Looking to get into the Cleveland market

[Henry LiChi]

Hi all,

I’m a new real estate investor with an architecture background and development experience. I’ve been researching and talking to property management and realtors in Cleveland. Even made a few offers but something always happens where the seller backs out.

I’d like to meet some locals to learn more about the area, particularly ones that are investing in Cleveland. I already have a great property manager that has been answering all my questions and even inspected a few properties for me.

I am currently offering on a duplex at 30,000. It is owner occupied with a long term tenant downstairs. Taxes are low, no back taxes, roof only few years old, new furnaces, new water heaters, updated electrical, no plumbing issues and great condition hardwood floors throughout. I’ve budgeted to have additional 5k for cosmetics and fixture upgrades.

Downtsairs is currently paying $500 a month

Upstairs will be delivered vacant, is a 3 bedroom 1 ba. My PM estimate a $500+ as a conservative number.

Total will be $1000 gross and I would pay cash for the property. After expenses (water/sewer/trash, landlord insurance, property tax, property management cost, and capex savings), I estimate about 400 net as a conservative number. I’m allowing about 300 per month for capex savings. Some say 40% rule of gross, but I broke down the figures for exactly how much each expenses will cost me then put 30% for capex. It may be excessive, but better safe than sorry.

I would greatly appreciate any advice given. I know a lot of people don’t like the Cleveland market, but I am not afraid of rehabs and know how to value engineer a property to be a long term rental.

I’m planning on flying out there sometime soon to see a few potential properties. Any suggestions for handyman and GCs will be greatly appreciated as well. My goal is up to 4 properties this year.

Thanks.

[James Wise]

Welcome to the site @Henry LiChi

Personally I think a duplex priced at 30k in the current market cycle is probably to rough to be a good investment. A couple years ago during the great recession maybe, but the market is back now so the decent duplexes in C-Grade areas are going to run you $75kish & in B-Grade areas they will be $100-120k+