Becoming a DIY Landlord? 10 Mistakes to Avoid

Key Takeaways

• Treat it like a business: Successful self-management requires DIY landlords to remove personal emotions from property decisions and view their rental strictly as a business asset rather than a former home.
• Prioritize legal and structural compliance: Ignoring local landlord-tenant laws, using generic lease templates, or attempting complex DIY repairs creates severe financial and legal liabilities for property owners.
• Proactively protect your bottom line: Maximizing profitability depends on implementing standardized tenant screening, calculating accurate market-driven rental rates, and maintaining a dedicated cash reserve for hidden operational expenses.

Handling a rental property without help from the pros is something many real estate investors and homeowners like. Being a do-it-yourself landlord on the face of it makes good financial sense. As a self-managed rental, property owners feel they can lower operating costs, manage their properties directly, and create more control over their tenants and day-to-day management issues.

However, at Liberty Real Estate Services, we know a rental property is both an asset from an investment standpoint and a liability from an operational standpoint. Mistakes in managing a rental can lead to costly outcomes with regard to tenant turnover, property vacancy, legal issues, property damage, etc.

Many of the most common landlord errors due to a lack of experience. Therefore, you cannot assume that the average landlord is careless.

In this article, we will discuss 10 of the most significant mistakes DIY landlords must avoid.

1. Managing It as a Personal Residence

Most of the time, DIY landlords make emotional rather than pragmatic decisions. For example, this happens when they rent out properties that they have a personal connection to, such as:

● Former principal residences.
● Family properties.
● Properties that were inherited.
● Vacation properties.
Personal emotions can affect an individual’s objectivity when making decisions about:
● Price.
● Tenant selection criteria.
● Enforcement of the lease.
● Maintenance budgets.

A successful DIY landlord understands that rental property management is a business activity.

2. Not Understanding Landlord-Tenant Laws

Ignoring landlord-tenant laws creates massive financial liabilities. Rental housing is heavily regulated by federal, state, and local governments, with many regulations covering different areas, including, but not limited to:

● The amount of the security deposit.
● Fair housing law compliance.
● The notice required to provide access to the rental property.
● The minimum standards for livable rental properties.
● Eviction procedures.
● Lease disclosures.

3. Hastily Screening Tenants

Newer landlords can feel pressured to fill an empty rental as quickly as possible. Vacancies cause financial stress, tempting newer landlords to prioritize speed over thoroughness to fill a unit. Unfortunately, while an initial vacancy will ultimately result in hardship, poor tenant selection can produce future losses.

An effective screening process includes:
● Credit history.
● Employment verification.
● Income verification.
● Landlord history.
● References.

Landlords who manage their own properties should utilize standardized, objective screening criteria.

4. Incorrect Pricing

Incorrectly pricing properties affects profitability. Pricing too high can result in:
● Long vacancies.
● Fewer inquiries.
● Lower-quality applicants.

Pricing too low can diminish the long-term yield on an investment property.

While it is acceptable for a DIY landlord to rely solely on the costs associated with the property mortgage or their personal feelings regarding the value of the property when determining rental rates, rental rates should also take into account (i.e., be based upon):

● Comparables.
● Demand.
● Condition.
● Trends.
● Amenities.

5. Utilizing Generic Lease Agreements

Those who do not fully understand their state’s laws with respect to lease terms or have chosen to use generic online templates have created an unnecessarily high level of risk for themselves. Ambiguous lease language generally leads to conflicts in the future.

6. Not Performing Regular Preventative Maintenance

Some “do-it-yourself” landlords save money on upkeep by deferring maintenance. However, deferring maintenance usually results in higher costs in the future.

Regular and preventative maintenance is a great way to enhance your property’s value, improve tenant happiness, and find long-term tenants.

7. Failing to Budget for Expenses

Landlords often miscalculate the overall costs of owning a rental property and neglect to include enough room in their budgets for unanticipated costs. Rental expenses exceed mortgage payment & property taxes. Some of the additional costs to consider include:

● Unexpected repairs.
● Vacancies.
● New appliances.
● Landscaping.
● Insurance.
● Legal fees.
● Cleaning for new tenants.

If you do not have reserve funds set aside, you run the risk of being unable to cover an unexpected repair or a large vacancy period.

8. Ignoring Record Keeping & Documenting Important Information

Not properly documenting important items will likely create major issues during a dispute, audit, or legal action.

If you are a DIY or landlord by definition, then you need to ensure you keep accurate and organized records for the following items:

● Lease agreement.
● Inspection report.
● Invoices for repairs.
● All correspondence with tenants.
● Payment history.

Ensure you keep accurate move-in and move-out records.

9. Emotional Response to Conflict

There are times when conflicts can arise between landlords and tenants. Things like, late rent payments, lease violations, noise violations, and maintenance issues. There are many landlord/tenant relationships in which the landlord is a DIY landlord and reacts to conflict emotionally instead of acting professionally.

The use of arguments, threats, or inconsistent enforcement of rules creates unnecessary escalation when dealing with landlord/tenant conflicts. When dealing with each other, landlords and tenants must maintain:

● Calmness.
● Respectfulness.
● Consistency.

10. Attempting to Perform All Repairs Personally

Many landlords who self-manage are inclined to perform repairs to save money on repair costs. Although learning basic maintenance skills can be beneficial, some repairs require a professional to ensure safety while performing the repair. Poorly executed repairs can result in:

● Safety risks.
● Code violations.
● Additional damages to property.
● Liability issues.

The following is a list of common repair types that typically require a contractor:

● Electrical repair.
● Structural repair.
● Major plumbing repair.
● Roofing repair.

Knowing when to call a qualified contractor is a critical aspect of being a good property manager.

Bottom Line

DIY Landlords can provide considerable financial gain. However, your success as a self-managed landlord will not only depend on your income from monthly rents. It also requires professional-level customer service, organizational abilities, an understanding of applicable laws governing rental properties, sound financial discipline, and consistent communication between all parties.

The key to successful DIY property management is to maximize the benefits of using knowledgeable and experienced professionals and developing systems that allow effective management of a rental at a standard similar to that of a typical business management entity.