110 years old duplex in Cleveland Ohio with CoC 10.5%

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110 years old duplex in Cleveland Ohio with CoC 10.5%

Robert Flores
New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes

I know the building is old but it has a nice CoC.

I am asking my realtor to get the maintenance/repair records to see what has been done in the past.

This will be an OOS investment and my first investment. My realtor was an investor too and he see's this investment as cash cow, but I am scared because the building is old.

Any advise how I can overcome my fears?

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Andrew C.
Investor · SE Wisconsin · Member since 2019 · 111 posts · 71 votes
3y

I have a 104 YO rental duplex in the midwest (Milwaukee). They are extremely common in parts of the larger midwest cities. Definitely find a good inspector. But a few things to start with:

1) was it built as a duplex? many are, and they're designed to make access to things easy. Many of the SFH->duplex conversions on older holes are pretty wonky. I'd be extra skeptical of that.

2) check the foundation. Have the inspector check the foundation. Minor issues can be safely braced, and you should then check above ground and look at drainage. If major issues are found I'd walk.

3) check the circuit breaker panels. For starters...does it have them, or is it still fuses? If it has circuit breakers, then likely someone has replaced the knob and tube wiring with something more modern. Are they 60amp or 100? If 100, then electrical has been touched more recently (good).

4) it's probably galvanized plumbing...which works fine, until it doesn't. When that happens you may end up needing to replace decent chunks of it. Touching the super old galvanized pipes seems to cause them to leak in other places. OTOH, that may not be a huge deal. I'm about to replace the galvanized in the lower unit from the primary shutoff valve, all the way out to the lower level hookups, with homerun-style 3/4" pex setup, and it's not that big a deal. The plumbing is super accessible in my unit from the basement. Something to check on.

5) furnace or boiler? Boilers can last a super long time (there's not a lot going on in there), but are like 8k if you have to replace one.

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  • Shane Kelly
    Real Estate Agent · Cleveland, OH · Member since 2021 · 383 posts · 361 votes
    3y

    You're very unlikely to find a new duplex in Cleveland as the majority of the inventory is going to be pre-1940s. You just need to make sure that you have a good inspector that will make sure that you're getting into a sound house, as some of the things they did in 1920 were a lot more sketchy and some of it could be better than today. If you're looking for inspector recommendations or anything, I'm happy to give you someone. But just know, that if you plan on investing in Cleveland long term, you're bound to have to deal with some old house issues.

    6Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Thank you, Shane for your response. Buy an hold is my plan. Please if you have a rockstar inspector, I would love to hear it. 

    3Reply
  • Frank Harris
    Member since 2022 · 17 posts · 6 votes
    3y

    I'm buying an 102 year old house in Cleveland ohio too and am a little concerned on the problems it might have as in plumbing and electrical etc.. I'll be needing a good home inspector too.

    2Reply
  • Andrew C.
    Investor · SE Wisconsin · Member since 2019 · 111 posts · 71 votes
    3y

    I have a 104 YO rental duplex in the midwest (Milwaukee). They are extremely common in parts of the larger midwest cities. Definitely find a good inspector. But a few things to start with:

    1) was it built as a duplex? many are, and they're designed to make access to things easy. Many of the SFH->duplex conversions on older holes are pretty wonky. I'd be extra skeptical of that.

    2) check the foundation. Have the inspector check the foundation. Minor issues can be safely braced, and you should then check above ground and look at drainage. If major issues are found I'd walk.

    3) check the circuit breaker panels. For starters...does it have them, or is it still fuses? If it has circuit breakers, then likely someone has replaced the knob and tube wiring with something more modern. Are they 60amp or 100? If 100, then electrical has been touched more recently (good).

    4) it's probably galvanized plumbing...which works fine, until it doesn't. When that happens you may end up needing to replace decent chunks of it. Touching the super old galvanized pipes seems to cause them to leak in other places. OTOH, that may not be a huge deal. I'm about to replace the galvanized in the lower unit from the primary shutoff valve, all the way out to the lower level hookups, with homerun-style 3/4" pex setup, and it's not that big a deal. The plumbing is super accessible in my unit from the basement. Something to check on.

    5) furnace or boiler? Boilers can last a super long time (there's not a lot going on in there), but are like 8k if you have to replace one.

