"Stupid" Mistakes Every Newbie Landlord Makes

General Landlording & Rental Properties

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"Stupid" Mistakes Every Newbie Landlord Makes

Mindy JensenPro Member

BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes

Not screening properly.

Not running numbers correctly.

Not evicting in time.

I want your mistakes and your stories behind those mistakes!

Please share below.

[email protected]Podcast Guest on Show #261

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Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

You win, or you learn. The only stupid mistake is not trying.

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John Lemkuhl
Minneapolis, MN · Member since 2018 · 1 post · 2 votes
8y
Not collecting a full deposit.
We tried to be generous work out a payment plan for the deposit so they could pay $200 extra a month until the deposit was paid in full. Well, the first month after she moved in, she disappeared and left damage on our brand new kitchen appliances; which, what are you doing to put a giant dent in a refrigerator??
Renters know the rent game. They know they need a full deposit. Don't bend on that. If they don't have a deposit and first month's rent, they're not the tenant for you.
2 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
8y
John is correct on stating "don't bend" in regards to deposits but the reality is that in this business, dealing with tenants/strangers, you should never make the mistake of bending on anything. Human nature is such that if you allow a opening you will be taken advantage of.
I do not have any examples of personal mistakes but will say that the vast majority of mistakes generally derive from new landlords not bothering to learn their state landlord tenant regulations before purchasing their property and not rigidly enforcing the regulations and their lease when a issue arises.
Trust and emotions are obviously two huge mistake causing factors that landlords must eliminate from their business practices. Landlords should immediately issued notices (pay or quit as example) when there is a lease violation then follow up with communication. Shoot first, ask questions later. Too many landlords expect problems to correct themselves and waste far too much crucial time waiting for the miracle that will never come. The only thing you can really trust in is that a tenant will screw their landlord when it suites their needs.
Operate by strict business practices and mistakes will become business as usual.
4 Reply
Preston C.
Rental Property Investor · KS/MO · Member since 2017 · 34 posts · 14 votes
8y
Its probably already been mentioned in some way or another, but I would say a huge mistake people make starting out (aside from screening well) is being flexible on terms of the contract. If you're flexible even on just the slightest terms, tenants will take advantage. For instance, not following up on late fees when tenants pay late. They will pay late every month and eventually may stop paying all together. Even if you think you have a good tenant, you need to make it very clear that the terms of the lease aren't flexible. If the rent is due the 1st and I don't have my money on the first, I make sure to let them know right away. Another thing is letting people split up the deposit and/or rent. If they can't come up with the money right away every month you are more than likely going to have problems.
2 Reply
Ker Xiong
Property Manager · Fresno, CA · Member since 2010 · 7 posts · 3 votes
8y
During screening, I went off word of mouth from others instead of properly screening tenants using background checks. I now use mysmartmove.com to verify.
3 Reply
Mindy JensenPro Member
OP
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
8y
Originally posted by @Thomas S.:

