How to Start a Property Management Business in Tennessee


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start a Property Management Business in Tennessee

Are you considering starting a property management business in Tennessee? This exciting opportunity offers numerous advantages, such as a growing market, recurring income, and the flexibility to set your own schedule. As more people move to Tennessee with a current population of 7,080,262, the demand for professional property managers is increasing, making this an ideal time to explore this entrepreneurial venture. Furthermore, property management businesses tend to be more resilient to economic fluctuations, offering a stable and secure career path. This article will teach you the basic steps to start a property management business in Tennessee.

Before diving into the world of property management, it’s essential to familiarize yourself with the necessary steps and requirements to establish a successful business in Tennessee, popularly known as The Volunteer State. If you plan to register an LLC in Tennessee for your property management business, the guidelines will be different from that of a corporate structure.

Prerequisites to Start Property Management Business in Tennessee

In order to start a property management business in Tennessee, several prerequisites must be met. First and foremost, you’ll need to obtain the necessary business licenses and permits required by your local government. This may include obtaining a real estate broker’s license, which often involves completing coursework and passing an exam. Additionally, you should familiarize yourself with the state’s specific landlord-tenant laws and regulations and any local zoning and building codes.

Prior experience in property management or real estate will be valuable, as well as strong communication, organizational, and customer service skills. Ultimately, establishing a solid network of industry professionals, such as contractors, attorneys, and real estate agents, will be crucial to the success of your property management business in Tennessee.

The requirements include obtaining the relevant licenses and permits, understanding the state’s landlord-tenant laws, and building a strong network of industry professionals. By carefully planning your entry into this thriving industry, you’ll be well on your way to creating a thriving property management business that provides value to clients and contributes to Tennessee’s housing market growth.

Property Management Business needs some special permits and expertise. It is recommended to consult any legal and industrial expert before you start processing your business registration in Tennessee. Besides, checking with local governments and authorities is highly recommended.

– LLCBuddy Editorial Team

How to Start a Property Management Business in Tennessee

In Tennessee, opening a property management company can be challenging, with obstacles posed by laws and regulations. Finding the initial steps to establishing a property management firm might take time, given the many associates you need to consider. It should go without saying that this procedure may be difficult and occasionally expensive without the right advice and guidance to lead you in the correct direction.

Step 1: Get a Business Plan

Writing a business plan is of paramount concern and should be every person’s first move when starting a property management business. A business plan gives you a thorough overview of the enterprise, lists the goods and services your business will offer, and explains what need or requirement each will address. It is also heavily advised that a market analysis be included in your company plan.

Aside from the insight into the goods and services you offer, this furthermore aids in identifying your competitors, target market, and the reasons why they require the goods or services you will be offering. Don’t forget to include a thorough operations strategy and a financial plan outlining the finances required to establish the business and its source.

Step 2: Choose a Business Structure in Tennessee

Understanding and choosing how to form a property management firm effectively is a crucial step in the entire process. To begin with, before you can run your property management business, you must decide what type of business structure you want. If you are forming a corporation, filing the Charter for Profit Corporation with the Secretary of State is a requisite. On the other hand, if you are forming an LLC, you need to file the Articles of Organization with the SOS.

Step 3: Get a Business Name in Tennessee

Getting a business name is the most important part of giving your company its identity. The name of a property management company should strike a balance between being memorable and simple to understand. Besides, Tennessee has its own regulations for naming your business. There are some Tennessee LLC naming guidelines for LLCs. It’s best to check the Tennessee Secretary of State’s website to check if your decided name is available. Once you have a name figured out, it’s also to check for a relevant domain name in case you want to direct clients to your website online.

Step 4: Assign Your Tennessee Registered Agent

The next thing you need to do is get a Registered Agent. The Tennessee Registered Agent is an individual or entity that handles your official and legal documents on your behalf. A Registered Agent will receive legal notices if your organization gets sued. You can be your own agent. However, it is good to appoint a professional service.

Step 5: Register Your Property Management Business in Tennessee

The most crucial step is registering your property management business in Tennessee. You must send the registration form to the Tennessee Secretary of State by mail or online, whichever is available for your business. If you form an LLC, you must file the Tennessee Articles of Organization and for the corporation, you must file Tennessee Charter for Profit Corporation. Pay the filing fee to the Tennessee Secretary of State while registering your business. For LLCs, the filing fee is $300 and for Corporations, the filing fee is $100 for online and by mail filing.

