Avoid Financial Drain and Tenant Problems

I’ve been in the real estate world since 2002 as an investor, agent, broker, and even author. Real estate has changed over the years but I still love it and still invest today. Over the years, I have learned many things and evolved from trying to rent and screen tenants based on gut feelings to developing systems that work much better!

Being a landlord can be rewarding, but navigating the world of rentals also comes with its share of challenges. To be successful and avoid unnecessary headaches, it’s crucial to avoid these common pitfalls.

1. Skipping Thorough Tenant Screening

Rushing to fill a vacancy almost always backfires. A proper screening process, including checking references, credit reports, and employment history, helps identify responsible tenants who are likely to pay rent on time and respect your property. Gut feelings are not the best way to choose tenants, even if they are friends or family, especially if they are friends or family! Don’t rush to rent a place to the first people who apply because you don’t have the time. If you don’t have the time, you should not be the one leasing the property.

I use DoorLoop for all of my tenant applications and screening. It makes managing background checks very easy.

You can read more about how I screen for tenants.

2. Neglecting the Lease Agreement

A clear, detailed lease agreement is what protects you when a dispute arises, including evictions. If you don’t have a lease or the right lease, it can make eviction take much longer and cost much more money. We try to avoid evictions but that is not always possible even with proper screening.

It must outline expectations, responsibilities, and procedures for rent payment, repairs, maintenance, and dispute resolution. Vague agreements lead to confusion and potential legal issues.

Either get a lease from a local attorney or use a high-quality online legal document generation tool. I use Legaltemplates.com. Using a local real estate attorney will be helpful in case a dispute arises later.

See my tips for the best ways to manage rental properties.

3. Ignoring Maintenance Issues

Ignoring leaky faucets, malfunctioning appliances, or minor repairs can snowball into bigger problems down the line. Prompt maintenance not only keeps tenants happy but also prevents costly damage and potential legal action. You cannot rely on your tenants to tell you about every issue. It is also important to schedule regular inspections to see if there are any major issues in the property and that the tenants are taking care of it.

See my article on how to find contractors for house flips and rentals.

4. Setting Unrealistic Rent Prices

Overpricing your property can lead to long vacancies and lost income. Research fair market rents in your area and consider factors like amenities, location, and condition before setting a price. Remember that asking price for other rentals is not always the best way to gauge market value. Those properties could be for rent for months and overpriced. Pay attention to the market to see which ones are being rented and which ones are sitting.

Zillow provides fairly accurate rent estimates (rent is easier to estimate than value).

Once you have an idea of market rent, you can use my Rental Property Cash Flow Calculator to understand your financials.

5. Failing to Communicate Effectively

Communication is key to a healthy landlord-tenant relationship. Be professional, responsive, and address concerns promptly. Ignoring tenant issues or being dismissive can create frustration and escalate into bigger problems. Ignoring tenants can also get you in trouble with the city or county where you reside.

I don’t personally deal directly with issues. I instead chose a great property manager to ensure communication is open and issues are handled promptly. They typically charge a percentage fee, which I simply build into my expenses.

Read my article on how to find a great property manager.

Conclusion

By avoiding these common mistakes, you can create a positive rental experience for both yourself and your tenants, leading to a smoother, more profitable investment.