7 Costly Mistakes New Landlords Make (and How to Avoid Them)
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Becoming a landlord is one of the most common ways people build wealth and generate passive income. With rental demand continuing to rise, it can seem like an opportunity too good to pass up. But here’s the truth: managing a rental property isn’t just about collecting rent every month. It comes with responsibilities, legal requirements, and the need to balance both your financial goals and your tenants’ needs.
Many new landlords jump in without realizing how much work goes into it. From screening tenants to handling repairs, keeping up with taxes, and navigating regulations, there are plenty of details that can make or break your success. A simple oversight could cost you money, create unnecessary stress, or even lead to legal trouble.
The good news? Most of these mistakes are avoidable with the right preparation and mindset. By understanding the most common pitfalls early on, you can protect your investment, build positive relationships with tenants, and grow your rental portfolio with confidence. In this blog, we’ll cover the biggest mistakes new landlords make and what you can do instead to set yourself up for success!
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Don't Make These Mistakes as a New Landlord
01) Poor Tenant Screening
One of the biggest mistakes that landlords make is that they do not screen tenants as they should. If you do not have any checks in place, then this will work against you more than you realise. If you don’t check your tenants, then you may find that they end up damaging your rental property and that you end up having to pursue a formal eviction notice. On top of this, you may also have to pay out more in fees, which is the last thing you need. If you want to help yourself, then working with a screening service is a very good idea. They can help you to go through everything and review the people who might be staying in your property. Sometimes they will even meet them in person, and they will also help you attract the right people.
02) Not Understanding Tax Obligations
Rental income comes with tax responsibilities. Many new landlords underestimate how complex this can be, or worse, they ignore it altogether. Failing to comply can lead to penalties, legal trouble, or even criminal charges.
How to avoid it:
Stay updated on current tax regulations.
Work with an accountant who understands rental property taxes.
Keep clear records of rental income, expenses, and agreements.
03) Not Protecting the Deposit
Another major mistake that a lot of landlords make is protecting the deposit. If you have a deposit, then you have to make sure that you register this and that you also make sure that all of the details are correct. If you don’t, then you may find that you struggle more than you have to with things. If you don’t protect the deposit, then you can be forced to repay the deposit to your tenant, and this can affect your legal standing. Although this may be a simple step, it is a big one if you want to make sure that you are as complacent as possible.
04) Skipping a Solid Tenancy Agreement
Relying on verbal agreements or generic templates can put you at serious legal risk. Without a detailed contract, disputes become much harder to resolve.
How to avoid it:
Always use a written tenancy agreement template or have one drafted.
Clearly outline rent, responsibilities, and expectations.
Consider working with a property lawyer to review your lease.
Use rental property management software to keep documents and payments organized.
05) Failing to Document Inventory
At the start of your tenancy, a document can be used to create an inventory that records the condition of the property and the contents as a whole. The more detailed and comprehensive it is, the better. Even a basic document, however, means that you can keep track of things, but as a general rule, this will help you to avoid disputes at a later date. If you neglect things like this, then you will find that you struggle to know when your tenancy ends, and the cleaning standards that are in place for it. You may also find that you cannot hold a deposit back from the tenant when they come to move out because there was no proof of how you left the property, or the condition of the appliances.
06) Neglecting the Property
Another common mistake is neglecting the property. A poorly maintained property attracts poor-quality tenants and creates bigger repair bills later. Even small issues—like scuffed walls or outdated appliances—can hurt your rental’s appeal.
How to avoid it:
Schedule regular property inspections.
Refresh paint, flooring, and fixtures as needed.
Fix problems promptly before they get worse.
07) Neglecting Energy Efficiency
Energy efficiency isn’t just about being eco-friendly—it’s about saving money and attracting tenants. Outdated, inefficient systems can drive up utility costs and push good tenants away.
How to avoid it:
Check your property’s energy rating.
Invest in energy-efficient appliances and insulation.
Highlight green upgrades when marketing your rental.
Final Thoughts
Being a landlord is a long-term investment, but it requires more than just collecting rent. By screening tenants carefully, protecting deposits, staying on top of taxes, and maintaining your property, you’ll not only protect your investment but also attract tenants who respect it.
Avoid these common mistakes, and you’ll be well on your way to becoming a confident, profitable landlord!