7 Hard Truths About Being a Landlord

We've talked about the 9 benefits of being a landlord, but let's be real—landlording isn't for everyone. While rental properties can build wealth and generate income, they also come with genuine challenges that deserve honest discussion.

At Hommy, we believe in transparency. Before you invest in rental property, you should know what you're getting into. Here are seven hard truths about being a landlord that you need to consider.

1. Licensing and Legal Requirements

Many cities now require landlords to get special licenses before renting out properties. These programs typically cost between $100 and $300 per year, but that's just the beginning.

Licensing requirements often include:

Meeting minimum safety and basic living standards
Passing regular property inspections
Making costly upgrades like energy-efficient windows
Ensuring building improvements meet local rules
Installing bathrooms on each floor (in some areas)

What you can do: Research your local licensing requirements carefully before buying a rental property. Include these costs and potential upgrade expenses in your investment plans. Some improvements may reduce your taxes, so talk with a tax professional.

2. The Always-On Schedule

While landlording isn't technically a full-time job, it's definitely not a "set it and forget it" investment either. You'll need to remain accessible nearly 24/7 to handle tenant emergencies.

That midnight call about a burst pipe? The weekend complaint about a neighbor's barking dog? They're all part of the package.

Time-intensive tasks include:

Marketing and showing the property during vacancies
Screening potential tenants and reviewing applications
Processing rent payments and security deposits
Coordinating repairs and maintenance
Responding to tenant concerns and complaints

What you can do: Consider hiring a property management company if you value your time and want a more hands-off experience. While this adds to your costs, it can greatly reduce your personal time commitment. Or, set clear boundaries and response times with tenants from day one.

3. When the Market Turns Against You

Even great properties sometimes sit vacant. A soft rental market can leave you covering all expenses with no income to offset them.

Common causes of extended vacancies include:

Economic downturns in your area
Major repair needs that deter prospective tenants
Seasonal fluctuations in rental demand
Simply bad timing or bad luck

Empty units hurt—you're paying the mortgage, insurance, taxes, and utilities without any rental income to balance the books.

What you can do: Always include vacancy rates in your profit calculations. A good rule is to budget for 5-10% vacancy each year. Build an emergency fund with 3-6 months of expenses to survive difficult periods. Consider offering move-in deals during slow seasons to attract quality tenants.

4. Nightmare Tenants (They're Real)

Despite your best screening efforts, you might encounter truly difficult tenants. These are people who:

Consistently pay rent late or not at all
Damage or neglect the property
File constant complaints about trivial matters
Create disturbances for neighbors

Many landlords describe feeling anxious knowing that someone else has day-to-day control over a property they've invested so much in.

People can change, too. A tenant with a stable job and good references can develop problems—substance abuse, job loss, relationship issues—that transform them into difficult renters within months.

What you can do: Good tenant screening is your first line of defense. Check credit reports, verify employment, contact previous landlords, and trust your gut feelings. A well-written lease and knowing how to enforce lease terms will help protect your interests. Consider requiring renters insurance to reduce damage-related losses.

5. Legal Problems and Compliance Issues

The legal risks of being a landlord go beyond just difficult tenants. You can face lawsuits from:

Current tenants claiming unsafe conditions
Prospective tenants saying you discriminated against them
Third parties injured on your property
Neighbors affected by your tenant's behavior

In some cases, you may even face legal responsibility for tenant bad behavior. For example, if a tenant does illegal activities and you knew but did nothing, you could be held responsible for harm to neighbors or other people.

Discrimination claims are particularly serious. Fair housing laws say you cannot discriminate based on race, religion, family status, disability, and other protected categories. Even accidental violations can result in big penalties.

What you can do: Learn about landlord-tenant law and fair housing rules in your area. Get good landlord insurance with liability coverage. Write down everything—lease agreements, maintenance requests, communications, and repair records. When unsure, talk with a real estate lawyer rather than risk a costly legal mistake.

6. The Money Pit Factor

Owning a rental property involves far more expenses than just the mortgage payment. Operating costs add up quickly:

Property taxes (often higher for non-owner-occupied properties)
Insurance premiums (typically more expensive for rentals)
Utilities (when vacant or included in rent)
Regular maintenance and upkeep
Emergency repairs
Property management fees (typically 8-12% of monthly rent)
Handyman and contractor costs
Legal and accounting fees

Rental properties generally cost more to operate than owner-occupied homes because tenants tend to be less careful with property that isn't theirs. Unexpected problems are common—aging HVAC systems, plumbing failures, roof leaks, broken appliances—and they never happen at convenient times.

