Investing in East Cleveland

[Vadim F.]

I know there are a ton of naysayers out there about East Cleveland saying the area is a lost cause but that is what is enticing me to the area. Usually when people say the area is the worst of the worst, it gets revitalized and gets too expensive to invest in like UC. Browsing the web, I came across https://neo-trans.blog/2022/09... which will be huge for the hard hit city/town. I am also picturing UC moving East since that is the only way it can go where properties haven't exploded in price yet. Question to those who are potentially in the know/currently investing in the area, what else is in the works for East Cleveland? I know the area won't change overnight and not everything can be found on the internet. 

[Shane Kelly]

I think some of the big things going for it other than the project you've mentioned are the fact that University Circle has begun to bleed over into Hough, Fairfax, and some of the far extremes of East Cleveland, and that it's literally on the floor, so it can really only go up from here. It's not the highest on my list of crappy cities that I think will turn, but I do think that it's in my top 5. I also concur with your last comment, it will not turn over night. To the clients I do advise to buy over there it's always that they buy for CHEAP, they buy with nothing but cashflow in mind (in the short term), and that they hold for as long as possible.

[Vadim F.]

Quote from @Shane Kelly:

I think some of the big things going for it other than the project you've mentioned are the fact that University Circle has begun to bleed over into Hough, Fairfax, and some of the far extremes of East Cleveland, and that it's literally on the floor, so it can really only go up from here. It's not the highest on my list of crappy cities that I think will turn, but I do think that it's in my top 5. I also concur with your last comment, it will not turn over night. To the clients I do advise to buy over there it's always that they buy for CHEAP, they buy with nothing but cashflow in mind (in the short term), and that they hold for as long as possible.

 Absolutely agreed! It’s all about cash flow in East Cleveland but the prices are low but the risk is extremely high. If you’re able to get a duplex in the 60-70k range and rent it out for $900 a door via sec 8, it’ll pay for itself in under 4yrs and you’re reaping pure profits after. It’s definitely a long game but may very well be worth the risk.

[Andrew Duna]

Hi Vadim. If you'd really like to invest in a cheaper area and you are okay with decent risk then I would recommend investing in the Clark-Fulton Area. It's currently D class and has a great chance for appreciation. Go for section 8 for now in order to mitigate some of that risk and then wait for that appreciation to trickle in. In my opinion-- something monumental would have to occur in order to pull East CLE out of the spot it's currently in.. whereas Clark-Fulton already has a lot of promising potential  

Here is a link for further info on the housing developments in the Clark-Fulton area: https://www.clevelandcitycounc...

[Vadim F.]

Quote from @Andrew Duna:

Hi Vadim. If you'd really like to invest in a cheaper area and you are okay with decent risk then I would recommend investing in the Clark-Fulton Area. It's currently D class and has a great chance for appreciation. Go for section 8 for now in order to mitigate some of that risk and then wait for that appreciation to trickle in. In my opinion-- something monumental would have to occur in order to pull East CLE out of the spot it's currently in.. whereas Clark-Fulton already has a lot of promising potential  

Here is a link for further info on the housing developments in the Clark-Fulton area: https://www.clevelandcitycounc...

 @Andrew Duna I am aware of the investment in Clark Fulton and prices are already reflecting the possible changes to come. The way I see that area now is potential appreciation vs cash flow due to gentrification. East Cleveland is pure cash flow with minimal appreciation for the time being but if and when University Circle does expand the prices may boom. East Cleveland to me looks like an area that is prime for live-work lofts. All the abandoned brick buildings can be restored to beautiful loft spaces. But that does need a lot of time and money invested.

[Nathan Harden]

You are going off pure 100% speculation with a HOPE that East Cleveland bounces back if it ever does. Think about how possible it may to get it rented then what if East Cleveland never rebounds and you try and sell? You put it on the market, it sits then gets vandalized in the first week.

[Vadim F.]

