Does anyone purchase in the inner city? Can you tell me the pros and cons? What have been some of your experiences?
Are you interested in buying in Cleveland. It depends on what you see in the marketplace. I invest in Cleveland as well and invest out in the flats.
Cleveland is a pretty diverse city. Prices, rents, and appreciation can vary greatly inner city. Where exactly were you looking?
I purchased in East Cleveland but am also looking in the 44128 and 44110 zip codes. I'm using money I have saved to purchase doubles with minimal work. Wanted to buy and hold with a goal of profiting a net of 4K monthly from 5 rental properties in 6 months. Once I have accomplished this, my goal is to start investing in properties in suburban areas. I am getting calls from potential tenants and some of the calls have been interesting. I just don't want to lose before I really get started.
Yes I've invested in East Cleveland. People have different opinions about the city itself. I love to hear both sides before I make my next purchase. I am actively looking for my next property and want to ensure that I make choices in the future that I am completely comfortable with.
It's really tough to talk about east side Cleveland since the east side doesn't just have a huge variance in suburbs, but literally, the block by block variance is huge! I mean, you've got 2m mansions in Bratenahl and 5k SFR's with the roof caving in just 300 meters down the road. It's great you're on the ground so you can see it all for yourself.
I really like the waterloo arts district in 44110 since it's starting to gentrify. The area is still pretty rough in my opinion, but I don't think it quite deserves its reputation. Lived there for a couple months this year and everyone I met is extremely optimistic for the neighborhood.
Your goal is doable, but you're going to have to find some seriously good deals. You can cash flow 800 per duplex (I know from experience), but let me know where you're finding those deals because I want more of the action!
I think cash flow of 400-500 per duplex in the area is somewhat reasonable. But screen the **** out of your tenants!
Try driving through some of those D areas they are referring to and see if it's your type of investment.
Sure it looks good on paper when you see a 15%+ cap and then you see the tenant profile and it might change your mind. Yeah it would be awesome to get a place for $30k and find a renter that pays $800/month for the next 10 years and you have the perfect investment. Its just hard to find unicorns . . .
I've spoke to some people who sell this investment strategy but they'll never give you any proof it's successful.
I've heard about that area up by the Beachland Ballroom and I can see that it could have some potential. Close to the highway with a direct artery into the city, and literally on the water. Prices seem great on paper but I'm not sure about the rental demographic.
I just wonder if it will be able to gentrify within this economic cycle. It seems like this could be a place that might thrive in the next cycle (5-10 years out). And once again, they need more employers to move into the area to keep the ascent in job growth. Your thoughts?
@Account Closed It's definitely not for the faint of heart to invest in that area. And tenant screening is absolutely a top priority. I'd personally rather give up an extra month or two in vacancy to find a good tenant. The ones I've found so far are great. One tenant works for a Boeing vendor and the other in some form of healthcare, so both relatively stable and no issues so far. But only time will tell.
I've met a lot of people just by hanging out at the coffee shop, restaurants, and bars in the arts district and heard lots of rumors of more galleries, restaurants, and maybe a brewpub going in over the coming years. Who knows what it will look like, but parts of town like Tremont turned around extremely quickly and Waterloo has plenty of upside potential.
I've also been seeing some potential plans for the Euclid mall to get turned into some sort of warehousing facility which would bring some jobs out that way. Amazon has their eye on North Randall for a fulfillment center that would bring an estimated 1,200 jobs and already leased 80,000 square feet in Euclid.
Growth may be slow, but I'm at least confident it will happen.
Clearly, I need to keep up on the business in that area. I've mentioned it in various forums here that they need larger employers to take advantage of the geographic location along with lower wages, leasing, taxes, etc.
I've seen the prices are similar to other areas in Cleveland but if it does turn out to be another Tremont, thats a rare case of appreciation in the Cleveland metro. I went to a couple of restaurants in the Tremont area and it just makes sense that that would be gentrified given the housing selection and the city views. I may be out there in the next couple of months and I will definitely make a trip up those neighborhoods you mentioned.
@Account Closed It would definitely be a rare case. The market went crazy in a couple of those suburbs. I have a buddy who made a good $150k in appreciation over the last few years! Do you know any other decent up-and-coming and sub $100k neighborhoods to keep an eye on? I've been looking a bit at Old Brooklyn since it's the most comparable working class neighborhood from what I've seen. Give me a shout if you're in town in September. I'll probably make a trip and we might have some overlap where I could show you what I'm working with.
Weirdest thing happened after I posted this just last night. An investor came and offered me double of what I paid for the property. Purchased at $9800 and was offered $23k which now confuses me even more. Title just transferred literally yesterday. Is something about to happen in East Cleveland that I don't know about yet? Should I sell or hold? I'm more confused than I was yesterday.
