How to Start a Property Management Business in Texas: When You Need a TREC Broker License

If you plan to collect rent, sign leases, or handle tenant deposits for other people's property in Texas for a fee, you will almost certainly need a license from the Texas Real Estate Commission (TREC). Texas does not issue a separate property manager license. In most cases the credential you need is a broker license, or you work as a sales agent under a sponsoring broker. This guide covers who needs a license, who is exempt, how to qualify, and the business setup that comes before your first management contract.

Most texas property management license questions come down to one issue: whether what you do counts as brokerage under state law. Once you answer that, the remaining steps are mostly paperwork, money handling, and planning.

Important: This article is informational only. It is not legal or tax advice. Licensing and business formation rules change, so confirm current requirements with TREC, the Texas Secretary of State, and the Texas Comptroller of Public Accounts. For complex situations, such as managing properties in several entities or holding client funds for large portfolios, talk with a Texas real estate attorney and a CPA.

What You Need Before You Start

Gather these items before you file anything:

• A list of the properties you expect to manage in the first year and who owns each one
• A written description of your services, stating whether you will collect rent, hold deposits, sign leases, or only advise owners
• Records that document your qualifying experience and education for the license you are pursuing
• Your preferred business name, checked for availability with the Texas Secretary of State
• A registered agent with a physical street address in Texas, if you plan to form an LLC or corporation
• A bank account that can be set up as a trust account before you accept any client money
• A budget for the filing fees in Step 4 and for TREC license fees, courses, and exams, which you should confirm with TREC and your education provider

Step 1: Decide Whether Your Activity Requires a License

Occupations Code 1101.002 defines a broker to include a person who, for a fee, leases or offers to lease real estate on behalf of another. The definition also covers a person who controls the acceptance or deposit of rent from a resident of a single-family residential unit. If you collect rent for an owner, sign leases for an owner, or control how tenant deposits are received, you are likely acting as a broker.

Occupations Code 1101.005 lists exemptions. The ones most relevant to property management include:

• An owner leasing property the owner owns, or an employee of the owner leasing that property
• An on-site manager of an apartment complex
• An attorney acting within the practice of law
• Hotel or motel management

Read the statute before you rely on an exemption. An on-site apartment manager exemption, for example, does not automatically cover someone who oversees scattered single-family homes across several neighborhoods. If your model falls between categories, ask TREC or an attorney to confirm it in writing before you take on clients.

Step 2: Understand That Texas Has No Property Manager License

Many people search for a texas property management license expecting a dedicated credential. Texas does not offer one. You have two practical routes:

1. Become a licensed broker and operate the business under your own license.
2. Work as a sales agent under a sponsoring broker. The sponsoring broker supervises your work and the brokerage is responsible for the activity. You do not run an independent management business under your own name.

Some owners hire a licensed brokerage or a licensed manager instead of licensing themselves. That can work, but it changes who signs contracts, who controls pricing, and who holds the trust account. Compare the options before you choose a structure.

If your business only finds tenants for a fee, look at the licensed residential rental locator license. It is a separate license from the broker license. Confirm with TREC which license fits your exact activity, because finding tenants and managing properties can overlap.

Step 3: Meet the Broker Qualifications

Most owner-operators who manage properties for others end up pursuing the broker license. TREC's qualification requirements for brokers include four years of experience, 360 points, and 270 qualifying hours plus related education. Check the real estate section of the TREC website for the current requirements, the accepted forms of experience, and how points are counted, since those rules can change.

Plan the timeline around these requirements. Clarify early which of your past jobs count toward experience, and keep records that prove it. Waiting until you are ready to launch to sort out documentation is a common reason applications stall.

Step 4: Form Your Business Entity

A property management company is often formed as a Texas LLC. The formation document is the Certificate of Formation (Form 205), with a filing fee of $300 through the Texas Secretary of State. A corporation uses the Certificate of Formation (Form 201), also with a $300 filing fee. Ask TREC how your business entity must be listed or registered alongside your broker license before you sign any management agreement.

Several rules apply to the name and to the registered agent:

• Name: It must be distinguishable from existing filings in the Secretary of State's records and must include an organizational designation such as Limited Liability Company, LLC, L.L.C., Limited Company, LC, or L.C. It cannot imply a purpose the entity is not authorized to pursue or falsely suggest a government affiliation. Call (512) 463-5555 to check preliminary availability.
• Name reservation: You can reserve a name for 120 days for $40.
• Registered agent: Every domestic filing entity must continuously maintain a registered agent and a physical Texas street address where the agent can be served during business hours. The agent must be a Texas resident individual, a domestic entity, or a qualified foreign entity, and the company cannot be its own registered agent. A post office box or mail forwarding service alone is not enough. Changing the agent or office costs $15.
• Speed: The Secretary of State does not publish a guaranteed standard turnaround. Electronic filing through SOSDirect or SOSUpload is the fastest standard route. Paper filings usually show as Received for at least one business day before processing. If you need guaranteed timing, Texas Express expedite options are available: Standard Expedite is $50 per document and is typically processed in two to three business days, Next Day Expedite is $500 per document for filings received by 12:00 p.m., and Same Day Expedite is $750 per document for filings received by 12:00 p.m. Expedite fees are in addition to the filing fee. Preclearance of a draft instrument is $50.

File through the Secretary of State's SOSDirect portal at direct.sos.state.tx.us, and review general entity information on the Texas Secretary of State corporations page.

Step 5: Register an Assumed Name If You Need One

If you operate under a name other than the exact name on your formation document, you need an assumed name certificate. The fee is $25, filed with the Secretary of State on Form 503 for LLCs, corporations, limited partnerships, and other registered filing entities. Since September 1, 2019, those entities no longer also file with the county clerk. The certificate can state a term of up to 10 years and must be refiled before it expires.

