Becoming a landlord for the first time is an exciting venture but it’s not without its challenges. Whether you’re renting out a single-family home, a condo, or a multi-unit building, mistakes can be costly. To help you succeed from the start, here are ten common pitfalls new landlords face and how to avoid them.

1. Not Screening Tenants Properly

The Mistake: Accepting the first applicant without thorough screening.

Why It’s a Problem: Poor tenant selection can lead to late payments, property damage, or even eviction.

How to Avoid It: Always run a background check, credit check, verify income and employment, and check references from previous landlords. Use a standardized rental application process.

2. Underestimating Maintenance Costs

The Mistake: Assuming rental income equals profit.

Why It’s a Problem: Unexpected repairs and routine maintenance can eat into your cash flow.

How to Avoid It: Set aside 1-2% of the property’s value annually for maintenance. Build an emergency fund to cover big-ticket repairs like HVAC or roof issues.

3. Setting Rent Too High (or Too Low)

The Mistake: Pricing based on emotion or guesswork.

Why It’s a Problem: Too high, and the property may sit vacant. Too low, and you lose potential income.

How to Avoid It: Research local market rates using sites like Zillow or Rentometer. Compare similar properties in your area before setting a price.

4. Not Knowing Landlord-Tenant Laws

The Mistake: Ignoring local, state, or federal regulations.

Why It’s a Problem: Legal missteps can lead to lawsuits, fines, or having to return tenant deposits unfairly held.

How to Avoid It: Familiarize yourself with fair housing laws, eviction procedures, lease requirements, and tenant rights. Consider consulting a real estate attorney.

5. Neglecting a Written Lease Agreement

The Mistake: Relying on verbal agreements or using generic templates.

Why It’s a Problem: Disputes are harder to resolve without clear documentation.

How to Avoid It: Always use a comprehensive lease agreement tailored to your state’s laws. Specify rent due dates, late fees, pet policies, maintenance responsibilities, and rules of conduct.