@Melanie Armstrong sounds like an okay problem to have! Sell or hold really depends on your strategy, and if you can rent the place now or not. If it's ready to rent then I say hold and you'll pay it off in a year or two. But if it's going to need some work then it might be nice to sell off-market, take the money and run. If you want to PM some specs on the property I can give some more thoughts. Sort of hard to say without more info.
Originally posted by @Melanie Armstrong :
Does anyone purchase in the inner city? Can you tell me the pros and cons? What have been some of your experiences?
It is very complicated and risky. Something can be "up and coming" this week, but not to much 3 months from now! I tend to prefer the suburbs.
If its rent ready, rent it. If it needs remodeling, SELL IT.
I have been looking 44135 (Kamm's Corner), 44111 (near Triskett) and Brooklyn/Old Brooklyn. I don't really see much appreciation potential but I do see a lot of potential in OB. They have the crime statistics (simple assaults, battery, menacing; aka. kids and bar fights) and home values that match the model of gentrification. From what the PM's have said, its very easy to get good tenants there and they stay for a longer period and can afford to pay those prices rather than tenants on the eastside that are more sensitive to economic factors. I've found it a little odd though that the duplex in OB go for less than the houses in the same area with the same sq footage. I probably need more insight from professionals that are more familiar with the area.
Keep me posted on next time you plan to be in the area to see if we can coordinate something. It sounds like you are a bit further in the game than I am but its always helpful to share resources and ideas. Love your Lazy Millennial thread lol
@Account Closed I've heard OB referred to as a good "starter neighborhood" for new investors. I think it's a fair statement. It's a blue collar working-class neighborhood. Seems like a good mix of potential issues, I mean, learning opportunities, and good returns.
If I close another this next deal in a week I might go out there again and might do some scouting for a few BP'ers interested in the area. I'll try to remember to let you know if it happens.
Lol, 'learning opportunities' Keep me posted on your progress. I have a list of areas I want to check out when I go back out there...Starting with all neighborhoods off of Lorain.
I agree with OB, thats probably where I will make my first investment, unless I can find a steal in Tremont (I spoke with a PM that said rentals in that area can go from $1-2k/unit. An entire rehabbed SFH can go for $3k depending on location).
Where is the property located that you are looking to acquire?
@Account Closed Tremont and Ohio City have really turned around according to everyone I've spoken with out there. I've got a buddy who just sold his house for a hefty chunk of appreciation in that part of town (also a real estate agent). I think you can do better in terms of rental returns in the neighborhoods like OB, but you'll find better tenants in Tremont and can definitely get higher monthly rent. And a much higher demand for the place.
I'm looking up near 185th and lakeshore blvd over on the east side.
If you need an investor friendly agent, my agent is a rockstar and her partner is the guy I referred to above...
@Ryan Evans undefined
I read this thread i am an investor in cleveland area looking for investor friendly agents. Could you send me their contact information?
Great thread ya'll. Figured i'd drop by & throw out some info for you all.
Since this thread was started they did get a fulfillment center in Euclid. Personally I love that area for investment & have been targeting it heavily. I see it as one of the most profitable areas in the Cleveland market here in the next decade or so.
As for Old Brooklyn I love that neighborhood as well. The quality of the housing & tenant base is lower than in Euclid but i'd agree that it's solid & working class. The southern half has a better housing stock & tenant base than the northern half. However I see the northern half as an area that has potential as it's the most logical location for the overflow of gentrification from Ohio City & Tremont.
I created The Ultimate Guide for Grading Cleveland Neighborhoods for out of state investors like you to be able to get a feel for all of the neighborhoods here in Cleveland. You guys should all check that out. There are some great rental neighborhoods and there are also some incredibly blighted areas. Prices will vary widely and you need to know why that is.
Knowing the pros and cons of each type of neighborhood is very important. Take a look at some photos below to see some of the things you should be prepared for if you engage in investing in these blighted areas. Note; these are all photos of properties in my company's rental portfolio. We have a portfolio of over 1,000 rentals in a wide range of neighborhoods in Cleveland so you can get through the savageness of what you see below but you do need to prepare for it. Some do not have the stomach for this type of stuff & that's ok. It's better to figure that out before you spend your money & get in over your head. There are many ways to make money in this business & investing in the hood is only one of them.
Tenants got into a fight over a nominal sum of money. Burning one parties car was the way one of the parties involved decided to handle the situation.
Best part about the car fire was one of the parties forgot which car was owned by the tenant. They just knew it was gold. So they set all of the gold cars they saw in the parking lot on fire.
No caption necessary for this toilet from hell.
This is what a kitchen can look like when a low income tenant moves out of it.
This is what a backyard can look like when a low income tenant moves out of it.
If tenants in these tough neighborhoods don't have yards, don't worry they will light off their fourth of July fireworks in their bathrooms.
Don't worry though. Sometimes when they move out they forget about their unregistered firearms.
Another point i'd like to make is you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
- Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
- Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
- Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
- Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
- Make sure your property manager is a licensed real estate brokerage.
- Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.