease property for an owner or you control the deposit of a tenant's rent, while the Idaho Real Estate Commission says property management is not regulated in Idaho. Propertyware counted 41 states requiring a broker license as of 2018, so confirm with your own state's real estate commission.
How much does a property management company get paid?
Property management companies commonly charge a monthly fee of 3% to 10% of rent, according to Propertyware and Upkeep Media, and RentalReady puts long-term residential fees at 8% to 12% in 2025 data. On top of that, leasing fees are often one month's rent or 50% to 75% of it, and renewal fees are around $200 or less.
How much does it cost to start a property management company?
Mashvisor puts the startup cost at between $2,000 and $10,000. The main pieces are entity formation (about $150 to $200 in documents plus state fees), licensing if your state requires a broker license, errors and omissions and general liability insurance, software, and a basic website. An EIN from the IRS is free.
What is the 2% rule in rental property?
The 2% rule is a quick screening test for buying rentals: the monthly rent should be at least 2% of the purchase price, so a $100,000 property would need to rent for $2,000 a month. Freedom Mortgage notes this is rare in most markets. It is an investor rule of thumb, not a property management fee rule.
Can I pay myself to manage my own property?
You can manage your own rentals, and states that license property managers generally exempt owners managing their own property, as Buildium reports for Colorado. Getting paid is harder. IRS Publication 527 lists management fees as a deductible rental expense, but it excludes the value of your own labor when it explains what counts toward an improvement's cost. Paying yourself a fee through a separate company is a tax question for your CPA.
What software does a new property management company need?
A company managing for other owners needs trust accounting, owner statements and usually online rent collection. Buildium publishes a starting price of $62 a month. Yardi Breeze includes an owner portal and has a $100 monthly minimum for residential portfolios; Breeze Premier also includes the portal and has a $400 monthly minimum. SealedFolio itself is for rentals you own, not client accounts, starting at $19 a month with a 30-day money-back guarantee.