Cleveland City Council Passes Housing Overhaul

Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.

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(photo from the article)

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Quote from @Jay Hinrichs:

Quote from @Kevin Sobilo:

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Link To Article

(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

that already happens in Cleveland.

I'm guessing having a single LLC for each property is more common there to avoid those situations.

well this client of mine had about 30 props there in cleveland so I am not sure 30 LLC would be to workable.. but he got sideways with the city on one property that had issues did not get it fixed in time city took him to court Judge froze any property in that name until issues were solved.. Well did not freeze one could still just quit claim it with no title insurance but once the city saw the transfer they hit him with a 5k fine.

Ok on a little soap box here on blaming OOS investors for cities dilapidated housing issues.

I have been working in the Rust belt deep south in these sub 125k markets now for 22 years funding flippers and literally thousands of OOS BRRR buyers. And keep in mind I am just the bridge lender so folks can BRRR and when they refi I am paid out I dont own any of these long term.

The OOS investor acquires a home normally from a fix and flipper be it a turnkey out fit or off of MLS and the agent they are working for like a Holton Wise there in Cleveland for instance.

So before they buy it the homes were in disrepair and vast majority are bought from locals who have failed to maintain the property but live there as owner occs.. those folks simply dont get hounded for violations like OOS or non owner occ props.

What I have seen is when neighborhoods start to go down hill when they start to turn from predominately owner occ to rentals or the school scores go way down.. Those that can afford a home move and landlords replace them..

Then you have out of state buyers that simply do not know what they do not know.. they tend to be influenced by on line reports of what one should make on a property IE it MUST Cash flow day one with minimum down. So as we know this only happens in rental areas and those areas are simply more prone to theft and tenant base can be much tougher on the home.

I have seen this play out a number of times.. OOS investor who maybe only has 50k in cash uses 30k to buy a 125k rental.. then they get hit with theft or a really bad tenant does 10k of damage and does not pay for 6 months.. they get with a PM that does not do a great job .. So day one thinking 20k for reserves starts to dwindle to the point that they run out of money. And now the house needs more rehab they no longer have the funds and the cycle repeats..house goes vacant thieves go in and strip it.. drug folks get in there and use it for shooting up and squatting kids go in and vandalize for fun. etc etc.. now the OOS investor just gives up and walks away. And some wholesaler snags it from them if there is enough equity to sell it again and rehab it again or it goes to foreclosure and the cycle repeats.

OOS investor tried their hardest but went broke.. Because the house they bought un knowingly was near impossible to keep upright. given the location.. this is my some of our BP members have done heat maps on cities to point out these neighborhoods..

However Investors can be their own worst enemy trying to go for the highest returns on paper which of course have the absolute highest risk factors.

In Jackson Mississippi South Jackson to be specific I have funded well over 500 props there and more than 10 I have funded 2 to 3 times over the last 20 years although I am not longer doing deals in South Jackson as I don't want to encourage out of state investors into those super high risk areas.

Locals that's a different story.. Just like this is a Cleveland thread you get over to West Cleveland and a few others stay out of the Bad C and D it can go just fine you go for the highest returns in East Cleveland you know the 20 caps and its far and few between that can make those work from OOS ..

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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
@Erin Dorsey Robinson, we have exactly this type of rental ordinance in the municipalities near me in PA. They came into fashion 12-15 years ago.
Some portions are probably illegal and unenforceable such as a vacant housing registry. I know places here that want $400/year to register vacant properties but I have never heard of anyone actually doing it or it being enforced. If the municipality ever tried to enforce it they would almost certainly risk having it struck down because they would need to show they did $400 of work to register the house because they can only charge a fee for the actual cost of the work by law otherwise. If they charge more its considered an illegal tax.
Rental inspections are common but really they are occupancy inspections focused on health and safety. Smoke detectors, GFCI outlets, handrails, working heat and hot water, etc. So, they aren't a big deal except for the hassle and cost.
Having a local "property manager" is another one we have which isn't consistently enforced. They want a local contact for the property which really benefits them not at all and since the role isn't clearly defined they don't require the property manager of record to be a real estate licensee even though to be a property manager within PA requires a license.
2 Reply
Erin Dorsey RobinsonPro Member
OP
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
2y
Quote from @Kevin Sobilo:

