What Are the Biggest ROI Killers for Landlords?

Being a landlord looks simple on the surface. You buy a property, find a tenant, collect rent, and watch the value appreciate. But if you’ve owned rental property for more than a week, you know it’s rarely that smooth. And when your returns aren’t where they should be, it’s often because one or more hidden ROI killers are quietly eating away at your profits.

Whether you’re managing a single-family rental or juggling a small portfolio, avoiding these traps is key to staying cash-flow positive and building long-term wealth. Thankfully, once you identify them, you can start eliminating or minimizing their impact.

Let’s explore some of the biggest ROI killers landlords face (and what you can do to stay ahead of them).

Extended Vacancies

Every month your property sits empty, you’re not just losing rent – you’re paying out of pocket. Mortgage, insurance, taxes, utilities, lawn care…it all adds up fast. And if you’re letting weeks go by between tenants, it’s draining your return on investment more than almost anything else.

One reason landlords face long vacancies is poor marketing. If your listing photos are dark, your description is vague, or the property isn’t priced competitively, prospective tenants will scroll right past it. Another issue is delayed turnover. The longer it takes to clean, paint, repair, and relist, the more money you’re losing.

To protect your ROI, streamline the turnover process. You need to start marketing before the current lease ends and invest in high-quality listings that actually attract the right tenants. Better yet, build a waiting list before the property is even vacant.

Bad Tenants

A bad tenant can cost you thousands in the long run. Whether it’s unpaid rent, property damage, constant drama, or legal headaches, poor screening is a quick way to tank your rental returns.

If you’re not running thorough background checks, calling references, verifying income, and using a solid screening process, you’re gambling. And when you gamble in real estate, you eventually lose big.

The solution is to set clear rental criteria and stick to them. Use a reputable tenant screening service. And trust your instincts – if something feels off, it usually is. It’s better to hold out for a qualified renter than to rush someone in who turns your asset into a liability.

Deferred Maintenance

Pushing off repairs might save money today, but it almost always costs you more tomorrow. That tiny roof leak? It turns into mold. That rattling HVAC unit? It breaks down in a heatwave. Deferred maintenance always leads to bigger bills, unhappy tenants, and longer vacancies.

But it’s not just major repairs. Little things – like worn-out carpet, outdated fixtures, or peeling paint – can also hurt your returns by making your property less appealing. And if the place doesn’t show well, you’ll either have to lower your rent or accept longer vacancies.

Smart landlords schedule regular inspections and proactively budget for repairs. They also make a habit out of fixing small issues before they become big problems. You don’t need to over-upgrade, but you do need to maintain the property like your business depends on it.

Self-Managing Without a System

There’s nothing wrong with managing your own properties (if you have the time and patience to do so). But too many landlords do it without much planning and the results are disastrous.

The biggest cost of poor self-management is tenant turnover. When tenants feel ignored or frustrated, they leave. And every turnover costs you time and money. Even worse, inconsistent practices open the door to legal issues and fair housing violations.

If you’re going to self-manage, treat it like a real business. A good property manager, like those from Green Residential, costs money, but they often save you more than they charge by avoiding costly mistakes. You’re almost always going to generate a higher annual ROI with a property manager on your team (versus self-managing your rentals).

Over-Improving the Property

Some landlords get carried away with upgrades that don’t actually increase rent enough to justify the cost. It’s easy to fall into the trap of thinking a full kitchen remodel or luxury vinyl plank in every room will attract better tenants or boost your rent by hundreds. But unless the market supports those rents, your ROI takes a hit.

Before making major improvements, run the numbers, says LinkedIn. Look at comparable rentals in your area. Will the upgrade allow you to raise rent meaningfully – or will you just break even?

Focus your money where it matters most: curb appeal, clean interiors, working appliances, and functional systems. Tenants want a clean, safe, well-maintained home. You don’t need to make it look like a showroom.

Poor Financial Tracking

If you’re not tracking your numbers, you don’t really know how your investment is doing. You might think you’re cash-flow positive, only to realize at tax time that you’ve been bleeding money all year.

Not having accurate financials also makes it harder to scale. You’ll struggle to qualify for financing, attract investors, or sell the property for what it’s worth if you can’t show clear financial performance.

Use a simple accounting system that helps you separate your personal and rental finances. This doesn’t have to be fancy. Even a basic spreadsheet can work, says Forbes.

Identify Your Triggers

As a landlord, it’s important that you understand what triggers are impacting your bottom line in positive and negative ways. As you get familiar with these factors, you can make more intentional choices that set your investments up for maximum profitability.

Last Updated: May 27, 2025