The fee locks in their rental rate, purchase price, and reserves the property for them to have the option to buy so you cant sell it to someone else during the option term.

You may be correct in Knoxville, where you can purchase solid investments at much lower entry points, and may not need as much in reserves. 

You typically will need 30-50% down payment and about 10% reserves.

Next if you have $100k to spend you will need to also add in closing costs, including inspections and appraisals for each home, plus you will want to have a reserve for the unexpected.  

Christine Swaidan a "nail on" window is usually reserved for new construction.

The fee locks in their rental rate, purchase price, and reserves the property for them to have the option to buy so you cant sell it to someone else during the option term.

If you pay attention to the fundamentals, make sure your property cashflowes after ALL expenses and capex reserves and you're in it for the long run, you will do fine. 

The fee locks in their rental rate, purchase price, and reserves the property for them to have the option to buy so you cant sell it to someone else during the option term.

All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

To be a landlord, you need to have reserves.