I'm taking a field trip to Cleveland!

Buying & Selling Real Estate
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I'm taking a field trip to Cleveland!

Ryan Evans
Rental Property Investor · Cleveland, OH · Member since 2016 · 653 posts · 769 votes

A lot of eyes are on the midwest these days so I thought I’d put an offer out there for all the BP folks around the country who have their eye on Cleveland, Ohio.

I've personally placed a major bet on Cleveland as an upcoming city for long term buy-and-holds and I have plenty of reasons why. I've got a duplex running a 44% ROI and another ~24%'er on the way. It's a duplex closing on Sep 5. I live in the Seattle/Tacoma area so I'm doing the whole out of state thing.

Anyway, I see a lot of interest in Cleveland, Akron, Toledo, Columbus, Cincinnati, etc. (sorry for keyword spam!), here in the forums, but the Midwest can be a risky place to invest. Not everyone has the capacity to fly out to every city they want to invest in, but some questions can only be answered by being on the ground.

So, if that’s you, maybe I can help! I’m flying to Cleveland from Sep 5-10th to get keys, fix the new place up, look at some properties, grow the team, and generally get the place rent ready. The ugly details are where the real learning happens so if you want to know about the deal, agents, contractors, taxes, regulations, contracts, financials, etc., while I go through the process, I’m happy to share my experience. I’ll be sure to document the process and post it on BP. I’ll also be bringing my best friend out from Alaska. He’s never set foot in Ohio or even bought a property but is looking at investing in Cleveland. Maybe you can relate?

Anyway, the BP community has helped me a ton, so here’s my chance to build up some good karma. If you want to know what it’s like to be a new out of state investor buying a property in the midwest, I invite you along for the ride :)

A year ago I was totally new to investing, but I’m slowly getting it figured out. Leave a comment or send a PM if you have any questions on what it’s like to do a deal out in the Cleve. If you like what you see and might want to talk partnerships, I’m all ears. Also, if you don’t have any local contacts out there and there is something we can do to help while we’re in town, don’t be shy!

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Michael Swan
Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
9y

Thank you @Ian Kurela

Anybody can do it if I can do it.  $80,000 combined family income here!!  I worked 60 hours a week for the last 10 years to achieve this.  If you live like no one else now, you can live like no one else later.  Get a great job, make a lot more w2 earned income than my family makes, invest in assets that put tax deferred cash flow in your pocket every month.  Stop contributing more than what your company will match in the 401K, get rid of those car payments, student loans, toys bought on time etc... Hoard  a lot of cash in a money market fund and build your financial freedom account up to capitalize on opportunities to buy more assets that put tax deferred cash flow in your pocket every month and you will be way above my $160,000 primarily tax deferred cash flow per year.  If you  don't make enough W2 earned income than get a part time job and hyper save for more assets.

YOU CAN DO IT!!!

Swanny 

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  • Michael Swan
    Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    9y

    Hi @Ryan Evans

    What did you think about the Euclid Area when you were there?   I have. A 12 unit Apartment complex and a duplex, side by side. Also, I have 5 half duplexes too that cash flow about $3,000 a month or $36,000 a year. I paid $200,000 all in cash, including fix up on those 7 single family.  The 12 unit Apartment complex cash flows $20,000 a year and I paid $480,000 for that apartment complex.  I put 25% down on that Apartment complex in Euclid.  So, on 19 front doors and on a $330,000 investment, I cash flow $56,000.00 a year on my Euclid properties.  Those properties in Collinwood are very close to my 19 front doors in Euclid.

    The single family I own are side by side.  One full Duplex and 5 half duplexes.  The Amish do a great job on my New roofing jobs.  The latest roof they did for me on my side by side Duplex at 1513 and 1515 E. 256 in Euclid cost me about $5000.00 total. Each side of the duplex is about 850 sf. Some of the front doors I have in Euclid are about $650-$800.00 a month rental rate, plus I charge $25.00 pet rent per pet.

    With an up and down Duplex, do you pay for water or is it seperately metered?

    Swanny

    1Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    9y

    @Ryan Evans if your estimate is for two HWT and 2 new furnaces - it's good.

    If it's for one - contact me, I'll give you my guys twice cheaper.

    Ike to analyze numbers - thank you! You're still learning and hopefully, you'll get better returns next time.

    Just be really picky about tenants unless you plan to manage these units locally - even if you get Sec.8 tenants, you'll need some efforts to collect the rent. Government subsidize only part of rent, some $$ tenants pay by themselves.

