Being a Landlord: The Top 5 Mistakes to Avoid

Published April 2022. Updated. October 5, 2023. 

If you're thinking about becoming a rental property owner, there are a few things to keep in mind to make sure it's a successful and profitable venture. Unfortunately, operating rental properties is not as easy as just putting up "For Rent" signs, setting the rent amount, and waiting for the money to start rolling in. 

Making mistakes when it comes time for your property management needs can cause you to lose rather than make money. However, successful investors are always on the lookout for new things that can improve their return on investment—and avoiding mistakes can help make that happen!

Our Hampton property management experts know a few things about what it takes to be a successful landlord! So, take our advice and read on to learn about the top five mistakes rental property owners make and how you can avoid them.

1. Improperly Screening Potential Tenants

One of the biggest mistakes landlords make is not screening their tenants properly. This can lead to problems, from missed rent payments to property damage.

A thorough tenant screening involves carefully checking references, including talking with previous landlords, which can provide insights into the tenant's reliability and history. Equally important is assessing credit scores, as they can indicate financial responsibility and the potential tenant's ability to consistently meet rent obligations.

Furthermore, conducting face-to-face interviews or virtual meetings allows you to gauge their character and establish a rapport. By investing effort in these steps when screening tenants, you significantly increase the likelihood of securing responsible tenants.

Good tenants are more inclined to respect and maintain the condition of your property and ensure on-time rent payments, leading to more revenue from your investment property.

2. Setting a Rent Rate Without Performing a Market Analysis

When setting the rent rate for your property, it's essential to conduct a thorough rental market analysis and research to ensure you're charging what the market indicates is ideal.

However, local landlords often make the mistake of setting monthly rent rates without performing a market analysis, leading to undercharging or overcharging for their properties. When the rent is too high (or too low), you risk losing money!

To avoid this mistake, take the time to research local rental rates and compare them to similar properties. To accurately answer the question "How much can I rent my house for," property owners need good research!

Good information about the market and rents for properties similar to yours will help you determine a fair rental price for your property.

3. Performing Unqualified Maintenance Instead of Hiring a Professional

It's no secret that rental properties require constant maintenance. However, what may be less well known is that hiring qualified maintenance teams could avoid many of these problems (and reduce your overall costs)! 

Unfortunately, many rental property owners make the mistake of trying to save a buck and employ unqualified or inexperienced people to take care of their properties—or attempt a DIY repair—leading to more problems down the road, from code violations to tenant complaints and repeat repairs for the same issue.

When operating a rental property, don't skimp on quality. Hiring a professional contractor to care for your property's maintenance needs is always the best course of action. They will be able to identify and fix problems before they become substantial issues.

 It may be a tad more expensive upfront, but it will save you money (and headaches) in the long run.

4. Having Unrealistic Financial Expectations

Another common mistake many real estate investors make is having unrealistic financial expectations regarding their rental properties. Some people think that being a landlord is a get-rich-quick investment strategy. However, the reality is that it takes time, effort, and the right strategies to be successful in this business.

In addition to anticipated rental income, a rental property owner must be aware of ongoing expenses, such as property taxes, insurance, maintenance costs, and vacancy rates. These expenses can add up quickly and eat into your profits if you're not careful. That's why it's essential to have a realistic understanding of what you can expect to make from your rental property (and what it will cost to operate it successfully) before you dive in headfirst.

The easiest way to assess your rental property's potential profitability is by calculating its ROI (return on investment). This helpful metric will consider several factors—such as location, property type, and amenities—to give you a better idea of what you can expect to make from your Hampton rental properties.

5. Not Hiring a Property Manager to Take Care of It All

The arguably most serious mistake rental real estate investors make is not hiring a property manager. While it may seem like an unnecessary expense, the truth is that good property managers can save you time, money, and a whole lot of headaches.

A qualified property management company will be able to take care of the day-to-day tasks associated with being a good landlord, from tenant screening services and rent collection to maintaining your investment property and dealing with repairs. This will free up your time to focus on other things—like growing your rental portfolio!

Are Property Managers Worth It?

We've already talked about ROI and managing expectations about expenses vs. income. So, does it make sense to add another expense by hiring a property management company instead of self-managing your property?

Yes!

Property managers like our team here at Osprey Property Management often prove invaluable for landlords, especially those who own multiple properties or live far from their rental units. In addition to handling daily tasks, their expertise in local rental markets ensures competitive pricing, minimizing vacancies.

They also navigate complex legalities, from lease agreements to eviction processes, safeguarding owners from potential lawsuits. By dealing with tenant concerns promptly, rental managers enhance tenant retention, leading to stable rental income.

For landlords who lack the time or expertise or those who prefer a hands-off approach, the cost of hiring a property manager is often offset by the peace of mind and financial benefits they bring. For many property owners, the value of a skilled property manager is undeniably worth the investment.

Being a Landlord is More Profitable With an Experienced Property Manager

We hope these mistakes don't sound too familiar! However, if you find that you're losing money (for any reason) or are ready to see better returns while being a landlord, it's time to hire a property manager. 

Osprey Property Management is one of the leading property management companies serving the Hampton Roads area. We specialize in helping landlords get the most out of their rental properties, and we would be more than happy to help you, too!

If you're interested in learning more about our services, or if you have any questions, please don't hesitate to contact us today. We look forward to hearing from you soon!

Learn more about what to look for when searching for a property manager! Download our free resource, the "Guide to Finding the Best Property Manager."