@Erin Dorsey Robinson, we have exactly this type of rental ordinance in the municipalities near me in PA. They came into fashion 12-15 years ago.
Some portions are probably illegal and unenforceable such as a vacant housing registry. I know places here that want $400/year to register vacant properties but I have never heard of anyone actually doing it or it being enforced. If the municipality ever tried to enforce it they would almost certainly risk having it struck down because they would need to show they did $400 of work to register the house because they can only charge a fee for the actual cost of the work by law otherwise. If they charge more its considered an illegal tax.
Rental inspections are common but really they are occupancy inspections focused on health and safety. Smoke detectors, GFCI outlets, handrails, working heat and hot water, etc. So, they aren't a big deal except for the hassle and cost.
Having a local "property manager" is another one we have which isn't consistently enforced. They want a local contact for the property which really benefits them not at all and since the role isn't clearly defined they don't require the property manager of record to be a real estate licensee even though to be a property manager within PA requires a license.
Kevin that's interesting to know. It's definitely going to be a bit of a waiting game to see how this unfolds. There are models here in the surrounding suburbs of Cleveland for this type of regulation. The notable example is South Euclid, where Sally Martin, Cleveland's new building and housing director successfully implemented similar measures prior to assuming the role in Cleveland. And since the registration fee is only $70, it probably wouldn't be too hard to justify. Ultimately, this will be tested in the courts. Cleveland is MUCH larger than South Euclid so there will be many more opportunities for someone to bring forward a suit challenging it. No one likes change, but who knows. Sometimes we are pleasantly surprised.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.
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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Erin Dorsey Robinson:

Quote from @Kevin Sobilo:

@Erin Dorsey Robinson, we have exactly this type of rental ordinance in the municipalities near me in PA. They came into fashion 12-15 years ago.
Some portions are probably illegal and unenforceable such as a vacant housing registry. I know places here that want $400/year to register vacant properties but I have never heard of anyone actually doing it or it being enforced. If the municipality ever tried to enforce it they would almost certainly risk having it struck down because they would need to show they did $400 of work to register the house because they can only charge a fee for the actual cost of the work by law otherwise. If they charge more its considered an illegal tax.
Rental inspections are common but really they are occupancy inspections focused on health and safety. Smoke detectors, GFCI outlets, handrails, working heat and hot water, etc. So, they aren't a big deal except for the hassle and cost.
Having a local "property manager" is another one we have which isn't consistently enforced. They want a local contact for the property which really benefits them not at all and since the role isn't clearly defined they don't require the property manager of record to be a real estate licensee even though to be a property manager within PA requires a license.
Kevin that's interesting to know. It's definitely going to be a bit of a waiting game to see how this unfolds. There are models here in the surrounding suburbs of Cleveland for this type of regulation. The notable example is South Euclid, where Sally Martin, Cleveland's new building and housing director successfully implemented similar measures prior to assuming the role in Cleveland. And since the registration fee is only $70, it probably wouldn't be too hard to justify. Ultimately, this will be tested in the courts. Cleveland is MUCH larger than South Euclid so there will be many more opportunities for someone to bring forward a suit challenging it. No one likes change, but who knows. Sometimes we are pleasantly surprised.

The city of Scranton had an issue with their rental ordinance at one point. They were charging something like $150 to inspect each rental unit when other municipalities were only charging $35-150.

They pressed the wrong landlord who filed a lawsuit. They found that they were collecting in fees 3x the budget for the entire department! So, they could not justify the fees. As soon as this came to light, they dropped the fee to $50 and I think the lawsuit was dropped or was settled.

Most of these ordinances are no biggie. Typically there is a yearly registration or landlord license the municipality charges a fee for and they collect info about the property and who is living there. They say that is so when emergency responders go there like the police that they will know who belongs there. Then they hit you for a rental inspection with every turnover and possibly on some other periodic basis like biannually or something depending on the municipality.
0 Reply
Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

That is exactly the kind of ordinance that is probably illegal and ripe to be struck down. They probably know its illegal as well.

I see illegal ordinances appear all the time some are VERY egregious.

A small city near me had what they called the "One strike ordinance", if a rental had anyone arrested for a drug or firearms offense they could shut the unit down for 6 months so nobody could live there! It didn't have to be the tenant and they didn't have to be convicted only arrested. It was enforced a few years before it was struck down as illegal. They had to know it was illegal when they enacted it.
1 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

That is exactly the kind of ordinance that is probably illegal and ripe to be struck down. They probably know its illegal as well.

I see illegal ordinances appear all the time some are VERY egregious.

