Renter · seattle, WA · Member since 2011 · 59 posts · 2 votes
Hi guys,
I was just speaking to my brother via skype a few minutes ago.
He's in Australia.
I tell him Im planning on doing a road trip to Cleveland to check out some properties.
I explain to him that there are properties there going from 35K and up. He's going to be a RE agent in OZ and he just freaked out when I told him. He just could not believe how low the prices were.
So then he asks me: "Why do you want to buy there? Who's gonna rent from you if everyone can buy?"
My only answer was that I assumed people in the area had bad credit?
Then I realized how bad that generalization was. :oops:
But can someone explain this to me? I guess he had a valid point. I guess vacancies are higher in those areas but since you can purchase at such a low price, its still worth it.
Who is renting these properties?
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
Many people seem to be programmed to live paycheck to paycheck, through bad times and good. Add to that the growing bias against home ownership, even among some who can afford it. And finally, the increased difficulty of getting a mortgage. Home ownership rates are declinIng even in very affordable markets.
I wonder as well. I invest only in California. But my thought process has been who is actually going to pay you rent if they can't afford to buy at those prices.
Interested to see the responses from BP members who in invest there.
Real Estate Investor · St. Clair Shores, MI · Member since 2010 · 27 posts · 3 votes
15y
A friend of mine invests in the metro area of Detroit and his philosophy is: A lot of families are getting foreclosed on, they need a place to live and a lot of them do not want to live in an apartment so they rent houses!
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
Many people seem to be programmed to live paycheck to paycheck, through bad times and good. Add to that the growing bias against home ownership, even among some who can afford it. And finally, the increased difficulty of getting a mortgage. Home ownership rates are declinIng even in very affordable markets.
Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
15y
There are not a lot of people with jobs that can afford to rent or buy. Ohio has been hit hard since globalizaton and the industrialization of other countries.
Flipper/Rehabber · cincinnati, OH · Member since 2009 · 211 posts · 59 votes
15y
Shhhh ;) The problem is they can't get in financed and don't have the cash. 15 to 20K here gets you a $750 rental in a non war zone. Tenants are plentiful as they would rather have a house than an apartment.. or they have lost a house or walked away from a similar house that they owed 100k on and were paying more than the rent on an upside down mortgage loan.
Real Estate Investor · Cleveland, OH · Member since 2010 · 31 posts · 18 votes
15y
I flip properties and rent in this area so I know both sides of the market. The rental market is very strong, but the the sales side of it is not for a few reasons:
1. Most lenders will not want to touch loans for such small amounts.
2. People who would be willing to buy in low priced areas typically do not have a high enough credit score, even though their income is sufficient.
3. A house for 35k will typically have city violations which require funds to be put in escrow until those violations are fixed. This takes cash, which most buyers in this market segment do not have.
4. Some people are still afraid to buy despite favorable prices/interest.
5. Many current renters would want to buy, but cannot because they had recent foreclosures or bankruptcies.
In general people in this area can buy the house they currently rent and save $100 to $200 per month in payments, but the reasons listed above prevent them from doing so.
I would be comfortable renting in this area, but be careful with your flips. You have to make sure the numbers are good and include a contingency for longer hold times.
Shhhh ;) The problem is they can't get in financed and don't have the cash. 15 to 20K here gets you a $750 rental in a non war zone. Tenants are plentiful as they would rather have a house than an apartment.. or they have lost a house or walked away from a similar house that they owed 100k on and were paying more than the rent on an upside down mortgage loan.
So for 100k I can get $3750 of cash flow? Almost sounds to good to be true.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
It is too good to be true. That's gross rent, not cash flow. Even if you pay cash, you have all the usual expenses. $1875 would be closer to your correct cash flow if you paid cash. Nevertheless, that's an 18% return.
Renter · seattle, WA · Member since 2011 · 59 posts · 2 votes
15y
Originally posted by InfusionRealty:
Originally posted by Steve Sparks:
Shhhh ;) The problem is they can't get in financed and don't have the cash. 15 to 20K here gets you a $750 rental in a non war zone. Tenants are plentiful as they would rather have a house than an apartment.. or they have lost a house or walked away from a similar house that they owed 100k on and were paying more than the rent on an upside down mortgage loan.
So for 100k I can get $3750 of cash flow? Almost sounds to good to be true.
He means $750 GROSS not cashflow.
That would be so sweet.
