Real Estate Guide

Top Landlord Mistakes that Kill Profit

Real estate is a highly profitable investment opportunity, but you can just as quickly lose a lot of money if you don't know what you're doing. After crunching the numbers, you might find that your actual profit is a far cry from what you expected.

This article will give you the lowdown on the top landlord mistakes that kill profit. So read till the end to find out if you're guilty of any. Or if you would like to know what common errors to avoid before entering the business.

  • Investing in a Bad Location

One of the most significant determinants of whether or not your real estate business will succeed is your location. Profits in the rental industry are all about a prime location, and if your property is sitting on the right spot, half the equation is complete. On the flip side, your business will suffer if your units are in a significantly less desirable area.

In a city, rent usually varies from one municipality to the other. And the landlords in highbrow areas with lower crime rates generally rack in a higher profit margin. But then again, taxes in certain municipalities can be a significant addition to your expenses. Besides, you don't necessarily have to invest in the most expensive neighborhood to make a decent return. If you're planning to invest in a vacation rental, look for places close to major tourist attractions. Semi-furnished apartments do well in areas with a younger population like universities. Furthermore, rentals close to amenities such as pharmacies, restaurants, parks, and schools are always a hot spot.

Take your time to evaluate your options before investing in a location carefully. If you're not familiar with the general area, lean on the expertise of a local real estate agent.

  • Miscalculating your expenses

Another pitfall landlords often fall into is miscalculating their expenses. Many people struggle with math, especially when you have to consider so many incoming and outgoing payments. But it's an essential part of keeping your books stay in the green.

Many landlords fall prey to underestimating the cost of maintenance and repairs. We usually expect things to go our way, so many property owners are guilty of dipping into their emergency funds. The downside of such a habit is that it leaves you strapped for cash when you have a mold infestation, need to get your roof redone, or fix another mishap. Although it's hard to come up with an exact figure of how much you'll need for repairs from one month to the next, there are methods you can use to arrive at an estimate.

In addition to underestimating maintenance costs, new landlords could make the mistake of charging too much rent. This choice is often to quickly recoup their investments in the property, cosmetic changes, and other upgrades. But real estate is a long-term commitment, and you require patience to reap the benefits. Instead of chasing away potential tenants with exorbitant figures, find out what similar rental types in the area are charging. Moreso, you don't have to commit to making upgrades all at once. It would be best if you took the time to evaluate the expected ROI, then go ahead when your finances can cover it.

  • Inadequately Screening Potential Tenants

Managing difficult tenants is one of the most significant challenges that come with being a landlord. When humans mix, misunderstandings, and disagreements are inevitable, so having one or two tasking encounters is an occupational hazard. However, you can save yourself a lot of trouble and money by thoroughly screening potential tenants.

Many landlords, especially the new ones, are eager to let out their spaces and rent the first month. But skipping the due process could be inviting trouble. A thorough tenant screening allows you to ensure that the person you're allowing to live on your property is a responsible adult. The last thing you want is the government locking up your apartment because you failed to realize your tenant is a notorious drug fiend.

Not only should you run their criminal background, but you should also perform a credit check. Nobody likes dealing with a tenant who can't pay rent. A tenant screening checklist can be a helpful tool, so you don't forget crucial things like employment history, migration status, and previous landlord references.

Other common mistakes worth mentioning are:

  • Neglecting proper documentation.
  • Not addressing maintenance issues on time.
  • Disregarding the importance of routine inspections.
  • Failing to adhere to real estate laws.


Being a landlord is a challenging task with plenty of room for error. But the good news is that since real estate is a relatively stable industry, you can learn and implement new strategies to improve your business. You could consult a professional property management to avoid costly mistakes, limit your risks, and maximize profits.

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