Ty Lacroix, a London, Ontario real estate broker with 50 years of personal investment experience, outlines 12 mistakes that cost real estate investors money, time, and equity — mistakes made by both novices and experienced investors alike.
According to the Real Estate Investment Network, inadequate due diligence and unexpected maintenance are the leading drains on working capital, with tenant turnover costing investors an average of $1,500 to $3,000 per vacancy. Every mistake on this list is preventable. Most are the result of moving too fast, trusting the wrong numbers, or underestimating what owning an income property actually requires.
Real estate investing is a business, not a passive hobby. It creates wealth for those who approach it with discipline and preparation — and expensive problems for those who do not.
I have been investing in real estate personally for over 50 years and have brokered these transactions in London, Ontario, for 24 of those years. The mistakes below are not theoretical. I have watched every one of them play out in real transactions, with real consequences for real people. Some were recoverable. Some were not.
The good news is that every mistake on this list is preventable — if you know what to look for before you buy.
1. Failure to Determine the Big Picture
Before you buy a single property, you need to answer a fundamental question: why are you investing, and what will it actually demand of you in terms of time, energy, and management?
Investors who skip this step buy properties that do not fit their lives, schedules, or financial situations. A duplex 45 minutes from your home that requires hands-on management is not a passive income stream — it is a second job you did not fully apply for. Clarity on the big picture before you commit saves you from making a decision that looks sound on paper and feels wrong every day after closing.
2. Not Verifying the Seller's Numbers
Claims of exceptional returns are everywhere in investment real estate. Sellers and their realtors present the best possible version of a property's financial performance — and sometimes, that version is not accurate.
Check everything independently: current rents against comparable active leases, payment history, property taxes, operating expenses, tenant deposits, and any planned capital expenses. The most common discrepancies I encounter are overstated rental income, understated vacancy rates, and missing maintenance costs. Each one individually shifts the investment analysis. Together, they can turn a property that looks profitable into one that loses money from the day you take possession.
3. Forgetting You Are Buying a Business
An income property is not a financial instrument you set and forget. It is a business with tenants, maintenance obligations, regulatory requirements, and the occasional crisis that does not wait for a convenient time.
Investors who treat it as a passive asset are consistently caught off guard by eviction timelines, unexpected capital expenses, and the time required to manage tenant relationships. Ontario's Landlord and Tenant Board process alone can take months to resolve a non-payment situation. If you have not budgeted for that reality — financially and emotionally — the business will remind you that it did not agree to be ignored.
4. Misunderstanding Negative Cash Flow
A property that runs at a modest negative cash flow is not automatically a bad investment — but negative cash flow you did not plan for, and cannot sustain, is one of the fastest ways to force a premature sale at the wrong time.
The distinction matters. Experienced investors evaluate the full return: debt reduction, appreciation, and tax considerations alongside monthly cash flow. What they do not do is absorb negative cash flow they cannot afford, hoping the market bails them out. Know your number before you buy. How much monthly shortfall can you carry without it affecting your financial stability or forcing a decision you are not ready to make?
5. Failure to Do a Thorough Inspection
A surface-level inspection on an income property is not an inspection — it is a brief visual tour of the problems you are about to inherit.
Tenant-occupied properties present specific inspection challenges: restricted access, furniture blocking walls and floors, and tenants who may not volunteer information about recurring issues. Ask tenants directly about pest problems, structural concerns, and anything that has been repeatedly repaired. Hire an inspector who has experience with income properties specifically, not just residential homes. The cost of a thorough inspection is trivial compared to the cost of discovering a foundation problem, a knob-and-tube wiring issue, or an unpermitted renovation after you own the building.
6. Failing to Have Adequate Insurance
Standard homeowner's insurance does not cover an income property. The liability exposure is fundamentally different — tenants, their guests, parking areas, common spaces, and the property itself all represent risk that requires specific coverage.
Investors who carry inadequate insurance discover the gap at the worst possible moment — during a claim. A tenant injury, a fire in a multi-unit building, or a liability dispute can produce financial consequences that dwarf the annual premium difference between adequate and inadequate coverage. Get a quote specific to the property type before you close, not after.