...The vast majority of mistakes generally derive from new landlords not bothering to learn their state landlord tenant regulations before purchasing their property and not rigidly enforcing the regulations and their lease when a issue arises.
Too many landlords expect problems to correct themselves and waste far too much crucial time waiting for the miracle that will never come.
I just tweeted this! SO SO SO TRUE!!!
[email protected]Podcast Guest on Show #261
3 Reply
Craig Bellot
Property Manager · CT · Member since 2014 · 687 posts · 329 votes
8y
Not ensuring the heat is on in vacant apartments in the winter time in Bridgeport, CT!
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Alexander FelicePro Member
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
8y
Letting people dictate my time
Tenant will get X done by Y time.....delay.....delay.....delay.....why am I waiting?
This is my business, everyone involved is on my time, or they don't get my time (obviously within reason). When I was new I let people fit me into their schedule by not being firm enough. Terrible dynamic to create.
Rental properties are supposed to create time, not make you beholden to it.
[email protected]Podcast Guest on Show #301
2 Reply
Kraig Kujawa
Investor · Orlando · Member since 2016 · 151 posts · 72 votes
8y
Underestimating rehab expenses has killed me on one house that looked like a good deal. It had a garage that had maybe 60% of the garage conversion to mother in law suite done. We couldnt figure out why they had stopped.
We had a GC come out and look at it, who estimated it, but then as that went underway, we figured out the mystery - the electrical couldn't support both units -- blammo a few K more.
And my other one -- underestimating the issues with trying to rent out a place on offseason. This one might be a bit of a wash because housing prices slow during Dec-Feb, but I definitely ate into my vacancy allocation while trying to rent it out.
Great thread. I've gotten lucky with tenants. Reading this keeps me from complacency.
1 Reply
Sean McDonnell
Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
8y
Putting our SFH up for rent at the end of November..
@Kraig Kujawa You are absolutely right, no one wants to move around the holidays! I wish I read through this discussion a few months ago. Great information in here.
2 Reply
Kraig Kujawa
Investor · Orlando · Member since 2016 · 151 posts · 72 votes
8y
@Sean McDonnell Yup! I am course-correcting by trying to get my tenants to sign shorter or longer leases to make their leases expire in March to May timeframe now. It's so important to me that I lost a tenant who didnt play ball
1 Reply
Niki C.
Aurora, CO · Member since 2017 · 52 posts · 19 votes
8y
Lesson: dont feel bad for your tenant when they tell you their story because you will hear more and more story from them :) My first tenant always tell me story make me feel bad for them to waive the late fee when pay late. I feel bad a little bit but i still collect the late fee and when they tell me they are not going to pay till mid of the month i didnt reply and post a 3 days notice, guess what? They paid me the same day i post the 3 day notice :)) and this month they pay rent on time without telling me any story since they already know what i am going to do to them. I always remind myself that i work hard to buy a rental, if i feel bad for them then who will feel bad for me when i dont get the rent and pay the mortgage out of my pocket?
5 Reply
Shane Seeley
Contractor · Geneseo, IL · Member since 2017 · 14 posts · 1 vote
8y
Wow, I currently don't have any rental property but I do repair and maintenance projects for a real estate group in my area. I've heard them talk about tenant "issues" but they don't even compare to some of the info shared here.
Buy & hold rental property is on our horizon in the near future so I appreciate all of you for sharing your trials.
0 Reply
Jairo Rincon
El Paso, TX · Member since 2018 · 21 posts · 6 votes
8y
My biggest mistake was my very first house. I let family rent the house out. I was 21 at the time and didn't know any better so I didn't get a property manger or establish a handwritten contract. The biggest issues I had was when it came to the monthly payment they would say, " hey I painted a room for you so I'm deducting that out of the monthly dues." These types of comments happened a few times and I lost some money. Not wanting to cause issues I allowed it to happen, big mistake on my part. Money and blood does not mix and I would avoid renting to family or even friends if possible. If you have to rent to a family member or a friend make sure they deal with your property manger instead.
1 Reply
Jason Dale
New Milford, CT · Member since 2017 · 25 posts · 6 votes
8y
My first tenants moved in October 1st. They are already out. They were a fairly young couple, excited to move in together. Then apparently the gf left him and lived with another guy for 7 weeks (and came back?) but he couldn't pay rent by himself. There were a LOT of issues during the 4 months they were there (parking, dogs barking, fighting until neighbors called the cops, shoveling dog poop from the garage into the walkway - caught on video and denying it - and never paying rent on time) but when they moved out, they left the garage full of dog poop, there were BB gun holes in one of the walls, dog pee and poop all over the inside and a bunch of stuff left over. They moved out voluntarily instead of being evicted which was not a great situation but at least I didn't have to go through the eviction process.
They seemed promising. They screened well. Sometimes you just get crappy tenants.
My new tenants seem great, they even offered to make improvements to the condo. Hopefully we'll get lucky this time, but I'm still skeptical. They move in next week.
0 Reply
William Tombs
Rental Property Investor · Oak Ridge, TN · Member since 2017 · 3 posts · 3 votes
8y
Biggest mistake that I keep seeing people make is trying to be too flexible with tenants. It may seem harsh, but being strict is the best way to not have your tenants need to dig themselves out of a hole.
If they can't afford the whole months rent on the first, but tell you they have half now, and will pay the other half in two weeks when they get paid, that is a huge red flag! If one paycheck doesn't pay rent for them, then why will they have next months ready in two weeks after that, and if they are constantly paying their rent 2 weeks late they are going to rack up late fees.
It may seem harsh, but I hate to be the creditor who is constantly getting paid late, or not at all.
Some exceptions apply.
2 Reply
Tyler Bushey
Investor · Biddeford, ME · Member since 2017 · 282 posts · 180 votes
8y
I would say being careful who you get advice from. Everyone thinks there an expert because their friend's brother was a landlord back in the day and he "knows everything." Also, laws change, stay up to date on how things work in your area!
2 Reply
Toshia Booker-Blakeley
Chicago, IL · Member since 2014 · 60 posts · 8 votes
8y
Not using preventive maintenance and or fixing repairs early
2 Reply
Scott Trahan
Port Orchard, WA · Member since 2017 · 5 posts · 1 vote
8y
@Jay Helms
That is the money maker for everyone involved right? If you factor in even half of your average hourly wage for your time doing something you are not great at actually cost you more in the long run.....
1 Reply
Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
8y
Originally posted by @Jason Dale:

