How to start a property management company in Tennessee

Disclaimer: This post is meant to give general information and does not constitute legal advice. Speak to a legal professional for specific details before making any decisions regarding legal compliance.

Tennessee’s rental market is growing, and starting a property management company here puts you in a strong position to build a real business. Whether you’re eyeing Nashville’s booming rental scene or the steady demand in Memphis and Knoxville, the opportunity is there. We recommend consulting a local attorney for state-specific legal questions as you get started.

This article walks you through every major step, from getting licensed to landing your first clients and scaling your portfolio.

What We’ll Cover:

• Licensing requirements and how to get your Tennessee real estate license
• Setting up your business entity, insurance, trust accounts, and legal documents
• Marketing your company, finding clients, and choosing the right software
• Strategies for growing your property management portfolio over time

Tennessee Property Management Licensing Requirements

If you plan to manage properties for other people in Tennessee, you need a real estate license. The Tennessee Real Estate Broker License Act (T.C.A. § 62-13-301) requires it. The Tennessee Real Estate Commission (TREC) oversees all licensing in the state.

There are two license paths available to you, and the one you choose depends on where you are in your career.

Real Estate License Requirements in Tennessee

To manage property for others, you must hold either an affiliate broker or broker license. Both require pre-licensing education, passing a state exam, and meeting ongoing continuing education requirements.

You’ll also need errors and omissions (E&O) insurance, which Tennessee law requires under T.C.A. § 62-13-112. Every active licensee must carry this coverage.

Continuing education is 16 hours every two years to keep your license active.

Affiliate Broker vs. Broker Paths

Many new property managers start as affiliate brokers. Here’s what you need:

• Be at least 18 years old
• Complete 60 hours of pre-licensing education from a TREC-approved school
• Pass the Tennessee real estate exam
• Complete 30 additional hours of education within six months of getting your license
• Work under a licensed broker

If you want to operate independently, you’ll need a broker license. That requires 120 hours of education and at least 36 months of active real estate experience.

Exemptions and Special Cases

You don’t need a license if you’re only managing your own properties. Tennessee law (T.C.A. § 62-13-104) exempts property owners from the licensing requirement when they handle their own rentals.

However, the moment you manage someone else’s property for compensation, you need a license.

Writing a Property Management Business Plan

A solid business plan gives you a roadmap and helps you make smarter decisions from day one. It doesn’t need to be complicated, but it does need to be specific to your market.

Market Analysis for Tennessee

Tennessee has several distinct rental markets, each with different dynamics. Nashville’s rental demand has surged with population growth. Memphis offers affordable entry points with steady cash-flow properties. Knoxville and Chattanooga provide mid-market opportunities with growing investor interest.

The property management industry is projected to surpass $26 billion. According to Buildium’s Property Management Industry Report, 75% of property management companies plan to expand their portfolios in the coming year. That means competition is increasing, but so is demand.

Defining Your Services and Pricing

Decide which services you’ll offer. Common property management services include tenant screening, rent collection, maintenance coordination, lease management, and financial reporting for owners.

Your pricing model matters. Many property managers charge 8–12% of monthly rent collected, with additional fees for leasing (typically 50–100% of the first month’s rent) and other services.

Referrals from current clients are the number one way property management companies grow, accounting for 30% of new business. Build that into your business plan from the start.

Registering Your Business in Tennessee

Once you have your license and business plan, it’s time to make your company official. Tennessee has specific requirements for business registration.

Choosing a Business Structure

Many property management companies form as an LLC. An LLC protects your personal assets and gives you flexibility with taxes.

Other options include sole proprietorship (simplest but no liability protection), S-corp (tax advantages but more complexity), and C-corp (rarely needed for small property management firms).

State and Local Registration Steps

Here’s what you’ll need to register in Tennessee:

• LLC filing with the Tennessee Secretary of State: Minimum $300 ($50 per member)
• Annual report: $300 per year
• Franchise tax: 0.25% of your company’s net worth ($100 minimum)
• Excise tax: 6.5% on net earnings
• Local business license: Approximately $15, depending on your city or county
• EIN from the IRS: Free and available online

Insurance and Bonding for Tennessee Property Managers

Insurance protects you, your business, and the owners you serve. Some coverage is required by law in Tennessee. Other policies are strongly recommended.

Required Insurance Policies

Errors and omissions (E&O) insurance is mandatory for every active real estate licensee in Tennessee under T.C.A. § 62-13-112. This covers claims arising from professional mistakes or negligence.

General liability insurance protects against third-party claims for bodily injury or property damage. While not legally required, most property management companies carry it.

If you hire employees, Tennessee requires workers’ compensation insurance for businesses with five or more employees.