Step 6: Apply for Tennessee Business Licenses and Permits

You must obtain proper business licenses and permits for your property management business in Tennessee. The license and permit types depend on the location (city/county) and the property you manage under your business. You must check with the Tennessee Secretary of State. In Tennessee, you do not need to obtain General License. Also, you do not need to get a Privilege License.

Step 7: Purchase Equipment For Your Tennessee Property Management Business

The equipment you need to launch a property management business won’t be excessive. You might either set up a home office or rent office space. Both reliable transportation and access to editable contracts may be made possible by joining a legal website. Other tools include a printer, computer, smartphone, and fax machine.

Consider assembling a good set of tools to handle everything from electrical to plumbing issues if you intend to handle your repairs in-house. But be mindful of licensing regulations and construction codes. You’ll need to either order signs for the properties you manage or deal with a printer familiar with property signage to comply with state-specific standards.

Step 8: Market Your Tennessee Property Management Company

Many property management firms in Tennessee use online and offline marketing strategies. Social media can be useful, but you should be careful which platforms you choose based on your target market. LinkedIn might help you expand your network if you want to work with property owners.

Additionally, consider publishing a newsletter to send to property owners monthly or every three months. It might have informative pieces about the sector and endorsements from pleased customers. A recommendation program for real estate agents could also be established. You can send the agent a gift or referral money for each customer they suggest.

Apartment management may come to mind when you think of property management. The most prevalent property management business deals with apartments, condos, single-family homes, and multi-generational homes. Yet, Tennessee is home to many successful property management firms.

Important Information

Cost to Start a Property Management Business in Tennessee

When starting your own property management business, it’s important to determine the costs of your entire procedure, from the start-up until your operations. Things like one-time fees, startup costs, and ongoing expenses that you need to cover should be deeply discussed with your agent if you have one.

The LLC filing fee in Tennessee is $300. If you start a corporation, the incorporation fee in Tennessee is $100 for online and by mail filing. The annual report filing fee in Tennessee for LLCs is $50 per member.

Getting the right insurance when starting out as a professional property manager is crucial to safeguard your company, yourself, and the properties you look after for other people.

Additionally, you might try applying for a government grant and obtaining a loan from a bank or a family member; however, you must be ready with a strong business plan and written payback terms. Company credit cards can also aid with purchases and fast cash flow, but be mindful of interest rates.

Why Start a Property Management Business in Tennessee

  1. Growing demand: With an increasing number of people moving to Tennessee, property owners are in need of professional property managers to handle their investments, resulting in a growing market for your services.
  2. Recurring income: Property management businesses generate consistent monthly income through management fees, allowing for predictable cash flow and financial stability.
  3. Low startup costs: Property management has relatively low startup costs compared to other businesses, as you don’t need a physical office space or significant inventory to get started.
  4. Potential for expansion: As your client base grows, so does the potential for expanding your business into other areas of real estate such as sales or development.
  5. Diverse clientele: Property management businesses in Tennessee can cater to a wide range of clients, from individual property owners to large corporations and investment firms, providing you with a diverse customer base.
  6. Flexibility: Running your own property management business allows you to set your own schedule and work at your own pace.
  7. Resilience to economic fluctuations: Property management businesses are generally less affected by economic downturns, as people will always need housing, making it a relatively stable industry.
  8. Opportunities for networking and collaboration: Establishing relationships with other industry professionals, such as real estate agents, contractors, and legal experts, can lead to new business opportunities and referrals, helping to grow your business.
  9. Increasing property values: As Tennessee continues to develop and attract new residents, property values will likely increase, providing potential long-term financial benefits for you and your clients.
  10. Personal satisfaction: Running a successful property management business in Tennessee allows you to make a meaningful impact on your clients’ lives and the broader community by providing well-maintained, safe, and comfortable housing options for residents.

