There was a client who struggled for a long time deciding whether to hire a management company or manage the property themselves. Rental prices in Little Rock are fluctuating between $1,082 and $1,195 (Zumper, as of July 2026). This represents an 8.6 percent increase compared to the previous year, indicating strong rental demand. This number suggests that among the markets observed over time, the upward trend is relatively clear.

The decision to hire management or not ultimately depends on understanding the loan structure first. Investment property loans require a down payment of 15 to 25 percent, which is higher than for owner-occupied homes, and a credit score of at least 620 is needed for approval, with a score over 740 required for preferred rates. It is a long-standing market practice that interest rates are set 0.5 to 0.75 percentage points higher than those for owner-occupied properties. Based on years of observation, there is a significant difference in the range of property options available between those who plan their finances with this knowledge in advance and those who learn about it later.

Rental income is only counted as 75 percent of the expected amount for loan income. The 1 percent rule, which states that the monthly rent should exceed 1 percent of the purchase price, has long been a standard used by investors. In areas like Little Rock, where rental prices are clearly on the rise and purchase prices are low, it is relatively easy to find properties that meet this criterion. However, just because rental prices are rising quickly does not guarantee that purchase prices will remain low, so it is advisable to develop a habit of recalculating every time market prices are checked.

In Arkansas, there is no statutory limit on how much rent can be increased. However, a written notice must be given 30 days in advance to raise the rent. In June 2024, Little Rock formalized tenant rights through a separate ordinance that includes hot and cold water, plumbing, heating and cooling, and roof conditions. From the perspective of someone who has observed the area for a long time, this ordinance reestablishes minimum housing standards at the city level. Details may vary according to county or city ordinances, so it is necessary to check.

The median effective tax rate in Little Rock is 1.13 percent, while the overall rate for nearby Pulaski County is about 1.04 percent (Ownwell, as of 2026). This is similar to or slightly higher than the national median of 1.02 percent, making it a factor that must be reflected in cash flow calculations. There can be significant differences by zip code, with tax rates sometimes nearly doubling even within Pulaski County, so it is advisable to verify based on the specific address after narrowing down property options.

For that client who was contemplating hiring a management company, I suggested calculating not only the fees but also the cap rate, which is the net operating income divided by the purchase price. If the cap rate remains above the local average even after accounting for management fees, they can make a decision with confidence that their profits will not be significantly compromised. Conversely, if the cap rate is already tight, it may be more realistic to lean towards self-management rather than hiring out.

Using a management company will cost 8 to 12 percent of the monthly rent in fees. For investors who are unsure about managing the property themselves or are located far away, this cost can be worth it to save time. Landlord insurance is typically more expensive than standard homeowners insurance, as it covers rental loss and tenant liability. Maintenance is generally advised to be budgeted at about 1 percent of the asset value annually, based on long-standing market experience. When it comes time to liquidate assets and move them elsewhere, considering a 1031 exchange to defer capital gains tax is also worth exploring.

There is no definitive answer whether to hire a management company or manage directly. My advice, based on years of market observation, is to calculate the rental levels, property taxes, and management costs together. Ultimately, that client was able to make a decision only after recalculating the cap rate, and I have seen through long experience that decisions confirmed by numbers do not waver later. This article is not investment or legal advice, and consulting a professional before any actual contracts is recommended.