5 Updates Landlords Shouldn’t Make

Marble countertops, shiny tiled floors, and a brand-new patio: while they might be pretty, upgrades like these won’t help your bottom line. If you plan to invest and maintain a profitable rental property, you’ll need to strike a balance between updating the space and minding your budget.  By creating an appealing setting, you can make more of a profit by increasing the rent – however, if you stray from updates to full-scale renovation, you might end up dealing with a property that costs more than it earns. Here are a few renovations that investors shouldn’t make on a rental property.

1. Adding a Swimming Pool

A pool may seem like an ideal addition to the backyard, but it won’t necessarily increase the value of the home. The feature can also take away space in the backyard for pets or children to play in on the property and make it seem unattractive to families who lack the time or resources to maintain it.

2. Room Addition

According to loans.usnews.com, room additions don’t always pay off due to the high cost of the construction. Projects with a lower price tag – such as appliance updates and repainting – tend to have a better ROI for landlords.

3. DIY Projects

From painting the walls to installing new sinks, DIY projects are cost-effective at a price; while they may seem cheap at the outset, they often look they were performed by someone who had a lack of experience and ultimately turn away would-be tenants. It’s necessary to leave the work to professionals to ensure that your money is an investment that pays off and attracts more tenants in the coming years.

4. High-Maintenance Landscapes

According to Time Magazine, creating a beautiful garden benefits the aesthetics of a home – but it doesn’t justify increasing the rent that you charge. It can also require a significant amount of money for landscaping services to upkeep the property or the tenants may not want to spend their weekends pulling weeds and watering different areas of the yard. Stick to landscaping that is easy to maintain to ensure that you don’t waste your money if you’re renting out the house.

5. Upgrading Everything

Many landlords make the mistake of upgrading everything and assuming that the home needs to have all new features or materials to attract good tenants. Overspending on upgrades can make the house appear too chic and regal for the local area, making it necessary to keep the upgrades to a minimum. Stick to adding new fixtures on the cabinets or new hardwood floors in the living room to make upgrades that are minimal, yet aesthetically effective.

Jason Cohen is a real estate investor and broker working in Pittsburgh, PA who has built his career around turning dilapidated properties into profitable rentals. As a veteran operative in the field, Jason is well-equipped to discuss the do’s and don’ts of property rehabilitation – and here, he points out a few renovations that investors shouldn’t make when they begin to prepare a home for future tenants. 

Originally posted on JasonCohenPittsburgh.net

How to Find a Great Real Estate Agent

Jason Cohen is the founder and president of Jason Cohen Pittsburgh, an informal real estate group which provides constructive advice to professionals considering property investments. Given his near-constant interpersonal work with other professionals in the field, Jason is well-equipped to offer guidance on the process of finding a competent real estate agent. Here, Cohen offers his thoughts.

What separates a great real estate agent from an ineffective one? In a social-media landscape where every realtor’s promotions are glossy and attractive, it can be hard for regular buyers and

sellers to discern whether the agents they research are actually the capable, honest professionals they appear to be online. However, there are some steps that real estate hopefuls can take to ensure a successful professional relationship before officially signing on with an agent. The following tips are brought to you by Jason Cohen, the president and founder of the informal real estate advising group, Jason Cohen Pittsburgh – consider observing them prior to committing to a real estate professional!

Check Qualifications
Every buyer and seller needs to make sure that the agent they hire is equipped to manage their needs. It’s especially important to find a professional affiliated with the National Association of Realtors – you can determine this by checking to see if the agent notes their title with a capital “R.” Those in the NAR pledge to follow a code of ethics, and will be held accountable for any professional wrongdoing in the field. This code protects clients from potentially troublesome action on the part of the agent. Clients should also check to make sure that the agent specializes in handling cases like theirs. For instance, an individual looking to buy a house should search for a realtor with an ABR certification: These professionals are Accredited Buyer’s Representatives, and have completed additional courses for representing buyers in transactions.

Review Agent Records

Clients should also direct their research towards answering a few basic questions: How long has the agent been in business? Are their current listings similar to yours? Does the agent have any marks on their record? While the first two can be answered through an online search or direct conversation with the agent, the last question should be directed towards the applicable state regulatory body, which will have a record of any concerns or complaints.

