“Sign here for three years. $1,500 placement fee per tenant. $1,000 early termination penalty.”
Sound familiar?
If you’ve ever worked with a property management company, you’ve probably seen contracts like this.
Long-term commitments. Hidden fees. Penalties for leaving.
Here’s what most property owners don’t realize:
Those placement fees and long-term contracts aren’t protecting you. They’re protecting the property management company from having to earn your business.
After 19 years managing 250 properties, I’ve learned something counterintuitive: The companies that lock you in with contracts are the ones least confident in their service quality.
The companies that charge placement fees benefit financially when your tenants leave.
At Simply Live, we do neither.
No placement fees. No long-term contracts. Month-to-month, cancel with 30 days’ notice.
In this post, I’ll explain: – What placement fees really are (and why companies charge them) – The perverse incentive placement fees create – Why long-term contracts protect bad service – How month-to-month contracts drive accountability – Why “no fees, no contracts” saves you thousands – The counterintuitive benefit of working with a company that doesn’t lock you in Let’s talk about why the best property management companies don’t need placement fees or contracts to keep clients.
Part 1: Placement Fees — The Hidden Profit Center
What Are Placement Fees?
Placement fees (also called “leasing fees” or “tenant placement fees”) are onetime charges for finding and placing a tenant in your property.
Industry standard: $500-$1,500 per placement (often 50-100% of one month’s rent) When they’re charged: Every time a new tenant is placed Example: – Property rents for $1,500/month – Placement fee: $1,500 (100% of one month’s rent) – You pay this every time a tenant moves out and a new one moves in
Why Do Companies Charge Placement Fees?
The official reason: “To cover the cost of marketing, showings, screening, and lease preparation.”
The real reason: It’s a massive profit center, especially on high-turnover properties. Here’s the math:
Property management company with 100 properties:
Scenario A: Low turnover (20% annual turnover) – 20 tenant placements per year $1,500 placement fee × 20 = $30,000/year Scenario B: High turnover (50% annual turnover) – 50 tenant placements per year $1,500 placement fee × 50 = $75,000/year The difference: $45,000/year in additional revenue from higher turnover Now ask yourself:
If a property management company makes $45,000 more per year when tenants leave more often, are they really incentivized to keep your tenants happy and renewing their leases?
No. The Perverse Incentive: Placement Fees Reward Turnover
Here’s the uncomfortable truth:
When a property management company charges placement fees, they make more money when your tenants leave.
Let’s compare two scenarios for a property management company managing your $1,500/month rental:
Scenario A: Long-term tenant (5-year tenancy) Revenue for the property management company: – Management fees: $1,500 × 12 months × 10% × 5 years = $9,000 – Placement fees: $1,500 × 1 placement = $1,500 Total 5-year revenue: $10,500
Scenario B: High turnover (5 tenants in 5 years) Revenue for the property management company: – Management fees: $1,500 × 12 months × 10% × 5 years = $9,000 – Placement fees: $1,500 × 5 placements = $7,500 Total 5-year revenue: $16,500
The Math Is Clear:
The property management company makes $6,000 MORE over 5 years when you have high turnover.
That’s a 57% increase in revenue from the same property.
Now think about the incentives:
- Do they benefit from thorough tenant screening? No. Faster placement = faster fee.
- Do they benefit from keeping tenants happy? No. Unhappy tenants leave = new placement fee.
- Do they benefit from lease renewals? No. Renewal = no new fee. New tenant
= $1,500 fee. • Do they benefit from addressing maintenance quickly? No. Delayed maintenance frustrates tenants, they leave, new placement fee.
Every time your tenant leaves, they make $1,500.
Every time your tenant renews, they make $0 extra.
Which outcome do you think they’re incentivized to create?
