Should you hire a third-party property manager?

Property management is a collection of challenges operators must overcome to maximize their property’s profitability. In multifamily real estate, property managers (PMs) aim to ensure their apartment communities generate adequate cash flow through resident satisfaction, collecting rent, marketing the property, handling property income and expenses, understanding landlord/resident laws and regulations, overseeing evictions, and scheduling/conducting inspections. [6]

Active real estate investing typically comes with one big challenge: property management. For many property owners without experience, managing a property on their own can be incredibly difficult.

The question now arises: Is it worth it to hire a property manager? Should they be third-party or in-house? Here, we will explore the role of a property manager and the pros and cons of hiring third-party vs. in-house.

THE ROLE OF A PROPERTY MANAGER

In real estate investing, a property manager is a professional responsible for overseeing and managing a property’s daily operations. Their duties include a wide range of tasks such as those mentioned above.

Property management refers to the oversight of residential, commercial, or industrial real estate by a third-party contractor or in-house team. [7] A property management company checks that the property is well-maintained and operates smoothly, including coordinating repairs and regular maintenance, managing budgets, and ensuring legal compliance.

By taking on these responsibilities, property managers free up property owners’ time, allowing them to focus on tasks like acquiring more properties, diversifying their portfolio, or handling other obligations. The property manager preserves the property’s value while it generates income. [7]

In addition to these operational tasks, property managers play a crucial role in financial management and reporting. They prepare detailed financial reports for property owners, including income statements, expense reports, and occupancy rates, helping to paint a clear picture of the investment property’s economic performance. [2]

BENEFITS OF HIRING A PROPERTY MANAGER

A property manager’s expertise and professional management help maintain the property’s value over time, making them an integral part of the real estate investment process. Here are some of the benefits of hiring a property manager even if you only have one property:

TIME SAVINGS: Hiring a property manager is particularly beneficial for those with demanding schedules or multiple commitments. Property management companies can save investors a lot of time by handling tasks like resident screening, rent collection, maintenance requests, and property inspections. [2] These professionals have the expertise to address issues promptly and efficiently, keeping residents satisfied while ensuring the property is well-maintained. Active investors can use this extra time to focus on other personal or professional activities, allowing them to maximize their productivity or simply save their energy for other priorities.

EXPERTISE & EXPERIENCE: Speaking of expertise, property managers are professionals who are well-versed in market trends. This allows them to optimize your property’s performance by handling its day-to-day operations. A lot of property management companies hire managers who are licensed real estate agents with years of experience. This means they are aware of the ins and outs of the real estate market. It is likely that they are already familiar with how to run a property based on how long they have been in the business. [3] Not only can they give you solid advice on setting competitive rental prices and maximizing income, but they can also handle other tasks expertly. They can conduct thorough resident screening to reduce the risk of late payments. They also have comprehensive knowledge about legal requirements and laws/regulations. This helps property owners avoid potential legal issues by ensuring compliance with local regulations.

RESIDENT SCREENING: Another significant advantage of hiring a property manager is their expertise in conducting thorough resident screening processes. A good property manager will have an in-place system to vet potential residents, including background checks, credit checks, and reference verification. [2] This meticulous screening reduces the risk of renting to problematic individuals who might cause property damage, engage in disruptive behavior, or fail to pay rent on time. Property managers help ensure a stable and consistent rental income by selecting reliable and responsible residents. They also have the knowledge and experience in terms of handling resident issues and legal matters, further protecting the owner’s investment.

MAINTENANCE & REPAIRS: A property management company can efficiently handle maintenance issues through its established network of trusted contractors and vendors. This network allows them to promptly address maintenance concerns, ensuring repairs are conducted swiftly and at competitive rates. [2] For individual property owners, navigating the process of finding reliable service providers can be time-consuming. It may even result in higher costs due to a lack of established relationships. By leveraging the existing network of property management companies, investors can preserve the value of their investment property. Proper maintenance also helps keep residents satisfied, improving their experience and motivating them to stay longer.

IN-HOUSE VS. THIRD-PARTY

A third party refers to persons or entities outside the primary party involved in an investment, deal, etc. In commercial multifamily real estate, a third party could refer to a property management team, a development company, a maintenance team, and more. Conversely, an in-house property management team uses its employees and resources to perform daily operations, which could be through a real estate model known as vertical integration.

A vertical integration strategy can make handling day-to-day operations less grievous and reduce expenses. To streamline its operations, a vertically integrated company directly oversees various operational components. Instead of outsourcing and relying on external contractors or suppliers, these companies acquire suppliers, distributors, manufacturers, and any other third parties they need to support the deal. 

Cost is a significant factor when choosing a property manager. Third-party property management contractors typically charge a percentage of the building’s rental income. While fees vary, they often range from 8% to 12% of the monthly rent for single-family homes, and between 2.5% and 5% of commercial multifamily properties. [10]

That said, property owners also need to be prepared for additional fees for services beyond the basic management, such as leasing fees or maintenance markups, which can further impact your bottom line.

