PM Fees - Too Much or Normal?

Question

I'm helping my MIL get her apartment set up as a LTR in Memphis. She found a PM through a friend in the building and they sent me the contract to review. The fees seem far above what I expected, but I manage my own rentals in FL so am not familiar with PM fees in general. I have listed the fee structure below. If you have any experience or knowledge in the Memphis area, will you please share your insight as to whether this is a normal fee breakdown or too much. If too much, do you have any PM recs?

Management & Leasing Fees

• Management Fee: 10% of the monthly rent = $180/month
• Leasing Fee (Tenant Placement): 60% of one month’s rent = $1,080 (one-time)
• Lease Renewal Fee: $250 per lease renewal

Upfront & Annual Fees

• Onboarding Fee: $350 (one-time for setting up the property)
• Annual Administrative Fee: $45 per year (for statements and 1099s)
• Reserve Fund Requirement: $300 (held for maintenance and expenses)

Maintenance & Repairs

• Ordinary Maintenance: Any repair costs exceeding $300 require owner approval.
• Emergency Repairs: Up to $300 without prior approval; HVAC, plumbing, and electrical repairs can go up to $500 without approval.
• Home Warranty Claim Handling: $40 per claim (if applicable).
• Multiple Quotes Request Fee: $100 per request if you require multiple vendor quotes.
• HVAC Filter Supply Fee: $195 per year per HVAC unit.
• Repairs & Improvements: 10% markup over vendor invoice cost.

Additional Fees

• Interest on Unpaid Sums: 10% late fee with a $39 minimum per month.
• Paper Check Administrative Fee: $20 per check if not using direct deposit.
• Insurance Documentation Penalty: $40 per month if proof of insurance is not provided.
• Eviction Protection Program (Optional): $15/month
• Property Damage Protection Program (Optional): $25/month

Termination Fees

• Early Termination Fee: Equal to the management fees for the remaining lease term.
• Vacant Property Termination Fee: $500 if no tenant is in place.
• Transfer to Another Manager: $500 file transfer fee.

Walter Bowser · Answer

Hi Chani,

These fees seem a bit high to me, specifically the leasing fee, on-boarding fee, Multiple quotes requests, HVAC filter supply, early termination fee, vacant property termination fee, and transfer to another manager fee.

The property managers fees should be philosophically aligned with your goals as the property owners.

Tina Sandoval · Answer

Hi Chani. Looks like for the Memphis market these fees are right in line with most pm companies. If you need any additional help I will tag @Crawford Peay who is an experienced  property manager perhaps he can help.

Jordan Ray · Answer

Hey Chani, It looks like this PM company has a fairly detailed fee structure, which is good for transparency, but some of these fees do seem on the higher end, especially for Memphis. A 10% management fee is common for smaller properties, but the 60% leasing fee is above market in many areas—30-50% is more typical. The onboarding fee and lease renewal fee are also on the higher side. The repair markup, multiple quotes fee, and HVAC filter supply fee are worth questioning as well.

If your MIL is comfortable negotiating, she may be able to get some of these fees reduced or waived. Otherwise, it might be worth getting a few more PM quotes to compare. I’d recommend checking local investor groups or networking with other landlords in Memphis to get recommendations for more competitive options.

One company I’d personally recommend looking into is RiverTown Realty. They are my go-to partner for property management in Memphis! They have a good reputation in the area and may offer a more reasonable fee structure. Hope that helps!

Adam Bartomeo · Answer

They are average on some fees but they are way overboard on how many fees they have. They must have an extremely high profit margin.

James Wise · Answer

All look in-line with typical market pricing.

Chelsea Canning · Answer

I have a property in Memphis...and frankly no matter how much I've spent on property management (have had three, all promise the sky and deliver next to nothing), I have gotten the run around by the property management team in all three cases, which has deterred me from investing further in Memphis real estate. How much you pay is NOT relevant by any means on the quality of property management. There is a whole subculture of scamming investors in Memphis so take the time to vet your providers. I previously had a great experience with MidSouth turnkey operation.

This last PM, specific for investors and with a comparable rate sheet, placed a tenant that had over 5 evictions in my rental when he said he had cleared her for credit and past evictions. And low and behold, I also had to evict her cutting into every bit of profit for the year.  The PM before, Evernest, provided a guarantee for renter within a certain time frame, gave me a much higher rental rate estimate, and then when couldn't deliver, made up a tenant to rent the home and then made up a break in which 'deterred the renter' thus resetting their clock guarantee. No police report was filed by the PM. They tried to charge me for repairs for this fake break in. I attempted to contact them multiple times but they wouldn't respond to attempts, I'm talking weeks with no response, so I hired another PM who went over and said the house was undisturbed and nothing was broken.

Memphis is a wild ride to invest in if you are out of town without a solid professional team.

Drew Sygit · Answer

@Stephen Akindona in our experience, the PMCs offering:

- No Termination Fees- Tenant Replacement Guarantees- Eviction Guarantees- Flat Fee Management- Etc.

only manage Class A & B+ properties, or bite off more than they can chew and their services suffer.

Stephen Akindona · Answer

@Chani Walker everything is normal expect for those fees to terminate. I have never heard of a property management company charging a fee to transfer the property to another management company. I know several local companies that really actually want to do a good job so they don't charge anything to cancel the contract. They require only a 60 day notice. They believe if they service you well, then you would never leave!

Melanie Thomas · Answer

Everything looks normal, except for the $500 transfer fee to another manager. I’m curious—does the fee get waived if you choose to self-manage? Good luck & happy investing!

Jennifer Nickerson · Answer

@Chani Walker These fees are consistent with the industry norm. I would confirm the home warranty they're referencing and it's coverage verses what their maintenance team will be doing. Involving home warranty companies can sometimes create delays in repairs/replacements. Please don't hesitate to reach out if you have any other questions. I'm with CB Properties here in Memphis.