Real-World Example: The Placement Fee Trap
Client story (before switching to Simply Live):
Property: 3-bedroom house, $1,400/month rent Previous property manager: 8% management fee + $1,200 placement fee Tenant history with previous PM: – Year 1: Tenant A (placed, $1,200 fee) – Year 2: Tenant A leaves (poor maintenance response), Tenant B placed ($1,200 fee) – Year 3: Tenant B leaves (rent increase too high), Tenant C placed ($1,200 fee) – Year 4: Tenant C leaves (unresolved issues), Tenant D placed ($1,200 fee)
Total placement fees paid over 4 years: $4,800 Management fees paid: $1,400 × 12 × 8% × 4 = $5,376 Total paid to PM: $10,176 Vacancy costs (4 turnovers, average 3 weeks each): $1,400 × 3 weeks × 4 = $16,800 in lost rent Total cost of high turnover: $26,976 over 4 years
Same property with Simply Live (no placement fees, better retention): Tenant history with Simply Live: – Year 1-4: Tenant A (same tenant, 4 years) Placement fee: $0 (included in management fee) – Lease renewals: $0 (included in management fee)
Management fees paid: $1,400 × 12 × 10% × 4 = $6,720 Vacancy costs: $0 (no turnover) Total cost: $6,720 over 4 years
The Savings:
Previous PM (with placement fees): $26,976 Simply Live (no placement fees): $6,720 Your savings: $20,256 over 4 years That’s $5,064 per year saved by working with a property management company that doesn’t charge placement fees and prioritizes tenant retention.
How Placement Fees Undermine Tenant Screening
Here’s another problem with placement fees:
They incentivize rushed screening and accepting marginal applicants.
Why?
Every day a property sits vacant, the property management company isn’t earning the placement fee.
The faster they place a tenant (any tenant), the faster they get paid $1,500.
This creates pressure to: – Accept marginal applicants (borderline credit, questionable income, weak rental history) – Skip thorough verification (don’t call previous landlords, don’t verify employment) – Rush the interview process (don’t dig into red flags) – Lower standards to fill vacancies faster The result:
Bad tenants get placed. They cause problems. They leave (or get evicted). New placement fee.
The property management company gets paid twice: once for placing the bad tenant, once for replacing them.
You pay the price: lost rent, property damage, legal fees, stress.
Why We Don’t Charge Placement Fees
At Simply Live, tenant placement is included in our 10% management fee. No separate placement fee. Ever.
Why?
Because our incentives are aligned with yours:
- You want long-term tenants. So do we. (More stable income, less work.)
- You want thorough screening. So do we. (Bad tenants create problems for everyone.)
- You want lease renewals. So do we. (Renewals are easier than placements.)
- You want low turnover. So do we. (Turnover is expensive and time-consuming.) When we don’t charge placement fees, we’re incentivized to: – Screen thoroughly (even if it takes longer) – Keep tenants happy (so they renew) – Address maintenance quickly (so tenants don’t leave) – Negotiate fair rent increases (so tenants can afford to stay)
Our success is measured by tenant retention, not tenant turnover. 80%+ of our tenants stay long-term (2-5+ years).
That’s not luck. That’s alignment of incentives.
Part 2: Long-Term Contracts — Protecting Bad Service
The Industry Standard: 1-3 Year Contracts
Most property management companies require long-term contracts:
Typical terms: – 1-3 year commitment – $500-$2,000 early termination fee – Automatic renewal unless you cancel 60-90 days in advance – Penalties for breaking the contract
Example contract language:
“This agreement is for a term of two (2) years. Early termination requires ninety (90) days written notice and payment of a $1,500 early termination fee, plus any outstanding fees and costs.” Why Do Companies Require Long-Term Contracts?
The official reason: “To ensure continuity of service and protect our investment in onboarding your property.”
The real reason: To lock you in so you can’t leave when you discover poor service, hidden fees, or better alternatives.
Here’s what long-term contracts really protect:
- Revenue guarantee (even if service is terrible)
- Time to hide problems (you’re locked in for 1-3 years before you can leave)
- Barrier to switching (early termination fees make it expensive to leave)
- Reduced accountability (they don’t have to earn your business every month)
The Problem With Long-Term Contracts
Long-term contracts create a power imbalance:
The property management company has: – Guaranteed revenue for 1-3 years – Legal protection (contract + termination fees) – No urgency to improve service (you’re locked in)
You have: – No leverage to demand better service – No ability to leave without paying penalties – No recourse if service quality declines
The result:
Property management companies get complacent. Service quality declines. You’re stuck.
