Cleveland and Chicago - Would love feedback

4 Replies

I’m 39 and have about 20k saved excluding my 401k. My salary is over 100k per year. I have a rental in Cleveland, Ohio I started renting 10 years ago when I moved to Chicago. I’ve had the same tenants in the house for 10 years but it only pays the mortgage. That house has approximately 50k in equity. I can sell it pretty cheap using my close friend who is a realtor in the area. I bought my second house in Bolingbrook, IL in 2012 and now has about 100k in equity. I want to move from Chicago area but my wife is committed to staying. 1) How would you approach the house in Ohio that is not cash flowing without scaring away the great tenants? 2) I want to buy more property and build my portfolio so I can eventually leave my salaried position. 3) would you recommend am LLC or wait until my portfolio is sizable? Several considerations: - I am willing to buy in other states (where would you recommend). - My wife is an accountant - I have great access to Chicago, Cleveland, Minneapolis, and Atlanta with free airfare, meals, and lodging. But do not need to be restricted to these areas. Thanks for any and all support in my journey and I am excited to build my portfolio!!

@Mark Kovacs Does the Cleveland unit cash flow if you raise the rents? If so, I would just give the tenants proper notice and raise the rents. This is a business. If they move, they will have to pay higher/market rents anyway. Or offer to sell them the property.

Going forward, I think there is a lot of opportunity in the city of Chicago. There are a ton of good areas and being local is always a benefit when scaling. 

Lastly. I like the series LLC structure and I would set up sooner than later, but get at least 2-3 rentals first, IMO.

Good Luck!

@Mark Kovacs     Give the people in Cleveland the proper notice that you will be raising the rents, and then raise them. I would go no more than 10%.

Then next year raise it another 10% until and keep doing this until you are CLOSE to market rents.  Keep it a little under market rents so that you keep the tenants.

If you have 50K in equity in your Cleveland property why not do a HELOC or refi and then re-invest in more Cleveland properties. You will definitely get better cashflow in Cleveland compared to Chicago....and you will find that the laws are much more friendly to landlords in Cleveland than they are in Chicago.

I have 5 units in Cleveland and I know that it can be tempting to not raise the rent on great tenants.....the tenants know this also. However, as someone stated above, this is a business.  

Originally posted by @Brian Garlington :

@Mark Kovacs    Give the people in Cleveland the proper notice that you will be raising the rents, and then raise them. I would go no more than 10%.

Then next year raise it another 10% until and keep doing this until you are CLOSE to market rents.  Keep it a little under market rents so that you keep the tenants.

If you have 50K in equity in your Cleveland property why not do a HELOC or refi and then re-invest in more Cleveland properties. You will definitely get better cashflow in Cleveland compared to Chicago....and you will find that the laws are much more friendly to landlords in Cleveland than they are in Chicago.

I have 5 units in Cleveland and I know that it can be tempting to not raise the rent on great tenants.....the tenants know this also. However, as someone stated above, this is a business.  

Great coaching Brian. I will try this approach. Would you recommend buying a multi-family in the Ohio City - Tremont area. I know just a little further west they get much more affordable.  Is this due to crime?

@Mark Kovacs

I'm not going to go into where YOU should and shouldn't invest in Cleveland....what I will say is if you are trying to figure out what neighborhoods are A,B C,D,F then you should reach out to the people at Holton-Wise. THey have a couple of people here on BP and @James Wise   has some great info. They also do Property Management and Have Realtors. I've been to their offices and met some of their people.   Top notch.

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