Quote from @Nathan Harden:

You are going off pure 100% speculation with a HOPE that East Cleveland bounces back if it ever does. Think about how possible it may to get it rented then what if East Cleveland never rebounds and you try and sell? You put it on the market, it sits then gets vandalized in the first week.

 OF course, but that can be said about majority of Cleveland neighborhoods. The already established areas are not a good investment for cash flow in my opinion, and will be banking purely on appreciation. If I am not mistaken, even University Circle at one point wasn't the most desirable area of Cleveland until some money came in. 

[Andrew Duna]

Quote from @Vadim F.:

Quote from @Andrew Duna:

Hi Vadim. If you'd really like to invest in a cheaper area and you are okay with decent risk then I would recommend investing in the Clark-Fulton Area. It's currently D class and has a great chance for appreciation. Go for section 8 for now in order to mitigate some of that risk and then wait for that appreciation to trickle in. In my opinion-- something monumental would have to occur in order to pull East CLE out of the spot it's currently in.. whereas Clark-Fulton already has a lot of promising potential  

Here is a link for further info on the housing developments in the Clark-Fulton area: https://www.clevelandcitycounc...

 @Andrew Duna I am aware of the investment in Clark Fulton and prices are already reflecting the possible changes to come. The way I see that area now is potential appreciation vs cash flow due to gentrification. East Cleveland is pure cash flow with minimal appreciation for the time being but if and when University Circle does expand the prices may boom. East Cleveland to me looks like an area that is prime for live-work lofts. All the abandoned brick buildings can be restored to beautiful loft spaces. But that does need a lot of time and money invested.

 Yep it is somewhat annoying that the prices in Clark Fulton are already factoring in some of the projected appreciation. While many properties are priced this way--  they oftentimes simply do not sell -- and go for lower than asking. 

I think there is some merit to investing right on the doorstep of University circle with the right expectations -- but otherwise the rest of East Cleveland is a large area that is a long ways away from investment dollars. So just like any investment strategy in these kinds of areas- paying attention to the specific street you invest in matters- as I'm sure you've already factored in. Wishing You All The Best 

[Vadim F.]

Quote from @Andrew Duna:

Quote from @Vadim F.:

Quote from @Andrew Duna:

Hi Vadim. If you'd really like to invest in a cheaper area and you are okay with decent risk then I would recommend investing in the Clark-Fulton Area. It's currently D class and has a great chance for appreciation. Go for section 8 for now in order to mitigate some of that risk and then wait for that appreciation to trickle in. In my opinion-- something monumental would have to occur in order to pull East CLE out of the spot it's currently in.. whereas Clark-Fulton already has a lot of promising potential  

Here is a link for further info on the housing developments in the Clark-Fulton area: https://www.clevelandcitycounc...

 @Andrew Duna I am aware of the investment in Clark Fulton and prices are already reflecting the possible changes to come. The way I see that area now is potential appreciation vs cash flow due to gentrification. East Cleveland is pure cash flow with minimal appreciation for the time being but if and when University Circle does expand the prices may boom. East Cleveland to me looks like an area that is prime for live-work lofts. All the abandoned brick buildings can be restored to beautiful loft spaces. But that does need a lot of time and money invested.

 Yep it is somewhat annoying that the prices in Clark Fulton are already factoring in some of the projected appreciation. While many properties are priced this way--  they oftentimes simply do not sell -- and go for lower than asking. 

