Greetings from Colorado Springs! My name is Lance Kohler, and I’m the managing broker of the Cornerstone Real Estate Team. Today, I’d like to talk about five mistakes that I often see DIY landlords make. Hopefully, you can avoid these same errors and keep your rental property running smoothly.
1. Not Inspecting Your Property
One of the biggest mistakes landlords make is failing to inspect their rental properties regularly. If you’re managing your own property, I highly recommend routine inspections.
While inspecting every month may be excessive, checking in every six months—or even quarterly if you’re highly motivated—can help you catch potential issues early. For example:
Ensure the furnace filter is being changed.
Check under sinks for leaks that tenants might not have noticed.
Identify routine repair needs.
Assess preventive maintenance items like gutters, exterior paint, and overgrown trees.
Making property inspections a regular habit can prevent costly repairs and keep your investment in good shape.
2. Neglecting Maintenance
Tied closely to inspections is the mistake of not keeping up with maintenance. As the saying goes, a stitch in time saves nine.
For instance, a small leak under a sink may seem minor at first. However, if left unchecked, it can warp floorboards, seep into lower floors, and lead to expensive damage. Regular property checks allow you to spot these problems early and address them before they become major issues.
3. Not Keeping Funds Separate
Another common error is failing to separate rental income from security deposits.
Rental income is yours to use as you wish, though setting aside some for repairs and emergencies is a smart idea.
Security deposits, on the other hand, are not your money. In Colorado (and many other states), the deposit legally belongs to the tenant and is held to ensure they fulfill their lease obligations.
To avoid financial headaches, always keep security deposits in a separate account. If the tenant moves out with no damages, you’ll need to return the full amount—so it’s best not to spend it.
4. Failing to Screen Tenants Properly
Some landlords skip the tenant screening process, often because they are renting to a friend or a friend of a friend. While it’s great to have a trusted connection, it’s still crucial to:
Run a rental application.
Check their credit score and income.
Conduct a background check.
Another mistake is skipping screening just because a tenant offers to pay several months of rent upfront. While there’s nothing wrong with accepting advance payments, it shouldn’t replace a thorough screening process.
For a deeper dive into our screening process, check out our video on tenant screening!
5. Not Raising Rent to Keep Up with the Market
Many DIY landlords tell me, I would never raise rent while a tenant is living in the property. While this might seem like a kind approach, it can hurt your investment in the long run.
Your costs—such as property taxes, insurance, and repair expenses—will increase over time. If you never adjust rent to match the market, you could find yourself struggling to cover these rising costs.
Long-term tenants are fantastic, but when they eventually move out, you may need to make costly updates, such as:
New flooring
Furnace or AC replacements
Other unit turnover expenses
Raising rent gradually and fairly ensures that your property remains profitable while keeping pace with market conditions.