However there is no way to put a cap on those types of fees.

I'd much rather replace a furnace / water heater upon acquisition and expect to not have any issues for x years than wonder when a Cap X event is going to happen.Any recommendations as to a good property management company? 

There are pros and con's to this.You can utilize this strategy with pretty much any line of credit, HELOC or HOA loan (Home ownership accelerator from CMG mortgage) to capitalize on this.The downsides are of course the variable rate feature of LOC's and HELOC's, however the HOA is a "hybrid," variant of the HELOC or LOC because the rate is capped unlike similar LOC's or HELOC's where its prime/libor/CMT + Margin, and these can go up to 18% usually depending on state to state.The HOA usually has a cap of 4-6% above your start similar to an ARM - adjustable rate mortgage.

But, there is usually a cap of 3-4 units. 

Other than a cap to my ability to raise rents during the lease-term, are there any downsides that I am not considering?  

Plus, legally, if you start accepting late rent, it can be perceived by the court that you have waived your right to requiring the rent on time.Also, if your lease doesn't already include it, it should say that accepting late rent does not waive your right to demand rent on time in the future (although this is questionable as to whether or not the court would still think you waived this clause), and you should consider adding a daily amount after the initial $25, so it keeps compounding up to a limit.I used a Nolo Press contract for California, and it included a cap on the late fee of something like $250. 

Is it a cap on how much they give?

I want to eventually do better than a CAP rate of 3.6%.

If you don't put a cap on the amount she can use she will turn on all the faucets if you piss her off. 

The issue is the result on the rates Im getting for the first year of cash flow.Two of the 3 properties have Negative ROI, Negative Cash ROI and a CAP rate below the Interest rate of the loan on the fisrt year of cahs flow.