FAQs

What licenses and permits do I need to start a property management business in Tennessee?
Depending on the services you offer, you may need to obtain a real estate broker license, a business permit, and any other licenses that may be required by the state of Tennessee. Additionally, you may also have to obtain a landlord/tenant license.
What laws must I follow when running a property management business in Tennessee?
Property managers in Tennessee must abide by the state laws and regulations governing landlord/tenant relationships, such as the Tennessee Landlord/Tenant Act. Additionally, property managers must also comply with the Fair Housing Act and all other federal, state, and local laws.
How do I find tenants for my Tennessee property?
You can find tenants for your property by advertising in local newspapers, online classifieds, and other online services. Additionally, you can also use word-of-mouth, open houses, and other methods to find tenants.
What are the taxes and fees associated with managing property in Tennessee?
Property managers in Tennessee may be required to pay sales tax on certain services, such as repair work, as well as other fees, such as fees for obtaining a business permit and landlord/tenant license.
What are the legal requirements for evicting a tenant in Tennessee?
According to the Tennessee Landlord/Tenant Act, landlords must provide proper notice to tenants before they can legally evict them. The amount of notice required depends on the reason for eviction. Additionally, landlords must also follow the proper legal procedures when evicting a tenant.
What are the licensing requirements for starting a property management business in Tennessee?
In Tennessee, those who offer property management services must possess a valid real estate broker license issued by the Tennessee Real Estate Commission, or maintain an employer-employee relationship with a real estate broker who is actively licensed by the Tennessee Real Estate Commission.
What fees are associated with obtaining a real estate broker license in Tennessee?
A person applying for a real estate broker license in Tennessee must pay an initial application fee of $150 and an examination fee of $68.
What is the minimum amount of education required to become a real estate broker in Tennessee?
A real estate broker in Tennessee must have completed a minimum of 120 hours of approved real estate courses, including 45 hours of broker-specific courses.
Are there any legal restrictions on the types of property management services a real estate broker can offer in Tennessee?
Yes, a real estate broker in Tennessee may only offer services related to the leasing, renting, or managing of residential or commercial real estate.
Are there any special taxes or fees associated with property management services in Tennessee?
Yes, property management services are subject to the state sales and use tax, as well as the local option sales and use tax, if applicable.
Are there any special laws or regulations that apply to the management of rental properties in Tennessee?
Yes, rental property owners in Tennessee are subject to the Tennessee Residential Landlord and Tenant Act, which sets forth the rights and obligations of both landlords and tenants.
Are there any special requirements for advertising rental properties in Tennessee?
Yes, landlords must comply with the Tennessee Fair Housing Act, which prohibits discrimination based on certain protected characteristics, including race, color, religion, sex, familial status, or national origin.
Are there any restrictions on the types of fees that may be charged by property management companies in Tennessee?
Yes, property management companies in Tennessee are subject to the Tennessee Securities and Exchange Commission’s regulations on the disclosure of fees.
Are there any legal requirements for collecting rent payments from tenants in Tennessee?
Yes, landlords in Tennessee are required to provide tenants with a written statement of their rental agreement, which must be signed by both the landlord and tenant. The statement must include the amount of rent due, the payment method, and the consequences of late payments.
What are the laws regarding the eviction of tenants in Tennessee?
Landlords in Tennessee must follow the procedures outlined in the Tennessee Residential Landlord and Tenant Act when evicting a tenant, which include serving the tenant with a written notice, filing an eviction complaint in court, and obtaining a judgement from the court.
Are there any restrictions on the fees that may be charged for late rental payments in Tennessee?
Yes, landlords in Tennessee may only charge a reasonable late fee, and may not charge more than five percent of the monthly rent for each day that the rent payment is past due.
Are there any laws or regulations that apply to the repair and maintenance of rental properties in Tennessee?
Yes, landlords in Tennessee must comply with the Tennessee Residential Landlord and Tenant Act, which requires landlords to maintain the property in a safe and habitable condition, and make all necessary repairs in a timely manner.
Are there any laws or regulations regarding the security deposits charged by landlords in Tennessee?
Yes, landlords in Tennessee must follow the Tennessee Residential Landlord and Tenant Act, which requires landlords to refund the security deposit within 45 days of the tenant vacating the property, and to provide the tenant with an itemized list of deductions, if applicable.
Are there any laws or regulations regarding the insurance requirements for rental properties in Tennessee?
Yes, landlords in Tennessee must comply with the Tennessee Residential Landlord and Tenant Act, which requires landlords to maintain adequate insurance coverage on the property.
What laws and regulations do I need to comply with when starting a property management business in Tennessee?
When starting a property management business in Tennessee, you will need to comply with applicable state laws, such as the Tennessee Property Management Act, as well as any local zoning ordinances. Additionally, all property managers must obtain a real estate license in the state of Tennessee.
Do I need to register my business in Tennessee?
Yes, you will need to register your business with the state of Tennessee in order to legally operate as a property manager. You will need to submit the necessary paperwork and fees to the Tennessee Department of Revenue.
What insurance do I need to carry when operating a property management business in Tennessee?
All property management businesses in Tennessee are required to carry liability and employee dishonesty insurance. Additionally, you may want to consider carrying errors and omissions insurance, as well as workers’ compensation insurance if you are hiring employees.
Can I use a lease agreement drafted in another state when managing properties in Tennessee?
No, you must use a Tennessee-specific lease agreement when managing properties in Tennessee.
What kind of fees can I charge my tenants in Tennessee?
The fees that a property manager can charge tenants in Tennessee are regulated by state law. Generally, a property manager can charge a late fee, a security deposit, a pet fee, an application fee, a non-refundable cleaning fee, and a refundable damage deposit.
What are the tenant’s rights in Tennessee?
Tenants in Tennessee are entitled to certain rights, such as the right to a habitable dwelling, the right to quiet enjoyment, the right to be free from discrimination, the right to access repairs and maintenance, and the right to receive proper notice before entering the property.
How do I get started in Property Management in Tennessee?
To get started in property management in Tennessee, you’ll need to obtain a license from the Tennessee Real Estate Commission by completing the necessary educational requirements and passing the exam. You’ll also need to register with the Tennessee Secretary of State, obtain a business license, and open a business bank account.
Are there restrictions on who can own a property management business in Tennessee?
Anyone who is 18 years of age or older, has the necessary qualifications, and meets the requirements set by the Tennessee Real Estate Commission can own a property management business in Tennessee.
What type of insurance do I need to operate a property management business in Tennessee?
Property managers in Tennessee must carry Errors and Omissions (E&O) insurance as well as general liability insurance.
What type of fees can I charge as a property manager in Tennessee?
Property managers in Tennessee can charge a variety of fees, including management fees, leasing fees, maintenance fees, and late fees.
What legal documents do I need to use when managing a property in Tennessee?
Property managers in Tennessee must use standard lease agreements and other documents such as tenant application forms, security deposit forms, and move-in/move-out checklists.
What are the laws regarding tenant rights in Tennessee?
Tenant rights in Tennessee are regulated by the Tennessee Residential Landlord-Tenant Act, which outlines the rights and responsibilities of both landlords and tenants.
What are the tenant eviction laws in Tennessee?
In Tennessee, tenants can be evicted for non-payment of rent, material noncompliance with the lease agreement, or other violations of the lease agreement. The landlord must provide written notice of the violation and the tenant must be given up to 14 days to cure the violation or vacate the premises.
Are there any restrictions on raising rent in Tennessee?
In Tennessee, landlords are not allowed to raise rent during the term of a lease without written consent from the tenant. However, landlords can raise rent upon lease renewal.
Are there any restrictions on the number of tenants that can occupy a property in Tennessee?
In Tennessee, the maximum number of tenants that can occupy a property is determined by the local zoning regulations.

