Top 11 Costly Mistakes New Landlords Make in 2025 and How to Avoid Them

Katrina Ávila Munichiello brings over fourteen years of editorial and writing expertise, specializing in real estate and property management insights.

Becoming a landlord might seem straightforward: purchase a property, renovate it, and rent it out for a profit. However, managing rental properties successfully requires a strategic business approach rather than a casual hobby.

By learning from the frequent mistakes new landlords make, you can safeguard your investment, save time, and avoid unnecessary stress.

Key Insights

• Treat landlordship as a professional business, even if part-time.
• Conduct thorough research before purchasing to maximize returns.
• Establish your rental business properly and engage an accountant.
• Understand and comply with local and federal rental laws.

1. Skipping Tenant Background Checks

Rushing to fill vacancies without screening tenants can lead to costly problems. Always use a standardized rental application to gather necessary information.

Obtain credit reports and verify employment and rental history to ensure tenant reliability. Even if a prospective tenant offers a deposit upfront, take the time to vet them thoroughly.

Pro Tip

Consider short-term rental platforms like Airbnb if your property is in a high-demand urban or resort area, offering flexible income opportunities.

2. Failing to Budget for Vacancy Periods

When calculating rental income, factor in potential vacancy times with zero rental income. Ensure you can cover mortgage payments, property taxes, and maintenance during these periods.

Neglecting this can risk foreclosure and financial hardship. A realistic cash flow analysis is crucial.

3. Underestimating Maintenance and Repair Costs

Maintaining your property is key to tenant retention. Set rent prices that cover routine upkeep like painting and cleaning, and prepare financially for major repairs such as structural fixes or appliance replacements.

4. Treating Landlording as a Hobby

Rental property ownership is a business. Open separate bank accounts, use bookkeeping software, and consult tax professionals to manage finances correctly.

Proper setup helps you avoid losses and take advantage of tax benefits available to landlords.

5. Relying on Verbal Agreements

Always have tenants sign a detailed lease agreement outlining terms clearly. This legal document protects you if disputes arise.

Review your state’s tenant-landlord laws beforehand to ensure compliance. Realtor.com offers comprehensive state-specific legal summaries.

6. Asking Discriminatory Questions During Tenant Screening

Avoid questions that could lead to discrimination claims. The Fair Housing Act prohibits denying tenancy based on race, color, religion, national origin, sex, marital status, disability, or family status.

7. Neglecting Tenant Communication and Property Checks

Regularly check in with tenants and monitor property condition, respecting tenant privacy and state laws regarding notice and entry.

Unauthorized visits can lead to legal issues or lease termination.

8. Ignoring Housing Codes and Safety Regulations

Ensure your rental meets all local building codes and safety standards. Failure to comply can result in tenant legal action or lease breaches.

9. Delaying Eviction Proceedings

Act promptly if eviction becomes necessary. Consult an eviction attorney early to understand your rights and procedures to minimize financial loss.

10. Not Enforcing Lease Terms Consistently

Enforce penalties for late payments and lease violations firmly. Inconsistent enforcement can encourage tenant noncompliance.

11. Failing to Keep Detailed Records

Maintain written records of all tenant communications, including emails, texts, and phone calls. Documentation is vital if legal disputes arise.

Should You Hire a Property Management Company?

If managing rentals feels overwhelming, consider hiring a professional property management firm. Though they take a fee, their expertise can protect your investment and reduce stress.

Interview multiple companies, check references, and review contracts carefully before deciding.

Managing Out-of-Town Rental Properties

For landlords living away from their rental properties, local property managers can handle daily operations and emergencies effectively, ensuring smooth management from afar.

Understanding the 1% Rule in Real Estate Investing

The 1% rule suggests a rental property is a good investment if monthly rent is at least 1% of the purchase price, helping evaluate potential profitability.

Final Thoughts

Landlording demands professionalism, careful planning, and ongoing management. If you lack time or expertise, partnering with a property management company can help you succeed in the rental market.

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