Real Estate Journal
The Latest and Greatest by M. Jane Garvey
area, but it would pay to check out other ads and see what features other landlords are highlighting. You may want to also talk to local real estate agents and potential tenants and see what their auto-reject buttons are. In my area garages and dishwashers are necessities. Fenced yards are a big deal if you are willing to rent to tenants with pets. Your other customer is you, the landlord. After years of owning rentals, I have my own requirements mostly built from experience. I want materials that last! They need to stand the test of time not only in style, but also in durability. I am never looking for the latest and greatest, although I will listen to the pitch about the better "mousetrap." I am looking for things that have been around for decades and are still top sellers at the supply house. There is no question that renters can be tougher on a house, but turnover is as well. Things need to survive with minimal maintenance, no specialized cleaning requirements, and no learning curves on operating them. They need to look nice now and 5 or 10 years from now. Ordinary wear and tear should not destroy them. And, on top of all of that, they need to be the most economical. For instance, over the lifetime of owning the property, I want to provide the flooring at the cheapest overall cost. That frequently means something that is not the cheapest, but an upgrade that provides better durability at a minimal increase in cost. To sum this up; Look at your rehab for resale with the latest trends in mind and look at your rehabs for rental with the economics in mind.
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re you paying attention to
what is "trending" in the design world. How about following the TV "reality" programs that are showing rehabs? Are you following the latest and greatest trends in your rehabs? Open concept, two tone cabinets, huge islands, reclaimed wood, stone counters, tiny houses, and man caves are all seeing their day in the sun. But, will these trends stand the test of time? Should you be following the trends as you do your rehabs? The simple answer is yes and no. Rehabbing for resale and rehabbing for rental are two different things. In both instances we aim to fix up the property so that things are fresh and new and appealing to our customer. But our customers are different, so the choices we make need to be different. Many years ago the owner of a local carpet shop told us that we should be looking at different carpet if we were planning to keep the property as a rental. Initially I thought he was going to show us ugly industrial looking carpet for the rental, but I was wrong. He started talking about how the carpet was made, how it would feel underfoot, and how it would last. He took us through his shop and showed us carpet that felt extra plush but would not hold up as long - better for a rehab for resale. He showed us carpet with a tighter weave that would hold up to the wear and tear of a rental. He recommended extra thick pad to make it feel more luxurious. While the carpet choices have expanded greatly since that early lesson, the basic thought that the choices need to be made with the goal in mind has stuck with me.
As I read about trends and watch shows demonstrating the latest and greatest, I think about how things will look to our customers in 5 years, 10 years, or even 20 years. There are classic looks that stand the test of time. And, there are things that look great but are not easy to maintain or live with. When I see some of these trends, I frequently think it looks great but I wouldn't want to have to live with it. There are times where new materials or equipment are introduced to the marketplace. Sometimes they catch on because they are far less expensive. But a shorter life can make the savings immaterial. Cheap plumbing connectors come to mind as one such false economy. A failure there can result in massive damage from flooding. Other times things catch on because they appear to make life easier, but once people live with them they realize that simpler is better. Humidity can damage electronic controls on appliances. Do we really need 50 different settings anyway? When you are rehabbing for resale, you can go with the latest design trends. Your customer is a homebuyer who has probably
been watching some of the "reality" shows, looking at design pictures in today's magazines, and is looking for some or all of these things. I would still recommend that you stick with things that are as neutral as possible so that they will go with the buyer's furnishings and taste. Homebuyers who buy your rehab will want things finished. Even if some of the things may invite additional work in the way of painting an accent wall, or reconfiguring the closet design, it is important to make it move-in ready. Many homebuyers will have exhausted their supply of spendable cash by the time they get through closing, so they need to be able to move in without additional money needed for rehab. As the carpet store owner told us years ago, the carpet that looks and feels better, but doesn't last as long, fits as something that the homebuyer can enjoy for a few years before they make a change that fits their design ideals. In a rehab for rental, we need to realize that we have two customers, renters, and ourselves. To satisfy our first customer - our rehab needs Jane Garvey is President of the Chicago to provide the basics that will appeal Creative Investors Association. to a renter. The requirements and desired elements vary from area to
Disaster Recovery ...continued from 4 Whether you are the ownerresident, landlord, lienholder or rehabber of the property, you will need to document, document the full extent of the damage to your property. If in doubt, it would be prudent for you to pay the extra money to hire an independent adjuster to work for you and help you level the playing field between you and your insurance carrier. On large claims of $50,000 or more, this is a must! The time to review your insurance policy is before you need it! Take time to assess your own Real Estate Journal ¡ Winter 2018
disaster preparedness. How are you doing with document retention and storage? How good are your insurance coverages? Have you identified any gaps in your current policies? Please put your hands on a copy of your insurance policy and carefully review it to determine what is covered and what is not. Ask detailed questions anytime you communicate with an adjuster as to what coverages you’re being allotted and how the damages are being calculated, and keep records of those conversations. Remember,
you are in a first-party relationship with the insurer in this case, and they owe you a duty of good faith. In a large-scale, catastrophic event, adjusters are going to be overwhelmed with more claims than they can manage. Do the best you can to simplify the adjuster’s job with excellent pictures, careful documentation, strong estimates for rehab costs, and accurate financials relative to the income being generated on your rental properties so you can avail yourself of the loss-of-rents provision of your policy.
Help your insurance carrier help you by keeping records, following up as needed, and tracking all expenses that are related to the claim. Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio 4 times via litigation. Read more of his viewpoints at WatsonInvested.com.
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