The 7 biggest mistakes all landlords make

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The 7 biggest mistakes all landlords make

From the outside, becoming a landlord might seem simple enough. You buy or renovate a property, find a tenant, and collect rent every month. But don’t be fooled by dreams of easy, passive income — getting started can be surprisingly tricky.

Even if you think you know what you’re doing, pitfalls abound. And while some are relatively harmless, just as many of those common landlord mistakes will cost you money and time in the long run.

shares the seven biggest mistakes that landlords make (especially beginners), so you don’t have to learn the hard way. Keep reading to find out what you should avoid when renting out your property, including one mistake you might not expect.

Mistake #1: Not Knowing the Law

Rental laws can be more complicated than many landlords think. In addition to federal rental laws, like the , each state has its own set of landlord-tenant ordinances. Depending on where you operate your rental property, these regulations could change from one county to the next.

Plus, landlord-tenant laws apply to many different aspects of the rental relationship, so it’s crucial to have at least a basic understanding of these rules. Brushing up on the fundamentals could save you from a lawsuit and/or fines from local housing authorities and the U.S. Department of Justice should things go really sideways.

Aside from and landlord-tenant laws, focus on understanding any limitations placed on security deposits, required notice periods before entering the property, and eviction procedures.

Also, check your local landlord-tenant laws frequently for any updates.

Mistake #2: Skipping Screening

Let’s say you’ve received a from someone who seems like they’ll make a trustworthy tenant. No matter how reliable that renter may appear, you should still conduct a thorough background check—yes, even if you already know them personally.

Tenant screenings reveal vital information about an applicant’s credit, eviction, and criminal history, so you know all the most important details about who lives in your property. Completing this step can protect you and your rental unit against adverse outcomes like frequently unpaid rent, a broken lease, or even eviction.

Mistake #3: Not Using a Compliant, State-Specific Lease

Like knowing your landlord-tenant laws, using a legally compliant, helps you protect your investment by setting the rules both parties must follow.

But a word to the wise: You can’t trust any “one-size-fits-all” lease agreement you find online. Many aren’t updated regularly. Even worse, a generic lease typically won’t cover state-specific landlord-tenant laws, so you’ll be out of luck if legal troubles arise.

Mistake #4: Underpricing Rent

Naturally, you’ll want to maximize your profits by for as much money as possible. But if you struggle to find a renter, you might find yourself tempted to drop the rent well below what you could get to fill the vacancy.

Not only will this practice cut into your bottom line, but you won’t be doing your tenants a favor, either. Instead of finding renters who can pay , you could end up renting to people who might struggle to pay an increased price further down the road — once you inevitably decide to to match local housing costs.

To determine the best, fairest price for your rental property, compare your rental against other local options that are similar in quality to your own (you don’t want to overprice your rental either). You can also use a to determine the correct number.

Even though losing a little bit of money in rent might not seem like a big deal at the beginning of a lease, it can add up quickly over time. Just think; if you underprice your rental unit by $100, that adds up to $1,200 in lost revenue every year.

Mistake #5: You’re Too Nice

Of course, you should always try to be decent and fair as a landlord. But on the other end of the spectrum, you shouldn’t fall into the trap of being too nice to your tenants. Like underpricing rent, this could cause long-term damage to both you and your tenants. Countless first-time landlords make this unexpected mistake.

Whether it’s waiving late fees, allowing at a later date, or not enforcing specific rules that were agreed upon in the lease, these “nice” actions can have serious consequences. Namely, some bad tendencies might spiral out of control, leading to more frequent late payments or even property damage.

Ultimately, enforcing rules and ensuring tenants pay rent on time isn’t a personal matter. Managing rental properties is a business, and hopefully a successful one at that. So, always stick to the rules established in your lease and set clear boundaries. You don’t have to be a jerk about it — be respectful.

But remember, enforcing your rules prevents much bigger problems for you and your renters.

Mistake #6: Delaying Maintenance

Completing property maintenance can feel like a never-ending cycle of chores. However, if you choose to put off fixing a leaky pipe or a broken furnace, these minor issues can easily turn into big problems that may cost thousands of dollars to fix. Some might even damage your property beyond repair.

Beyond property damages, neglecting maintenance issues can result in:

Tenant complaints
Negative reviews
Withheld rent (depending on the state)
Fines and penalties
Lawsuits from tenants

Your tenants pay attention to how long you put off property maintenance. Conducting regular maintenance allows you to handle those “small issues” before they can get any worse.

You might even consider offering tenants a small reward for reporting maintenance issues, such as a gift card or rent discount. This perk encourages your renters to be proactive and keep an eye out for future problems.

Mistake #7: Poor Communication

Landlords should always attempt to resolve any issues with tenants as soon as they arise. Failing to communicate with your renters professionally, promptly, and clearly can lead to unhappy tenants, or even worse, legal troubles.

The Wrap Up: 7 Landlord Mistakes

From failing to run a tenant background check to simply charging too little for rent, there are all kinds of easy mistakes that any landlord can make. Luckily, it’s equally easy to prevent these problems now that you know what to avoid — even if you have to put in a little extra work in the short term.