All Forum Posts by: Robert Kohnfelder

I have a SFH property here in Pittsburgh that will be finished with work and ready for rent in the next few weeks, and I'm wondering about the water bill (PGH2O to be specific). First off, I also own a duplex which doesn't have the water split between units, so it is in MY name as the landlord and I pay the water/sewage bill each month for both units, while the tenants each pay for their own gas/electric - this seems pretty standard around here. However, with the new single family rental, my initial thought was that the incoming tenant would pay for ALL utilities. While I've seen plenty of similar rentals with ALL utilities paid by the tenant, I also see a few that keep the water in the landlord's name (tenant is NOT responsible, barring excessive usage).

So I'm wondering what the reason for this is, whereas the electric and gas always seem to be paid by the tenant. Are there benefits to keeping the water in my name? Or should I let the tenant pay for it, along with gas/electric? That is how I'd prefer to do things, but there has to be a reason that so many rentals have water bills kept in the landlord's name.

Any and all input would be much appreciated!

@Ofer Eyal Thanks a lot for the well wishes and the sound advice. I think I'll be able to handle the tenants regardless, so I'm really just wondering if there are any unknown (to me) drawbacks to renovating the property into the 5 bedroom classification. 

Hey All,

My most recent purchase is a property that needed (needs) a lot of work. We are in the process of rehabbing the house in order to rent it out this summer, and then hope to refinance later this year in order to work towards another similar deal -- that's the plan for now, at least. Before we closed on this as-is deal, we strategized to get the necessary work to make it "rental ready" and not go over the top with anything in terms of spending, partially due to an upcoming wedding and a few pending repairs needed at other properties. Fast forward a few weeks later, and we have bumped up our budget (and standards) multiple times along the way in hopes of rehabbing this place into an higher quality SFH that will generate more income than first anticipated.

One option we are currently discussing is adding electric baseboard heaters to the recently finished top floor, which consists of two large, symmetrical rooms. Based on our appraisal from a few months back, the house is currently considered a 3 bedroom property, due to a lack of heat source (ductwork doesn't go up to the top floor) in the then-unfinished top floor rooms. I spoke with realtors, appraisers, and contractors to conclude that adding a heat source (along with existing means of egress) would indeed make these considered "bedrooms" (but please chime in if you disagree here). So, we had an electrician come over and to our surprise, due to a dedicated circuit that was installed for the air conditioner unit (needs repaired, but circuit is fine), the process of wiring/installing electric baseboard heaters is fairly cheap and easy to do.

Having said that, I am racking my brain for possible pros and cons of adding these heat sources and being able to call these "bedrooms". Since this is my first endeavor, I'm looking for expertise on the subject just to make sure I'm not overthinking (or underthinking!) the long-term effects of this decision: Converting a 3 BR house to a 5 BR house would be the optimal move here, as it won't cost us much and it will greatly enhance the appaisal and cash-out refi amounts later this year, no? In turn, this helps accomplish my next deal (whatever that may be) faster. Additionally, this property will be able to rent out for more money each month, also helping recuperate some rehab costs in the near future. On the flip side, a few seasoned investors warned me that by going from 3 BR to 5 BR, you are inviting a whole different tenant pool: more people, larger families, kids, etc. This part doesn't especially concern me, but someone actually recommended that it might be best to get the heat sources installed for the refinancing benefits, but to list the rental as only a 3 BR or 4 BR home if I wanted to attract a slightly different tenant pool. I'm not sure if this is common or even sensible... Another "con" might be the electricity usage of these bad boys -- I know it isn't very kind to your electric bill. However, I won't be paying the utilities here, and I'm fine telling a tenant up front to consider using them sparingly.

If anyone out there has experience with a similar scenario with adding bedrooms to a house or has additional pros/cons they can add to the list for consideration, it would be much appreciated. Thanks!

Hey All,

My most recent purchase is a property that needed (needs) a lot of work. We are in the process of rehabbing the house in order to rent it out this summer, and then hope to refinance later this year in order to work towards another similar deal -- that's the plan for now, at least. Before we closed on this as-is deal, we strategized to get the necessary work to make it "rental ready" and not go over the top with anything in terms of spending, partially due to an upcoming wedding and a few pending repairs needed at other properties. Fast forward a few weeks later, and we have bumped up our budget (and standards) multiple times along the way in hopes of rehabbing this place into an higher quality SFH that will generate more income than first anticipated.

One option we are currently discussing is adding electric baseboard heaters to the recently finished top floor, which consists of two large, symmetrical rooms. Based on our appraisal from a few months back, the house is currently considered a 3 bedroom property, due to a lack of heat source (ductwork doesn't go up to the top floor) in the then-unfinished top floor rooms. I spoke with realtors, appraisers, and contractors to conclude that adding a heat source (along with existing means of egress) would indeed make these considered "bedrooms" (but please chime in if you disagree here). So, we had an electrician come over and to our surprise, due to a dedicated circuit that was installed for the air conditioner unit (needs repaired, but circuit is fine), the process of wiring/installing electric baseboard heaters is fairly cheap and easy to do.

