Property management companies are an added expense, further subtracting from a landlord’s potential profit. Ron Leshnower, a legal publisher for NOLO, confirms this. When inquiring about management groups, “expect to hear quotes ranging between 5% and 10% of what you collect in rent revenue”. Although the percentage seems low, 5 to 10 percent can be bank-breaking in a down rental market. A landlord can lose out on a huge portion of profit when hiring a property management company.

The expenses don’t end with monthly management fees however. Property management groups are also known to overcharge for simple repairs. A leaky faucet can turn into a several-hundred-dollar call to a plumber. A loose floorboard can cost the landlord thousands when the management company hires an outside contractor. Without a keen eye, property management companies can take advantage of your hands-off approach.

Dealing with tenants is one of a landlord’s most burdensome duties. When hiring property management groups you trust them to deal with high-maintenance renters. Yet, property management often don’t know what to do when tenants tear up your house.

Sometimes accepting bad tenants cannot be avoided. To prevent monetary loss, property management companies will fill a rental with the first tenant that applies. They'll often forego an extensive background check. This is a costly mistake. Bad tenants can default on lease agreements or steal appliances or furniture. They can even do irreparable damage to your property! The damage dealt can transform your newly updated home into an undesirable fixer-upper. You'll be tired of being a landlord in no time.

Large property management companies have competing priorities concerning handling your rental home. These management companies will be juggling multiple landlords and their properties. They'll often mishandle or neglect your property due to the sheer volume of complaints. Are they a 24-hours group? If not your tenants will be neglected during afterhours. Instead, they'll call you with emergencies. “Be prepared for calls in the middle of the night,” warns Forbes’ Harlan Landes

Some realtors have trouble complying with tenant-landlord laws. Most states give the tenant the right of first refusal (ROFR). The ROFR is a contractual right. It allows the tenant to sue a landlord if not given the offer to buy before selling the rental property. If an agent ignores the ROFR, you could be in major legal trouble. You could end up spending thousands in legal fees before selling.

Agents also must be mindful of a current tenant’s right to refuse showings. Showing a home to potential buyers is key to selling residential property. If the tenant is unwilling to show or unable to keep the property in showroom condition, you may lose out on a sale.

Michele Lemer from Bankrate.com warns of this. “Many real estate agents are reluctant to show buyers a tenant-occupied home. They expect resistance to allowing visitors into the property. They assume the condition will be less than optimal."

It’s true. Some tenants can be uncooperative and downright hostile during the selling process. Others refuse to pay the last month’s rent before closing. Before hiring an agent to assist in selling a house with tenants, take your time. Decide whether they’re worth the headache and money it costs to sell a tenant-occupied property.