Real-World Example: The Contract Trap
Client story (before switching to Simply Live):
Property owner: 2 rental properties in Lansing Previous property manager: 10% management fee, 2-year contract, $1,000 early termination fee per property
What happened: Year 1: – Service was okay (they were trying to impress during the “honeymoon period”) – Maintenance response time: 2-3 days – Communication: responsive
Year 2: – Service declined significantly – Maintenance response time: 1-2 weeks Communication: slow, often ignored – Discovered 30% markup on maintenance (not disclosed) – Tenant complained about poor maintenance, threatened to leave
Property owner wanted to switch to Simply Live.
The problem: – 6 months left on 2-year contract – $1,000 early termination fee × 2 properties = $2,000 – Plus 90 days’ notice required
The choice: – Pay $2,000 + 3 months of fees to leave now – Or wait 6 months and risk losing the tenant
The property owner waited (couldn’t afford the termination fees).
The result: – Tenant left due to poor maintenance – 4 weeks vacancy – $1,500 × 4 weeks = $6,000 lost rent – Plus $1,200 placement fee for new tenant
Total cost of being locked in: $7,200 If they’d had a month-to-month contract, they could have switched immediately and saved the tenant.
Why Long-Term Contracts Protect Bad Service
Here’s the uncomfortable truth:
The best property management companies don’t need long-term contracts. Why?
Because their service quality keeps clients.
If you’re doing a great job: – Clients don’t want to leave – Retention is high (80%+ stay 7+ years) – You don’t need legal contracts to keep clients If you’re doing a mediocre job: – Clients want to leave – Retention is low (clients leave as soon as contracts expire) – You need legal contracts to trap clients
Long-term contracts are a red flag. They signal: “Our service quality isn’t good enough to keep you voluntarily, so we’re going to lock you in legally.”
Part 3: The Month-to-Month Advantage
Why We Use Month-to-Month Contracts
At Simply Live, all contracts are month-to-month.
No long-term commitment. No early termination fees. Cancel with 30 days’ notice. Why?
Because we’re confident in our service quality.
We don’t need legal contracts to keep clients. Our results keep clients.
The Accountability Factor
Here’s the counterintuitive benefit of month-to-month contracts:
They force us to earn your business every single month.
With a 2-year contract: – We’re guaranteed revenue for 2 years – We can get complacent – You’re stuck even if service declines With a month-to-month contract: – We have to earn your business every month – We stay sharp and responsive – You can leave anytime if service declines (so we make sure it doesn’t)
Month-to-month contracts create accountability.
We know that every month, you’re choosing to stay with us.
That choice is based on: – Service quality – Communication – Results (tenant retention, vacancy rates, maintenance response time) – Transparency If we’re not delivering, you can leave. So we make sure we’re always delivering.
The Freedom Factor
Month-to-month contracts give you freedom:
Freedom to: – Try our services risk-free – Leave if your situation changes (selling the property, self-managing, etc.) – Switch if you find a better option – Demand excellent service (because we know you can leave)
This freedom benefits you: – No risk in trying us – No penalty for changing your mind No feeling “trapped” in a bad relationship – Leverage to demand great service
And it benefits us: – Clients who stay are choosing to stay (not legally obligated) – High client satisfaction (because we have to earn it) – Referrals and word-of-mouth (happy clients tell others) – Continuous improvement (we’re always trying to keep you)
Our Track Record: 80%+ Retention Without Contracts
Here’s the proof that month-to-month contracts work:
Simply Live retention rate: 80%+ of clients stay 7+ years Industry average (with long-term contracts): 50-60% retention, 2-3 year average relationship We keep clients longer without contracts than most companies keep clients with contracts.
Why?
Because we focus on service quality, not legal obligations.
Our clients stay because: – We deliver results (<2% vacancy, 80%+ tenant retention, zero evictions in 3 years) – We’re transparent (no hidden fees, no markups, detailed monthly reports) – We’re responsive (maintenance within 24 hours, owner questions answered same day) – We’re trustworthy (4.9-star Google rating, voted Best Property Management 2025)
You don’t need contracts when your service is excellent.