7. Failing to Inspect, Approve, and Confirm All Documents
The document list for an income property transaction is significantly longer and more complex than a standard residential purchase. Building permits, zoning compliance, rental and lease agreements, health licenses, laundry leases, underlying loan documents, condominium by-laws, title policies, inspection reports, and insurance certificates — each one has the potential to surface a problem that materially affects the value or viability of the investment.
Investors who do not review every document thoroughly — or who rely on the seller's representations without independent verification — regularly discover after closing that something was missing, misstated, or non-compliant. At that point, the problem is yours. Do not attempt to manage this alone. A real estate lawyer and an experienced investment real estate broker are not optional expenses — they are the people who catch the things you do not know to look for.
8. Failing to Get a Bill of Sale for All Personal Property
Investment property sales frequently include personal property — appliances, laundry equipment, furniture in furnished units, fixtures, and mechanical equipment. If it is not specifically itemized in the agreement of purchase and sale, its inclusion is not guaranteed.
I have seen transactions in which appliances disappeared between the accepted offer and closing, in which laundry equipment the buyer assumed was included turned out to be leased, and in which fixtures the buyer counted on were removed by the seller. Be specific. List everything. Confirm ownership before you assume it transfers.
9. Charging Above-Market Rents
Vacancy is your single largest expense — not in theory, but in practice. A property sitting empty for two months while you hold out for a rent that is $100 above market costs you $4,800 in lost income annually, plus the carrying costs of the vacancy period itself.
Charge fair market rent, treat your tenants with respect, and respond promptly to maintenance requests. Long-term tenants in well-maintained properties are the foundation of a profitable portfolio. Investors who chase top-of-market rents at every turnover consistently experience higher vacancy rates, faster tenant turnover, and greater wear on the property than those who price accurately and manage professionally.
10. Failing to Select Qualified Tenants From the Start
Most evictions trace directly back to an inadequate screening process. A tenant who looked fine at the viewing, whose references were not checked, whose credit was not pulled, and whose previous landlord was not contacted — that tenant is a risk you chose to accept.
Take the time. Check previous landlord references, employment verification, credit history, and any prior judgments. If there are red flags in the screening process, investigate them fully before proceeding. The cost of a thorough tenant screening is measured in hours. The cost of a problematic tenancy is measured in months — and sometimes in significant legal fees, property damage, and lost income.
11. Failing to Obtain Tenancy Confirmation Letters
When you purchase a tenant-occupied property, you are inheriting existing tenancy agreements — and the obligations that come with them. What the seller tells you about those tenancies and what the tenants understand to be true are not always the same thing.
Obtain written confirmation from every existing tenant before closing: the agreed monthly rent, the lease start date, the security deposit held, and any side agreements or verbal arrangements with the current owner. Discrepancies between the seller's representation and the tenant's understanding do not resolve themselves after closing — they become your problem to manage under the Residential Tenancies Act. Find out before you own the building, not after.
12. Spending Positive Cash Flow
The investors who build significant wealth through real estate over time share one habit: they reinvest positive cash flow to accelerate mortgage amortization rather than spend it.
Every dollar applied to principal reduces your debt load, increases your equity, and shortens the path to owning your properties free and clear. A portfolio of unencumbered income properties generating rent with no mortgage payments is the end goal for most serious long-term investors. Spending the cash flow along the way delays that outcome by years — sometimes decades. The discipline to reinvest when you do not have to is what separates the investors who get there from those who perpetually hold leveraged assets.
A Final Thought
Investment property in London, Ontario, can be one of the most reliable wealth-building vehicles available to a private investor. It can also be an expensive, time-consuming lesson in what happens when preparation is skipped and due diligence is rushed.
Every mistake on this list is preventable. None of them requires extraordinary knowledge or resources to avoid. They require time, discipline, the right professional team, and the willingness to ask hard questions before you commit — not after.
If you are considering buying an income property in London, Ontario and want a direct conversation about what the process actually looks like — including the questions most investors do not think to ask — I am available.
519-435-1600
Please discuss any investment decisions with your professional advisors, including your accountant and your lawyer. Real estate investment is not guaranteed, and results depend on individual circumstances, market conditions, and the quality of your decisions.