Reach Out to Previous Clients

Don’t be afraid to ask a potential agent for a list of former clients! Reaching out to previous home buyers and/or sellers will help you better understand the agent’s skill set, capabilities, and professionalism. Make sure to ask for details; how long was the client’s home on the market? How much did it sell for? Was the agent friendly and helpful, or were they professionally challenging? All of these questions will help you come to a decision when choosing a professional to represent your real estate interests.

For more helpful advice and intriguing articles, please visit Jason Cohen Pittsburgh’s blog at JasonCohenPittsburgh.org.

Handy Tips for First-Time Landlords

Jason Cohen has been an active investor within the Pittsburgh real estate community for nearly a decade. While he began his industry efforts by purchasing and renovating cheap residential buildings in high-potential neighborhoods, he has since expanded his investments to large-scale commercial and residential properties in vibrant neighborhoods. Here, Jason Cohen provides a few tips to new landlords.  

You’ve finally done it. You’ve purchased the building, touched up the paint, laid the carpet, and put your first investment property up for rent. But as the inquiries come in, you realize that the easy part is over – now, you have to deal effectively with your tenants. Jason Cohen Pittsburgh is an advising group operating in the city; as such, its veteran members have heard their fair share of first-time rental horror stories. It’s common for a first-time investor to be so caught up in the buy and the renovation process that they find themselves at a loss when they need to communicate professionally with the people living in their units. Unfortunately for landlords, the work doesn’t end when the contractors leave. Below, Jason Cohen, head of Jason Cohen Pittsburgh lists a few tips for aspiring landlords to take note of before opening their doors to tenants.

Be Assertive

Everyone has an off month now and again. Sometimes, a tenant can’t make a payment on the day it comes due – and in some cases, that’s okay. Landlords should be empathetic and understanding if a tenant faces tragedy or finds himself in a temporary financial crunch, so long as the tenant communicates the situation. If, however, the tenant chooses to go dark and refuse to pay the agreed-upon rental sum, landlords need to act assertively. You need the rent they owe you to keep up the building and make a profit. Being overly understanding to an elusive or underpaying tenant will only result in your missing needed funds. Be assertive! Don’t be afraid of pursuing a delinquent tenant for the money they owe you.

Check Credit and References

Never rent to someone who doesn’t have a job or has a credit score of under 600. Those without the means to pay rent or a history of regular repayment will inevitably leave you waiting for payments that may never come. Screen your potential tenants closely to ensure that they will be responsible, reliable occupants who will care for your unit and pay on time.

Make Smart Renovations

Don’t install marble countertops if your unit is in a low-income neighborhood. In all likelihood, those that inquire about your unit will be looking to pay a rent in line with those offered in nearby homes; if you try to cover a fancy renovation by asking a significantly higher rent, your prospective tenants will walk. Be smart, and don’t risk renovations that offer little return!

Be Organized

Organization is key to any successful business venture. After all, how will you know you made a profit if you have no documentation of the fact? Ensure your success by keeping organized and detailed records!

For more tips, advice, and real estate content, please visit Jason’s site at JasonCohenPittsburgh.org.

Get a Real Estate Agent!

It can be complicated to get a purchased closed in the current market; it has changed dramatically from just a few years ago.  Buyers face more hurdles than ever, including stricter financing, low housing supplies, higher mortgage rates and rising prices.  To negotiate these challenges, you need to find a real estate sales professional who will help you close the deal.  A good real estate professional understands current market conditions, and has house-by-house neighborhood experience that will help you to obtain the right home at the best possible terms.

Your agent will also be able to help you find a home quickly.  Not only do real estate agents have access to the local multiple listing service, they and their colleagues share an extensive knowledge of homes coming onto the market.  Your real estate professional will tell others about your home requirements, so that they’ll also be looking for good homes for you.  Networking actually serves as one of the biggest advantages of the industry.  Many homes are bought and sold without any ads in the newspaper or signs in the front yard.  Yet for buyers to be shown the latest homes on the market there needs to be a strong relationship between buyer and real estate professional.  

If you want to be a buyer who's in the position to make the first and best offers, then make sure your agent knows how committed you are.  Some ways to do this include getting prequalified with a lender, working with only one agent and not shopping for homes without your agent.  Real estate professionals mostly work off commission, so be loyal; in return, they’ll tell you about any exceptional deals before anybody else.  Don’t try to play agents off of each other; agents tend to talk, and they’ll be quick to find out that they’re working for the same buyer.

