What's driving growth in Cleveland?

24 Replies

Hi BP,

I've been interested in Cleveland as a city for investment. Has anyone here in BP had experience?

I know this may have been asked before.

Are there any reasons or drivers that are helping the city become such a popular area for development and redevelopment? It seems like most of the midwestern cities (and states like OH) have been losing population due to migration to cities in the south and west.

Really curious to hear anyone's experience has been with investing in Cleveland overall!

Lastly, I'm looking to connect with any brokers who work with MultiFamilies. And any local brokers who know the area well.

Thanks everyone,
Andy

Hi Andy,

I am an investor from Cleveland, who now lives in California.   There are varying opinions on where Cleveland development is heading.   My opinion would be too long for a post reply so I will spare you.  I will say I am happy about my decision to invest there, but would caution those from out of state to really study the area before diving in.   To a Californian all the architecture looks the same and everything looks relatively cheap.  But there is a fine line between stable, blue collar cheap, and war zone cheap.   I can recommend the Holton-Wise Property Group for guidance on the west side.    @James Wise  has a great primer for a lay of the land.  Check out his "The Ultimate Guide to Grading Cleveland Neighborhoods" post in the forum.

@James Wise undefined

@John Koster yes I've read a while back on a BP thread that taxes is a big thing to watch out for and development could be going in a few directions.

I'd love to connect with you over email or phone if you're open to it. I'll PM you. And thanks for the heads up and recommendation on Holton-Wise - James and Federico. I'll def reach out.

Open to hear any other investors opinions and experiences with investing in Cleveland SFH and MF. I am from Cincinnati and look forwards to taking a trip to visit both cities soon.

Howdy Andy,

I wrote this post about my and my partner's field trip to Cleveland last June, going back to purchase a duplex+ this September.  Just need a realtor to call me back -:)

Best,

MRod

https://www.biggerpockets.com/forums/549/topics/474134-cleveland-msa-an-out-of-state-investors-field-trip-report

@Michael Rodriguez I just came across that post again today as someone bumped it up. It's a great overview of what Cleveland is all about and thanks for putting it together! I'm thinking about doing a similar thread on my upcoming trip back out to Cleveland as an OOS investor about to close on my 2nd property out there. 

@Andy C. but in regards to the drivers behind the city, here's why I chose Cleveland in no particular order. 

-It's bottomed out. I believe the money is made when you buy, and Cleveland is cheap.

-It has a disproportionately large number of duplexes. Just the way things were built back in the day, I guess. (I like MFR)

-It's got some great stuff going for it - one of the best medical facilities in THE WORLD, two of the best sports teams in the country (Cavs and Indians), rock and roll hall of fame, several fortune 500 HQ's, a flourishing arts/culture/music scene, and the infrastructure of what was once one of the richest cities in the world. 

-I can see the overinflated cities around the states cooling off and younger people moving to trendy cities they can actually afford. Cleveland has a lot of culture compared to most of the rust belt cities. 

-And most importantly for me, you can cash flow like crazy out there if you find the right deal. 

@Andy C. , I've been interested in Cleveland as well. This is a good recent article that mentions several of the interesting things happening in Cleveland.

http://www.latimes.com/travel/la-tr-cleveland-2017...

 I've never been but from what I've been reading and also hearing from people currently investing there it seems to have that cool/hip factor emerging and I've seen that translate into large price increases in other cities. Say price appreciation doesn't happen in the Midwest or rust belt but all real estate is local. An example from Ohio is Over the Rhine in Cincinnati it used to be a very high crime area with rundown buildings but not it's a really hip area and some people are paying $400,000 or more to live in condos there. 

It seems the trick is getting in before everyone already knows a city is cool or hip. 

Regarding population growth you might find this interesting. Downtown Cleveland has seen a large increase in college age millennials which is not something that I think most nationwide would expect. 

"The study also showcases the dramatic gain of millennials in Downtown Cleveland – a 76 percent increase in 25- to 34-year-old residents from 2000 to 2012. As of 2012, 63 percent of Downtown Cleveland residents were millennials"

https://www.clevelandfoundation.org/news_items/mil...

@Ryan Evans , that would be awesome if you did a thread on your upcoming trip. I do think you are likely right about younger people moving to trendy cities they can actually afford. Living in high cost cities like L.A ,SF,NYC or Seattle can be great if one is making high wages in tech or finance or some other field but otherwise people are really struggling. If one is an artist for example they might struggle just to pay rent in NYC or those other cities, but in a lower cost city they can easily afford their own studio or gallery spaces etc. Opening a business isn't such a crazy proposition either because retail rents are lower etc. 

