The 7 most costly mistakes landlords make – and why 2025 is still the best time to invest in rental property

Investing in rental property remains one of the most effective ways to build long-term wealth — and in 2025, there’s more reason than ever for optimism. According to the latest PayProp State of the Rental Industry report, a record 87.1% of property professionals in South Africa expressed confidence in the future of the market.

Factors such as falling inflation, rising rental growth, and near-record-low tenant arrears have created the perfect environment for savvy investors and landlords to grow their portfolios.

But as promising as the outlook is, owning rental property isn’t without its risks. According to Lorraine Dellbridge, Rentals Manager at Lew Geffen Sotheby’s International Realty, even experienced landlords can make costly mistakes that jeopardise their returns.

“With the right property and management approach, landlords can see significant returns. But understanding common pitfalls is essential to protecting your investment and ensuring long-term success,” she says.

If you’re a landlord — or planning to become one — here are seven of the most common (and expensive) mistakes to avoid, especially in a thriving but competitive market.

1. Failing to screen tenants properly

One of the most frequent — and expensive — errors landlords make is rushing to fill a vacancy without conducting proper tenant screening. Problem tenants can cause property damage, miss rent payments, or become difficult to evict.

In fact, finding quality tenants remains the number-one concern for South African rental professionals, with 32.4% listing it as a key challenge in 2025.

How to Avoid It:

Use a reputable property management company or tenant vetting software. Over 83% of South African agencies now use tech-based screening tools, which can check credit history, rental records, and criminal backgrounds. A few extra days of due diligence can save months of financial and legal stress.

“A credit report offers landlords crucial insight into how a potential tenant manages their monthly debt obligations and overall credit exposure. It reveals whether someone is overextended, nearing their credit limits on facilities like credit cards, or frequently opening new loan accounts just to get by. A detailed report also highlights monthly credit expenses, making it easier for landlords to assess disposable income — in other words, whether the applicant can truly afford the rent and if they’ve been transparent about their financial obligations," says Michael-Anne Abrahams, MyProperty Home Loans expert. 

Going the extra mile to get a comprehensive report is not just for those looking to buy a home but also for landlords looking to protect their investment.

2. Underestimating maintenance and repair costs

Many landlords don’t adequately budget for regular upkeep — or they assume tenant wear and tear will be minimal. Unfortunately, deferred maintenance only leads to more expensive repairs down the line, and it can negatively impact tenant retention.

Maintenance and inspections are now among the top three challenges facing rental agencies, showing just how crucial this area has become.

How to Avoid It:

Set aside 1–2% of the property’s value each year for repairs and maintenance. Conduct regular inspections (increasingly automated by 57% of property professionals) to catch small issues before they escalate.

More here on costs that landlords often underestimate

3. Not understanding rental laws and regulations

Ignorance of the law is no defence — and it’s a mistake that could lead to major legal and financial consequences. From lease clauses to eviction procedures, landlords must comply with national legislation and local municipal by-laws.

In South Africa, the Rental Housing Amendment Act outlines tenants’ rights and landlords’ obligations in detail — and it's illegal to “contract out of the law.”

How to Avoid It:

Educate yourself on current regulations or work with a professional rental agent. Legal compliance is critical, and getting it wrong can result in fines, lawsuits, or delays in evictions.

Here is our guide to landlord rights and obligations

4. Overpricing or under-pricing your rental

Setting the wrong rent — either too high or too low — can severely affect your return on investment. Overpricing leads to prolonged vacancies, while underpricing eats into your profit margins.

Despite growing confidence in rental growth, landlords should not rely on gut instinct or outdated pricing models.

How to Avoid It:

Do your homework. Use up-to-date data on comparable rentals in your area, and consider factors like amenities, condition, and location. Better yet, consult a rental agent who can perform a comparative market analysis for accurate pricing.

5. Using poor or incomplete lease agreements

A handshake or generic online lease isn’t enough to protect you or your property. Poorly written agreements can lead to legal battles, unpaid rent, and confusion over responsibilities.

How to Avoid It:

Use a detailed, legally compliant lease that reflects current legislation. Include essential clauses like rent due dates, maintenance responsibilities, penalties for late payment, and pet policies. Also include an ingoing inspection report and property condition report as addendums to the lease.

A well-drafted lease agreement is essential for avoiding disputes. Include the following:

• Rent amount and payment schedules.

• Clear maintenance responsibilities.

• Inspection clauses that are reasonable and agreed upon by both parties. Entry and exit inspections are vital for documenting the property's condition at the beginning and end of the lease. This protects both parties in case of disputes regarding damages or repairs. Ensure both inspections are conducted with the tenant present, and detailed reports are signed by both parties.

Note: Any clause that contradicts the law, such as limiting tenants' rights, risks invalidating the lease.

Entry and exit inspections are not just a formality—they are a legal requirement under South African rental laws and are crucial for documenting the property's condition at the start and end of a lease. These inspections help:

• Protect the landlord by clearly outlining pre-existing damages.

• Protect the tenant by ensuring they are not held responsible for wear and tear or damages that existed before their tenancy.

• Reduce disputes by providing clear, documented evidence of the property's condition.

Both inspections should be thorough, with detailed reports and photographs. Ensure the tenant is present during these inspections, and have both parties sign off on the findings.

6. Trying to do everything yourself

Self-management can work for a single cottage on your property, but landlords who own multiple units or live far away often struggle with time, communication, and maintenance oversight.

In 2025, more agencies than ever — 68.3% — are focusing on managed rentals as their primary growth strategy, showing a clear shift toward professional property management.

How to Avoid It:

If you’re feeling overwhelmed, bring in a professional property manager. While there’s a cost involved, it often pays off in better tenant relationships, reduced vacancy rates, and smoother operations.

7. Failing to budget for vacancy and turnover

Many landlords assume their property will always be occupied. But tenant turnover is inevitable, and vacancies — even brief ones — can significantly disrupt your cash flow.

How to Avoid It:

Plan for at least one month of vacancy per year. Begin marketing early when a lease is ending, and maintain strong communication with current tenants to encourage renewals.

Why 2025 is still the best time to be a landlord

Despite the potential pitfalls, now is one of the most promising times in recent memory for rental property owners in South Africa. Agencies report:

• Rising rental growth and demand

• Near-record-low tenant arrears

• Technology-driven efficiencies, especially in tenant vetting, inspections, and maintenance

• Landlord confidence on the rise, with most planning to retain or grow their portfolios

Property professionals are increasingly focused on revenue growth through better service and management, not cost-cutting. Only 0.5% plan to reduce their tech spend in 2025, and fewer than 1% plan to shrink office space — proving that face-to-face collaboration and tech-enabled service are both here to stay.

Owning rental property can be a rewarding and profitable journey — but only if approached strategically. The difference between a struggling landlord and a successful one often comes down to preparation, attention to detail, and a willingness to embrace professional support and technology.

By avoiding these common mistakes and capitalising on 2025’s positive market conditions, South African landlords have a real opportunity to maximise returns, reduce stress, and grow long-term wealth.