Sole proprietors and general partnerships are different. They file with the county clerk in each county where they maintain a business office or conduct business, and county fees vary. Texas counties do not otherwise license businesses like this, so the assumed name filing is usually the only county-level step.

Step 6: Set Up the Trust Account Before You Accept Client Money

Client rent and security deposits must flow through a trust account under TREC rules. Do not accept a single dollar of owner or tenant money into your operating account. Open the trust account in the correct name, with the structure TREC requires, before your first lease is signed. Check TREC for the current trust account rules, including account titling, records, reconciliation, and timing of deposits, because these details matter and are easy to get wrong.

Ask your bank whether it offers trust or escrow accounts for real estate brokerage and confirm the requirements with TREC before you open the account.

Step 7: Handle State Taxes and Filings

Texas has no state personal income tax and no state corporate income tax. Your business is instead subject to the Texas franchise tax, a privilege tax administered by the Comptroller. For the 2026 and 2027 report years, the no tax due threshold is $2,650,000 in total revenue. Entities at or below that threshold owe no franchise tax, but they must still file a Public Information Report, which is due May 15 each year to the Comptroller, not the Secretary of State. There is no separate state annual report fee with the Secretary of State.

Above the threshold, the rates are 0.375 percent for retail and wholesale entities, 0.75 percent for all other entities, and a 0.331 percent EZ Computation rate for entities under $20 million in total revenue. Most property management firms fall into the all other entities category, but confirm your classification with the Comptroller. Texas does not require a publication notice for new LLCs.

Sales tax is a separate question. The state sales tax rate is 6.25 percent, and businesses selling taxable goods or services generally need a sales and use tax permit. The permit is issued at no charge and typically takes two to three weeks. Whether your management fees, or any add-on services you sell, are taxable is a question for the Comptroller. Do not assume either way. Start at comptroller.texas.gov/taxes and apply for the permit at comptroller.texas.gov/taxes/permit if your review shows you need one.

Step 8: Check Local Requirements

Texas does not issue a general state business license, and it does not have a statewide general contractor or roofing license. Counties license nothing beyond the sole proprietor assumed name filing described above. Cities may have their own rules for rental operations, registration, or inspections, so call your city's permitting office and ask whether any local requirements apply to managing rental properties in your area. The Texas Business Licenses and Permits Guide from the Texas Economic Development and Tourism Office is a useful starting reference for activity-specific requirements.

Common Mistakes to Avoid

• Looking for a property manager license. Texas does not issue one. Your real choice is a broker license or a sales agent position under a sponsoring broker.
• Assuming the owner exemption covers you. It applies to owners and their employees leasing their own property. It does not cover a company managing other people's homes.
• Collecting money before the trust account is open. Client funds belong in the trust account from the start.
• Using a mailbox as the registered office. A post office box or forwarding service alone does not satisfy the registered agent rule.
• Skipping the Public Information Report. A company that owes no franchise tax still has a May 15 filing obligation with the Comptroller.
• Naming the company without an entity designation. A name such as Sunrise Property Care without LLC or another designation can be rejected.
• Paying for expedite without a deadline. If you are not signing a contract within days, standard electronic filing may be enough. Use expedite only when the timing matters.
• Treating rental locator work as management. If you only find tenants for a fee, the rental locator license may apply instead of a broker license.

Estimated Startup Costs

The table below lists the fees verified for this guide. Items marked with a confirmation note need to be checked with the named agency before you budget for them.

Item	Cost	Where to confirm
LLC Certificate of Formation (Form 205)	$300	Texas Secretary of State
Corporation Certificate of Formation (Form 201)	$300	Texas Secretary of State
Name reservation, 120 days	$40	Texas Secretary of State
Standard Expedite, per document	$50	Texas Secretary of State
Assumed name certificate (Form 503)	$25	Texas Secretary of State
Registered agent change or office change	$15	Texas Secretary of State
Sales and use tax permit	No charge	Texas Comptroller
TREC broker license, education, and exam fees	Confirm with TREC and your education provider	Texas Real Estate Commission
Trust account opening and bank fees	Confirm with your bank and TREC	Your bank and TREC

Expected Results

Completing these steps in order may help you launch on a sound legal footing. A licensed broker structure, a registered entity with a compliant registered agent, and a trust account set up before your first lease can reduce the chance of compliance problems that stall a new company. Owners tend to respond better to managers who can show proof of licensing and clear handling of their money, so the paperwork can also support your sales conversations.

Timing will vary. Your license timeline depends on qualifying experience, coursework, and exam scheduling. Your entity filing can take anywhere from a few business days with expedite to longer through standard processing. Your sales tax permit typically takes two to three weeks once you apply. Build a launch calendar with buffer time rather than a fixed date.

Next Steps

1. Write down the services you will provide and check them against the Occupations Code 1101.002 and 1101.005 definitions.
2. Confirm your broker qualifications on the TREC website and document your experience.
3. Check your business name with the Secretary of State and file the entity documents.
4. Name a registered agent with a physical Texas address and get written consent.
5. Open a trust account once you have confirmed the current TREC rules.
6. Calendar your May 15 Public Information Report and review your franchise tax position each year.

If you need help with the business side, the Texas Small Business Development Center Network offers free business advising across the state. For questions about licensing, ask TREC directly, and for complex ownership, contract, or tax questions, consult a Texas attorney or CPA before you start taking clients.

Disclaimer: This article is for general information only and is not legal or tax advice. Verify all requirements, fees, and deadlines with the agencies named above before you act on them.