Key Takeaways:
- DIY landlords often underestimate the time and responsibility required to effectively manage a rental property.
- Thorough tenant screening and clear written lease agreements are essential to avoiding costly disputes and vacancies.
- Proper rental pricing and preventive maintenance help protect long-term profitability and property value.
- Treating rental properties like a business—not a personal home—helps landlords maintain professionalism and better tenant relationships.
Though managing a rental property as a do-it-yourself-er may seem like an attractive way to save money as a landlord initially.
Many landlords are drawn to DIY renting because they feel that it gives them more control over their property, allows them to be involved in the decision-making process, and allows them to save money on leasing costs.
For some people, managing a rental property as a do-it-yourself-er can indeed be a profitable endeavor. Becoming a successful DIY landlord requires more than just a passion.
To succeed as a DIY landlord, you must be organized, have a firm commitment to performing your responsibilities, and understand exactly what your responsibilities will be as a DIY landlord.
In this article, TJC Real Estate will discuss seven common mistakes DIY landlords should avoid. These mistakes can adversely affect your financial investment and professional reputation.
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1. Underestimating Your Time Commitment
Many first-time DIY landlords make the mistake of thinking that managing a rental property is a passive endeavor.
Although a rental property may provide you with a source of income, creating and maintaining that income requires you to invest time and energy on an ongoing basis.
Most self-managing landlords will generally bear the following responsibilities:
- Marketing vacancies.
- Screening prospective tenants.
- Processing maintenance requests.
- Collecting rental payments.
- Managing lease renewals.
- Responding to emergencies.
Even if you own only one property, it takes a substantial amount of work to manage your property effectively, especially when there are unexpected problems.
2. Poor Tenant Screening
If you hurry through tenant selection, you may create long-term problems that are worse than a temporary vacancy.
Some do-it-yourself landlords hurry the process due to pressure to fill a unit quickly and skip important parts of the applicant screening process.
One common error is not confirming if the candidate is using housing subsidies and therefore protected by certain aspects of Colorado Law.
Others will utilize their personal impressions only, instead of using objective criteria.
An effective tenant screening process should include:
- Verifying the applicant’s income.
- Evaluating the applicant’s credit report.
- Rental history checks.
- Background screening.
- References.
Inconsistent or incomplete screening increases the likelihood of late payments, lease violations, or property damage.
3. Inaccurate Pricing of the Rental Property
Because of an emotional connection with their rental property, some property owners may overvalue their property. Other property owners may underprice the rent, fearing that if they do not, they will have longer vacancy rates. Both approaches can ultimately result in problems.
When the rent is substantially above the market price, there is an increased likelihood of extended vacancy periods and, as a result, a lower quality of tenant applications as well as increased rent pressure.
Conversely, when the rent is priced below market value, the owner may experience:
- Loss of long-term rental income from the tenant.
- Difficulty covering the monthly expenses of the rental property.
- Having to deal with tenant expectations that cannot be fulfilled once established.
To set a fair rent amount for your rental property, you must consider comparable properties in your market area and how your rental property fits within that market based on location, amenities, and current demand trends.
Read our guide to pricing Denver homes to rent for more information.
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4. Not Writing Down a Lease Agreement
Not having a documented lease agreement can have huge legal and financial repercussions for landlords.
DIY landlords will often enter into informal, verbal agreements with their tenants or rely on outdated residential lease information, which can lead to future misunderstandings.
Colorado landlord-tenant law also prohibits the use of verbal changes to terms, so it’s best to have everything in writing.
Many DIY landlords also utilize vague terminology related to responsibilities or expectations of both parties, which can lead to confusion and disputes.
A comprehensive written lease should include the following sections:
- Legal details of both parties.
- Property description.
- Rent schedule.
- Maintenance responsibilities.
- Occupancy limit.
- Pet policy.
- How to handle delinquent rent and late fees.
- How the property should be utilized (how many people, etc.)
The above documentation will provide a legally binding agreement for both parties and provide a basis upon which to resolve issues when required.
If you want more information on lease essentials, read our guide to lease agreement must-haves.
5. Ignoring Preventive Maintenance
If maintenance is ignored, it can lead to an increased likelihood of worse problems occurring over time, and could make your property unsafe .
For instance:
- A leaky roof can eventually lead to structural damage.
- A slow plumbing leak can cause mold issues.
- A neglected HVAC unit can malfunction unexpectedly.
Many DIY landlords defer maintenance to save money.
6. Treating Your Rental as if It’s Your Own Home
New landlords can struggle to keep their emotions for their property separate from the decision cycle of running a business. Rental properties are your investments, not your homes.
Tenants will decorate and occupy spaces differently from the way the owner has done, and will prioritize the structural and functional aspects of the building differently as well.
As a result, first-time landlords often make common errors in judgment when managing their properties that are due to their emotional attachments, such as:
- Excessive ( and potentially illegal ) entry into the property.
- Excessive involvement in the tenant’s life.
- Taking normal wear and tear personally.
The establishment of professional boundaries in relation to the landlord-tenant relationship is important for maintaining healthy relationships between landlords and tenants.
7. Poorly Maintained Documentation
Property management requires good documentation. Several new landlords do not have a formalized method for maintaining the records related to the property. As a result, their records can become disorganized.
Several critical records should be maintained by the landlord, including the following:
- Lease agreements.
- History of rent payments.
- Invoices for maintenance.
- Inspection reports.
- Logs of communication.
Final Thoughts
The potential to become a DIY landlord to generate financial gain, have more operational control, and gain valuable experience in investments is appealing.
However, being responsible for the self-management of your rental property has many obligations that can not be overlooked.
The majority of mistakes when it comes to DIY property management are often from treating it casually rather than treating it professionally.
The safest course of action for property owners looking to become DIY landlords is to partner with TJC Real Estate instead.
Our property management services take care of the granular issues that come with DIY landlording and let you enjoy your investment goals in peace.