Part 4: The Total Cost Comparison
Scenario: Managing a $1,500/month rental for 5 years
Let’s compare the total cost of two property management companies:
Company A: Traditional (8% + placement fees + 2-year contract) Fees: – Management fee: 8% – Placement fee: $1,500 per tenant – Contract: 2-year minimum, $1,000 early termination fee – Maintenance markup: 30% (not disclosed)
5-year tenant history: – Year 1: Tenant A placed ($1,500 fee) – Year 2: Tenant A leaves, Tenant B placed ($1,500 fee) – Year 3: Tenant B leaves, Tenant C placed ($1,500 fee) Year 4: Tenant C stays – Year 5: Tenant C leaves, Tenant D placed ($1,500 fee)
Costs: – Management fees: $1,500 × 12 × 8% × 5 = $7,200 – Placement fees: $1,500 × 4 = $6,000 – Maintenance (annual average $3,000, 30% markup): $3,000 × 30% × 5 = $4,500 – Total paid to PM: $17,700
Additional costs: – Vacancy (4 turnovers, 3 weeks each): $1,500 × 3 weeks × 4 = $18,000 lost rent – Total cost: $35,700 over 5 years
Company B: Simply Live (10% + no fees + month-to-month) Fees: – Management fee: 10% – Placement fee: $0 (included) – Contract: Month-tomonth, no termination fee – Maintenance markup: 0% (transparent pricing)
5-year tenant history: – Year 1-5: Tenant A (same tenant, 5 years) Costs: – Management fees: $1,500 × 12 × 10% × 5 = $9,000 – Placement fees: $0 Maintenance markup: $0 – Total paid to PM: $9,000
Additional costs: – Vacancy: $0 (no turnover) – Total cost: $9,000 over 5 years
Your Savings With Simply Live:
Company A (8% + fees + contract): $35,700 Simply Live (10% + no fees + month-to-month): $9,000 Total savings: $26,700 over 5 years That’s $5,340 per year saved.
And you have the freedom to leave anytime (but you won’t want to).
Part 5: The Hidden Benefits of “No Fees, No Contracts”
Benefit #1: Aligned Incentives
When we don’t charge placement fees: – We’re incentivized to keep your tenants happy (so they renew) – We’re incentivized to screen thoroughly (so we place good tenants who stay) – We’re incentivized to address maintenance quickly (so tenants don’t leave)
Your goals = Our goals
Benefit #2: Better Tenant Screening
When we don’t make money from turnover: – We take our time to find the right tenant (not just any tenant) – We decline 40-50% of applicants (strict standards) – We verify everything (income, employment, rental history, background) – We interview thoroughly (dig into red flags)
Result: 80%+ tenant retention, zero evictions in 3 years
Benefit #3: Proactive Tenant Retention
When we benefit from lease renewals (not new placements): – We keep tenants happy (responsive maintenance, fair rent increases) – We address issues before they become problems – We communicate regularly (inspections, check-ins) – We negotiate renewals early (90 days before lease end)
Result: Average tenant stay 2-5 years (industry average: 1-2 years)
Benefit #4: Continuous Accountability
When you can leave anytime: – We stay responsive (answer calls/emails same day) We deliver results (low vacancy, high retention) – We stay transparent (detailed monthly reports, no hidden fees) – We continuously improve (because we have to earn your business every month)
Result: 4.9-star Google rating, voted Best Property Management 2025
Benefit #5: Risk-Free Trial
When there’s no long-term contract: – You can try our services with minimal risk – You can leave if your situation changes (no penalty) – You’re never “trapped” in a bad relationship – You have leverage to demand excellent service
Result: Clients stay an average of 7+ years (by choice, not contract)
Part 6: Common Questions
Q1: “If I can leave anytime, why would I stay?”
