I have owned rental properties for over 10 years now, and during that time, I have learned what all the other veterans seems to know: no one gets to be a landlord without encountering a series of gotchas. Your best bet is to try to keep them to a minimum.

Hiring a property manager can be one of the smartest moves a landlord can make. However, during your evaluation, you should be aware of the types of management companies that you are likely to encounter, hidden fees that some charge and potential headaches. Here are some important lessons I learned along the way:

1. Your Options: There are generally two options available when searching for someone to manage your rental property. There are property management companies and there are independent managers. Generally speaking, the management companies tend to charge a higher commission and 10% or more is typical. Independent property managers often charge a lower percentage or a flat rate.
2. Hidden Fees: Look out for any clauses in your contract requiring that you have your maintenance done by their preferred contractors. There may be a markup involved and you might not have the most competitive bid available.
3. Ask for a list of fees: I’ve seen some places charge for postage, gas surcharge, and added management fees when their presence is required longer than usual. For example, if they need to meet with contractors several times in a given month or be present for an inspection. I have also seen where a finder’s fee is charged when a new tenant is found regardless of whether you find the tenant or they do.
4. What’s included: Find out what’s included in the management fee and what services are optional. For example, having the management company pay some of your bills such as water, taxes, etc. is often extra.
5. Payments: It goes without saying that if your tenants pay the management company late. They in turn will pay you late. However, I’ve seen payment rules all over the place. For example, some companies wait for a certain amount to be in your account before mailing out a payment or require that you always have an available balance with them for potential use on emergency repairs. If you have multiple rentals, some companies will wait until all of your tenants of have paid so that they only have to send you one check in the mail. All of these rules have the potential for putting you in a bind if the delays are too long.