Considering Ohio? Here Are Cleveland’s Best Real Estate Niches and Neighborhoods

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As a Cleveland native, Tal Tamir has always appreciated the distinct beauty in his city, so it makes perfect sense that he now helps investors find the gems within this real estate hotspot.

Tamir specializes in pairing buyers with the right investments: properties that will bring personal profits and increase values within his community. With a keen eye toward market trends, Tamir and the rest of the team at Premier Cleveland Investing know what it takes to find—and close—those diamond-in-the-rough properties that every investor dreams of.

Read on for Tamir’s insights into Ohio in his own words.

My background

I was born and raised in Cleveland and became an agent here about three and a half years ago. I created my team, Premier Cleveland Investing, to fill a gap in the market for investor-focused real estate agents. This year, we are on track to help our clients buy and sell over $15 million worth of Cleveland real estate. A lot of those clients are repeat buyers and sellers.

We have built an amazing team over the years. We have reliable, trustworthy, and vetted property managers, title companies, lawyers, insurance brokers, lenders, inspectors, interior decorators/stagers, wholesale suppliers, and more.

When it comes to contractors, we have some that we refer our clients to, but right now, they are all swamped and not taking on any new jobs. We are continuing to find and vet contractors and handymen to always have a list of dependable people and companies we can refer our clients to.

What makes the Cleveland property market unique?

I genuinely believe Cleveland is one of the best markets to invest in real estate. In my opinion and experience, it is a highly undervalued and overlooked investment market. You can acquire good, solid properties for great prices and expect steady cash flow along with a sound tenant base.

Cleveland offers affordable costs of living and of doing business, a robust workforce, and great educational institutions. It’s also home to many highly sought-after hospitals, including the world-renowned Cleveland Clinic. I also love that there are so many sub-cities of Cleveland to choose from when investing.

It is worth noting for out-of-state investors that there is a big (friendly) rivalry between the east and west sides. People tend to pick a side and stay there, strongly identifying either as an “eastsider” or “westsider.” Both the east and west sides of Cleveland have great investable neighborhoods.

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How competitive is the real estate market?

The market is on fire here—investors are definitely catching on to the gem that is Cleveland. When the properties are listed on-market and priced right, they get multiple offers (seven or more) and go into the highest-and-best scenarios almost every time.

The overpriced ones will often sit for a little while but then eventually be purchased. This is why we like to source off-market deals for our clients to avoid these bidding wars.

What kind of rental demand is Cleveland experiencing?

The rental demand is extraordinarily strong here, especially for clean and affordable residences (C+ to B+ neighborhoods), including both single-family and multifamily throughout Cleveland. Many tenants do not want to move out of their current places because there seems to be nowhere else to go. They are looking to rent from a landlord who takes care of the property and provides an “affordable luxury” living experience.

There have been many instances of out-of-state investors coming in to buy properties and then not taking care of them. We make sure to vet our buyers and connect them with reliable property management companies to ensure that all parties involved are taken care of, including the tenants, the owner, and the property itself.

What kind of numbers can investors expect?

Investors can expect double-digit, cash-on-cash returns with as-is cap rates between 7-10%. These numbers used to be slightly higher, but things are more competitive with the market as it is now.

As for pro forma cap rates, you can expect 10%+ after coming in and doing some strategic renovations (often minor and more cosmetic) and raising the rents to the market rate.

What do you love about Cleveland?

I love Cleveland for the community and tight-knit feeling. Once people come to Cleveland, they often stay here. There are so many different neighborhoods with entertainment options, bars, and restaurants that make them unique. There are local favorites, great museums, and plenty of outdoor spaces.

You probably wouldn’t think of Cleveland as having a great outdoor scene, but it’s one of my favorite things about living here. There are so many Metroparks with hiking, gazebos, eating areas, fire pits, grills, and many water activities on the lake.

Which Cleveland neighborhoods excite you most?

I really love Cleveland Heights. It’s a great neighborhood with tenants paying solid rents. Demographics include college students, hospital workers, and more—overall, a good mix of people. Its bars, restaurants, and nightlife create an attractive social scene, too.

There is an $80 million mixed-used development happening, including 261 luxury apartments and 11,000 square feet of commercial retail space. This is great news for investors who own property around the neighborhood because they can offer their tenants more of an “affordable” luxury (vs. the high-end units being developed) while still having access to all of the retail options that the new development will bring.

Lakewood is also a really desirable neighborhood with a diverse community and a lot to offer. It’s cool because it feels like a “city-suburb” hybrid. You can sense that a lot is going on there, but at the same time, you can enjoy some solitude and quiet within a lot of the communities of Lakewood. It is really the best of both worlds! There’s something for everyone, including great food, bars, entertainment, outdoor activities, and more. This is a trendy area, and properties are usually sold for a premium here.

Lastly, I want to mention the Clark-Fulton area. As of today, I would say it may not be the best neighborhood in terms of property values. However, I would say Clark-Fulton has the growth potential right now, and there’s a possibility for significant appreciation in the years to come. There is a $1 billion MetroHealth redevelopment happening that will slowly transform the entire surrounding neighborhood. I would get in now and hold!

What niches should investors consider?

I would say properties ranging from five to 20 units. It’s a smaller, niche market in the sense that you’re competing with fewer people. From what I’ve seen, investors are either looking for 20+ units or looking for singles, duplexes, and triplexes, so the five-to-20-unit market is a good place to be.

Which niches are seeing the most success?

We see the most success with long-term buy-and-hold strategies. BRRRR is also a great strategy here in Cleveland, but they are extremely competitive right now and have been harder to come across. There are definitely deals out there—they might just take a little longer to find.

Who is the primary employer?

Many large companies in Cleveland employ a lot of people, but not necessarily one “primary” employer in the area. Obviously, the Cleveland Clinic is a giant here. Other large employers include Procter & Gamble, Progressive Insurance, Parker Hannifin, Sherwin-Williams, American Greetings, Nestle, Lincoln Electric, Case Western Reserve University, Amazon warehouse facilities, and more.

Many smaller companies scattered throughout Cleveland give the city a great mix of large, corporate companies and smaller, family-owned businesses ranging across all industries.

Cleveland is a unique city in Ohio—and a great find for out-of-state investors. Ready to dive into the Cleveland market? Connect with trusted, investor-friendly agents today.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.