The Top 8 Mistakes Made By Rookie Landlords

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Everyone has been a rookie at something at some point in their lives, whether it was in a new school, job or sport or even as a landlord.

Being a rookie means that you lack the experience of more seasoned players. This lack of experience often translates into so called “rookie mistakes” because some things just have to be learned from experience.

Over the years I have talked with many a rookie landlord. Many times these talks arise due to some sort of problem the rookie has encountered and they are now seeking advice to solve it. We more seasoned landlords tend to see these same rookie mistakes over and over again.

The Top 8 Mistakes Made By Rookie Landlords

The following are what I think are the top eight rookie landlording mistakes, and if you avoid them, you’ll be sure to have a higher chance of success!

1. Rookies Do Not Properly Screen Tenants

Tenant screening is perhaps the most important thing a landlord can do.

I see too many rookies take potential tenants at their word and forgo the full background check thinking it will save them time and/or money. Unfortunately, rookies just do not seem to have built up their BS detectors yet and believe what potential tenants tell them.

2.Rookies Do Not Treat Their Rentals As A Business

Rookies will co-mingle funds, lose receipts, and generally keep things unorganized.

Landlording is not a hobby. If you want to make money you have to treat landlording as a business. Otherwise those dollars will disappear and you will be left wondering where they went

Related: 2 Simple Tips For Beginner Real Estate Investors

3. Rookies Accept The Sob Story

The first few time your tenant is late with the rent I guarantee that you are going to get some kind of sob story.

Of course, being the nice person that you are you will want to let them slide a bit. After all you do not want to be a jerk right? Wrong! Learn not accept the sob story. Rent is due when rent is due and if you let things slide once guess what you have taught them. Think about this. Will your bank or lender let you slide? Will the grocery store? No. Does that mean you can’t make an arrangement for exceptional circumstances? No, but you need to….

4. Rookies Do Not Get Everything in Writing

Rookies will often do a deal with a verbal handshake only to get burned later with the “I thought you said I only had to pay this much?” Always get everything in writing. Insist on it.

5. Rookies Do Not Understand The Costs

What does it cost to paint a small bathroom?

How much is it to snake out a sewer line or to keep the grass cut? How about paying someone to do your taxes? If you do not understand these business costs you are setting yourself up for failure. At the end of the day you will wonder where all the money went.

6. Rookies Do Not Know The Law

If a tenant chooses not to pay you, you can’t just change the locks or turn off the utilities.

There are laws and rules that we have to live by. I have seen more than one rookie landlord make a mistake with a deadbeat tenant that ends up costing them time, money and aggravation.

7. Rookies Never Do Property Inspections

Rookies often think that if they never hear from their tenant then everything must be alright.

Nothing could be more wrong. You need to go by every once in a while and make sure all is OK. Do not equate silence from the tenant with all is well.

8. Rookies Rent To Friends and Family

Rookies think renting to friends or family is the perfect scenario.

Related: Don’t Make This Mistake and Leave Money on the Table When Syndicating Deals

After all they believe they know them and their character. In reality, this is an awful thing to do unless you never want to speak to those friends or family members again. When money gets involved between friends and family, believe me, the character suddenly changes for the worse. Be smart. Do not rent to friends and family in the first place.

So what would you add to the list of rookie mistakes? Have many of these mistakes did you make when you were a rookie?

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About Author

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.

19 Comments

  1. You and I think almost alike!

    I have discussed many of those subjects too, right here on BP. It’s interesting how many people thought I was cold hearted when I evicted my terminal cancer patient, but if they do not pay, or voluntarily move out, you need to do what is necessary to get the place re-rented.

    • Kevin Perk

      Eric,

      That is pretty hard core, but you do need to treat this as a business as I said. Did you try to work with this person? Give us some backstory.

      As always, thanks for reading and for the comment,

      Kevin

      • It was a woman and kids living in an apartment that i just purchased. She had not paid rent in about 4+ months to the previous owner, who was in foreclosure. When I tried to deliver the notice of amount due, she did not answer the door, even though I had just spoke with her a few hours prior. So I posted the amount due on her door, along with a cure/quit notice for God or anyone else that walked by to see. The same way a Sheriff posts an eviction notice. She called the cops about the posting. The cops did not do anything.

        So, regardless of her situation, she was not paying rent and did not want to move. She wanted another ‘fresh start’ with me, but she was not prepared to hand over any money.

        I had another tenant in that same building (a 4-plex) I evicted on the same day. It was a nightmare building when I purchased it, but it is OK now.

