Hi everyone, I'm looking into Cleveland for some duplexes or triplexes. The main two neighborhoods I'm looking at is Euclid and the triangle neighborhood formed between Cleveland Heights, University Heights and Coventry Village. The cash flows seem strong and they seem to have price-rent ratios in the 1.5-2.2 range. The thing is, is that there seems to be a ton of foreclosures in this Cleveland heights/university heights-ish area. Can anyone shed some light on this? the neighborhood seems like B or maybe A-, very nice area, so not sure why this is. Is that a big red flag to avoid? I havent read any books or articles on this situation.
@Steven Murphy Based on your question, I'm operating under the assumption that you haven't even visited Cleveland yet. You need to spend more than just a few days there to really get to know the market.
You're also getting a lot of advice from people who aren't actually from Cleveland. It isn't bad advice, but you also need to connect with folks who live in Cleveland NOW as it's changed drastically in the last 10 years. I second Georff's advice. You need to connect with James Wise and other people who invest AND live in Cleveland.
There are plenty of people who don't actually live in Cleveland "NOW" but still know the market extremely well. I am an out of state investor who lives 2000+ miles away, but I am pretty sure I know the market far better than you.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
@Steven Murphy welcome to BP. Sounds like you are reading listings and believing what the sellers are saying? High rent to price ratios don't exist in A and B areas. All the best!
@Bjorn Ahlblad im basing those numbers off of what im seeing rental properties are going for in the area and then rounding down. Regardless, my question is more about the buying in a neighborhood with foreclosures. Thanks!
Investor · Cape Coral, FL · Member since 2019 · 135 posts · 41 votes
6y
What do you consider a ton of foreclosures? Cleveland definitey has a “few” vacant properties and foreclosures..
It also depends on what you are trying to do with the property. A large number of foreclosures hurt your resale value as it hinders perception and may affect appraisal value. If you are looking to hold it as a cash flow property maybe appreciation doesn’t matter to you. If you are looking for appreciation, then an area with a history of a lot of foreclosures might play a negative for that goal.
@Dan Sarao It seems like the majority of the duplexes for sale in this neighborhood are foreclosures, many more than just normal home sales. Yes, for the most part, I would be holding it for cash flow. I just am curious if investing for cash flow properties in a neighborhood where there a large amount of foreclosures is a huge red flag.
London · Member since 2019 · 722 posts · 386 votes
6y
A rather general statement so take it for what it might be worth.
If there are a lot of foreclosures, it also means that there is a lack of demand in the area. Maybe a surplus of properties. A 'great deal' on a property with weak demand could just mean a correctly priced deal which will suffer from high vacancies and other issues over time.
Investor · Cape Coral, FL · Member since 2019 · 135 posts · 41 votes
6y
@John, unless the street is an abnormality, the rental demand should not be an issue in the Cleveland Heights/University Heights area.Selling it or getting any appreciation in those conditions, maybe.
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Steven Murphy Based on your question, I'm operating under the assumption that you haven't even visited Cleveland yet. You need to spend more than just a few days there to really get to know the market.
You're also getting a lot of advice from people who aren't actually from Cleveland. It isn't bad advice, but you also need to connect with folks who live in Cleveland NOW as it's changed drastically in the last 10 years. I second Georff's advice. You need to connect with James Wise and other people who invest AND live in Cleveland.
Investor · Cape Coral, FL · Member since 2019 · 135 posts · 41 votes
6y
@Nicole Heasley Beitenman - as I am getting thrown into a group without you knowing anything about me or who I am, just to let you know I have been investing in Cleveland for quite some time, have travelled to the city several, several times over the years and currently operate a business in the city with a local partner. Also, I took his questions, and my original answer as something that was applicable across markets in general.
I agree he should work with locals, I suggest that to everyone as that is how I got comfortable and still feel Comfortable Investing in the market, but I also think all individualS should have the ability to give an opinion and contribute. As a whole let’s not silence out of staters assuming they know nothing. Everyone in this forum is interested in the Cleveland market, and honestly the way the investor pool in Cleveand is going, there may be more Long distance investors than local Cleveland Investors soon (If not already).
Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
6y
@Steven Murphy there are foreclosures everywhere, who cares. . You are buying for cash flow, right ? Also pricing has gone up significantly over the last 3, 5 years, I see it going even higher. We used to provide props all in for about 35k, with 1k ish in rents, Now about 65k all in on avg. Also these areas are not A, Everything in cleveland begins with a B, we cant make real money in A.... 1- 2% rule does apply . BTW stop reading books. Do not overpay, and get overcharged for repairs, Its all about your team,
Good Luck
PS if you are not cash, well it will be very difficult to get a good deal.
Real Estate Agent · Cleveland, OH · Member since 2019 · 359 posts · 295 votes
6y
@Steven Murphy Cleveland heights is a solid rental area. Although taxes are high, you will have a higher rental rate and good tenant base. I wouldn't say there are a TON of foreclosures there and there is definitely cash flow available. Coming from someone who has bought, sold, rented out, and lived in Cleveland hts for some years. Just he careful, some portions of CH go to East Cleveland schools and rental rates/market value drop in those areas. University heights is similar. Also remember that this area is close to downtown and home to JCU, CWRU, UH, & Cleveland Clinic.
@Steven Murphy Based on your question, I'm operating under the assumption that you haven't even visited Cleveland yet. You need to spend more than just a few days there to really get to know the market.
You're also getting a lot of advice from people who aren't actually from Cleveland. It isn't bad advice, but you also need to connect with folks who live in Cleveland NOW as it's changed drastically in the last 10 years. I second Georff's advice. You need to connect with James Wise and other people who invest AND live in Cleveland.
There are plenty of people who don't actually live in Cleveland "NOW" but still know the market extremely well. I am an out of state investor who lives 2000+ miles away, but I am pretty sure I know the market far better than you.
Contractor · Warren, OH · Member since 2015 · 147 posts · 55 votes
6y
@Steven Murphy
There’s a neighborhood guide for Cleveland out there on the forms that will help you out a lot as well. Try and search for that. There’s a link in my thread I posted about Cleveland multi family but I couldn’t figure out how to copy and paste it in this thread.