population/jobs market growth in Cleveland

Cleveland, Ohio
General Real Estate Investing
4yFollow

population/jobs market growth in Cleveland

Guillaume Jean Andre Palomba
Member since 2022 · 14 posts · 8 votes

Hello everyone

I am still aspirant for my first out-of-country investment (goals are cash flow, long term holding).

During the past days i tried my best to do some researches about Cleveland real estate market.

i got confirmation from multiple sources that this city has the potential to offer exceptional cash flow :

-affordable houses prices

-high rental value

-low vacancy rate

is it too good to be true? why a city offering these opportunities isn't assaulted (pardon my french) by investors yet ?

by checking some basics datas , i found out that Cleveland has some cons: unfriendly weather, high criminilaty, declining population, slow growing job market...

my concerns are especially:  declining population and slower job market growth (than the national average).

do these 2 factors make the city a dangerous place for long term investment ? 

vacation rate could increase, houses could loose value overtime...

there are probably other factors that i miss, please let me know what do you guys think.

3Reply
83 views

Most Popular Reply

Shital Thakkar
Specialist · Dallas, TX · Member since 2010 · 511 posts · 252 votes
4y

Always good to invest in city with high job growth.

Here is list of cities with highest growth in US...

4Reply
See this reply in the discussion

21 Replies

Jump to latestLatest
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
    4y
    Quote from @Guillaume Jean Andre Palomba:

    Hello everyone

    I am still aspirant for my first out-of-country investment (goals are cash flow, long term holding).

    During the past days i tried my best to do some researches about Cleveland real estate market.

    i got confirmation from multiple sources that this city has the potential to offer exceptional cash flow :

    -affordable houses prices

    -high rental value

    -low vacancy rate

    is it too good to be true? why a city offering these opportunities isn't assaulted (pardon my french) by investors yet ?

    by checking some basics datas , i found out that Cleveland has some cons: unfriendly weather, high criminilaty, declining population, slow growing job market...

    my concerns are especially:  declining population and slower job market growth (than the national average).

    do these 2 factors make the city a dangerous place for long term investment ? 

    vacation rate could increase, houses could loose value overtime...

    there are probably other factors that i miss, please let me know what do you guys think.


     Hey Guillaume,

    You have listed all very valid points and concerns.

    As far as the benefits of investing in Cleveland Yes on lower prices (on the right deals), Yes on high rent, Yes on low vacancy rate. There are by far not enough rental units to make up for the demand, causing higher rents. Moderate Appreciation does exist as well as a bonus.

    As far as some of the negatives, yes population has been declining, however considering the lack of available rental units, and higher rents, this in my professional opinion as an investor in Cleveland and an Agent is why I am not worried about that factor for the foreseeable future. 

    As far as crime show me any big city that offers higher than average cash flow that does not have pockets of crime. These pockets of crime do not effect all the great locations that are safe and provide great cash flow and good appreciation. If you want to invest somewhere without any crime good luck getting much cash flow. You must weigh the risk to reward ratio and determine if the "risks" outweigh the benefits. 

    2Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    @Nicholas Misch

    thanks so much for this quick reply and for these explanations. Cleveland seems by far my best option so far. but as a beginner i have the anxiety to lose it all, so i really try to understand as much i can . Again, thanks for these valuables points you made.

    1Reply
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
    4y
    Quote from @Guillaume Jean Andre Palomba:

    @Nicholas Misch

    thanks so much for this quick reply and for these explanations. Cleveland seems by far my best option so far. but as a beginner i have the anxiety to lose it all, so i really try to understand as much i can . Again, thanks for these valuables points you made.


     I know it can be scary enough investing, then to do it from far away depending on others is even scarier. I know its said on BP over and over, but building a great team on the ground where you want to invest, that you can trust can't be overstated. 

    Eventually we just need to make a move and learn whatever lessons must be learned to get to the next level. 

    1Reply
  • Account Closed
    Investor · Leander, TX · Member since 2016 · 299 posts · 402 votes
    4y

    - Occupancy Tax

    - Landlord Tax

    - City Inspections (No matter what violation I fixed, a new one would come up.) My PM would say yes, basically they just want the check.

    - High turnover in some areas

    I can only talk about my 4 years in the Cleveland Market, being an OOS investor and I felt nickeled and dimed from the city and the high turnover (4 years, 4 different tenants) was the last straw, as the cost to redo the place after every tenant, was too much.