Also Read

Why Tennessee Property Management Business is So Important

One of the primary reasons why property management businesses are so important is their ability to take care of the myriad details involved in maintaining and operating a property. From conducting regular maintenance and repairs to hiring contractors and vendors, property managers take on the responsibility of keeping properties in optimal condition so that owners can rest easy knowing that their investments are being well cared for. This is especially crucial in Tennessee, where the unique climate and terrain can present challenges in property maintenance and upkeep.

Another key role that property management businesses play is in managing tenant relations. From finding qualified tenants to addressing their needs and concerns, property managers serve as the intermediary between landlords and tenants, helping to foster positive relationships and ensure that both parties are satisfied. This is particularly important in a state like Tennessee where rental properties are in high demand, as property managers can help landlords attract and retain quality tenants while also ensuring that tenants receive timely and efficient service.

Property management businesses are also essential in ensuring regulatory compliance and risk management for property owners. With laws and regulations governing everything from fair housing practices to landlord-tenant relationships, property managers are well-versed in navigating the legal landscape and ensuring that properties are in compliance with all relevant statutes. In a state like Tennessee where the legal framework surrounding real estate can be complex, property management companies provide invaluable expertise and guidance to property owners looking to avoid legal pitfalls and liabilities.

Overall, the role of property management businesses in Tennessee cannot be overstated. From ensuring that properties are well-maintained and profitable to managing tenant relations and navigating the legal landscape, property managers serve as indispensable partners for property owners in maximizing their investments and minimizing their risks. In a state where the real estate market is thriving and rental properties are in high demand, property management businesses play a crucial role in helping property owners succeed in the dynamic and competitive real estate industry.

Conclusion

In an expanding market, learning how to launch a property management firm in Tennessee can be a low-risk, high-reward endeavor. There may be few entry barriers and inexpensive startup costs for this profession. All things considered, for the right businessperson, launching a property management firm in Tennessee may be a satisfying and successful endeavor. The LLCBuddy Editorial Team recommends that you must take legal consultation before starting any business in Tennessee.

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