Should You Hire a Property Manager or Sell Your Texas Rental?

You own a rental in Texas, and the calls about leaks, late rent and turnovers are wearing on you. Two paths usually come up: hand the house to a property manager, or sell it. Either one can be the right call.

Is the rental in Dallas, Tarrant, Collin, Denton or a nearby county? Our DFW guide to city rental rules adds the city permits and inspections that can come with a turnover or a sale.

What a Texas property manager does

A property manager finds tenants, shows and leases the house, and collects the rent. The management agreement you sign sets out the rest, such as who approves repairs, how often you get a statement and how rent reaches you.

Texas treats much of that work as real estate brokerage. Under the Real Estate License Act, a person who leases real estate for someone else in exchange for a commission or other pay is a "broker" (Occupations Code Sec. 1101.002). The same definition covers anyone who, for another person and for pay, controls the acceptance or deposit of rent from a tenant in a single-family rental.

The Texas Real Estate Commission's FAQ on property manager licensing says it depends on what the manager is doing. If the duties include showing or leasing the property for the owner, and the manager is paid for that, a license is required.

Chapter 1101 also lists people it does not apply to (Sec. 1101.005). Four matter most to landlords:

• You and your employee. The act does not apply to an owner, or the owner's employee, leasing the owner's own property. You can manage your own rental without a license.
• On-site apartment managers. An on-site manager of an apartment complex is exempt.
• Attorneys and powers of attorney. A Texas-licensed attorney is exempt. So is an attorney-in-fact under a power of attorney, but only for up to three real estate transactions a year.
• Rentals owned by an LLC. A separate exemption covers the LLC's managers and managing members, and employees or members who negotiate the lease as part of their job (Sec. 1101.005(11)).

Those exemptions are narrow. Before a friend or relative leases the house for you for pay, ask a Texas real estate attorney. Ask any manager you interview whether they hold a Texas real estate license.

Duties that stay with the landlord

A manager takes over the work, but Property Code Chapter 92 still puts the duties on the landlord, and hiring someone does not end them. Check that your agreement says who handles each of these:

• Repairs (Sec. 92.052). The landlord must make a diligent effort to repair a condition once the tenant gives notice to the person or place where rent is normally paid. The tenant must be current on rent, and the condition must materially affect the physical health or safety of an ordinary tenant, or be a hot-water failure. The duty generally does not cover damage caused by the tenant, the tenant's household or guests, beyond normal wear and tear. If tenants pay rent to your manager, that is where repair notices will land.
• Security deposits (Secs. 92.103 and 92.104). The deposit is due back within 30 days after the tenant moves out. The landlord does not have to send it until the tenant gives a written forwarding address, but a tenant who never does keeps the right to it (Sec. 92.107). A landlord who keeps all or part must return any balance with a written description and itemized list of all deductions. The list is not required if the tenant owes rent at move-out and the amount is not disputed.
• Security devices (Sec. 92.153). While a tenant lives there, and with some exceptions, the house must have window latches; a doorknob lock or keyed dead bolt, a keyless bolting device and a door viewer on each exterior door; and the required sliding-door locks, without the tenant having to ask.
• Smoke alarms (Sec. 92.255). The landlord must put at least one smoke alarm in every separate bedroom. Corridor and per-level rules apply too.
• Owner and manager disclosure (Sec. 92.201). A landlord must disclose to a tenant the name and address of the owner shown in the county deed records. If the tenant asks, it is due within seven days. If an off-site company is primarily responsible for managing the house, the landlord must also disclose that company's name and street address.

A careful manager handles all of this, but the duties stay yours, so ask how you will know each one was done.

The costs to put in your own math

Managers price their work in different ways. Ask each one you interview to list every fee in writing, and look for these types:

• A monthly management fee. Ask what it is based on and whether it is charged in months the house sits empty.
• A leasing or tenant placement fee, charged when the manager finds a new tenant.
• A renewal fee, charged when a current tenant signs a new lease.
• A maintenance markup, an amount added on top of the cost of repairs the manager arranges.

Also ask how you can end the agreement and what leaving costs. Then add the costs a manager does not remove: repairs, empty months between tenants, insurance and property taxes. Our holding cost calculator can help you tally what the house costs you each month.

One offset: management fees are on the IRS list of the most common rental expenses (IRS Publication 527). Within limits such as the passive activity rules, a deduction can lower the after-tax cost of a manager.