...
My new tenants seem great, they even offered to make improvements to the condo. Hopefully we'll get lucky this time, but I'm still skeptical. They move in next week.
Be VERY skeptical and DO NOT take them up on their offer "to make improvements" - if you allow them to do "improvements" you might find that they lack any DIY skills and you end up regretting allowing that to happen.
3 Reply
Bryon Johnson
Realtor · Los Angeles, CA · Member since 2016 · 5 posts · 1 vote
8y
Thank you to everyone sharing their newbie landlord lessons learned, very helpful information to take into account.
0 Reply
Ola Dantis
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
8y
@Mindy Jensen
Getting too emotional when it comes to being firm with a tenant
2 Reply
Marian Smith
Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
8y
Michael Clay I am pretty friendly with my tenants. If you set up business procedures and don’t deviate you can have the best of both worlds, maybe. I have said, “I know you are paying in a couple of days but I have to send a late notice on the 6th...just business.” They then know you do what you have to do while wearing your pm hat, but are a friendly person. (You never want to delay the timeline on eviction, every late day is akin to stealing rent from you...not saying get angry, just realistic). I am not sure what could crop up at that close of quarters, but if you have written policies (lease or house rules) you could explain that your lender (or insurance or partner) expects you to follow the no modifications to unit, no pets, no smoking, no guests over 48 hours without approval, one vehicle, written policy. Be friendly and explain you follow policy, it is a business like any other service business and all have policies. Deviate once and risk the give inch, take mile...I guess you could “talk to partner” and if it becomes frequent say partner is weary of all the requests...car salesman tactic. people businesses are not 100% hard and fast...but in 99% cases follow “policy” and you will have few regrets.
1 Reply
Mehdi Zeramdini
New Haven, CT · Member since 2018 · 1 post · 0 votes
8y
Not having a clear procedure for eviction and letting emotions interfere with my judgement.
Eviction should be a systematical, procedural operation. Think about it as an "IF...Then" statement.
0 Reply
Michael Clay
Charlotte, NC · Member since 2017 · 85 posts · 38 votes
8y
Originally posted by @Marian Smith:

Michael Clay I am pretty friendly with my tenants. If you set up business procedures and don’t deviate you can have the best of both worlds, maybe. I have said, “I know you are paying in a couple of days but I have to send a late notice on the 6th...just business.” They then know you do what you have to do while wearing your pm hat, but are a friendly person. (You never want to delay the timeline on eviction, every late day is akin to stealing rent from you...not saying get angry, just realistic). I am not sure what could crop up at that close of quarters, but if you have written policies (lease or house rules) you could explain that your lender (or insurance or partner) expects you to follow the no modifications to unit, no pets, no smoking, no guests over 48 hours without approval, one vehicle, written policy. Be friendly and explain you follow policy, it is a business like any other service business and all have policies. Deviate once and risk the give inch, take mile...I guess you could “talk to partner” and if it becomes frequent say partner is weary of all the requests...car salesman tactic. people businesses are not 100% hard and fast...but in 99% cases follow “policy” and you will have few regrets.
0 Reply
Michael Clay
Charlotte, NC · Member since 2017 · 85 posts · 38 votes
8y
Awesome insight. Much appreciated!
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