    6Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Thank you Andrew. I learn a lot on this forum and I appreciate everyone’s input.
    I will take note of your advice, and when the inspection comes, I will pull out my notes.

    1Reply
  • Sam McCormackBusiness Member
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes
    3y

    @Robert Flores

    Hi Robert, I am an agent in Cincinnati and building that old is very common. You'll see lots of structures that are nearly 150 years old with a stone foundation that old up great for how old they are. Like @Shane Kelly said, you're going to see so many older properties in places similar to Cleveland and Cincinnati. Not sure if that helped you, but just know, so many other people have bought buildings just as old as that one! If it has it's issues it has it's issues, but all properties could have that!

    [email protected]859-443-4952
    Sam McCormack Realtor
    View Page
    2Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Thank you, Sam! I will keep that in mind.

    This forum is very useful to new investor like me.

    1Reply
  • Rudy Sant
    Rental Property Investor · Plantation, FL · Member since 2015 · 25 posts · 6 votes
    3y

    @Robert Flores Robert..take in consideration 👌 building needs to comply with occupancy and lead based paint stipulations before being able to offer it for rent. The house stock in Cleveland is old indeed. Plumbing and basements, and unrelated electric are to be inspected carefully..is this the Easy of Cleveland ? I been looking for a 4plex on the East ..just cause they affordable. I go there once a month let me know if I can be of service.

    2Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Hey Rudy, thanks for your response. I will keep that in mind. One of the reason I am active in this forum is to verify my next step. I am greatful for all experienced realtors/investors responses,and continually learning from you guys.

    Thank you.

    1Reply
  • Greg Haygood
    Accountant · Washington, DC · Member since 2019 · 16 posts · 15 votes
    3y

    @Robert Flores I’m an out of state real estate investor in with properties in Cleveland. My last purchase was a 100+ year old duplex in Cleveland Heights, OH.

    I used WIN Inspection to vet this house, and I’ve used them several times during my search process. I would not consider buying a home without their feedback and/or inspection report.

    I’ve had several good experiences with inspector Dan DelMonte, but I’m confident that they have have a very professional, knowledgeable crew.

    https://wini.com

    3Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Thanks Greg! Iwill ask my realtor if they know them. I appreciate your input.

    0Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    3y

    The construction in Cleveland is pretty old. What does the inspection report say? 

    I would love to connect and help out because I am also an out of state investor from Northern Virginia and invest primarily in Cleveland. 

    2Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    3y

    @Robert Flores
    As @Shane Kelly mentioned a lot of the properties in Cleveland were built in the 1920-1940 range. To deal with that you would send an inspector in that would take a look at the property and put together a report for you on its condition.

    [email protected]614-412-4565
    Reafco-556 Reviews
    View Page
    1Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Thank you, @Patrick Drury. I appreciate the response.

    0Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Hi @Aj Parikh. I am not yet in that stage, but definitely I will scan the inspection report  thoroughly :) 

    0Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    3y

    It’s not in your area but I own two different properties that are 100 ish years old. There’s not much getting around the fact that sooner or later your issues will manifest. If no one has ever done a full gut job down to the studs, simple electrical or plumbing updating can be harder because odds are you have plaster walls that are NOT as simple as cutting drywall and patching, for starters. Having said that, I find I’m super drawn to older houses that are overlooked if they are in up and coming areas, as I subscribe to the philosophy that investing is not just for cash flow but appreciation and equity growth as well. Hopefully you are able to balance the concerns you rightfully have with calculated risk. Best wishes to your success.

    4Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    3y
    Quote from @Robert Flores:

    Hi @Aj Parikh. I am not yet in that stage, but definitely I will scan the inspection report  thoroughly :) 


     Got it. There are multiple other strategies on investing long distance. Feel free to reach out if you want to connect and discuss. 

    1Reply
  • Matthew Hermenau
    Miami · Member since 2018 · 14 posts · 13 votes
    3y

    @Robert Flores

    Hey Robert,

    I just purchased a home in Cleveland Heights and can say that you seriously need to do a thorough inspection of the property before anything.

    - Are there any POS violations? Mine had a laundry list and they were “easily fixable” per the inspector. Handyman came back with an estimate 4-5x what I was expecting nearly destroying any margin for profit.

