New to BP and investing in Cleveland

57 Replies

Hey everyone,

I joined BP about 1 month ago and have been soaking in all the info I can. Watching webinars, became a PRO member, reading forums in my spare time and listening to podcasts during my drive time.

Just wanted to introduce myself as a new investor in the Cleveland, Ohio market. I am primarily trying to get my investing career started with a House Hack deal (duplex or greater). This way I can lower my cost of housing and gain capital to save in effort to look for my second deal.

I have lots of questions in terms of financing and renovations to gain equity. I am looking for fellow investors with helpful hints or willing to meetup in the Cleveland market.

I look forward to hearing back from some other members.

Thanks!

Zach

Originally posted by @Zachariah Hays :

Hey everyone,

I joined BP about 1 month ago and have been soaking in all the info I can. Watching webinars, became a PRO member, reading forums in my spare time and listening to podcasts during my drive time.

Just wanted to introduce myself as a new investor in the Cleveland, Ohio market. I am primarily trying to get my investing career started with a House Hack deal (duplex or greater). This way I can lower my cost of housing and gain capital to save in effort to look for my second deal.

I have lots of questions in terms of financing and renovations to gain equity. I am looking for fellow investors with helpful hints or willing to meetup in the Cleveland market.

I look forward to hearing back from some other members.

Thanks!

Zach

 Welcome to the site Zach. House hacking is a solid plan. What neighborhoods are you looking into?

Originally posted by @Shannon Kelly :

Hey Zach,

Just starting out myself but in the Cleveland Area as well!

 A warm welcome to you as well Shannon. Where are you at in your investing journey?

Originally posted by @Jason Kiner :

@Zachariah Hays

Hey Zach and Shannon

Also new to the game and in the Cleveland area!

Welcome Jason. What do you have goin on in the land?

@Zachariah Hays welcome to BP! House hacking is a great way to get started. You are able to purchase a property with an FHA loan for 3.5% down. There are many REI meetups in the Cleveland area which is a great place to ask questions. I attend one that is the last Thursday of every month at the melt on Rockside road. Best of luck to you!

@James Wise hey James thanks for the welcome! I am mostly interested in Lakewood, west Cleveland, west park, cudell, and better parks of Brooklyn.

Lakewood interests me the most because of the demand and long term tenants but some of the taxes are outrageous.

I have been on the MLS and seen some potential in the west park/cudell area with better taxes and prices. However, I am unfamiliar with the demand in comparison to Lakewood.

@Mike Rosso hey mike. That's exactly what I am thinking man. FHA sounds awesome aside from the annoying PMI charge 🙄

I see you’re out of Amherst. Do you have any investment properties?

Originally posted by @Zachariah Hays :

@James Wise hey James thanks for the welcome! I am mostly interested in Lakewood, west Cleveland, west park, cudell, and better parks of Brooklyn.

Lakewood interests me the most because of the demand and long term tenants but some of the taxes are outrageous.

I have been on the MLS and seen some potential in the west park/cudell area with better taxes and prices. However, I am unfamiliar with the demand in comparison to Lakewood.

 West Park is pretty solid. Close to Kamm's Corners the better. Brooklyn itself is a suburb which doesn't have any bad parts. I assume you are talking about "Old Brooklyn" which is a neighborhood in Cleveland proper. The south western portion of Old Brooklyn definitely has the nicest housing stock & tenant base. Lakewood gets nicer & more expensive the further west you go.

Yes PMI is annoying however, as long as you buy the property correctly your cash flow will cover most if not all of it. Think of it simply as a cost of doing business. Yes, I currently own 5 SFR's all in Euclid.

@Zachariah Hays

Welcome!! I would talk to Mike Rosso. He lives there and invests there. If you want to talk to me, message me too. I have 6 apartment complexes (82 front doors) in Lake County, a 12 unit in Euclid, and a 24 unit in Ellet,,in Akron. I am only an investor.