    0Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    @Account Closed

    wow, sorry to hear that.

    i haven't heard about these taxes, how much do they represent in % of the house value ?

    are city inspections and the need to redo after each tenants  because you rent under section 8 status ?

    0Reply
  • Account Closed
    Investor · Leander, TX · Member since 2016 · 299 posts · 402 votes
    4y

    I've been in the Austin, Atlanta, Birmingham, and Cleveland markets and I never had the run around in the first three markets that I got in Cleveland.

    The taxes were from the City of Warrensville Heights, which is in Cleveland and they were flat rate $100 to $200 and not on % and again nickel and dime here and there. 

    No, I didn't do section 8, just seemed everybody was ready to move on after one year, and they always left the place in a mess as the cost on turnover was from $6K to $12K on each turnover when the tenant left. 

    The city made me fix this and that, put this in, take that out, like for example I had to build a stair railing, (it was a 1952 house that never had one and now in the 2020s all of a sudden it was an issue to have one?) fix the garage foundation, fix the sidewalk, the interior paint I could use, etc. every year it was something, and I was always why wasn't this reported with the other so called violations last year, it was like they were looking for stuff.

    Also, I had to pay the utilities and I would get reimbursed later through the rent, with the PM, which I always had a dispute with on the amount to reimburse, as the PM's didn't trust the tenants to pay their bills.

    I'm just glad to be out!

    3Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    these taxes were annual or monthly ?  why no RE agents mention them when doing the numbers about specific offers ? 

    as well these reparations  arbitrarily required are scary.

    how possible that tenants deteriorate your house without paying anything? isn't there a system of deposit paid by tenants ? why PM let it happen, isnt it their job to check the house regularly and to protect owner interests ?

    would you have suggestions about market areas in USA  to check for a first investor with a low budget ?

    0Reply
  • Account Closed
    Investor · Leander, TX · Member since 2016 · 299 posts · 402 votes
    4y

    The taxes were annual. 

    Again this is in Warrensville Heights, so it might be different where you are, and I was never told about them myself until I got the bills in the mail along with code violations.

    The deposits were only $900, so it doesn't cover much. 

    Turnovers are just expensive, no matter how they leave the property, make sure you have plenty of cash reserves for wherever you go.

    Some PM's don't like to bother the tenants, so they don't do their inspections all the time like they should.

    I recommend newer properties, the old ones cost too much to upkeep and the insurance premiums are higher. 

    IMO, Alabama and Georgia are good markets as they are very landlord friendly, Alabama has the lowest property taxes in the country, good cash flow, and Georgia has good appreciation (but more expensive to buy) 

    2Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    @Account Closed

    huge thanks for taking the time to reply so accurately.

    my best regards

    1Reply
  • Account Closed
    Investor · Leander, TX · Member since 2016 · 299 posts · 402 votes
    4y

    No problem, I wish you good fortune!

    1Reply
  • Shital Thakkar
    Specialist · Dallas, TX · Member since 2010 · 511 posts · 252 votes
    4y

    Always good to invest in city with high job growth.

    Here is list of cities with highest growth in US...

    4Reply
  • Roy Gottesdiener
    Rental Property Investor · Singapore · Member since 2018 · 128 posts · 48 votes
    4y

    @Guillaume Jean Andre Palomba

    I've been in the Cleveland market for two years, own 7 SFH and have a bit of a mixed opinion regarding the market.

    1. We were able to find great deals on the MLS, not like other markets where it's all off market, no contingencies etc. For example I have two rentals that were all in for 100k and appraised for 140k

    2. Tenants - I have some great tenants and some bad ones, still 7 units over 2 years is not a large sample but doesn't look like anything unusual

    3. POS, taxes, etc - yes they're high but if you prepare for them and get your numbers right you should find deals that work for you with these numbers

    4. Population and job growth - I'm also a bit worried about it but at the end of the day if it took me a month on average to find a tenant, and I made 40% equity through forced appreciation, I think I'm safe in terms of returns for the near future

    4Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    @Roy Gottesdiener thanks for for your input, it's very helpful.

    0Reply
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
    4y
    Quote from @Roy Gottesdiener:

    @Guillaume Jean Andre Palomba

    I've been in the Cleveland market for two years, own 7 SFH and have a bit of a mixed opinion regarding the market.