I think there is some merit to investing right on the doorstep of University circle with the right expectations -- but otherwise the rest of East Cleveland is a large area that is a long ways away from investment dollars. So just like any investment strategy in these kinds of areas- paying attention to the specific street you invest in matters- as I'm sure you've already factored in. Wishing You All The Best 

 Thanks @Andrew Duna. I think there will be major changes up until Superior. Afterwards, will be more street by street. Having grown up and still living in the SF Bay Area, I have seen my fair share of areas that at one point were talked about like East Cleveland. East Oakland used to be the murder capital of the United States if not the world. Poverty, gangs, dilapidated building, crack epidemic, and everything else you can name existed. Also, like east Cleveland it is surrounded by very desirable and rather expensive areas such as Piedmont, Rockridge, Montclair. No one wanted to invest in that area for the longest time up until the 2010s. Once 2010s hit, businesses decided to invest in the area because there was space available and it was cheap. Soon after young professionals and families began buying houses and adding value to the neighborhoods within East Oakland. Now it is a melting pot of all cultures living there. There are still some pockets that haven't changed and most likely will not change but overall the area has changed for the good. So in short, I see those similarities and that is what is drawing me to East Cleveland, because 20yrs ago if someone said you were investing East Oakland you were looked at as someone who has no clue what they are doing.

[Andrew Duna]

Quote from @Vadim F.:

Quote from @Andrew Duna:

Quote from @Vadim F.:

Quote from @Andrew Duna:

Hi Vadim. If you'd really like to invest in a cheaper area and you are okay with decent risk then I would recommend investing in the Clark-Fulton Area. It's currently D class and has a great chance for appreciation. Go for section 8 for now in order to mitigate some of that risk and then wait for that appreciation to trickle in. In my opinion-- something monumental would have to occur in order to pull East CLE out of the spot it's currently in.. whereas Clark-Fulton already has a lot of promising potential  

Here is a link for further info on the housing developments in the Clark-Fulton area: https://www.clevelandcitycounc...

 @Andrew Duna I am aware of the investment in Clark Fulton and prices are already reflecting the possible changes to come. The way I see that area now is potential appreciation vs cash flow due to gentrification. East Cleveland is pure cash flow with minimal appreciation for the time being but if and when University Circle does expand the prices may boom. East Cleveland to me looks like an area that is prime for live-work lofts. All the abandoned brick buildings can be restored to beautiful loft spaces. But that does need a lot of time and money invested.

 Yep it is somewhat annoying that the prices in Clark Fulton are already factoring in some of the projected appreciation. While many properties are priced this way--  they oftentimes simply do not sell -- and go for lower than asking. 

I think there is some merit to investing right on the doorstep of University circle with the right expectations -- but otherwise the rest of East Cleveland is a large area that is a long ways away from investment dollars. So just like any investment strategy in these kinds of areas- paying attention to the specific street you invest in matters- as I'm sure you've already factored in. Wishing You All The Best 

 Thanks @Andrew Duna. I think there will be major changes up until Superior. Afterwards, will be more street by street. Having grown up and still living in the SF Bay Area, I have seen my fair share of areas that at one point were talked about like East Cleveland. East Oakland used to be the murder capital of the United States if not the world. Poverty, gangs, dilapidated building, crack epidemic, and everything else you can name existed. Also, like east Cleveland it is surrounded by very desirable and rather expensive areas such as Piedmont, Rockridge, Montclair. No one wanted to invest in that area for the longest time up until the 2010s. Once 2010s hit, businesses decided to invest in the area because there was space available and it was cheap. Soon after young professionals and families began buying houses and adding value to the neighborhoods within East Oakland. Now it is a melting pot of all cultures living there. There are still some pockets that haven't changed and most likely will not change but overall the area has changed for the good. So in short, I see those similarities and that is what is drawing me to East Cleveland, because 20yrs ago if someone said you were investing East Oakland you were looked at as someone who has no clue what they are doing.

 Very interesting to hear that perspective/story. Thanks for sharing 

[Charles Brown]

@Andrew Duna

[Charles Brown]

@Charles Brown

I’m a contractor in Cleveland and I know this area very well, and there is potential in and near

University Circle, and have those same ideas

of housing development there, DM me and let’s discuss it.

