Investing in rental property can be an excellent way to build wealth, generate consistent income, and diversify your financial portfolio. But the reality is that being a landlord involves far more than just collecting monthly rent. Many new property owners make avoidable errors that cost time, money, and peace of mind.
According to the U.S. Census Bureau, rental vacancy rates average 6–7% nationally, which equates to nearly one month of lost income per year for the average landlord. Add rising maintenance costs and strict legal requirements, and it becomes clear why so many first-time landlords encounter challenges early on.This guide explores the five most common landlord mistakes, explains why they happen, and provides practical, evidence-backed strategies to avoid them.
Mistake #1: Underestimating Costs and Failing to Budget
Why it happens:
New landlords often focus only on the mortgage when running their numbers. Rent may cover the loan payment, but hidden and recurring expenses quickly erode profits.
What gets overlooked:
- Vacancy loss: Even the best-managed properties sit empty sometimes. National averages suggest landlords should plan for about one month of vacancy per year.
- Turnover expenses: Cleaning, painting, advertising, and re-keying locks all add up.
- Maintenance and repairs: According to Buildium’s 2025 Property Management Industry Report, maintenance and repairs remain among the most significant recurring costs for landlords.
- Insurance and taxes: Both can increase annually, cutting into margins.
Example: A landlord charging $1,500/month might expect $300 in profit after a $1,200 mortgage. But once a vacancy, $2,000 in repairs, and annual taxes and insurance are factored in, the “profit” can disappear.
How to avoid it:
- Create a reserve fund equal to 5–10% of rental income.
- Budget for at least one vacant month per year.
- Invest in preventive upkeep — regular inspections cost less than emergency replacements.
Mistake #2: Weak Tenant Screening
Filling a unit quickly feels like the top priority, but rushing the process often leads to costly tenant screening mistakes.
Risks of inadequate screening:
- Missed or late rent payments leading to cash flow issues.
- Lease violations such as unauthorized pets or occupants.
- Evictions, which can add up to thousands in legal fees, lost rent, and damages.
Best practices for screening tenants:
- Require detailed applications with rental and employment history.
- Run credit, background, and eviction checks (within legal limits).
- Verify income, aiming for at least 3x the monthly rent.
- Call previous landlords to confirm reliability.
It’s better to leave a property vacant for a short time than to rent to someone who may cause months of stress and financial loss.
Mistake #3: Overlooking Legal Requirements
Rental laws vary by state and city, but nearly all jurisdictions regulate leases, deposits, habitability, and eviction. Ignoring these landlord legal responsibilities is one of the fastest ways to end up in court.
Frequent oversights include:
- Mishandling security deposits. For example, the Texas Property Code, Chapter 92 requires landlords to return security deposits within 30 days of tenant move-out.
- Using generic leases that don’t comply with state-specific laws.
- Failing to provide required disclosures such as lead paint, mold, or smoke detectors.
- Attempting “self-help” evictions like changing locks, which are illegal in most states.
Authority note: Federal housing regulations (24 CFR § 5.703) require that rental units be safe, sanitary, and habitable, free from health and safety hazards. HUD also emphasizes landlords’ obligations in its HCV Fact Sheet for Landlords.
Prevention tips:
- Learn your state’s landlord-tenant laws in detail.
- Use attorney-reviewed lease agreements tailored to your jurisdiction.
- Document all communications, notices, and repairs.
- Always follow the legal eviction process.
Mistake #4: Neglecting Property Upkeep
Delaying or ignoring repairs is another critical error. Landlords sometimes hope minor issues will resolve themselves, but problems nearly always worsen. Applying proactive property maintenance tips can protect both the property and tenant satisfaction.
How small problems become big ones:
- A $200 roof patch becomes an $8,000 structural repair if ignored.
- Skipping a $150 HVAC tune-up can result in a $6,000 replacement.
- Overlooking a slow plumbing leak may cause thousands in water damage.
Why this matters for tenants:
Maintenance responsiveness is consistently ranked among the top reasons tenants decide whether to renew their lease. A well-maintained property encourages longer stays, reducing turnover costs.
Strategies that work:
- Schedule seasonal inspections.
- Build relationships with reliable contractors.
- Track and document all repairs for accountability and tax records.
Mistake #5: Setting the Wrong Rent
Determining rent is both science and art, and rental pricing mistakes can harm profitability.
Consequences of mispricing:
- Overpricing: Units remain vacant longer. Studies show that overpriced rentals often stay on the market much longer than competitively priced ones, leading to higher vacancy losses. See Zillow rental market data for insights on pricing trends.
- Underpricing: Landlords lose money every month, and undervaluing a property may also attract less reliable tenants.
How to avoid it:
- Conduct a market analysis of comparable rentals.
- Adjust based on condition, amenities, and location.
- Reassess pricing annually to reflect market conditions.
The goal is to find the balance between maximizing income and keeping the property occupied.
Bonus Mistake: Trying to Manage Alone
Even if you avoid the five mistakes above, managing a property entirely by yourself can still create stress. Landlording requires handling emergencies, staying up to date with legal changes, marketing vacancies, and resolving tenant issues.
Why it’s challenging:
- It often becomes a second full-time job.
- Legal or compliance mistakes can be costly.
- Emotional strain comes with tenant disputes and after-hours calls.
Alternatives:
- Hire a property management company for day-to-day operations.
- Use management software to streamline rent collection and maintenance requests.
- Join landlord associations for education and resources.
Top 5 Mistakes at a Glance
For quick reference, here are the top mistakes new landlords make — and how to avoid them:
- Underestimating costs → Build a reserve fund and budget for vacancy.
- Weak tenant screening → Always verify income, credit, and rental history.
- Overlooking legal requirements → Learn state laws and use attorney-approved leases.
- Neglecting maintenance → Stay proactive with inspections and repairs.
- Setting the wrong rent → Research the market and reassess pricing annually.
Avoiding Common Landlord Mistakes With Confidence
Owning rental property can be a rewarding path to long-term wealth, but success doesn’t come automatically. By budgeting for hidden costs, screening tenants carefully, staying legally compliant, prioritizing maintenance, and pricing rentals strategically, you’ll avoid the most common landlord mistakes and protect your investment.
Partner With Apogee Properties
At Apogee Properties, we help landlords simplify management, stay compliant, and make smarter decisions that boost returns. If you’re ready to avoid costly errors and enjoy peace of mind, our team is here to support you every step of the way.