When keeping it with a manager makes sense

Selling is not always the better answer. A manager can be the right move when most of these are true:

• The rent covers the mortgage, taxes, insurance, repairs and the manager's fees, with money left over.
• The house is in good shape, and you have savings set aside for the next big repair.
• You want to own the house for years, and your problem is the day-to-day work, not the property.
• Your tenant pays on time and takes care of the place.
• A sale now would bring a tax bill you would rather plan for first (see the tax section below).

Then a licensed manager may fix the problem you actually have: your time. Hire well and check the statements.

When selling makes more sense

Selling tends to fit when the house itself is the problem, not just the workload:

• Repairs keep coming, and each turnover means another round of work before anyone can move in.
• After fees, repairs and empty months, the rent leaves little or nothing.
• You live far from the house and cannot check on a manager's work.
• You need the money for something else, such as another purchase, a debt or retirement.
• You are simply done being a landlord.

A tenant moving out is a natural time to decide. If the house will sit empty while you think it over, read our guide to vacant rental risks in Texas. If it is in Dallas–Fort Worth, the DFW guide lists city registration, permit and inspection rules by county, with a link to each city's own page.

Selling with the tenant in place

You do not have to wait for an empty house to sell. Start with the security deposits. Property Code Sec. 92.105 makes the new owner liable for returning tenants' security deposits from the date it acquires title. You, as the seller, stay liable for the deposits you collected until the buyer has received them or assumed that liability, unless a written contract between you says otherwise.

If your manager holds the deposits and the lease file, bring the manager in early so those records reach the title company. Our guide to selling a house with tenants in Texas covers the lease, notice to a month-to-month tenant and showings in more detail.

The tax side, in general terms

Taxes can tip the decision either way, and they depend on your own numbers. A few federal rules shape most rental sales:

• Depreciation comes back. On a rental held more than a year, the part of the gain that comes from depreciation is generally "unrecaptured section 1250 gain" (IRS Publication 544). It is taxed at a maximum rate of 25%, and some sellers also owe the net investment income tax (IRS Topic No. 409).
• Skipped depreciation still counts. You may not have claimed all the depreciation you were entitled to. You still reduce your basis (your tax cost in the house) by the full amount you could have deducted, so the taxable gain at sale can be larger (IRS Publication 527).
• Trading into another rental. Since 2018, a like-kind (1031) exchange applies only to real property held for business or investment use, not real property held mainly for sale. Selling first and buying later works only as a deferred exchange under an agreement, and you must not receive or control the sale money before you get the replacement; a qualified intermediary is one IRS safe harbor for that. You must identify the replacement in writing within 45 days and receive it within 180 days, or by your tax return due date with extensions if that comes first (Instructions for Form 8824).
• Losses you could not use. Rental losses the passive-loss rules kept you from deducting are generally allowed in full in the year you dispose of your entire interest in the rental activity. The sale must be fully taxable, to a buyer not related to you. Selling one of several grouped rentals, or selling on installments, works differently (IRS Publication 925).

On the state side, the Texas Comptroller notes that Texas does not levy an income tax (Fiscal Notes, 2023). If a business entity owns the rental, ask whether it owes Texas franchise tax or must file a report, which can apply even when no tax is due. Talk to a CPA before you list or sign anything, so you know your after-tax number for keeping the house and for selling it.

If you decide to sell

Cash Home Advisors buys houses in Dallas–Fort Worth, Houston, San Antonio and Austin. We do not manage rentals; we buy them. You sell as-is, no repairs, and there are no agent commissions. We can close in 7–14 days, and we pay all closing costs.

Asking is free, no obligation, and a real person calls you back. Request a cash offer, or read how our process works first.

For a duplex or fourplex, see selling a small multifamily property in Texas.

Frequently asked questions

Sources

1. Texas Occupations Code, Chapter 1101 (Secs. 1101.002 and 1101.005, Real Estate License Act)
2. Texas Real Estate Commission, FAQ: Does a property manager have to be licensed?
3. Texas Property Code, Chapter 92 (Secs. 92.052, 92.103, 92.104, 92.105, 92.107, 92.153, 92.201, 92.255)
4. IRS Publication 527 (2025), Residential Rental Property
5. IRS Publication 544 (2025), Sales and Other Dispositions of Assets
6. IRS Topic No. 409, Capital gains and losses
7. IRS Instructions for Form 8824 (2025), Like-Kind Exchanges
8. IRS Publication 925 (2025), Passive Activity and At-Risk Rules
9. Texas Comptroller, Fiscal Notes (December 2023): property tax and no state income tax
10. Texas Comptroller, Franchise Tax

General information, not legal or tax advice. Talk to a Texas attorney or CPA about your situation.