[Charles Brown]

@Vadim

[James Wise]

ya'll wild

[Bob Stevens]

Quote from @Vadim F.:

I know there are a ton of naysayers out there about East Cleveland saying the area is a lost cause but that is what is enticing me to the area. Usually when people say the area is the worst of the worst, it gets revitalized and gets too expensive to invest in like UC. Browsing the web, I came across https://neo-trans.blog/2022/09... which will be huge for the hard hit city/town. I am also picturing UC moving East since that is the only way it can go where properties haven't exploded in price yet. Question to those who are potentially in the know/currently investing in the area, what else is in the works for East Cleveland? I know the area won't change overnight and not everything can be found on the internet. 

 We are trying to buy everything there, just no inventory. I did get a 7 unit last week but want more, Those that say do not buy in EC simply are not informed, 

[Todd Jones]

I was raised in East Cleveland so I can provide some insight. In summary, it’s complicated.

Sorry if this is lengthy but I feel I should inform.

Background:
East Cleveland was the home to John D. Rockefeller who invested quite a bit into the city including the historical Rockefeller homes. This area is whisper quiet and rivals even the better areas. Most of the homes are extremely large and there is a fair share of duplexes. They officially got a mayor in the 1980s. Prior to this, it was a commissioner and a city manager. Several officers were arrested for basically stealing city funds. When Mayor Davis left, he (allegedly) destroyed the office. Mayor
Onunwor was pretty good and kept pointing out how funds mysteriously disappeared (e.g., the park's water fountain fund) but he got arrested for corruption in relation to contract hiring. Mayor Brewer managed to have the city of Cleveland handle the water, which was HUGE benefit. The current mayor is maintaining things "ok" but the city council won't budge regarding progress/change. Watching the city council is pure entertainment (i.e., Councilman Forbes would very intentionally rustle papers on the mic when someone else spoke).

When you combine (1) city officials taking money for decades per police reports and mismanaging the area, (2) high city tax of 2.5% city tax w/ no credit unlike other cities, (3) the loss of Huron Road hospital which was the biggest income, you now see why East Cleveland is like this now.

Issues:

- Roads: Horrific. Need proof? Drive down Terrance Road between Lee and Noble...ok, don't. Please don't. Your car doesn't deserve potholes the 1 ft deep.

- People: The culture is "keep to yourself" in most cases. Shaw does produce highly educated adults and they have embedded vocational training. The population has dropped to 17k, down by 37% since 2000. They used to have several events such as the Love Festival on Euclid Ave, which was popular w/ 0% violence, but it was shut down. Now, they feel the city won’t make a comeback and the police will be 1 hour late to calls.

- Area/Homes: Several businesses have left hence the abandoned commercial buildings. The folks who have businesses are dying off. In several cases, homes are not boarded up. Demolition companies don't want to deal with them based on their unprofessionalism. I have family in demolition. You can get a home for $5k-$15k easily or more so take care of the unpaid taxes.

- The city has been in a fiscal emergency for over 10 years but the state ok'ed a plan to get them out. Check out their service department building.
https://www.ideastream.org/new...

- Crime and drug problems? Yes.

Summary:

So...should you buy in East Cleveland?

Depends.

You will have tenant issues (miss rent payments), finding a property manager would be extremely hard, pay higher taxes, have to do major rehabs, and fix up the place after each tenant leaves. However, the homes are very large, made out of "old school wood", you can purchase a substantial amount of land, and always have cash flow and large CAP.

If you are willing to deal with the potential headaches, then go full steam. Just don't slumlord as the tenants will react very strongly. Expect to keep them as selling will be practically non-existent.

The future? UC will only take over so much as the cemetery is a clear demarcation. Every once in a while there are talks to combine EC with Cleveland they don't want it.

Hope this helps!

[Bob Stevens]

Quote from @Nathan Harden:

You are going off pure 100% speculation with a HOPE that East Cleveland bounces back if it ever does. Think about how possible it may to get it rented then what if East Cleveland never rebounds and you try and sell? You put it on the market, it sits then gets vandalized in the first week.

