Property managers usually charge a percentage of the rent they collect, generally in the range of 8% to 10%. Some charge extra for customized reports, inspections, and evictions. Many keep all tenant paid fees for the rental application, late charges, and check overdraft fees. Be aware that late fee income is a significant source of revenue for many companies. While if you were managing the property, you might call a tenant on the 5th of the month to remind him or her that there will be a late charge if no payment is received, a management company might not do that because they want to collect the late fee. The problem is, many tenants realize that being six days late is all the same as being 29 days late, because the late fee is the same. As a result, when they pass the date when a late fee is due, they often wait even longer to pay their rent.
You will be responsible for paying all repair expenses. Some management contracts give the company the right to do minor repairs themselves, or hire outside people, without your prior approval. Ask about the dollar limits for these situations. Also ask about the labor rates and materials markups, and if the management company or a related company does the repairs.
Be sure to ask about reimbursements for travel, telephone calls, copies, and the like. These can be important profit centers for some management companies. You might find yourself being billed an additional $20 to $30 a month for such minor items.
The most important fee for your purposes will be the termination fee. Most management companies require a specific term for their contracts. If you sell the property before the expiration of your agreement, you might have to pay a lump sum equal to the remaining management fee they might have earned. While such clauses are usually not negotiable, you can lessen their impact. Ask for an amendment so you will not owe the termination fee if one of their other owners buys your property. In the alternative, ask for a reduced termination fee. That way, the management company is motivated to tell their other owners about your house, because they keep the management account and they make the (reduced) termination fee from you.