10 Costly Mistakes First-Time Landlords Make

By Matthew Whitaker, founder of Evernest. Updated July 2026.

This post covers insurance requirements, eviction procedures, and lease law. It is general guidance, not legal, financial, or insurance advice. Rules vary by state and change frequently. Talk to a local attorney before making decisions around lease language, screening criteria, or eviction filings.

Most first-time landlords who struggle aren't making one catastrophic decision. They're making a handful of avoidable mistakes that compound quietly over the first year until the damage shows up all at once. I've managed over 15,000 properties across 50 cities, and I have watched first-time landlords make every possible version of these mistakes. They're surprisingly similar from market to market, and most of them are entirely preventable. I'm Matthew Whitaker, founder of Evernest and author of How to Rent Your Home. Here are the 10 most expensive ones, in priority order, with the actual dollar cost of each.

The short version. The two most expensive mistakes are overpricing the rent (which leads directly to mistake number two) and skipping tenant screening. Everything else on this list is real and worth avoiding, but a bad tenant placement can cost you $20,000 or more and takes months to unwind. Get the price right, screen seriously, and the rest of these mistakes become much easier to avoid.

Mistake 1: Overpricing the Rent

Potential cost: $1,000 to $4,000 in your first year, sometimes more.

This is the most common mistake I see, and it almost always comes from one of three places. The owner sets rent based on what they need, covering the mortgage, the taxes, the insurance, plus a buffer. Or they trust a Zillow estimate that comes in high. Or they look at their house, decide it's nicer than the comps, and price for a premium the market won't actually pay.

That third one is the most expensive. The market doesn't care that you loved your kitchen renovation. It cares about what comparable houses are renting for right now.

Here's the math. Every extra week of vacancy costs you roughly a quarter of a month's rent. If you overprice by $100 and the house sits empty for four extra weeks, you just lost $1,500 chasing $1,200 over the year. The math is bad. And it gets worse: the longer you sit empty, the more pressure you feel to accept whoever shows up. You start skipping reference calls. You overlook an eviction because the applicant called it a misunderstanding. You compromise on screening just to fill the property. That's how overpriced rentals become bad tenant rentals.

Before you list, compare three sources: currently listed comps, recently leased comps (that one matters most), and either a paid pricing tool or a free professional rental analysis. Price at market or slightly under what the data supports. Lease it fast. Raise rent at renewal. That's the order.

Mistake 2: Skipping Tenant Screening to Fill It Faster

Potential cost: $5,000 to $30,000 in lost rent, eviction costs, and property damage.

This is the biggest single mistake on the entire list. After a few weeks of vacancy, the owner panics. A nice-seeming applicant shows up. The owner skips the reference call, skips income verification, skips the eviction history check, and hands over the keys just to fill the unit.

Six months later, the rent stops coming. The eviction takes another four to nine months depending on the state. The turnover after the eviction costs another $10,000 in repairs and lost rent. A bad vacancy month costs you $1,000. A bad tenant costs you $20,000. Don't trade one for the other.

Mistake 3: Doing Your Own Showings Without ID Verification

Potential cost: Hard to quantify, but the safety and fraud risk is significant.

There's a safety dimension to having strangers walk through your home. There's also a fraud dimension most landlords don't think about. People can photograph your locks, your alarm panel, your garage code, your vehicle plates. Some of them never plan to apply. They're casing the property.

Self-showing technology (Rentley, Tenant Turner, and ShowMojo are the main platforms) puts a smart lockbox on the door, verifies the applicant's ID through the app, and lets pre-screened prospects tour on their own schedule. You don't have to be there. If you do show in person, require a government-issued ID at the door before you unlock anything. It's the cheapest piece of risk management a DIY landlord can do.

Mistake 4: Keeping the Wrong Insurance Policy

Potential cost: $25,000 to $200,000 or more in uncovered liability.

A lot of first-time landlords keep their homeowners policy when they convert a property to a rental. That policy does not cover a rental. The moment the house stops being your primary residence, your homeowners coverage lapses or becomes invalid for a claim. Others buy the cheapest landlord policy they can find, with low liability limits and no umbrella coverage.

