7 Most Common (and Potentially Costly) Mistakes that Landlords Make

Investing in rental property has long been considered a solid wealth-building strategy and, especially in times of economic uncertainty, is considered a safer investment than other less tangible options.

“It can be an excellent all-round investment that offers consistent cash flow in the short-term, long-term appreciation, tax advantages and the potential for passive income down the line, and with the right property and management approach, landlords can see significant returns,” says Arnold Maritz, Co-Principal for Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay.

“However, as with any investment, rental properties come with their share of risks and one of the biggest dangers for new and even experienced landlords is making avoidable mistakes that can cost thousands of Rands and even jeopardise the investment so understanding these pitfalls is key to protecting your bottom line and achieving long-term success.”

Maritz shares the following common costly mistakes landlords make — and how to avoid them:

1. Failing to Screen Tenants Properly

Rushing to fill a vacancy without thorough screening is a recipe for disaster. Problem tenants can cause property damage, miss rent payments or even become difficult to evict and many landlords regret not conducting thorough background checks, credit history reviews and verifying employment and previous landlord references.

The best way to avoid this potentially disastrous situation is to use a reputable property management company that will have access to multiple screening channels and will also assist and manage the situation if an issue does arise. However, if you opt to manage your own property, then it’s essential to use a consistent screening process for all applicants and invest in tenant screening tools or use a professional service that can check credit, criminal records and rental history. A few days of diligence can save months of stress and financial loss.

2. Underestimating Maintenance and Repair Costs

Many landlords forget to budget for regular maintenance or assume repairs will be minimal, but the truth of the matter is that unexpected issues are inevitable. Deferred maintenance also leads to bigger problems (and costs) down the road and can hurt your property's value and tenant satisfaction.

Furthermore, landlords also often underestimate the level of wear and tear their tenants will have on their property and, when they move out, it might take more than a coat of paint to prepare the property for the next tenant.

Set aside 1-2% of the property value annually for maintenance and schedule regular inspections so that you can address small issues before they become major expenses.

3. Not Understanding Local Laws and Regulations

Landlord-tenant laws are comprehensive and vary by city and ignorance of the law isn’t a valid excuse. Missteps such as illegal lease clauses, improper eviction procedures or failing to return security deposits in time can result in lawsuits or fines.

Educate yourself on local regulations or consult a real estate attorney or property management company to ensure that you are fully au fait with the regulations.

4. Overpricing or Under-pricing Rent

Setting the wrong rent can quickly erode profits. Overpricing often leads to long vacancies, while under-pricing reduces your return on investment (ROI). Some landlords rely on gut instinct or outdated comparisons rather than accurate market data which is a recipe for disaster.

Research comparable rentals in your area and adjust for factors like amenities, condition and location or consult local property managers or estate agents to price competitively.

5. Poor or Incomplete Lease Agreements

A handshake or a generic lease downloaded from the internet isn’t enough. A vague or poorly written lease can easily lead to legal disputes over responsibilities, rent payments or property damage, not to mention the stress of dealing with these issues.

Use a detailed, legally compliant lease tailored to your city and be sure to include all the important clauses such as rent due dates, maintenance responsibilities, pet policies and penalties for late payment. Always have tenants sign before they move in and keep copies on file.

6. Lack of Professional Property Management (When Needed)

If you’re renting out the cottage on your property, managing the rental yourself often makes sense. But some landlords try to manage everything themselves, even when they have multiple properties or live far from the rental property, and this can lead to poor tenant communication, neglected maintenance, stress and even financial loss.

If you're overwhelmed or inexperienced, consider hiring a property manager. While it comes at a cost, it often pays off in saved time, fewer headaches and more efficient operations.

7. Failing to Plan for Vacancy and Turnover

Many landlords assume their property will be rented year-round, but vacancies do happen, and tenant turnover comes with cleaning, repairs and marketing expenses. If you haven’t planned financially, even a month of vacancy can impact your cash flow.

Always budget for at least one month of vacancy per year. Maintain good relationships with tenants to encourage renewals and begin marketing early when a lease is ending.

“At the end of the day, owning rental property can be a powerful wealth-building tool, but it’s not without its challenges,” says Maritz, adding that the difference between a successful landlord and one who constantly struggles often comes down to preparation and attention to detail.

“By avoiding these common mistakes, you can protect your investment, keep your tenants happy and maximise your profits. Remember that rental real estate isn’t just about owning property; it’s about managing people, processes and expectations wisely.”