The Biggest Risks for Self-Managed Landlords and How to Avoid Them

Managing rental properties yourself can be rewarding, but it also comes with significant risks. Without the right knowledge and systems in place, self-managed landlords may face legal issues, financial losses, and tenant-related challenges. Here are the biggest risks and practical ways to avoid them.

1. Legal Compliance and Fair Housing Violations

Many landlords unknowingly violate landlord-tenant laws, leading to fines or lawsuits. Common legal pitfalls include:

• Improper tenant screening that unintentionally discriminates against applicants.

• Unlawful lease agreements that fail to comply with state and local regulations.

• Incorrect eviction procedures, which can result in costly legal battles.

How to Avoid It:

• Familiarize yourself with federal, state, and local landlord-tenant laws.

• Use legally reviewed lease agreements tailored to your state.

• Follow fair housing guidelines when screening tenants.

• Consult a real estate attorney if unsure about legal procedures.

2. Problem Tenants and Nonpayment of Rent

A bad tenant can cause financial headaches, from unpaid rent to property damage. Self-managed landlords often struggle with:

• Tenants who stop paying and delay eviction.

• Tenants who damage the property beyond the security deposit.

• Frequent turnover, leading to high vacancy rates.

How to Avoid It:

• Conduct thorough background checks, including credit, eviction, and criminal history.

• Verify income and rental history to ensure tenants can afford rent.

• Require a strong lease agreement with clear payment terms and consequences for late rent.

• Consider offering incentives for long-term leases to reduce turnover.

3. Poor Maintenance and Costly Repairs

Neglecting maintenance can lead to expensive repairs, code violations, or tenant disputes. Common issues include:

• Ignoring small repairs that turn into major problems.

• Failing to meet health and safety standards.

• Losing tenants due to poorly maintained properties.

How to Avoid It:

• Conduct regular inspections to catch maintenance issues early.

• Set up a network of trusted contractors for quick repairs.

• Budget for emergency repairs and routine upkeep.

• Respond to tenant maintenance requests promptly to maintain good relationships.

4. Time and Stress Management

Managing a rental property is time-consuming, especially if you have multiple units or a full-time job. Landlords often struggle with:

• Late-night maintenance emergencies.

• Keeping up with paperwork and rent collection.

• Handling tenant disputes and evictions.

How to Avoid It:

• Use property management software to automate rent collection and maintenance requests.

• Set office hours for tenant communication to avoid burnout.

• Hire a property manager or property management company if the workload becomes overwhelming.

5. Liability and Insurance Gaps

Self-managed landlords sometimes underestimate their liability exposure. If a tenant or visitor gets injured on the property, you could face a lawsuit.

How to Avoid It:

• Carry landlord insurance, which provides more coverage than a standard homeowner’s policy.

• Require tenants to have renter’s insurance to protect their belongings.

• Keep the property safe and code-compliant to minimize injury risks.

Final Thoughts

Self-managing rental properties can save money, but it comes with challenges. By staying informed, using the right tools, and outsourcing when necessary, landlords can minimize risks and maximize their rental income. If managing on your own becomes overwhelming, partnering with a professional property management company can be a smart investment.