Swanny

@Mike Rosso yeah I have been analyzing many deals on the BP calculators to score my first deal. I have been adding in PMI to the calculator to account for it.

I’d love to reach out to you for some questions, some large some small for insight as it seems you have been doing this for some time now. Any reason why you prefer SF vs. MF?

@Michael Swan that’s awesome swanny! Any reason why you chose right here in NE ohio? San Diego is a hell of a ways from here haha

Read through your profile, that’s an amazing track record. I would love to pick your brain if you ever have the time. I just connected with @Mike Rosso so looking forward to talking with him more

I'm currently invested in Lakewood and Lorain. I've house hacked 3 times now and have used FHA, Conventional loans and VA. Hit me up if you have any questions or need contacts. Welcome to BP

Thanks @Anthony R. ! I currently reside in Lakewood so it’d be cool to get together if you’re still around in this area.

Maybe check out your Lakewood property and ask you some questions about the area, prices, and finance info. It sounds like you have gone many avenues to finance your deals.

@Zachariah Hays

I told my story on Podcast 238.  Also, Brandon and Josh just included me in their newest book on pages 25-26

How to invest in Real Estate a Beginner'a Guide is the name of the book.  It was published  Oct 29th.  

We had 10 rental single family here we purchased in San Diego in 2011 and 2012.  They doubled in value and we 1031 exchanged most of them for Apartment complexes in 2015-2017.  We also bought with cash in 2014-2015 8 single family in NE Euclid.  Those were purchased before we started 1031 exchanging the Condos for the apartment complexes.  I had a colleague of mine that was investing there and turned me onto the area, before Amazon was even a thought or President Trump was even hinting he would run for President.  I was buying short sales, bank owned Foreclosures etc... for about $25,000 average in NE Euclid and we had to put about $5,000 each to fix up. 

We just sold all those for about $45,000 each in 2018 and 2017 to focus on our repositioning Apartment complexes.  I really like NE Euclid and Lake County.  

Lake County is especially Landlord friendly.  Plus, the demographics are good hard working C to C+ neighborhoods that pay their rent like clockwork.  I have about 118 front doors and only 4 vacancies and 2 of those are due to people that died in the last month.  Some of the other areas touted a small good C class neighborhoods are really D class neighborhoods.  

Buyers beware.  I have been there and done that.  Never again!! I had a 10 unit very close to Monticello and Noble Rd.  I thought that would be a C class area, but later foolishly was duped. I sold that dog and ended losing about $200,000-$250,000 over the course of 2.5 years.  The city is also beginning to become more liberal and Cleveland Heights Commercial Property taxes are just Stupid over 5%.  Crazy!!!

Oh!  Don't get me started on Cleveland Water.  What a mess they are.  I can tell you some stories about CMHA, the City gastapo for your properties etc...  I was soooooooo happy when I sold that 2435 Noble Road, in Cleveland Heights.  I bought it for $420,000 May of 2015 and sold it for $320,000 December of 2017.  I put $100,000 down on that money pit and took $75,000 out of my pocket for 2.5 years of ownership too, plus I had to give back $25,000 at sale too.  I paid a 1% penalty for paying off loan early too.  I was attracted by the nice improvements that were made to the place.  That quality of tenant doesn't appreciate that. 

Lots of Fake News out there.  Buyer beware!!

Swanny

@Zachariah Hays feel free to reach out anytime. 

I started out looking for small MF properties 1-4 units however these 2bd 1ba SFR's ended up working out nicely. A lot of the MF I looked at were up and down units and I was not interested in those.

@Zachariah Hays @Shannon Kelly @Jason Kiner you've all come to the right place, BP is a great resource, and plenty of experienced folks on here.

@Michael Swan I looked into your building when you were selling. Tough call but better to cut losses and move onto better opportunities.

Monticello / Noble area of Cleveland Heights is filled with competing products, 8-30 unit brick buildings everywhere, and the neighborhood is nowhere near a C grade. Definitely D grade. It gets nice south of Mayfield Road.

