Memphis Property Management Agreements - a comparison, options?

[Cathy McNair]

We've been working with a turnkey/property management company that has done a good job for us.  We would prefer to stay with them to manage our recent purchase, but unfortunately their PM agreement has become more onerous and non-negotiable and we are evaluating other options.  I'd welcome recommendations or referrals for Memphis-area property management, preferably unaffiliated with turnkey companies since we haven't researched those yet.

Because there are often posts asking about typical management contract terms, I thought I would share a comparison table I made of agreements from three Memphis-area turnkey companies frequently mentioned on BP.  As expected, there are slight variations in the managements fees and many clauses, but the differences in termination fees, mandatory commissions, and willingness to negotiate were surprising and could have a huge impact on exit strategy when the time comes. 

	Company A	Company B	Company C
Management Fees	80% (min $800) of 1st month’s rent for tenant placement $195 lease renewal fee 8-9% monthly fee	50% of 1st month’s rent for tenant placement $250 lease renewal fee 9-10% monthly fee $65/month fee when not rented (e.g., due to repairs or selling)	100% of 1st month’s rent for tenant placement $250 lease renewal fee 10% monthly fee
Contract	12 months, auto-renews annually and upon vacancy	12 months, auto-renews annually	12 months, auto-renews monthly after first 12 months
Contract Termination Requirements and Fees	60 days written notice. Owner must pay 100% of remaining management fees if lease in effect. (Leases are typically for 2-yr terms)	60 days written notice. Owner must rekey property at their expense	30 days written notice after first year or with uncorrected default in performance. Owner must pay 100% of remaining management fees if lease in effect. (Leases are typically for 2-yr terms)
Selling Fees	Owner must use Agency to sell and pay 6% commission (unclear if there is of waiver of termination fees). If sold with another agency, Owner must pay PM Agency 3% commission plus termination fees.	No clauses regarding sales	If sold with lease option, Owner must pay Agent ½ option fee and ½ first month’s rent. If sold to a PM-procured tenant during or within 12 months of PMA, Owner must pay Agent 6% commission.
Will negotiate contract terms	NO (Discuss yes, negotiate no.)	Unknown	YES – significant reductions in termination fees and sales commissions