 You seem not to be up to speed as to what is going on.6, 7 years ago you could buy MF for about 4, 5k per unit, now , up to 45k per. Also there is a lot going on, we are buying everything we can, however there is no inventory ( its seems the world IS up to speed) . I picked up a 7-unit last week, all in 200k, Rent about 45k with a net of about 32k, not to bad. 3 weeks ago, SF all in 70k, rent 1400,( rented in 4 days) we want as much as we can get in certain areas.  IMO it will double in price over about 5, 8 years. 7 years ago we picked up an 81 unit , all in 1 mill, gross about 500k net about 270k (insane return ) for the last 5 years, Now turning down 3 mill. As mentioned in most of my comments, Its ALL about knowledge and your team 

All the best. 

[Bob Stevens]

Quote from @Todd Jones:

I was raised in East Cleveland so I can provide some insight. In summary, it’s complicated.

Sorry if this is lengthy but I feel I should inform.

Background:
East Cleveland was the home to John D. Rockefeller who invested quite a bit into the city including the historical Rockefeller homes. This area is whisper quiet and rivals even the better areas. Most of the homes are extremely large and there is a fair share of duplexes. They officially got a mayor in the 1980s. Prior to this, it was a commissioner and a city manager. Several officers were arrested for basically stealing city funds. When Mayor Davis left, he (allegedly) destroyed the office. Mayor
Onunwor was pretty good and kept pointing out how funds mysteriously disappeared (e.g., the park's water fountain fund) but he got arrested for corruption in relation to contract hiring. Mayor Brewer managed to have the city of Cleveland handle the water, which was HUGE benefit. The current mayor is maintaining things "ok" but the city council won't budge regarding progress/change. Watching the city council is pure entertainment (i.e., Councilman Forbes would very intentionally rustle papers on the mic when someone else spoke).

When you combine (1) city officials taking money for decades per police reports and mismanaging the area, (2) high city tax of 2.5% city tax w/ no credit unlike other cities, (3) the loss of Huron Road hospital which was the biggest income, you now see why East Cleveland is like this now.

Issues:

- Roads: Horrific. Need proof? Drive down Terrance Road between Lee and Noble...ok, don't. Please don't. Your car doesn't deserve potholes the 1 ft deep.

- People: The culture is "keep to yourself" in most cases. Shaw does produce highly educated adults and they have embedded vocational training. The population has dropped to 17k, down by 37% since 2000. They used to have several events such as the Love Festival on Euclid Ave, which was popular w/ 0% violence, but it was shut down. Now, they feel the city won’t make a comeback and the police will be 1 hour late to calls.

- Area/Homes: Several businesses have left hence the abandoned commercial buildings. The folks who have businesses are dying off. In several cases, homes are not boarded up. Demolition companies don't want to deal with them based on their unprofessionalism. I have family in demolition. You can get a home for $5k-$15k easily or more so take care of the unpaid taxes.

- The city has been in a fiscal emergency for over 10 years but the state ok'ed a plan to get them out. Check out their service department building.
https://www.ideastream.org/new...

- Crime and drug problems? Yes.

Summary:

So...should you buy in East Cleveland?

Depends.

You will have tenant issues (miss rent payments), finding a property manager would be extremely hard, pay higher taxes, have to do major rehabs, and fix up the place after each tenant leaves. However, the homes are very large, made out of "old school wood", you can purchase a substantial amount of land, and always have cash flow and large CAP.

If you are willing to deal with the potential headaches, then go full steam. Just don't slumlord as the tenants will react very strongly. Expect to keep them as selling will be practically non-existent.

The future? UC will only take over so much as the cemetery is a clear demarcation. Every once in a while there are talks to combine EC with Cleveland they don't want it.

Hope this helps!

 Nice post, Its all about knowledge and your team. Knowing where to buy and how to screen the most important part. I'm assuming you know exactly what I am referring to as we know whats coming to EC :)