I think that infrastructure is really important too like you mentioned. You have younger people today that have more an appreciation for these older historic buildings. In L.A i've seen that the areas that have gentrified the most have been the ones where the architecture is historic and interesting. Everything old is cool again.

@Michael Rodriguez @Ryan Evans  @Andy C.   @John Koster  

I'm originally from Cleveland and am a full time investor living in southern California. My business partner and I just spent three days in Cleveland checking on our properties and to meet with some brokers. The trip was incredible, and really opened my eyes to what's happening in Cleveland since I left in 2006. Basically... here are a few pointers and pros:

A- Younger people who aren't having kids hate the suburbs, and want to live somewhere cool. So, they're migrating to areas around cool restaurants, retail, coffee, bars, and recreation.

B- Younger people want to live close to downtown, and close to their parents. 

C- There's a lot more fun stuff to do than there was 10 years ago- I remember when cleveland sports were terrible for a few years before Lebron came in 2003.

D- The city has put a ton of money into commercial development- East bank of flats, West side market, Detroit Shoreway, E 4th, W 6, W 9th, Case, University Circle, Tremont etc.

E- Thriving 5 star restaurant scene. Michael Simon & Zack Bruell at the forefront of making it delicious to live in Cleveland.

The cons, at least for an out of state investor, is that you have to know the neighborhoods you're investing in... AND the streets. I can't stress enough how quickly beautiful architecture in Cleveland Heights turns into burnt out sketchy neighborhoods. Within blocks. Zip codes overlap with cities, and can be confusing. And also, getting quality tenants is always important.

My portfolio: I have a few rentals in Akron and Cleveland, and at the moment have two rehab projects and a foreclosure in Chesterland that I'm closing on in a few weeks. 

If anyone would like to jump on a call, or connect personally.. PLEASE DON'T BE SHY! (I can't remember exactly but from what I read on this forum a few of you are from Cali). I'd love to discuss opportunities to work in harmony with those that are interested in revitalizing my hometown of CLE!!!

Hi all,

Listen to my BP Podcast as a guest on show 238.  I have 1031 exchanged all my pricey rental properties in San Diego for Apartment complexes and 8 single family in suburbs of the Cleveland area, primarily in Euclid and Lake County.  After listening to the podcast, feel free to go to my profile and give me a call.

Swanny

This is great! I am originally from the Broadview Heights area, moved to Dublin, OH in middle school and am now living in West Palm, FL. I have been becoming more and more interested in foregoing my first investment in FL and going straight for out of state rentals. This post has a lot of great information and was sent to me by @Bob Razler

I have spoke with one property manager in the area but would love as many recommendations as possible. Thank you for all the info and I will be sure to listen to your show @Michael Swan :)

@Michael Swan has a big ear and I appreciate him taking my call a week or so back.

Mike you're the best for giving back by taking time to talk with us and our wacky Ohio OOS investor plans -:)

Remember everybody on BP I am sending you an open invitation to go  to my profile and give me a call if you are interested in going down the road I am traveling on presently.

Swanny

Hey Andy!!

Cleveland is AMAZING! 

been buying here for over 20 years, and cant believe how it keeps getting hotter!

The prices are getting driven up by out of town investors flocking to the double digit

CAP rates.

It has lost population a bit, but the surrounding areas are still growing!

If ya ever visit, look me up, we can take a tour. 

If been great getting all your responses! This is why I'm such a fan of BP.

Thank you so much for sharing all the knowledge, wisdom, and why you love Cleveland.

In my last visit I honestly saw so many great attributes about it - not surprised by the attention it's getting. Let's hope the city continues to attract population.

I've connected with a few of you so far and have read all the posts. Promise to get back to you all at some point this week. Life + baby has gotten the better part of me(not an excuse)

Andy

@Michael Swan How have your experiences been investing in Euclid? I've been looking at 2 SFR turnkeys off Williams and Ball St. Seems a lot of SFRs just have 1 bath, odd quirk of these old builds. You've might have heard an Amazon center will be in Euclid 2019.

Do you know if Willowick and Bedford nearby are good cities as well?

I would highly recommend Lake County!!  Euclid is a great cash flow area if you have the right PM.  Contact me if you want to talk.

Swanny