    Good luck with your adventure

    1Reply
  • Michael Swan
    Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    9y

    Good point @Irina Belkofer,

    All of my front doors are managed by a property manager and I live in San Diego.  My property manager has that Amish connection etc.., saves a lot of money using his connections.

    Swanny

    1Reply
  • Federico Gutierrez
    Realtor · Cleveland, OH · Member since 2015 · 2k+ posts · 857 votes
    9y

    Your numbers are great in theory, I'm not a debbie downer just a realist BUT

    What happens when you get one bad tenant and they punch holes and mess up your place and you need to evict. I'm not going to be like @Michael Swan and pitch my whole portfolio here, but I know it's going and will happen during the time of ownership. 


    Plus when you have tenant turn over you're going to have costs of turn over. That I didn't see in your numbers. I'd love to to see if what you actually calculated plays out in real life in 1,3,5yrs time.


    Congrats on the pick up. I like the like

    If you’re thinking, “but Zillow says it’s only worth ___” then listen here. Properties in Cleveland sell for what someone is willing to pay, not what a computer algorithm comes up with.

    Best of luck I'd be really interested to see how managing from the other side of America goes.

    0Reply
  • Michael Swan
    Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    9y

    Hi @Federico Gutierrez

    I am not pitching or selling anything here on BP.  I don't work for a Realty company like you.  I was just asking if Evan checked out Euclid and investigated using the Amish for roofing.  Are you ever pitching anything here.  I would say that you are the one pitching stuff.  Wow!!

    Swanny

    1Reply
  • Heather R.
    Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Ryan Evans Wow! Amazing to hear how this all turned out! What a whirlwind...

    A couple quick questions: How much are you paying your agent to screen, show, and lease up tenants? Is this just a one-off this time or will you have this person help you each time?

    It sounds like you have found some great people to help you in the area! Who all makes up your team?

    Thank you for sharing!

    0Reply
  • Ty L.
    Investor · Northern Virginia · Member since 2017 · 159 posts · 59 votes
    9y
    @Ryan..thanks so much for sharing. You've got me thinking about Cleveland.
    1Reply
  • Ryan Evans
    OP
    Rental Property Investor · Cleveland, OH · Member since 2016 · 653 posts · 769 votes
    9y

    @Michael Swan I like the Euclid area. The parts that I've seen are quite a bit nicer than much of Cleveland's east side. But I haven't explored it too much. I've stuck with the neighborhood I know so far, but I'm starting to explore outward now that I'm getting more familiar with things. As far as the water goes, it's not metered separately in most duplexes I've seen so I've built it into the rent. And thanks for the tip with the Amish folks. I'll have to explore that route!

    @Federico Gutierrez I've budgeted in turnover. Maybe not to the extent of expecting the place to get fully trashed, but I do keep reserves for that sort of thing. Since I've separately budgeted out many of the big-ticket items from the start I'm pretty confident that my capex can go towards potential tenant issues. 

    @Heather R. It has been hectic! I'm having my agent do all my tenant screening. Since she was my friend before my agent she's been very gracious and placed both tenants in my first duplex for one month's rent on just one unit, so $650 total for both units. We're doing the same deal on this duplex. Though, she lives nearby and wouldn't be screening tenants at all if the properties were in another part of town. As far as the rest of the team goes, I know a general contractor, electrician, plumber, maintenance manager, lawyer, and a couple others!

    2Reply
  • Michael Swan
    Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    9y

    Hi all,

    If you have less than 7 single family or front doors, I would highly advise to have at least $10,000 in reserves for each single family you own.  once you get above 7 front doors, you have a little more economies of scale to deal with when Murphy's law raises its ugly head.  You can't be too safe.  The biggest issue is having enough money in reserves, before doing all the improvements and dealing with vacancies in the winter (not good in NE Ohio by the way)  I would NOT want any vacancies between November and March or April in NE Ohio.  I have had all of these happen since 2014 when I bought my first duplex in Euclid.  Also, make sure you have a good PM that is on a first name basis with the judges and has a huge presence in the area you are investing.  That save a lot of heartaches.

    Again, not bragging, just stating facts that I have 109 front doors in Euclid, Shaker, Cleveland Heights, Painesville and now 24 units in Akron I just closed on 2 weeks ago.  My offer stands and I am not selling anything, (No realty company, turnkey etc..)  go to my profile and reach out to talk to me. 

     I am simply an investor that invests in the area you guys are interested in.  I don't take financial advice from people that have less than me and have not been down my road I am traveling.  I have a full time teaching job at a parochial school and also teach in the evenings at a community college.  I teach P.E. and Reading and Study Skills and have been investing in RE since 2011.

    I love this stuff!!

    Swanny

    4Reply
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