    - How old are the furnace, water heater, other appliances? Don’t get stuck with old appliances and have them fail on you especially in the midst of winter. Make sure gas, water and electricity is turned on for your inspection. Many will try to leave them off especially if a property is vacant and not being used to cut down on costs/risk of pipes freezing

    - Understand that the city is EXTREMELY slow! I have easily had to call daily to get them to simply tranfser title into my name and let alone get a re-inspection after fixing the violations. This will have a major impact on when you can get a tenant. Again, winter is a harder time and rent will be lower since people aren’t trying to move in the harsh winter.

    3Reply
  • Matthew Hermenau
    Miami · Member since 2018 · 14 posts · 13 votes
    3y

    I also live out of state and my property is ~100yrs old. Make sure you have a solid team (real estate agent, lawyer, contractor, handyman, prop management, etc.). Because you will need this if doing it out of state. Also make sure you factor in 10% for the property manager and 1st month rent if that’s how you’d like to operate it. Just doing it out of state made me seriously reconsider a lot of stuff since you need to have massive trust in people you barely know and the risk of you not being a drive away to fix something if things go sideways.

    Also, interest rates are climbing so curious if you got a fixed rate from the bank? Don't let them jerk you around and wait for one only to find out it's considerably higher effectively ruining your COC you calculated (learn from my mistake!)

    Just looking out so you don’t have the same issues/roadblocks my friend. Happy to answer any more Q’s via DM.

    2Reply
  • Kyle S.
    Member since 2022 · 64 posts · 35 votes
    3y

    If you buy it I would make sure you leave a fairly large amount for repairs/maintenance because like some have said things will break with a house that old. 

    If it was me I would do my best to steer clear or make sure you get a screaming deal on a home this old especially for your first investment property. 

    2Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Hey Matthew, thanks for the advice. Yeah I got a fix rate. I know the rates are keeps going up and they said it will keep going up.

    I know, I need to have a good team to be successful and I am working on it :) one step at a time.

    0Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    Thanks @Kyle S. for the input. I wish I have a bigger budget :).

    0Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    @Matthew Hermenau a lot of wisdom here. I appreciate those inputs. I will keep those in mind. Thanks again.

    0Reply
  • Ahmad H.
    Rental Property Investor · New York, NY · Member since 2013 · 136 posts · 101 votes
    3y

    @Robert Flores My rentals are mostly 100+ years old and I would be cautious of buying & managing them from afar. 10% CoC is tempting only until you run into your first major repair and realize profit went poof for the year or couple of years. First off, I would budget 10% of rent for CapEx, at minimum and I wouldn't buy anything without 10-15k in reserves available right after closing. Things I would do/consider to reduce chances of headaches down the line:

    1. Call the building department to check for existing & past violations for the property. Learn about their rental requirements as far as certifications, how frequent, cost, and if building is current on everything.
    2. Run a camera down the sewer line to check for sags, tree branches, and other issues. Replacing sewer line to the city main, depending on many factors, can be anywhere from 3k to 10k+.
    3. Electrical system: Does it have circuit breakers or fuse boxes? What kind of wiring is there? Romex, BX, knob & tube, etc..
    4. Is there asbestos insulation that needs to be removed? Lead water lines?
    5. Furnace/boilers: How old are they? When do you expect they'll need to be replaced? Budget for that or better yet get them done early on if they are close to end of useful life and save yourself expensive emergency heating repair
    6. Is there a driveway that will need to be plowed? Get quotes from several companies now and don't rely on owner's expense line for snow removal.
    6. Are you buying one or plan to buy many? If only one, in my opinion, the headache is not worth a few hundred bucks a month. Only do this if you plan to scale, as scaling will also bring your costs down, and you'll have more leverage and better relationships with your team.
    7. You're potentially buying at or very close to the top of the market cycle, so this is a pure cashflow deal, unless you hold for 5 to 10 years. Go over everything with a fine-tooth comb to increase chances of +ve cashflow

    3Reply
  • Robert Flores
    OP
    New to Real Estate · Murrieta, CA · Member since 2022 · 47 posts · 18 votes
    3y

    A lot of wisdom here @Ahmad H. I will copy your list and make sure I do follow them thoroughly. Thank you.

    0Reply
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