Real Estate Investor · Boca Raton , FL · Member since 2010 · 69 posts · 17 votes
15y
Doin' it all day in Atlanta. I had 12.5% net equity caps in 2008. Now, in 2011, prices are so low, and granted, rental rates have come down as well due to competition in the rental market. But even with the rental rates dropping, I have 18% net caps all day every day in non war zones. I live in south florida and cant do that in my back yard!
I dont mean to hijack your thread OP.
But Arbitrage8 I would be interested to know where in Atlanta you are getting those type of rates and what property price range?
Handyman · THUMB, MI · Member since 2010 · 72 posts · 14 votes
15y
Originally posted by Steve Sparks:
Shhhh ;) The problem is they can't get in financed and don't have the cash. 15 to 20K here gets you a $750 rental in a non war zone. Tenants are plentiful as they would rather have a house than an apartment.. or they have lost a house or walked away from a similar house that they owed 100k on and were paying more than the rent on an upside down mortgage loan.
SHHH! is right. I too am living proof that it really is a great time to be a landlord in the rust belt. I bought 3 houses last year all for under 20k and all are rented for 600 to 650 a month. I post the house and get a dozen calls a day. There are a lot of good people that are looking for houses to rent right now. Most are people that walked away from an upside down mortgage. I like these people because they take pride in your property. They know what its like to own a house. My houses are in a rural town 80 miles from Detroit so no war zones here. The economy is coming back here but if gas prices get up around $5 a gallon for any length of time you will see a full blown depression here.IMO
Investor · Holly, MI · Member since 2009 · 95 posts · 23 votes
15y
Originally posted by DAVID GAGE:
Originally posted by Steve Sparks:
Shhhh ;) The problem is they can't get in financed and don't have the cash. 15 to 20K here gets you a $750 rental in a non war zone. Tenants are plentiful as they would rather have a house than an apartment.. or they have lost a house or walked away from a similar house that they owed 100k on and were paying more than the rent on an upside down mortgage loan.
SHHH! is right. I too am living proof that it really is a great time to be a landlord in the rust belt. I bought 3 houses last year all for under 20k and all are rented for 600 to 650 a month. I post the house and get a dozen calls a day. There are a lot of good people that are looking for houses to rent right now. Most are people that walked away from an upside down mortgage. I like these people because they take pride in your property. They know what its like to own a house. My houses are in a rural town 80 miles from Detroit so no war zones here. The economy is coming back here but if gas prices get up around $5 a gallon for any length of time you will see a full blown depression here.IMO
The secret of the rust belt is slowly leaking out. My examples:
Metro Detroit
Purchased 3 houses 3/1 during 2010
Avg purchase price 25k
Avg rehab cost 7k
Avg Rent $825
Rented all 3 with a yard sign and before the rehab was finished..non sec 8.. 2 of the 3 tenants had a foreclosure
You can do the math :cool:
Flipper/Rehabber · cincinnati, OH · Member since 2009 · 211 posts · 59 votes
15y
Originally posted by InfusionRealty:
Originally posted by Steve Sparks:
Shhhh ;) The problem is they can't get in financed and don't have the cash. 15 to 20K here gets you a $750 rental in a non war zone. Tenants are plentiful as they would rather have a house than an apartment.. or they have lost a house or walked away from a similar house that they owed 100k on and were paying more than the rent on an upside down mortgage loan.
So for 100k I can get $3750 of cash flow? Almost sounds to good to be true.
I would sell 3 of my properties for 100K that are More like $2,600 net.. not trying to sell them.. Just sayin. And if you buy them distressed here this cash flow was created for 60K.
Handyman · THUMB, MI · Member since 2010 · 72 posts · 14 votes
15y
Originally posted by Ben Kevan:
I just closed on my first property in the rust belt. It may not be the best of numbers, but it was my first property.
I'm looking for a second, and you gotta keep things quiet.. :o).. SHHHHHHHHH..
WOW!!! That takes balls buying your first property 2500 miles away. I hope it works out for you. I myself want to buy some SFH in Georgia but can't seem to bite the bullet. I seem to be a bit of a control freak. Thats a habit I will eventually have to break if I want my business to grow :mrgreen:
Real Estate Investor · Litchfield, OH · Member since 2010 · 3 posts · 1 vote
15y
I've been buying in the rust belt (NE Ohio) market the past four years. Won't go to Cleveland though... taxes are way to high. A county auditor being thrown in jail as a result... that and mismanagement of funds.