If you are working with a third-party property manager/management company, you must be prepared for potential conflicts with how they manage your property. You must verify that your goals align with how they operate, since you will mostly relinquish day-to-day control over your property. [3]

While third-party property managers can offer valuable expertise and convenience, it is crucial to weigh these benefits against the potential drawbacks of cost, control, and alignment with investment goals.

Food delivery services can offer insight into the differences between in-house teams and third-party contractors. Food delivery services for restaurants aren’t entirely new. In fact, the inception of pizza delivery service was during the late 1950s in Los Angeles. [8] Eventually, Uber Eats, Instacart, DoorDash, and the like came onto the scene. These third-party delivery services worked for a while. However, restaurants didn’t take long to implement their own food delivery systems, using their employed staff to generate more income; this is considered in-house. [9]

IS IT WORTH IT?

When actively investing in multifamily real estate, the decision to hire a third-party property manager depends on your personal preferences and circumstances:

• Do you have the time and expertise to manage the property yourself?
• Are you comfortable dealing with residents and handling maintenance issues?
• Can you afford the cost of property management services?
• Do you value peace of mind and reduced stress in professional management?

If you find that managing the property yourself is overwhelming or if you live far from the rental property, hiring a property manager can be a worthwhile investment. However, if you have the time, skills, and desire to manage the property, you might prefer to save on the management fees and handle it independently. [3]

CONNECT WITH AN INSTITUTIONAL REAL ESTATE OWNER/OPERATOR 

BAM Management is the property management arm of The BAM Companies, an institutional multifamily real estate owner/operator. It strives to hire the most professional and knowledgeable staff to ensure a satisfying resident experience. The BAM Management team’s direct involvement with the day-to-day management of its properties and residents provides the necessary levers for income growth and cost control.

The BAM Companies invests in its people. Property managers under the BAM Management umbrella are encouraged to continue their education and become certified in their respective fields, whether it is a maintenance team member seeking their certificate for apartment maintenance technicians (CAMT) or a leasing consultant interested in becoming a national apartment leasing professional (NALP), The BAM Companies advocates for professional development and cultivating skilled PMs in the industry. 

Review BAM Management career opportunities here or visit The BAM Companies website to learn more.

Just like choosing a property manager you trust, working with a trustworthy sponsor (owner/operator) with a track record for reliability and excellence is also essential. Consider working with BAM Capital.

The BAM Companies is a vertically integrated owner/operator. This means BAM Capital can guide you throughout the entire passive investment process, handling everything from acquiring the properties to renovating and managing them.

BAM Capital partners with accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement. As the private equity arm of The BAM Companies, BAM Capital has been focusing on buying the most assets and staying disciplined in its investment thesis. BAM Capital’s investment strategy aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units.

Remember that no investment is without risk. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect BAM Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. BAM Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment.

© 2025 BAM Capital. All rights reserved.

SOURCES:

[1]: Investopedia. (2024). “A Beginner’s Guide to Real Estate Investing.” https://www.investopedia.com/mortgage/real-estate-investing-guide/

[2]: Investopedia. (2024). “Property Management: Definition, Roles, Types, and Duties.”  https://www.investopedia.com/terms/p/property-management.asp

[3]: Good Life Property Management. (n.d.). “Pros and Cons of Hiring a Property Management Company.” https://www.goodlifemgmt.com/blog/pros-and-cons-of-hiring-a-property-management-company/

[4]: Multifamily Refinance. (n.d.). “Multifamily Syndication: The Complete Guide.” https://multifamilyrefinance.com/apartment-investing-blog/multifamily-syndication#important

[5]: BAM Capital. (n.d.). “Current Portfolio.” https://bamcapital.com/

[6]: BAM Capital. (2025). “What is a Certified Apartment Manager (CAM) and how do I become one?” https://bamcapital.com/what-is-cam-and-how-to-become-one/ 

[7]: Investopedia. (2024). “Property Management: Definition, Roles, Types, and Duties.”  https://www.investopedia.com/terms/p/property-management.asp 

[8]: History Guild. (2022). “The History of Food Delivery.” https://historyguild.org/the-history-of-food-delivery/#:~:text=As%20the%20movement%20towards%20the,restaurant%20to%20offer%20these%20services.

[9]: DoorDash for Merchants. (2024). “Comparing In-House and Third-Party Food Delivery Services for Restaurants.” https://merchants.doordash.com/en-us/blog/food-delivery-services-for-restaurants 

[10]: Good Life Property Management. (n.d.). “Pros and Cons of Hiring a Property Management Company.” https://www.goodlifemgmt.com/blog/pros-and-cons-of-hiring-a-property-management-company/