A small city near me had what they called the "One strike ordinance", if a rental had anyone arrested for a drug or firearms offense they could shut the unit down for 6 months so nobody could live there! It didn't have to be the tenant and they didn't have to be convicted only arrested. It was enforced a few years before it was struck down as illegal. They had to know it was illegal when they enacted it.

What is worse is areas of Ohio, Indiana etc. will scout properties that are non owner occupied and owned by people out of state and go after them hard.
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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

That is exactly the kind of ordinance that is probably illegal and ripe to be struck down. They probably know its illegal as well.

I see illegal ordinances appear all the time some are VERY egregious.

A small city near me had what they called the "One strike ordinance", if a rental had anyone arrested for a drug or firearms offense they could shut the unit down for 6 months so nobody could live there! It didn't have to be the tenant and they didn't have to be convicted only arrested. It was enforced a few years before it was struck down as illegal. They had to know it was illegal when they enacted it.

What is worse is areas of Ohio, Indiana etc. will scout properties that are non owner occupied and owned by people out of state and go after them hard.

There is a stigma associated with out of town owners everywhere I think. If you actually talk to code enforcement people most will say the rate of problems is the same or worse for local owners.
Uneven enforcement of the ordinance is another way they can get themselves in trouble. Eventually these kinds of things come back to bite them.

1 Reply
Erin Dorsey RobinsonPro Member
OP
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
2y
Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.
That may be an effective approach. I haven't read all the details of this legislation yet to see if something like that is included but I wouldn't be surprised if they moved in that direction. They are going to have to find a way to put some teeth in it because many of the landlords who will be impacted live out of state.
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0 Reply
Erin Dorsey RobinsonPro Member
OP
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
2y
@Kevin Sobilo This is true as well. It isn't just the out of town owners who have properties that have fallen into disrepair. I've had many discussions about this same issue. Local owners also have to be diligent. In Cleveland, I think there is a particular focus on out of town owners because the cost of entry is so low. People can come here and purchase property for less than $100k that cash flows so people have been coming in droves and buying things up.
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1 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Erin Dorsey Robinson:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.
That may be an effective approach. I haven't read all the details of this legislation yet to see if something like that is included but I wouldn't be surprised if they moved in that direction. They are going to have to find a way to put some teeth in it because many of the landlords who will be impacted live out of state.

I agree they should be aggressive but I think they take it overboard. They try and get criminal offenses for not mowing the lawn. Like any government, they are like a yo yo and do nothing forever and then implement some policy that is so burdensome it ends up just being dumb.
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
Been dealing with this in Metro Detroit for over 20 years.
City of Detroit also requires a lead-based paint inspection!
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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Erin Dorsey Robinson:

@Kevin Sobilo This is true as well. It isn't just the out of town owners who have properties that have fallen into disrepair. I've had many discussions about this same issue. Local owners also have to be diligent. In Cleveland, I think there is a particular focus on out of town owners because the cost of entry is so low. People can come here and purchase property for less than $100k that cash flows so people have been coming in droves and buying things up.

My market is much the same. A cheaper cash-flowing market, PLUS my market is only a couple hours drive from major cities like NYC and Philly. So, people from those more expensive markets can come here and physically see the properties they want to invest in.
1 Reply
Danielle Price
Investor · San Jose, CA · Member since 2015 · 51 posts · 20 votes
2y
Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

@Erin Dorsey Robinson. I was looking into a property in E. Cleveland and there was a POS on the property. Does that mean the issues must be fixed prior to sale and title transfer? It actually held up the potential purchase being owner/occupied.
1 Reply
Erin Dorsey RobinsonPro Member
OP
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
2y
Quote from @Michael Smythe:

Been dealing with this in Metro Detroit for over 20 years.
City of Detroit also requires a lead-based paint inspection!
Michael I know all about that too. Detroit is my home away from home. Both parents are from there. It’s so much bigger. The scale is vastly greater than what we have going on in Cleveland so the problem is bigger too. Cleveland also now requires property owners to pass a lead test at various points for tenant occupied property. It’s not dependent on impending title transfer. What’s your focus in the D? Inbox me! Let’s talk. I love Detroit:)
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Erin Dorsey RobinsonPro Member
OP
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
2y
Quote from @Kevin Sobilo:

Quote from @Erin Dorsey Robinson:

@Kevin Sobilo This is true as well. It isn't just the out of town owners who have properties that have fallen into disrepair. I've had many discussions about this same issue. Local owners also have to be diligent. In Cleveland, I think there is a particular focus on out of town owners because the cost of entry is so low. People can come here and purchase property for less than $100k that cash flows so people have been coming in droves and buying things up.