Having said that, I am racking my brain for possible pros and cons of adding these heat sources and being able to call these "bedrooms". Since this is my first endeavor, I'm looking for expertise on the subject just to make sure I'm not overthinking (or underthinking!) the long-term effects of this decision: Converting a 3 BR house to a 5 BR house would be the optimal move here, as it won't cost us much and it will greatly enhance the appaisal and cash-out refi amounts later this year, no? In turn, this helps accomplish my next deal (whatever that may be) faster. Additionally, this property will be able to rent out for more money each month, also helping recuperate some rehab costs in the near future. On the flip side, a few seasoned investors warned me that by going from 3 BR to 5 BR, you are inviting a whole different tenant pool: more people, larger families, kids, etc. This part doesn't especially concern me, but someone actually recommended that it might be best to get the heat sources installed for the refinancing benefits, but to list the rental as only a 3 BR or 4 BR home if I wanted to attract a slightly different tenant pool. I'm not sure if this is common or even sensible... Another "con" might be the electricity usage of these bad boys -- I know it isn't very kind to your electric bill. However, I won't be paying the utilities here, and I'm fine telling a tenant up front to consider using them sparingly.

If anyone out there has experience with a similar scenario with adding bedrooms to a house or has additional pros/cons they can add to the list for consideration, it would be much appreciated. Thanks!

What is your goal with this property? I have bought 3 properties with K&T wiring (one is rented, one is primary, and one will soon be rented). You will hear differing opinions, but most electricians are obviously going to recommend updating the K&T wiring. Having said that, my first property was a duplex with an FHA loan, and we used the outdated wiring to get a fair deal on the property. FYI, here is how a veteran home inspector described our situation: "While the electrical system appears to be operative at this time, it is below current electrical standards. You should be aware more than one insurance carrier will not underwrite a home with active knob and tube wire."

So it works fine, but not only is it outdated, you may have to pay more when it comes to homeowners insurance. We did just that until recently switching to a carrier (Farmer's/Foremost) who doesn't have an issue with it... But safety is another story. Our duplex still has K&T wiring in the upper unit, and has not had any issues in nearly 3 years. We still plan to update the wiring one day, but hopefully it remains problem-free in the meantime. If you (or your tenants) are responsible and don't overload the outdated receptacles, there won't be any issues -- but it's not always that simple. My personal home has some K&T wiring as well, but again, we are careful not to overload the few K&T outlets.

Lastly, the property we just bought had a good amount of K&T wiring, and it was purchased in as-is condition. Since we were looking at a major rehab process and most of the walls were already damaged, we spoke with an electrician... He recommended replacing/updating all of the OUTLETS that were K&T, but said that the light switches/fixtures are less of a safety concern. I'm not saying this was the correct thing to do, but renovating on a budget, we decided to spend the money to update all of the outlets, since that is where people are going to be sapping high electricity from (space heaters, hair dryers, etc.). It saved us a few hundred dollars and I definitely feel good knowing the main issues are corrected. 

All in all, it really depends on whether you're looking for K&T houses to flip, rent out, or live in... each one might lead to a different gameplan, but the smartest and safest move it to update old wiring, especially if it's throughout the house.

I second the idea of looking into an FHA loan (better for lower income/credit when starting out), 3.5% down payment, and buying a duplex or triplex perhaps, to live in one unit and rent out the others to pay your mortgage. Save up; then do it again. And if/when you figure out a long-term residence or investment strategy, you will already own the previous properties with established income. It depends what area(s) you're looking into here in the 412, but there are plenty of spots where a 3-5% down payment would be enough for a decent living arrangement in a decent neighborhood.

I own a few properties in Mount Washington -- a great area to invest (and live in) thus far! Some other nearby areas that I believe have potential to line up with your goals are Allentown, Knoxville, Arlington, Mount Oliver, Beechview, and the South Side Slopes. Obviously, some of these neighborhoods have worse crime rates than others, but you might have a better shot getting something for less than $60k (I just purchased something right around that number in 15211 ZIP code).

@Ray Fisher that's not a bad idea! I'm sure the neighbors, some of which I know, wouldn't mind "spreading the word" as the project rolls along. However, putting that sign in front of a house that still *looks* rough on the outside is somewhat worrisome... an interesting idea to consider, nonetheless!

Don't quote me, but I'm fairly confident on a basic lease agreement template (for the state of PA at least) you can actually list the number of occupants allowed in the property. For instance, I rent out a 1 BR + 1 BA unit with "1 tenant occupancy" for the same reasons you mentioned. However, with a SFH and potentially a different state, I'm not sure of your options. I don't know how smart it would be to write in the listing "rental for single person", I would likely just use the applicants' information to make my decision when the time comes. But again, legally, I'm not sure how to answer your question without knowing your local/state laws.

@Nathan Gesner That's definitely what I'm leaning towards! Thanks for the input.