    1. We were able to find great deals on the MLS, not like other markets where it's all off market, no contingencies etc. For example I have two rentals that were all in for 100k and appraised for 140k

    2. Tenants - I have some great tenants and some bad ones, still 7 units over 2 years is not a large sample but doesn't look like anything unusual

    3. POS, taxes, etc - yes they're high but if you prepare for them and get your numbers right you should find deals that work for you with these numbers

    4. Population and job growth - I'm also a bit worried about it but at the end of the day if it took me a month on average to find a tenant, and I made 40% equity through forced appreciation, I think I'm safe in terms of returns for the near future

    Sound like a pretty good experience so far based on your purchase vs appraisal values and ability to find new tenants (I have yet to have turnover that took more then 1 day). What problems have you had specifically that gives you a mixed opinion?
    0Reply
  • Tim Rostro
    Rental Property Investor · Centralia, WA · Member since 2017 · 75 posts · 85 votes
    4y

    @Account Closed

    I had a duplex in Euclid, OH, northeast of Cleveland and what you've described with your property felt like mine.  Unfortunately, I also had a Section 8 tenant and another who didn't rent for several months.  I ended up having both sides rented out to tenants on housing assistance.  The city would show up for their annual inspection and they always had to find something wrong, something petty.  I had enough to pay the mortgage on that property but that place was just costing me money every month.  Luckily, it doubled in value and I sold it last year.  I ended doing a 1031 exchange and bought two SFHs in the same area.  Both are better investments than that duplex.  My other two properties in central TX haven't given me any headaches.  

    3Reply
  • Nathan Grabau
    Realtor · Longmont, CO · Member since 2021 · 577 posts · 631 votes
    4y

    I will not invest in areas that have declining industry or population. The only Ohio market I have found that is not in this boat is Columbus. I personally have invested in the Ames, Iowa area because of the properties offer good cashflow, a lot entry point, and the area is not in decline. My realtor in Ames is also an investor and has a property management company. If you are interested in getting on a call with him, send me a message and I can get you two connected! 

    2Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    @Nathan Grabau thanks very much for your input, and offering your help. i will do my homework about Colombus and Ames, Iowa and will get in touch with you shortly for more informations.

    1Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    4y

    Cleveland is a very large city - There are likely pockets that are growing and other areas that are declining.

    There are thousands of cities in the United States, many of which have populations that are increasing. Why invest in a city that is decreasing?
    You may get cash flow(you are being compensated for your risk). However, your appreciation may be limited.

    No one can tell the future, if you invest there, you may do well or you may not.

    Best of luck

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
    View Page
    1Reply
  • David Leggett
    Real Estate Broker · Cleveland, OH · Member since 2018 · 227 posts · 133 votes
    4y

    A lot of great insight into the Cleveland market on this thread!  The key in this market is to have an excellent realtor who specializes in investment real estate who can help you identify the best cash flow areas, and stay away from areas with higher crime rates and lower rents.  Also, many of the property management companies in the area are very poorly run, so that will also increase your costs unless you have a strong property management team. 

    But other than that, downtown Cleveland has been expanding for years and last time I checked it had a 96% occupancy rate.  People want to live close or in downtown Cleveland, which was not always the case.  This is fueling growth in tons of sectors, including housing in surrounding neighborhoods.  And I've seen strong appreciation over the last few years as well, which has also raised rental rates. 

    And the medical sector in Cleveland is booming, with hospitals like Metro and Cleveland Clinic literally pouring billions of dollars into the area.  This is having a huge impact on surrounding neighborhoods with almost 13% of the population working in the medical sector in this area.  That means there's tons of demand for rental properties, and people are making good incomes and can afford top market rents.

    I think, like in any market, the better team you have, the better results you will have.  But there's definitely tons of great cash flow opportunities in the Cleveland market if you know where to look. 

    3Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    @David Leggett

    Thanks very much for your insight.

    Would you have some realtors/property managers to recommend ?

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @Guillaume Jean Andre Palomba

    We think the Midwest is a GREAT place for OOS investors to consider!

    YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/...

    Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

    Many OOS investors set themselves up for failure because they don't truly take the time to understand:

    1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

    2) The Class of the PROPERTY they are buying - which is relative to the overall area.

    3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

    4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

    5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

    6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

    7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

    8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

    9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

    10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

    11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
    ***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

    https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

    Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

    Good luck with whatever you decide😊

    [email protected]248-209-6824
    Logical Property Management4.9460 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free