The work really starts once you find the house that you want.  You’ll need to navigate negotiations, loan approval, seller’s disclosures, inspections and countless other hoops.  Yet from helping you to make a reasonable offer to providing for the discovery and disclosure of material facts, your agent can protect your interests.  Agents are skilled negotiators and problem solvers, who can also anticipate problems before they happen.  Your agent will share your risk, and make sure that you go into any home purchase fully prepared.  So take advantage of what could be the greatest homebuying resource around!

The Lease

A lease is the written legal agreement between a tenant and landlord, property manager, or property owner. Be careful when dealing with any legal document, as they represent binding terms. Certain information is necessary within the contents of the lease document, but sections can be tailored to match your (the landlord’s) specific preferences and that of the property. At Jason Cohen Pittsburgh, we know the importance of this document and cannot stress it enough. It is the basis for what youyou’re your tenant expect from one another. The Internet houses an abundance of sample leases, which you can use either as guides to write a tailored lease. A lawyer can also draw up a lease for a nominal fee.

The required sections of a lease are:

• The parties involved
• Property location
• Lease term
• Rental amount
• Acknowledgment or signature

The first section, parties involved, is simply a clarification of the names of the tenant and the landlord.  The property location should be listed in as detailed a description as possible. Include the unit number with the street address. The lease term should include the date that the tenant can take possession of the property and when she/he will have to vacate or renew the lease. The rental amount can be listed as a weekly, monthly, or annual fee — monthly is most common. Lastly, the lease must be signed by the tenant and the landlord, property manager, or property owner to be valid.

Within the section of the lease including the rental amount, it is advisable to detail additional terms. The deposit amount should be clearly stated in this section. The circumstances in which the deposit can be used can be explained in a separate section. The late payment policy can be included with the rental amount, or it could have its own addendum. The latter is more common.

Although a pet policy is not a necessary section in the lease, at Jason Cohen Pittsburgh, we advise you to include it in as much detail as possible. If an additional deposit is required for pets, describe it in this section. If pets are allowed, detail the types and sizes of the allowed and restricted pets. Consider all types of pets — from mice and hamsters to cats and dogs. Even take into account exotic pets, such as lizards and monkeys — you never know what you’ll encounter renting out a property. While many people do not consider fish a problem when it comes to rental unit, the size of aquarium should be limited to what the floor can support. Research the types of pets that residents may have before writing this section to be sure to cover all situations. Of course, the pet policy can be a simple “no pets allowed, ” but you may find the tenant pool shrinks with this strict rule. 

Sometimes a tenant will allow friends or family to visit or stay for an extended period. You can choose to include a section limiting the time that a guest can stay. Fifteen days is a common term for a guest. Detail the circumstances in which this can be allowed. For instance, a tenant caring for an ailing mother in the apartment can be viewed differently than a friend crashing on the couch for six months. Punishments for breaching this rule can either be listed in this section or in a section allotted to breach of contract for any reason. 

The words written in a lease agreement can be as important as the tenant’s signature. Including the mandatory parts of a contract make the agreement legal. Adding additional sections tailored to the property and your preferences will minimize issues later on in the renting process. 

Eviction 101: For Property Managers

As a property owner, you know that it is very important to find the perfect residents for your rental properties. Have you ever stopped to think, what happens if I was wrong? Just how hard is it to get a bad tenant out of my rental unit? While it varies from state to state, in most cases the process of eviction is long and arduous. Jason Cohen Pittsburgh knows how to protect yourself and your company while also maintaining the rights of your tenants by following several rules.

Even before you have a resident, you must consider eviction and the process of eviction. When creating the lease agreement, include sections explaining when and why you, as the property owner, have the right to evict a tenant. A violation of the rules and regulations in the lease is a reason to begin the eviction procedure. Obviously, failure to pay rent and regular late payment are two major reasons to evict a tenant. If the tenant is willfully destroying the property, you also have a case for eviction.

The first step in the process is giving the tenant written notice. If the reason for eviction is failure to pay rent, or breaking the lease by having an illegal roommate or pet, you may want to serve a “Notice to Quit” in place of the eviction notice. A “Notice to Quit”, allows the resident a period, such as 10 days, to correct the wrong. If the tenant has broken the lease to the point that a correction will not be offered, the tenant must be given a 30-day notice to leave if the lease is for a year or less. A 90-day notice is issued for leases that are longer than a year. This notice must include certain information in order to be legal — the date of the notice, the name and address of the tenant’s rental unit, the reason for the notice, the time period for correction, the date of eviction, and a statement detailing how the notice was given to the tenant. If essential information is omitted, the notice is not valid and the process must start over.