My market is much the same. A cheaper cash-flowing market, PLUS my market is only a couple hours drive from major cities like NYC and Philly. So, people from those more expensive markets can come here and physically see the properties they want to invest in.

Oh yeah. That’s super convenient.
[email protected]
1 Reply
Erin Dorsey RobinsonPro Member
OP
Real Estate Agent · Cleveland, OH · Member since 2020 · 280 posts · 365 votes
2y
Quote from @Danielle Price:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

@Erin Dorsey Robinson. I was looking into a property in E. Cleveland and there was a POS on the property. Does that mean the issues must be fixed prior to sale and title transfer? It actually held up the potential purchase being owner/occupied.
Point of sale violations occur when the city flags certain conditions at the property that do not meet the standard of the city’s building code. Typically, there are two options- either the repairs must be made prior to title transfer, or the buyer has to agree to assume those violations which involves making a written guarantee that the repairs will be made within the required timeframe after closing. There may be a fee associated with assumption of violations- maybe a couple hundred dollars. There may also be a requirement that funds be held in escrow to guarantee the repairs are completed. Those funds are returned after a second point of sale inspection to assess the condition after the violations have been corrected. The escrow hold can be as much as 150% of the estimated cost of repairs. The method by which the estimate is made varies from city to city.

Ler me know if you have other questions happy to help. You can always inbox me.
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0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

That is exactly the kind of ordinance that is probably illegal and ripe to be struck down. They probably know its illegal as well.

I see illegal ordinances appear all the time some are VERY egregious.

A small city near me had what they called the "One strike ordinance", if a rental had anyone arrested for a drug or firearms offense they could shut the unit down for 6 months so nobody could live there! It didn't have to be the tenant and they didn't have to be convicted only arrested. It was enforced a few years before it was struck down as illegal. They had to know it was illegal when they enacted it.

What is worse is areas of Ohio, Indiana etc. will scout properties that are non owner occupied and owned by people out of state and go after them hard.

There is a stigma associated with out of town owners everywhere I think. If you actually talk to code enforcement people most will say the rate of problems is the same or worse for local owners.
Uneven enforcement of the ordinance is another way they can get themselves in trouble. Eventually these kinds of things come back to bite them.

This is why out of state investment almost doesn't make sense.
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

that already happens in Cleveland.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
0 Reply
Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Carlos Ptriawan:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

That is exactly the kind of ordinance that is probably illegal and ripe to be struck down. They probably know its illegal as well.

I see illegal ordinances appear all the time some are VERY egregious.

A small city near me had what they called the "One strike ordinance", if a rental had anyone arrested for a drug or firearms offense they could shut the unit down for 6 months so nobody could live there! It didn't have to be the tenant and they didn't have to be convicted only arrested. It was enforced a few years before it was struck down as illegal. They had to know it was illegal when they enacted it.

What is worse is areas of Ohio, Indiana etc. will scout properties that are non owner occupied and owned by people out of state and go after them hard.

There is a stigma associated with out of town owners everywhere I think. If you actually talk to code enforcement people most will say the rate of problems is the same or worse for local owners.
Uneven enforcement of the ordinance is another way they can get themselves in trouble. Eventually these kinds of things come back to bite them.

This is why out of state investment almost doesn't make sense.

I have no clue why you think that is true. There are stigmas about lots of things and life is imperfect and unfair so sometimes those stigmas may result in being unfairly disadvantaged. That is why we have laws so that those unfairly disadvantaged situations are the exception not the rule despite people's biases.
0 Reply
Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

that already happens in Cleveland.

I'm guessing having a single LLC for each property is more common there to avoid those situations.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Kevin Sobilo:

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

that already happens in Cleveland.

I'm guessing having a single LLC for each property is more common there to avoid those situations.

well this client of mine had about 30 props there in cleveland so I am not sure 30 LLC would be to workable.. but he got sideways with the city on one property that had issues did not get it fixed in time city took him to court Judge froze any property in that name until issues were solved.. Well did not freeze one could still just quit claim it with no title insurance but once the city saw the transfer they hit him with a 5k fine.
Podcast Guest on Show #222
JLH Capital Partners51 Review
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2 Reply
Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Kevin Sobilo:

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

that already happens in Cleveland.

