6 Common Mistakes First-Time Landlords Make (and How To Avoid Them)
Being a landlord can feel exciting at first. You're turning your property into a stream of income, building equity, and stepping into real estate investing. But there's more to managing a rental than collecting rent checks. Many first-time landlords walk into avoidable problems because they don't understand what goes into successful property management.
Whether you've inherited a property or you've bought one with the intention of renting it out, avoid these common mistakes that could cost you time, money, and peace of mind.
1. Skipping Through Tenant Screening
One of the fastest ways to lose money on a rental is to rush through tenant screening. If you're too quick to fill a vacancy, you might end up with someone who makes late payments, damages the property, or violates lease terms.
You need a complete screening process that checks credit history, rental background, source of income, and criminal records. Don't rely on gut feelings or verbal assurances. Always request references and actually contact them. Make sure the application process is consistent for everyone to stay compliant with fair housing laws.
To streamline this process, consider using tools that help track applicants and screen tenants in one place. Property management platforms like Hemlane offer features for background checks, credit reports, and applicant tracking so that you can make smart choices with less hassle. They also help you stay organized and reduce the chances of overlooking important steps during the screening process.
2. Failing To Create a Legally Binding Lease
A handshake or a generic lease agreement downloaded from the internet isn't enough. Rental laws vary by state, and your lease needs to reflect that. A vague or outdated lease can leave you unprotected if a tenant breaks the rules, causes damage, or stops paying rent.
Your lease should clearly outline responsibilities, rent due dates, late fees, maintenance protocols, rules for pets, guest policies, and what happens if either party breaks the agreement. It should also include clauses required by law in your state. If you're unsure what to include, it's worth consulting with a legal expert or using a state-specific lease template.
3. Underestimating the Costs of Being a Landlord
Renting out property isn't just passive income. Repairs, maintenance, vacancies, and legal issues can add up fast. Many new landlords assume the rent check will cover the mortgage and leave a profit, but that's not always the case.
You'll need to budget for repairs, property taxes, insurance, and emergency expenses. You also need a reserve fund in case the unit sits vacant or a tenant stops paying rent. Skipping this step could lead to financial strain when unexpected costs hit.
Set aside at least 10 to 15% of the rental income for maintenance and another chunk for vacancies and legal fees. If you treat it like a business from day one, you'll be better prepared when challenges come up.
4. Ignoring Local Landlord-Tenant Laws
You can't enforce rules that violate state laws, and you can't evict someone without proper legal grounds. Unfortunately, many first-time landlords run into trouble by not understanding the legal rights of both tenants and landlords.
Each state has different rules around security deposits, notice periods, late fees, eviction procedures, and property access. If you ignore them or don't keep up with changes, you risk fines, lawsuits, or having your eviction case thrown out of court.
Understanding these laws also helps preserve a healthy landlord-tenant relationship, which can lead to better communication, fewer disputes, and more long-term tenants. Do your homework or consult a local real estate attorney for legal advice before writing lease terms, increasing rent, or attempting to remove a tenant. Staying compliant is part of protecting your investment.
5. Trying To Do Everything Alone
It's tempting to manage everything yourself to save money, especially with just one property. However, this can lead to burnout or missed deadlines. Managing tenant communications, repairs, showings, bookkeeping, and legal compliance adds up quickly.
Outsourcing some tasks or using technology to stay organized can lighten the load without giving up control. Maintenance coordination tools, rent collection systems, and accounting software can make life easier and reduce mistakes.
You don't have to hire a full-service property manager right away, but you do need support. Automation tools and reliable vendors can help you manage like a pro without eating into your profits.
6. Neglecting Routine Maintenance
Waiting until something breaks down to fix it can result in expensive repairs and unhappy tenants. Small problems like a leaky faucet, a cracked window, or faulty wiring can escalate fast if ignored.
It's better to stay ahead of problems by performing regular inspections and preventative maintenance. Clean gutters, service the HVAC system, check for leaks, and make sure safety equipment like smoke detectors are working. Tenants are more likely to take care of the property if you show that you do, too.
Proactive maintenance also helps you avoid legal issues related to habitability. If the property becomes unsafe or uninhabitable due to neglect, you could be held liable.
Key Takeaway
Being a successful landlord isn't just about owning a property. It's also about managing people, finances, and legal responsibilities. The more you treat it like a business, the better your results will be. Avoiding these common mistakes saves you time, money, and stress in the long run. With the right tools and mindset, you'll build a rental process that's both profitable and sustainable.
Published 6/17/25