Rules are in place for getting the notice to quit or evict to the tenant as well. Oddly, you cannot mail this notice. The property owner or a representative at least 18 years old can deliver the notice. If it cannot be given directly to the resident, the notice can posted on the tenant’s door of the rental unit or somewhere else where the tenant will be sure to see it. Be sure to make sure it is conspicuous.  The notice cannot be hidden, covered, or placed in the mailbox. If the notice is not delivered properly, the notice is not valid and the process must begin again.

The next step depends greatly on the resident’s reaction to the notice. If the notice demanded a correction to illicit behavior and the tenant corrects this wrong, the tenant cannot be evicted. For example, if the notice gives the tenant 10 days to pay the late rent, and the tenant pays the rent, the tenant cannot be evicted. This also holds true for illegal pets or roommates. If a correction was not offered, the best-case scenario is that the tenant vacates the premises within the notice period. 

If the resident does not comply with the eviction, the property owner must file a complaint. The complaint will result in a hearing. Until the hearing is held and the decision is made, the tenant will still be in the rental unit. At this point, the tenant can file a counter-complaint, which will also be considered at the hearing. If you, as the landlord, win the case, you will receive a judgment for possession. However, you must wait no less than 15 days to have a constable or sheriff give the resident an “Order for Possession”.  Issuing an “Order for Possession” informs the tenant that, after a set date on the notice, the constable or sheriff will forcibly remove the tenant and the belongings from the unit. The set date must be at least 15 days from the notice.

When reviewing the procedure for eviction, it can be shocking how long it can take to remove a problem resident. Even though the procedure does not seem fair from a landlord’s perspective, it is the law. In order to avoid these proceedings, Jason Cohen Pittsburgh knows that it is essential to find the proper residents.

The Pros and Cons of Renting to Section 8 Tenants

Sure, there are the horror stories of tenants turning your property into a veritable house of horrors, but renting to Section 8 tenants can have advantages. The U.S. Department of Housing and Urban Development runs this financial assistance housing program to help low-income families afford rentals. As with any demographic, there are risks and rewards to renting. At Jason Cohen Pittsburgh, we believe in thoroughly researching a program before either writing it off or diving in headfirst.

Pro: Rent comes in on time via direct deposit

Since HUD is responsible for the payments, rent is automated and deposited to a landlord on time every month. The federal government does not have medical or education expenses or vacation plans that make monthly payments late.

Con: Inspections

Local Public Housing Authorities conduct frequent inspections in 13 aspects of the property that must all meet their standards.

Pro: HUD takes care of payments if a tenant cannot

Even if a resident falls into unemployment, HUD will cover the rent until work is found.

Con: Lack of security deposits

The vouchers that HUD supplies for monthly rent payments do not cover security deposits. Obtaining the deposit directly from the tenant can be challenging, but it should be an essential step towards ensuring the state of your investment.

Pro: Higher profit margins

Because of the government assistance, you can charge more monthly rent in lower-income neighborhoods where properties are much cheaper to purchase.

Con: Limits on voucher amounts

Although you could receive more money in rent from HUD if you were to rent to non Section 8 tenants in the same depressed area, there are also limits on how much rent the government will pay each month. HUD calculates Fair Market Rents annually and allots voucher amounts based on those while factoring in number of bedrooms and condition of property. Even if your property is immaculate, there is a limit on how much HUD will pay.

Pro: Free marketing

Tenants are relatively easy to find by listing your property on the Section 8 web site. Keep your marketing costs low by containing your advertising on a free government site.

Con: Stigma

While you may not have any trouble renting your HUD-assisted unit, you may have issues renting other units in your building due to the stigma attached to Section 8 tenants. Even if the conception that Section 8 tenants are unruly is wholly untrue, it is still enough to drive other potential renters away from your property.

When dealing with Section 8 and any other tenants, screening potential renters is extremely important. If you are worried about the wear and tear that is often (whether fair or not) associated with HUD-assisted tenants, the onus is on you as a responsible landlord to thoroughly screen all applicants. At Jason Cohen Pittsburgh, we cannot endorse Section 8 housing either way. It is up to you as a landlord to decide if the pros outweigh the cons.