  2. Scott Stevens on

    Rookies make up rules on the go when talking to potential tenants. They are just asking for a professional tenant to walk all over them. I think some good tenants may shy away from amateur landlords because they sense that they likely have some complicated system for accepting rent, handling repairs, or that the amateur just can’t communicate the next steps in the process to the prospect and the prospect feels overwhelmed. I think these good prospects will turn to a management company or a landlord who appears to be a management company (myself, I’m always mistaken for a realty company because of how good my ads look and how I answer the phone) and the less ideal tenants flock to get accepted by the rookie.

    • Kevin Perk

      Scott,

      You make a very valid point. I think many potential tenants can sense when someone is new and perhaps in over their heard. As you say “professionals” will go after this type of tenant.

      As an example, I can remember when we first started out we used to use those generic “For Rent” signs that you can get from any big box home store. We would get all kinds of crazy calls from them. Once we switched to our professional signs with our company name on them those crazy calls for the most part stopped. It seems to me that “professional” tenants seek out the non professional landlord. And nothing screams non-professional like a generic “For Rent” sign.

      Again, very good point.

      Thanks for reading and taking the time to comment,

      Kevin

  3. Yo Kevin,

    Knowing the law is something as a landlord your supposed to know. Sadly, landlords are humans just like me and you so they’er not perfect. Sometimes we let our emotion get the best of us and over look following the law.

    Kevin I know many landlords myself who got themselves in big time trouble over changing locks. At the end of the day you just need to follow the rules and everything will be cool.

    Antonio Coleman “Signing Off”

    • Kevin Perk

      Antonio,

      I know what you mean by emotion. After all, a deadbeat tenant is stealing from you. It makes you mad and you want them out now!

      But you have to treat landlording as a business. And any business person will tell you that a cool head prevails. So do not do anything rash. It is better to walk away, cool off and get competent advice on what to do.

      Sure you want instant justice, but it just does not work that way. So as you say “just follow the rules and everything will be cool.”

      Thanks for taking the time to read my post and comment. I appreciate it.

      Kevin

  4. I made mistake #1 with my first tenant, but have so far managed to avoid the rest of the list…
    Nolo Press her in CA has some EXCELLENT books for landlords (Landlord rights AND tenant’s rights — learn them both!!!).

    • Kevin Perk

      Deanna,

      Nolo has some great resources for landlords and tenants alike. Very smart of you to read them both. All landlords should be very familiar with the law in their jurisdiction. Sometimes just having the knowledge can avoid an escalation of a minor problem into a serious one.

      Thanks for reading and for commenting,

      Kevin

  5. Always get the 1st month’s rent and security deposit in a cash equivalent – or allow enough time for a cheque to clear the bank – before handing over the keys. Easier than trying to get them out once both cheques bounce! Learned that one the hard way….

    • Kevin Perk

      Susan,

      Good point!

      Also, cash may seem great and we do take it for security deposits and first month’s rent, but we also like to see that you can and do use the banking system.

      Thanks for taking the time to read and comment,

      Kevin

  6. Thank you for posting this! I will be printing this out and adding it to my “land lording guide” binder that I am making. I think my favorite was the sob story tip. I need to build a brick wall around my emotions to avoid being suckered into this. Or just following my lease rules down to the T.

    Thanks again!

  7. Jeffrey A. Wing on

    I don’t know if this would qualify as a rookie mistake but shortly after I moved into my current apartment, the owner did a complete remodel of the complex. When my new lease came do I already had a good idea that the rent increase was going to be rather high but still within my budget (it was). However, many of my neighbors thought it was too high and immediately moved out. I guess time will tell if this was a good idea by the landlord.

    • Kevin Perk

      Jeffery,

      Yes, time will tell if can get what he thought he would get in rents and if those new tenants will stay for more than one term.

      Yes you can remodel and raise rents to the max but will that cause a lot of turnover? It can and turnover is a cashflow killer.

      Who know, he might have been wise or had money to burn. As you say, time will tell.

      Thanks for reading and commenting,

      Kevin

  8. Good advice … Especially about not taking tenants word for anything, and particularly about doing a background check!!!

    I rented an efficiency to a woman without doing a background check. Basically took her at her word. I did check her employment, and she had a decent, good paying job. Anyway, as it turned out she stopped paying rent after two months. I had to go through the eviction process … And this woman knew all the ropes, and was able to delay the eviction for about nine months!!!

    As it turned a simple background check (OF BOTH CRIMINAL AND CIVIL BACKGROUND) revealed this woman was a professional at what she did. Since 1989 she was evicted from every place she’d ever lived … Even though her current income was $53,000.00 per year.

    It was hard for me to believe that someone who could easily afford to pay their rent would do such a thing. Who would want to be evicted and have to move every 10-12 months or so? Speaking with the Clerk of the County Court Office they told me, “you’d be surprised at how many people play this scam” …

    Good advice!

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