Bonding and Additional Coverage

A surety bond may be required depending on your local jurisdiction and the types of properties you manage. Check with your county or city for specific bonding requirements.

Umbrella policies provide additional coverage beyond the limits of your other policies. As your portfolio grows, this extra layer of protection matters more.

Insurance requirements and coverage options vary, so it’s a good idea to speak with a licensed insurance agent familiar with property management in your area.

Setting Up Trust Accounts and Financial Systems

Handling other people’s money is one of the biggest responsibilities you’ll take on. Tennessee has specific rules about how you manage tenant and owner funds.

Tennessee Trust Account Requirements

The Tennessee Uniform Residential Landlord and Tenant Act (URLTA, T.C.A. § 66-28) applies in counties with a population of 75,000 or more. Under this act, security deposits must be held in a separate account at a Tennessee bank.

You’ll need dedicated trust or escrow accounts to keep owner and tenant funds separate from your operating funds. Commingling funds is a serious violation that can cost you your license.

Accounting and Bookkeeping Setup

Set up accounting systems before you take on your first property. You’ll need to track rent payments, owner disbursements, maintenance expenses, security deposits, and management fees for every property.

Purpose-built property management accounting software handles automatic reconciliations, trust accounting compliance, accounts payable, and 1099 e-filing. These are areas where general accounting tools fall short.

Your tax obligations include the franchise tax (0.25% of net worth) and excise tax (6.5% on net earnings) at the state level, plus any local business taxes.

Property Management Agreements and Legal Documents

Your management agreement is the foundation of every owner relationship. Tennessee law also sets specific rules for lease agreements and tenant interactions.

Structuring Your Management Agreement

A strong property management agreement covers:

• Scope of services: What you will and won’t do
• Fee structure: Management fees, leasing fees, maintenance markups, and any other charges
• Term and termination: How long the agreement lasts and how either party can end it
• Liability limitations: What you’re responsible for and what falls on the owner
• Owner obligations: What the owner must provide (such as insurance, maintenance funds, and legal compliance)

Get an attorney to review your agreement template before you use it.

Tennessee Rental Law Basics

The URLTA (T.C.A. § 66-28) governs residential rental relationships in qualifying Tennessee counties. Key provisions include:

• A 5-day grace period for rent payments
• Limits on late charges at 10% of the rent amount
• 14-day notice required for nonpayment before further legal action
• Required disclosures about property conditions and lead-based paint (for pre-1978 properties)

You must also comply with the Fair Housing Act at both the federal and state level. Familiarize yourself with protected classes and fair housing best practices.

Business formation rules differ by state. We recommend consulting a local attorney for guidance on your specific situation.

Marketing Your Property Management Company

You have your license, your business is registered, and your systems are in place. Now you need clients. Marketing for property management is about building trust with property owners.

Building Your Online Presence

Start with a professional website that clearly explains your services, fees, and the markets you serve. Make sure it’s mobile-friendly and loads quickly.

Claim and optimize your Google Business Profile. When owners in Nashville or Memphis search for a property manager, you want to show up in local results.

Content marketing works well in property management. Write about topics owners care about, such as tenant retention, maintenance best practices, and local market trends.

Networking and Referral Strategies

According to Buildium’s Property Management Industry Report, referrals from current clients are the top growth method for property management companies, accounting for 30% of new business. And 74% of rental owners say customer service is their top concern when hiring a property manager.

Build relationships with real estate agents, investors, and other professionals in your area. Attend local real estate investor meetups in Nashville, Memphis, and Knoxville.

Join the NARPM Tennessee chapter to connect with other property managers and gain access to industry resources.

Finding and Onboarding Your First Clients

Landing your first management contracts takes hustle and a clear value proposition. Here’s how to get started.

Prospecting Strategies for New Property Managers

Target property owners who are most likely to need help. Look for:

• Out-of-state investors who own Tennessee rental properties
• Accidental owners who inherited property or couldn’t sell their home (this group is growing due to the sales slowdown)
• Small portfolio owners with 1–10 units who are tired of self-managing

Reach out to real estate agents who work with investors. Attend investor meetups. Build a referral network.

Onboarding Properties and Setting Expectations

When you sign a new client, have a clear onboarding process:

1. Conduct a thorough property assessment and document current conditions
2. Set up the property in your management software
3. Transfer or place tenants
4. Establish communication expectations with the owner

Set competitive management fees and be transparent about all fees from day one. Owners who understand your pricing structure stick around longer.

Choosing Property Management Software

The right software saves you time, reduces errors, and lets you grow without adding overhead. It’s one of the most important investments you’ll make.