Then a tenant trips on a step. A guest gets hurt at the pool. A fire starts in the kitchen. A $1,000,000 lawsuit is not unusual. A $200,000 liability limit isn't enough.

Get a real landlord policy with at least $500,000 in liability coverage. A million dollars is much better. Add a personal umbrella policy on top for another million in coverage. The total annual cost is a few hundred dollars more than the cheapest option. That's the cheapest protection you can buy relative to what it covers.

Mistake 5: Skipping the Move-In Inspection

Potential cost: You could lose most or all of your security deposit claims, and potentially owe money out of pocket.

The move-in inspection is your baseline. When the tenant moves out and there's damage, the move-in photos and the signed condition report are the only way you can legally prove the damage wasn't there before they arrived. Without that documentation, you cannot deduct from the deposit in most states, and in some cases you can be penalized for trying.

Before the tenant's furniture arrives, photograph every wall, every floor, every appliance, every fixture. Record a narrated video walkthrough. Have the tenant sign a written condition report that same day. 90% of move-out disputes trace back to a move-in that wasn't documented carefully enough. Don't skip this step.

Mistake 6: Letting Maintenance Slide

Potential cost: $3,000 to $15,000 when small repairs are delayed.

A small leak under a kitchen sink costs $200 to fix in week one. The same leak in month 12 has rotted the cabinet base, warped the floor, and grown mold. That's a $3,000 repair, and it should have been $200. A water stain on the ceiling caught in month six is a $50 caulk job. Caught in month 18, it's a roof repair, drywall replacement, and mold remediation rolled into one.

Maintenance is the area where DIY landlords believe they're saving money and are quietly losing it. Fast response, quality vendors, done right the first time. That's the formula. The cost of being cheap on maintenance is always more expensive than the fix would have been.

Mistake 7: Running Rental Money Through Your Personal Checking Account

Potential cost: Lost tax deductions, audit risk, and costly accounting mistakes.

If your tenant pays rent into your personal checking account, you pay a plumber from the same account, and you pay your kids' registration fees from the same account, you have made bookkeeping nearly impossible. Worse, if the IRS audits you, co-mingled finances are the single fastest way to lose deductions you were legally entitled to take.

Open a separate bank account the day you decide to rent out your house. Every dollar of rent goes in. Every rental expense goes out. This is almost always free, and it saves you hours every April. It is also the easiest mistake on this list to avoid. There is no reason not to do it.

Mistake 8: Renting to Friends or Family Without a Real Lease and Real Enforcement

Potential cost: Financial losses and a damaged relationship.

This one feels like the safest choice because you know them and trust them. Here's what actually happens. The first time they pay late, which they will, you can't enforce the late fee without straining the relationship. The first time they damage something, which happens with any tenant, you can't deduct from the deposit without an argument. The first time they ask for a little flexibility, which they will, you have to choose between the lease and Christmas dinner.

If you rent to friends or family, treat it exactly like any other tenancy. Same screening, same documentation, same lease, same enforcement. If you aren't confident you can do that, don't rent to them. There is no middle ground that works.

Mistake 9: Using a Generic or Non-State-Specific Lease

Potential cost: Ranges from a minor headache to a catastrophic loss depending on what goes wrong.

Some landlords use a one-page lease template they found online. Some use no written lease at all. When something goes wrong, the lease is the only enforceable document you have. If it's incomplete, you have nothing to enforce. If it's not state-specific, parts of it may not be valid where your property is located.

A California lease is illegal in Texas. A Texas lease is incomplete in New Jersey. Use a state-specific lease from your local rental housing association, or a platform like TurboTenant or Avail, or have a real estate attorney draft one. The lease is the document you write before anything goes wrong, so that when something does, the answer is already in there.

Mistake 10: Not Knowing Your State's Eviction Process Before You Need It

Potential cost: Months of additional lost rent and hundreds to thousands in avoidable legal fees.