According to property management experts, landlords should budget approximately 1% of the property's value annually for maintenance and repairs.

What you can do: Build a detailed budget that includes all potential expenses. Create a healthy emergency fund for unexpected repairs—aim for at least $5,000-$10,000 depending on the property value and age. Learn basic maintenance skills to handle small repairs yourself. Keep detailed expense records for tax purposes. Working with a property manager can help you plan and control costs more effectively.

7. Unexpected Events You Never Saw Coming

The past few years have taught landlords that unexpected events can seriously disrupt even the best plans. Recent examples include:

COVID-19 eviction bans that stopped landlords from removing non-paying tenants
Difficulty showing properties during lockdowns, leading to longer vacancies
New rent control laws that limit your ability to raise rents
Economic changes that suddenly affect local rental markets
Natural disasters that require big repairs
Sudden changes in lending standards or insurance availability

These unexpected situations can seriously affect your ability to manage your property profitably and maintain your expected income.

What you can do: Build flexibility into your financial planning. Never borrow too much—make sure you can survive several months without rental income. Stay informed about local housing laws and political trends. Consider buying extra insurance coverage for events like natural disasters or loss of rent. Spread out your investments so you're not completely dependent on rental income.

The Bottom Line: Know What You're Signing Up For

Becoming a landlord can be financially rewarding, but it's important to enter this venture with eyes wide open. These challenges are real, and they require:

Substantial time commitment
Financial reserves for emergencies
Emotional resilience
Knowledge of legal requirements
Problem-solving skills
Patience and people management abilities

Property ownership isn't a guaranteed path to easy passive income—it's an active investment that demands attention, resources, and dedication.

Frequently Asked Questions (FAQs)

Is being a landlord really that difficult?

It depends on your situation. Some landlords have great experiences with minimal issues, while others face significant challenges. Your success largely depends on thorough tenant screening, property maintenance, financial preparation, and how you handle problems when they arise. Location and property type also play major roles.

Can I hire someone to handle these problems for me?

Yes. Property management companies can handle most day-to-day landlord responsibilities, including tenant screening, rent collection, maintenance coordination, and even dealing with difficult tenants. This typically costs 8-12% of monthly rent plus additional fees, but many landlords find the peace of mind worth the expense.

Should these challenges stop me from becoming a landlord?

Not necessarily. Understanding these challenges helps you prepare properly. Many successful landlords face these same issues but have systems in place to reduce their impact. The key is realistic expectations, proper financial planning, and a willingness to learn. If you're not prepared for these challenges, consider other investment options.

What's the best way to avoid problem tenants?

Good screening is essential. Check credit history, verify income (tenants should earn at least 3x monthly rent), contact previous landlords, and do background checks. Trust your gut feelings during showings and interviews. A complete lease agreement and consistent enforcement of lease terms also help set clear expectations from the start.

How much should I budget for unexpected expenses?

Financial experts recommend keeping a reserve fund of 3-6 months of expenses (including mortgage, taxes, insurance, and utilities). Also, budget about 1% of the property's value each year for maintenance and repairs. If the property is older, increase this to 1.5-2%.

Are there areas where these problems are less common?

Generally, properties in stable neighborhoods with strong rental markets face fewer challenges. Areas with consistent employment, good schools, and desirable amenities tend to attract more reliable tenants and experience shorter vacancy periods. However, these properties typically have higher purchase prices and more competition.

Final Thoughts

We don't share these challenges to discourage you from becoming a landlord—quite the opposite. Understanding what you're getting into helps you prepare properly and make informed decisions.

The reality is that successful landlords face these same challenges. The difference is they've learned to manage them effectively through experience, proper systems, and sometimes by working with professional property managers.

At Hommy, we help landlords navigate these challenges every day. Whether you're just starting out or managing multiple properties, our platform connects you with experienced property management professionals and provides resources to help you succeed.

Ready to learn more about how property management can help reduce these challenges? Explore our platform to find the right property management partner for your rental business.