You share valuable first hand experiences that many BP members like the newer guys on here would find beneficial. What would you say moved you to get into this deal in the first place, and what are some lessons learned?

Hi @Jad Boudiab and all in this thread.  On Podcast 238 I told my story on how Noble Road went bad really fast.  I checked the normal things the Newbies do, visited the property, saw the elementary school and middle school nearby, I figured it was at least a few miles away from Euclid Ave.  went south a about 3-4 blocks and the area seemed to be adequate.  I was excited about the fake numbers the broker and owner was showing me.  Fake high in place rents.  Was excited about 4 members of the same family being in 4 of the 10 units.  As soon as the sale went through the blank hit the fan, we had to evict 2 of the 4 menbers that were not paying.  It turned out that I vastly overpaid and that I realized this would not be a good value play and learned my lesson the hard way. 

 I only trust 2 Commmercial brokers now out of the 10 I originally dealt with since 2015.  Many are like glorified used car sales people that will sell you out in a heart beat and can't see the forest through the trees and are NOT thinking about all the future business they could have received from a true player like me.

My advice to newbies that want to invest in true Multifamily, to go in on their first deal with others that invest in that area.   

Be careful of people that are marketing to you due to you being in California, Washington, Hawaii, New York, New Jersey, and now even Texas and parts of illinois now too I hear from people buying in D class areas when they think they are buying in C or B class areas.  They have an angle!! I have people in Cleveland that I know want good deals.  The reason these people are marketing to you is that it is NOT a good deal.  Some of the areas they are marketing, I would not take the property for free!!

I just Google Earth down to the street level at the commercial surrounding the property in a 6 block radius and it is a dead giveaway.  Payday loans, Used  car dealerships,  grafitti, broken or boarded up windows, abandoned buildings, unsavory characters loitering.  

NO Starbucks, Trendy shops, restaurants, cafes or coffee shops, large grocery shopping etc...  If it looks like a duck, quacks like a duck, and walks like a duck l, it is a duck.  If I would not want my wife walking in the neighborhood at 9:00 pm. Or later, I don't want to buy it.  If you fix up the duck to a beautiful Swan (pun) it will turn into an ugly duckling eventually!!  Caveat Emptor!! Buyer beware.  Think about the angle.  You search out the broker etc... don't have them search you out.

I Only but in Blue Collar hard working neighborhoods, where the resident's priorities are usually family and then Paing their rent.  Not a car and bling and drugs and then maybe pay your rent.

You wanted an honest opinion and what I would have done different.  So there you have it.

Happy Healthy and Prosperous New Year.  Get Brandon and Josh's new book.  I am featured as one of the first examples in Ch 1 on pages 25-26.  No fake news with me!!!

Swanny

Welcome to the site @Zachariah Hays . Halfway through my first FHA house hack in Willoughby. Definitely a great way to go. Lakewood has been inflated for the last couple of years when it comes to 2-4 units. Make sure that the numbers make sense if you are looking there. Easy to overpay.

I second what @Jeff Brower said about Lakewood being inflated at the moment. Every single morning and every single night I check realtor.com for new listings from Amherst to W117th and I consistently see Lakewood buildings listed welllllll above what I personally would consider an investors deal. Lorain and Elyria have a lot of deals popping up but almost all of them require 10-20k of TLC so that needs to be factored in. 

@Michael Swan you should open a new topic for OOS investors in Cleveland.

I can't stress enough how it's dangerous - to invest just trusting some words of people who make money off you. 

Every time I look at a building or a duplex-triplex which was severely overpaid for, the tax address is in California, Texas, New York etc.

Cleveland Hts is not the same every where: even in best parts it has pockets. Noble north from Monticello does have good places as well but it's East Cleveland schools with Cleveland Hts property taxes (notoriously high)

Leave these areas for local investors, don't get yourself into trouble. It's very expensive lessons to learn

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