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

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.

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.