Rental Property Investor · Atlanta, GA · Member since 2016 · 23 posts · 4 votes
Hello everyone,
I see some good buy and hold deals in Cleveland, Ohio that can, potentially, cash flow well. The thing that concerns me is the age of the homes. Most of them were built in the early 1900s. To those of you who invest in this area, what are your experiences with these older homes? Does maintenance and capex eat into your cash flow? How do you go about minimizing this risk? I am in touch with a reputable property management firm in the area who has excellent reviews and referrals. This does give me some level of comfort. I look forward to hearing your advice and experiences.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
10y
@Abbas Raza The average age depends on where you buy. The city was built first, then the inner ring suburbs, etc. Parma was built up after the war, as were many of the other suburbs (1950's). Split levels in Independence in the 70's.
Yes, I have seen other investors saying that they don't touch things built before 1980, but that isn't really practical in many areas of Cleveland, just due to the history of the area.
Yes maintenance and capex will eat into cashflow, as with many RE investments. Even after accounting for these items, you can be profitable. Some areas will never cashflow, the same as some entire metropolitan areas will never cashflow. The demand and quality/age of houses in those areas drive prices above what can be justified for rentals, as the rent rate doesn't reflect these increased values.
In Cleveland, you have 16K houses though, and million plus homes, painting with a broad brush (Cleveland is a good market to invest, Cleveland's housing stock is old) is the same as USA today saying housing is down. You can't speak for everything, just on average.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
10y
@Abbas Raza The average age depends on where you buy. The city was built first, then the inner ring suburbs, etc. Parma was built up after the war, as were many of the other suburbs (1950's). Split levels in Independence in the 70's.
Yes, I have seen other investors saying that they don't touch things built before 1980, but that isn't really practical in many areas of Cleveland, just due to the history of the area.
Yes maintenance and capex will eat into cashflow, as with many RE investments. Even after accounting for these items, you can be profitable. Some areas will never cashflow, the same as some entire metropolitan areas will never cashflow. The demand and quality/age of houses in those areas drive prices above what can be justified for rentals, as the rent rate doesn't reflect these increased values.
In Cleveland, you have 16K houses though, and million plus homes, painting with a broad brush (Cleveland is a good market to invest, Cleveland's housing stock is old) is the same as USA today saying housing is down. You can't speak for everything, just on average.
I see some good buy and hold deals in Cleveland, Ohio that can, potentially, cash flow well. The thing that concerns me is the age of the homes. Most of them were built in the early 1900s. To those of you who invest in this area, what are your experiences with these older homes? Does maintenance and capex eat into your cash flow? How do you go about minimizing this risk? I am in touch with a reputable property management firm in the area who has excellent reviews and referrals. This does give me some level of comfort. I look forward to hearing your advice and experiences.
Thanks,
Abbas
Hello Abbas,
Welcome to BP and congratulations on deciding to invest in the Cleveland area. I am from Cleveland and I can tell you it is a perfect place for REI.
Yes, many of the homes are a bit older, but for many tenants that adds to the charm. Often times these homes have been rehabbed completely and you would not even know they were built over 50 years ago unless you were told!
Keep your eye out for honest companies in Cleveland. Sometimes they might not be as upfront with you as you would like. Make sure you are able to inspect the homes and see how much work was actually put into them.
I really hope you find a great investment in Cleveland. Feel free to reach out to me if you have any questions.
Tom - I'm out of state. I would definitely order an inspection. However, I will not be able to view or walk the property myself with the inspector. I would need him/her to walk me through the inspection findings via email and phone. Any thoughts on this? I guess the key is to find a reputable inspector, right? Do you have any you could recommend, by chance?
Property Manager · Brecksville, OH · Member since 2014 · 486 posts · 464 votes
10y
There are many good inspectors working here, and most have experience working with the older housing stock that you are considering. However, I would say that there is plenty of post war investment property to go around.
Tom - I'm out of state. I would definitely order an inspection. However, I will not be able to view or walk the property myself with the inspector. I would need him/her to walk me through the inspection findings via email and phone. Any thoughts on this? I guess the key is to find a reputable inspector, right? Do you have any you could recommend, by chance?
Send me a direct message and we can talk more about this!
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
10y
Abbas,
I have done literally over 1000 deals in Cleveland area and many of them are older than my great grandpa! LOL
With that said, the only scary thing about those homes to me is the mechanicals and those are cheap to update.
if you are buying something here in my hometown, just shoot me a call or message. I will five my opinion even if I am not selling it to you. I will probably know the house or seller just from the address.
I can save ya a lot of headaches.
Good luck and don't worry, not a big deal to have old houses.
Things that we run into with the really old stock are galvanized plumbing and knob and tube wiring. Both can be upgraded, but of course at a decent cost.
As another member stated you can buy into an area like Parma that is a newer stock it also has a more stable tenant base than the tenant base living in older stock in Cleveland proper. An area like Lakewood has incredibly old stock as well but you will also see a higher class tenant base as well as higher rents & taxes.