Features That Matter Most for New Property Management Companies

Look for software that covers your core operations:

• Property accounting with trust account compliance and automatic reconciliations
• Online rent payments for tenants
• Maintenance request tracking and work order management
• Tenant screening with credit and background data
• Owner portals for real-time financial reporting
• Rental listing syndication to fill vacancies faster
• Online leasing to handle applications and lease signing digitally

According to Buildium’s Property Management Industry Report, 58% of property management companies are now using AI tools. Look for software that includes AI-powered features to help you work more efficiently.

Evaluating Software for Growth

Choose software that you’re confident will grow with you. Buildium has extensive, built-in accounting, maintenance tracking, tenant screening, online payments, owner and resident portals, and even a marketplace for specific services that it’s core offerings don’t cover. It comes in three tiers (Essential, Growth, and Premium) with increasing levels of automation and customization.

Key things to evaluate when choosing software:

• Can it handle trust accounting compliance?
• Does it integrate with other tools you use?
• Does it offer an open API for custom workflows?
• How quickly can you get up and running?

Growing Your Property Management Portfolio in Tennessee

Starting your company is one thing. Growing it is where the real work (and reward) begins. Tennessee’s rental market gives you room to scale.

Strategies for Adding Doors

Set specific growth targets. Know how many doors you want to add each quarter and track your progress.

Buildium customers who focused on growth expanded their portfolios by an average of 298%. Growth-minded property management companies using property management software expand portfolios by 2.8x in their first year.

Here’s how to add doors:

• Build an owner referral program. Happy owners refer other owners. Make it easy for them.
• Target growing Tennessee markets. Nashville, Memphis, and Knoxville all have active real estate investor communities.
• Add services that increase revenue per door. Consider ancillary revenue services, property insurance admin fees, and marketplace services for tenants.
• Focus on customer service. 67% of tenants would recommend their current property manager. Reputation drives growth.

Building Your Team as You Scale

You can handle a small portfolio on your own, but growth means hiring. Plan for your first hires:

• A maintenance coordinator to manage work orders and vendor relationships
• A leasing specialist to handle showings, applications, and move-ins
• An administrative assistant for owner communications and bookkeeping support

The right property management software handles much of the operational work, which means you can manage more doors before needing to hire. Automation features, such as workflow automations and AI-powered tools, let you scale without proportionally increasing your team.

Get Started Faster with the Right Tools

Starting a property management company in Tennessee takes preparation, but the opportunity is real. The state’s growing rental markets, combined with strong demand from property owners, make it a solid time to get into the business.

Key Takeaways:

• Get your Tennessee real estate license (affiliate broker or broker) through TREC before managing properties for others
• Register your business, set up trust accounts, and secure E&O insurance before taking on your first client
• Build your client base through referrals, networking, and a strong online presence
• Invest in property management software early to run your operations efficiently and scale faster

Ready to get started? Buildium gives you the tools to manage and grow your portfolio from day one. You can start a 14-day free trial or schedule a demo to see how it works.

Frequently Asked Questions

Do You Need a License to Be a Property Manager in Tennessee?

Yes. Tennessee requires a real estate license to manage property for others. You’ll need either an affiliate broker or broker license through the Tennessee Real Estate Commission (TREC). The only exemption is for owners managing their own properties under T.C.A. § 62-13-104.

How Much Does It Cost to Start a Property Management Company in Tennessee?

Expect to spend $3,000–$5,000 to get started. That includes pre-licensing education and exam fees (~$1,000–$1,500), LLC filing ($300+), E&O insurance ($500–$1,500 per year), and technology costs. Ongoing costs include your annual report ($300) and state taxes.

How Much Do Property Managers Charge in Tennessee?

Many property managers charge 8–12% of monthly rent collected. Leasing fees typically run 50–100% of the first month’s rent. Some companies charge flat monthly fees instead of a percentage. Additional fees for maintenance coordination and lease renewals are common.

Can You Manage Property Without a Real Estate License in Tennessee?

Only if you’re managing your own property. Tennessee law (T.C.A. § 62-13-104) exempts property owners from the licensing requirement for their own rentals. If you manage properties for other owners for compensation, you must hold a valid real estate license.

What Is the Difference Between a Property Manager and a Real Estate Agent in Tennessee?

Both require a Tennessee real estate license, but they serve different functions. Property managers handle ongoing operations such as rent collection, maintenance coordination, tenant screening, and owner reporting. Real estate agents focus on buying and selling transactions. Many professionals hold both roles, but the day-to-day work is very different.

This article is for informational purposes only. Requirements vary by state — consult qualified professionals for advice specific to your situation. Read more on Growth