Is proudly owning a rental property as straightforward and worthwhile because it sounds?
Or might dashing in with no plan find yourself costing you excess of you anticipated?
On this article, you’ll study the highest 5 most expensive errors landlords make—and methods to keep away from every one with smarter, proactive steps.
From skipping inspections to utilizing the mistaken insurance coverage coverage, we’ll cowl what to not do and provide you with actionable recommendation you’ll be able to belief—based mostly on years of expertise insuring rental properties for on a regular basis landlords such as you.
1. Skipping Due Diligence Earlier than Shopping for
Shopping for a rental property with out absolutely understanding its situation is the only most costly mistake new landlords make.
Many rush in, considering an affordable buy equals large earnings. However the low value usually alerts severe points—getting older infrastructure, mould, outdated wiring, or uninsurable circumstances. You may get caught with a cash pit that no insurer needs to the touch.
✅ What to do as a substitute:
- All the time rent a trusted third-party dwelling inspector.
- Make sure the roof, plumbing, electrical, and HVAC are as much as code.
- Check for mould and doc it.
- Perceive the price to carry the whole lot as much as livable requirements earlier than signing a contract.
If the numbers don’t make sense after your inspection, stroll away. It’s higher to cross than inherit a legal responsibility.
2. Not Having a Written Lease (and Authorized Help)
A verbal settlement will not be a rental settlement.
You possibly can’t implement “you break it, you purchase it” with no legally binding lease. And also you actually can’t shield your self in courtroom in case your phrases aren’t written clearly and professionally.
✅ What to do as a substitute:
- Pay a lawyer to create or evaluation your lease settlement. It’s definitely worth the upfront funding.
- Stick with 12-month leases minimal.
- Make sure that the tenant understands
the lease—not simply indicators it.
Clear contracts present you’re severe and assist scale back battle later.
3. Failing to Display Tenants Correctly
Determined landlords put within the first particular person with a pulse and a paycheck. That’s dangerous.
Skipping background checks or credit score studies can depart you with unpaid lease, property injury, or worse—authorized bother.
✅ What to do as a substitute:
- Run a credit score and felony background verify.
- Be cautious about permitting smoking or pets—these are widespread sources of harm and legal responsibility.
- Require renters insurance coverage ( an HO-4 coverage
)
and have tenants present a replica on your information. This ensures they’re lined for private property and legal responsibility, lowering your danger.
Sure, it takes a couple of further days to display screen, however it will possibly prevent 1000’s in the long term.
4. Utilizing the Flawed Sort of Insurance coverage
Common owners insurance coverage received’t cowl rental properties—and that’s an issue you received’t uncover till a declare is denied.
You want a particular sort of coverage designed for non-owner-occupied houses.
✅ What to do as a substitute:
- Get a Dwelling Fireplace
or Landlord
coverage. - Notify your insurer if the house might be vacant for 30+ days—protection can lapse with out discover.
- Keep away from insuring properties that insurers are hesitant to cowl (e.g., uncared for, high-risk, or low-income leases with out updates).
- Take into account including a private legal responsibility umbrella coverage
that extends protection above and past the legal responsibility limits of your landlord coverage. This added layer of safety might be invaluable for those who’re ever concerned in a severe legal responsibility declare.
The suitable coverage provides you peace of thoughts. The mistaken one can depart you bankrupt.
5. Shedding Observe of the Property Over Time
Out of sight ought to by no means imply out of thoughts in terms of your rental.
Some landlords don’t even know the age of the roof or what the home is made from. Others haven’t set foot inside since buy. That’s a recipe for costly surprises.
✅ What to do as a substitute:
- Observe all updates and repairs in a shared folder or spreadsheet.
- Bodily go to or drive by the property each 3–6 months.
- Hold it maintained prefer it’s your main residence—it’s an funding, in spite of everything.
You don’t have to micromanage, however you do have to handle.
Conclusion: Previous, Current, and Future
Up to now, you will have believed proudly owning a rental property was a passive revenue dream—till shock repairs, unreliable tenants, and denied claims turned it right into a nightmare. Now, you’re geared up with a clearer image of what it takes to do it proper—since you’ve seen the 5 most typical and expensive errors landlords make.
The next move?
Evaluate your present properties with this record in hand—and repair any gaps earlier than they value you.
And in terms of defending your funding, your greatest guess is working with an area, impartial insurance coverage dealer who understands the distinctive dangers landlords face.
At Vargas & Vargas Insurance coverage
, our skilled workforce is all the time prepared that can assist you discover the best protection on your property and scenario.
📞 Name us at 617-298-0655
or 💬 textual content 617-409-0329
—we’re right here if you want us.