I'm guessing having a single LLC for each property is more common there to avoid those situations.

well this client of mine had about 30 props there in cleveland so I am not sure 30 LLC would be to workable.. but he got sideways with the city on one property that had issues did not get it fixed in time city took him to court Judge froze any property in that name until issues were solved.. Well did not freeze one could still just quit claim it with no title insurance but once the city saw the transfer they hit him with a 5k fine.

I would think a law like that will eventually be struck down, but I would have to look at it carefully to be more certain.
I agree 30 LLCs would be a lot depending on their value and the cost to maintain LLCs in that state.
Another preemptive option might be to create quit claim pocket deeds to yourself for each properties up front. So, that if the municipality ever tries that you just file the pocket deed to excluding it from action by the city because the "transfer" happened before the city took action even though it was recorded later. Unless the city is actually filing a lien against all the properties or a lis pendens or something the timing to record wouldn't be too critical.
I'm sure someone will find a strategy to cope with this eventually.
0 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
2y
This actually sounds like one of the more reasonable pieces of legislation being passed by city councils these days. But it's definitely becoming clear that laws regarding real estate investment and property management are becoming more arduous across the country. It's definitely important to stay informed.
Podcast Guest on Show #121
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Kevin Sobilo:

Quote from @Carlos Ptriawan:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

That is exactly the kind of ordinance that is probably illegal and ripe to be struck down. They probably know its illegal as well.

I see illegal ordinances appear all the time some are VERY egregious.

A small city near me had what they called the "One strike ordinance", if a rental had anyone arrested for a drug or firearms offense they could shut the unit down for 6 months so nobody could live there! It didn't have to be the tenant and they didn't have to be convicted only arrested. It was enforced a few years before it was struck down as illegal. They had to know it was illegal when they enacted it.

What is worse is areas of Ohio, Indiana etc. will scout properties that are non owner occupied and owned by people out of state and go after them hard.

There is a stigma associated with out of town owners everywhere I think. If you actually talk to code enforcement people most will say the rate of problems is the same or worse for local owners.
Uneven enforcement of the ordinance is another way they can get themselves in trouble. Eventually these kinds of things come back to bite them.

This is why out of state investment almost doesn't make sense.

I have no clue why you think that is true. There are stigmas about lots of things and life is imperfect and unfair so sometimes those stigmas may result in being unfairly disadvantaged. That is why we have laws so that those unfairly disadvantaged situations are the exception not the rule despite people's biases.

i've been in this position, cost of hidden repair could be as low as $100 into whooping $25k.
one thing that I really hate is city ordinance, hence OOS many times don't make sense especially if the city is tricky and house is problematic. It's part of the unknown of unknown in real estate.
In these city not moving grass=jail which is ridiculous , on other and, stealing a bra for $850 in victoria secret in Oakland is not a crime LOL
law on the same country can be extremely exhausting just for hundred a month lol
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Kevin Sobilo:

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Erin Dorsey Robinson:

Hey everyone- I ran across an article today and shared with my clients and fellow investors. Thought I'd post on here as well. Cleveland City Council has passed a series of new regulations targeting landlords who allow their properties to fall into disrepair. The new rules will go into effect this Spring (2024) and include measures such as registration of vacant housing, inspection requirements to transfer property and the requirement that out of state investors have a "local agent in charge", a representative on the ground in Cleveland to be held accountable for the condition of the property. Staying informed is still important even if you're not living in the place where you invest. What you don't know can still become a headache.
Link To Article
(photo from the article)

What some jurisidictions are doing is fining sellers for illegal transfers when there are issues with property. For example, if you have overgrown grass at 123 Main st they will stop you from selling 456 east street until the violations on other properties are corrected.

that already happens in Cleveland.

I'm guessing having a single LLC for each property is more common there to avoid those situations.

well this client of mine had about 30 props there in cleveland so I am not sure 30 LLC would be to workable.. but he got sideways with the city on one property that had issues did not get it fixed in time city took him to court Judge froze any property in that name until issues were solved.. Well did not freeze one could still just quit claim it with no title insurance but once the city saw the transfer they hit him with a 5k fine.

I am one time attending the court judge issue only to have the issue fixed two days later (having a contractor that can work in winter is fairly difficult and city is asking for repeating inspection). Luckily the court was on remote but still it's not a nice experience.
I would avoid any city that the gov do stuffs like this. I may invest in oakland that has even more tenant-friendly environment but they ain't too strict on code enforcement lol.
it just not worthed time and struggle since we're OOSI.
1 Reply

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