Honestly, I can't believe the number of great deals that are out here. William Ware's example is very common nowadays. The problem is finding the funds to carry a note for 1 to 2 year payback. As previously mentioned most banks don't loan at such a small amount and Hard Money only loans for 6 months.
Flipper/Rehabber · Mentor, OH · Member since 2011 · 121 posts · 51 votes
15y
Originally posted by John Buehrer:
I've been buying in the rust belt (NE Ohio) market the past four years. Won't go to Cleveland though... taxes are way to high. A county auditor being thrown in jail as a result... that and mismanagement of funds.
Honestly, I can't believe the number of great deals that are out here. William Ware's example is very common nowadays. The problem is finding the funds to carry a note for 1 to 2 year payback. As previously mentioned most banks don't loan at such a small amount and Hard Money only loans for 6 months.
I am new to the site but I too live in the rust belt and own and rent three homes. The problem I now have is that I can not get enough capital to continue to buy, rehab, and hold these properties. The surronding areas of Cleveland are really great places to live and you can find incredible deals. Most of the deals require some renovation however the homes are good bones and in good neighborhoods and rent quickly.
I do have a question John and the others what is the best way to get capital (because banks will not loan) I have been trying for the past six months can anyone point me in the right direction this is the first site that I came across where people know the real estate venture.
Real Estate Investor · San Jose, CA · Member since 2009 · 2 posts · 3 votes
15y
Hi John,
I have a property that I purchased in NE Ohio and I was able to use Peer to Peer (P2P) lending. The only problem is that they will lend you a maximum of 25k at 6 months at a time (of course you will have to make payments on time during that period). After 6 months you can re-apply for a new loan if less than 25k.
The really good thing is that you avoid banks and it does not go on your credit as an inquiry. Try searching for Prosper or Lending Club.
Real Estate Investor · Select a State · Member since 2011 · 4 posts · 0 votes
15y
Hi, I have been investing in Rustbelt areas for 2 years and now own 14 1 and 2 unit houses. Many of my tenants have been foreclosed on by either the banks or the state for tax arrears. Most are section 8 so the rents are anywhere between $650 and $1000. I now buy, renovate, find tenants and sell these properties for $30-$35,000 to my friends and family with 15% net yields. [SOLICITATION REMOVED]
Investor · CA · Member since 2010 · 150 posts · 40 votes
15y
Originally posted by DAVID GAGE:
Originally posted by Ben Kevan:
I just closed on my first property in the rust belt. It may not be the best of numbers, but it was my first property.
I'm looking for a second, and you gotta keep things quiet.. :o).. SHHHHHHHHH..
WOW!!! That takes balls buying your first property 2500 miles away. I hope it works out for you. I myself want to buy some SFH in Georgia but can't seem to bite the bullet. I seem to be a bit of a control freak. Thats a habit I will eventually have to break if I want my business to grow :mrgreen:
The problem isn't that the property is 2500 Miles away. The problem is I live in California :o)
Flipper/Rehabber · Mentor, OH · Member since 2011 · 121 posts · 51 votes
15y
Originally posted by Eric Gonzales:
Hi John,
I have a property that I purchased in NE Ohio and I was able to use Peer to Peer (P2P) lending. The only problem is that they will lend you a maximum of 25k at 6 months at a time (of course you will have to make payments on time during that period). After 6 months you can re-apply for a new loan if less than 25k.
The really good thing is that you avoid banks and it does not go on your credit as an inquiry. Try searching for Prosper or Lending Club.
Thanks Eric
I will search them now I never thought of that idea I have been trying to think of unconventional ways. I will update you thanks again.
Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
15y
I love out of state landlords that come into Ohio and think that buying up our vacants will be a cash cow. I've been investing and renting for a few years now and I will tell you, these are old homes and require a lot of maint on a regular basis. Sure, labor is cheap and the tenants are plentiful, but it takes a lot of time managing these homes.
The reason I say I love out of state landlords is because they quickly find that it's too much work and hassle trying to operate in my neighborhood and they put the place up for sale. I can get them cheap and newly rehabbed. An example. Landlord from Calf bought a duplex in my area. He invested 2 new furnaces, 2 new hot water tanks, 2 new baths, new carpeting, roof and windows. He paid $32K for it. 2 years of not being able to keep it rented and dealing with all of the incompetent local management companies, he put it back on the market for $23K.
I offered $17,5K and he took it and ran as fast as he could.