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Frank Wolter
  • Rental Property Investor
  • Cleveland, OH
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Out of State investors getting ripped off, heed these warnings!

Frank Wolter
  • Rental Property Investor
  • Cleveland, OH
Posted Oct 4 2018, 06:13

I am a local investor and I invest heavily in the Cleveland area. But I'm seeing a lot of out of state investors coming and buying here. I use to honestly get a little upset because I was feeling it was going to make investing harder for me or I was going to have to sit back until this trend slowed down or stopped. Because it will, I see investors going out as their coming in due to property management issues ( also I know things that are going to effect out of state investors that the City of Cleveland does that will effect these investors soon. I know this type of information because I worked there 20yrs. Unfortunately I cant spread that on BP. )

But that's just one instance, I know I might of teased you a little but that wasn't the real issue. The issue is that out of state investors are driving prices of homes up. That's going to happen and in most instances it cant be stopped. but there are well known PM on BP that increase these prices more or inflate others. Meaning as far as repairs. 

For instance I have a large network and I should considering I grew up here and am know in my network. I have a large pool of handymen that cover every aspect. I have about 10 full time guys and I can always pull others if needed. Anyways I seen one of my drywall side guys at the gas station. Just in conversation I asked what he's up too. He informed me that he's working with some Cali guys for the next 2 weeks and is " taxing their ***'s". I said really how's that?  "I'm hanging 38 drywall boards for 10k". He was laughing. I was like wow, that's crazy. I can get a whole house rehabbed in my areas for an average of 10-15k material's and labor (on average each house varies). I could easily get that done for 2k easily.  This is just one instance but these are the things that add up. 

My advise is this. Find REAL boots on the ground. Depending on your investment level that could be easier or harder. Create a team and do not depend on what property managers say. Do your own investigation. FLY OUT. Especially before you invest. FLY OUT and meet these people face to face. Two weeks ago I had 4 investors fly out from Cali to do their own investigations on people they wanted to work with. They reached out to me and others in the area. We talked and it went well. They were here for four days. They met with numerous others including PM companies. After it was said in done they contacted me and informed me they were interested in partnering in some ventures that I have. That they were surprised on how many pm companies failed to meet them, didn't answer their phones and weren't what they said they were. This included a popular name in this area that I see on BP all the time.

So keep in mind. These prices are increasing because of you. Not your fault but you are effecting the price. Once this dust settles they will not resell for what you purchased it for so be mindful . Follow trends. The market prices are going to drop ( a sign is no income verification needed loans, 2007 all over again.) You can get better rehab and repair prices. You can. Barter! Hell if that Cali investor would of told my side drywall guy 5k he would of did it still! If your investor you must save save save

My overall point. FLY out occasionally. FIND SOMEONE WITH INTEGRITY THAT YOU CAN TRUST.Never invest or buy from anyone until you meet them face to face. Fly out and check on your investment but don't let your property manager know. Then go to their office and see the books. Fight to get all repairs and rehab work prices lowered. You really can save a lot of money. There shouldn't be a difference between local and out of state prices.  hope this was helpful and good luck with your investments. 

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