Every state's eviction law is different. Some states complete the process in 30 days. Others take six to nine months. Notice periods vary. Cure period rules vary. Filing requirements vary. Court hearing timelines vary. If you don't know how it works in your state before you have to file, you will make a procedural mistake that resets the entire clock and costs you another month of rent.

Hire a local eviction attorney the first time you have to file. Most charge a flat fee of $500 to $1,000 per case, which is far cheaper than getting it wrong on your own. And read your state's eviction process before you ever sign a lease with a tenant. Knowing what it actually takes to remove someone will change how seriously you take screening from day one.

The Checklist: 10 Mistakes to Avoid

1. Overpricing the rent based on what you need instead of what the market pays
2. Skipping tenant screening to fill a vacancy faster
3. Running showings without ID verification
4. Keeping homeowners insurance instead of a real landlord policy
5. Skipping the move-in inspection and written condition report
6. Letting small maintenance issues sit until they become large ones
7. Running rental income through your personal bank account
8. Renting to friends or family without treating it like a real tenancy
9. Using a generic or non-state-specific lease
10. Filing an eviction without knowing your state's specific process

Frequently Asked Questions

How much can overpricing my rental actually cost me?Every extra week of vacancy costs roughly a quarter of a month's rent. If you overprice by $100 and the house sits empty for four extra weeks, you lose about $1,500 chasing $1,200 in extra rent over the year. The hidden cost is worse: extended vacancies create pressure to accept under-screened applicants, which can turn a pricing mistake into a bad tenant situation worth $20,000 or more.

Will my homeowners insurance cover my rental property?No. Once a property stops being your primary residence, a standard homeowners policy no longer covers it, or may deny a claim entirely. You need a dedicated landlord policy with at least $500,000 in liability coverage ($1,000,000 is better), plus a personal umbrella policy for an additional layer of protection. The extra annual cost is a few hundred dollars. The potential uninsured loss is $25,000 to $200,000 or more.

What should a move-in inspection include?Photograph every wall, floor, appliance, and fixture before the tenant's furniture arrives. Record a narrated video walkthrough of the whole property. Then have the tenant sign a written condition report on move-in day. That signed documentation is the only thing that lets you legally deduct for damage at move-out. 90% of deposit disputes trace back to a move-in that wasn't documented carefully enough.

Is it ever okay to rent to a friend or family member?Only if you can treat the arrangement exactly like any other tenancy: same full screening, same lease, same late fee enforcement, same security deposit deductions. If you aren't confident you can hold that line when they pay late or cause damage, don't rent to them. There is no version of a relaxed, friendly arrangement that doesn't end in a strained relationship, a financial loss, or both.

Do I need a lawyer to file an eviction?For your first eviction, yes. Every state's process is different, notice requirements vary, cure period rules vary, and one procedural mistake can reset the entire timeline and cost you another month or more of lost rent. Most local eviction attorneys charge a flat fee of $500 to $1,000 per case, which is far cheaper than making an error on your own. Read your state's eviction rules before you ever sign a lease so you understand what tenant removal actually involves.

What lease should I use for my rental?Use a state-specific lease from your local rental housing association, or from a landlord platform like TurboTenant or Avail, or have a real estate attorney draft one for your state. Generic online templates are often incomplete or contain provisions that are unenforceable in your jurisdiction. A California lease is illegal in Texas. A Texas lease is incomplete in New Jersey. The lease is the document that protects you when things go wrong, so it has to be right.

How do I keep rental finances separate from personal finances?Open a dedicated bank account for the rental the day you decide to rent out the property. Every dollar of rent goes in, every rental expense goes out. This is almost always free to open and makes bookkeeping simple. It also protects your tax deductions: co-mingled finances are one of the fastest ways to lose legitimate deductions if the IRS ever audits you.

Where to Go from Here

Every chapter of my book, How to Rent Your Home, includes a checklist of common pitfalls and how to avoid them. If you want the full playbook in one place, start there.

Get the free PDF of How to Rent Your Home

Get a free rental analysis on your property

No pressure, no obligation. Both are free. If you already have a tenant in place and want a second opinion on any issues that might already be affecting your rental, the analysis is a good place to start.

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