A: Because our service quality makes you want to stay. Our retention rate: 80%+ of clients stay 7+ years
Why clients stay: – Results: <2% vacancy, 80%+ tenant retention, zero evictions in 3 years – Transparency: No hidden fees, no markups, detailed monthly reports Responsiveness: Maintenance within 24 hours, owner questions answered same day Trust: 4.9-star Google rating, 19 years in business
You’ll stay because we’re earning your business every month.
Q2: “What if I want to cancel? What’s the process?”
A: Give us 30 days’ written notice. That’s it.
No early termination fees. No penalties. No hassle. We’ll: – Coordinate the transition (to you or another property manager) – Provide all documentation (leases, financials, maintenance records) – Transfer tenant security deposits – Answer any questions
We want the transition to be smooth, even if you’re leaving.
Q3: “Don’t placement fees cover real costs?”
A: Yes, but those costs should be included in the management fee.
Tenant placement costs: – Marketing: $50-100 – Showings: 3-5 hours of staff time Screening: $50-75 (background/credit checks) – Lease preparation: 1-2 hours of staff time – Move-in inspection: 1-2 hours
Total actual cost: $200-400 Industry placement fee: $1,500 Markup: $1,100-1,300 (275-650% profit margin)
At Simply Live, these costs are included in our 10% management fee.
We don’t need to charge separately because: – We have low turnover (so placement costs are rare) – We’re efficient (systems and experience reduce time/cost) – We’re not trying to profit from turnover
Q4: “What if I have multiple properties? Can I get a discount?”
A: Yes, we negotiate for larger portfolios.
Standard pricing: – 1-3 properties: 10% or $100/month minimum – 4-10 properties: Negotiable (as low as 8-9%) – 10+ properties: Custom pricing
Still no placement fees. Still month-to-month.
Q5: “How do I know you won’t raise your management fee?”
A: We can adjust fees with 30 days’ notice (same as you can cancel). But here’s our track record: – 10% management fee for 19 years (never increased) No hidden fees added over time – Transparent pricing structure
Why we don’t raise fees: – Our costs don’t increase significantly over time (economies of scale) – We grow by adding properties, not raising fees – Fee increases drive clients away (and we don’t want that)
If we ever needed to adjust fees, we’d give you 30 days’ notice, and you’d have the option to stay or leave (no penalty).
The Bottom Line: Freedom + Accountability = Better Service
After 19 years managing 250 properties, here’s what I’ve learned:
The best property management relationships are built on trust and results, not contracts and fees.
Placement fees create perverse incentives: – Companies benefit from turnover (not retention) – Rushed screening (not thorough vetting) – Short-term thinking (not long-term relationships) Long-term contracts protect bad service: – Guaranteed revenue (no accountability) Trapped clients (no leverage) – Complacency (no urgency to improve)
Month-to-month contracts with no placement fees create alignment: – We benefit when you benefit (tenant retention = stable income) – We’re accountable every month (you can leave anytime) – We focus on service quality (not legal obligations)
The result: – 80%+ client retention over 7+ years (without contracts) – 80%+ tenant retention (without placement fee incentives) – <2% vacancy rate (industry average: 5-8%) – Zero evictions in 3 years (proper screening works) – 4.9-star Google rating (clients are happy)
No placement fees. No long-term contracts. No early termination penalties. Just great service that earns your business every month.
That’s not just our pricing model. It’s our promise.
Ready to Experience the Month-to-Month Advantage?
If you’re tired of being locked into contracts or paying placement fees every time a tenant leaves, let’s talk.
Free 20-minute consultation: We’ll review your current property management costs and show you how much you could save.
What you’ll get: – Complete cost comparison (your current PM vs. Simply Live) Breakdown of hidden fees you might be paying – No-obligation assessment – Month-tomonth contract (try us risk-free)
We serve rental property owners in the Lansing tri-county area.
10% management fee. Zero placement fees. Month-to-month contracts. Complete freedom.
Because the best property management companies don’t need to lock you in.
Simply Live LLC | Lansing Tri-County Property ManagementPhone: [ (517) 258-0349] | Serving rental property owners in Michigan’s tri-county area for 19 years
“We don’t need contracts to keep clients. Our results keep clients.”
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