Hello BP,

Can anyone give me some insight on the rental market in Cleveland. I have been seeing a lot of things come up in Cleveland area. Clearly the real estate market is still in the dumps there. However, is there a decent market for rental properties? 

I have experience in remodels, flips, buy & hold however, I know very little about Cleveland. How is the homes to tenants ratio? I would like insight from people who are actively investing in Cleveland rentals or rehab properties. 

Are there any places to stay out of? The bulk of my rentals are in very low income/poverty areas so I'm not afraid of that market but in some places it simply won't work. Any management company recommendations? 

Thanks!

@Jake Oreskovich  I think you will find that our market is preforming better than you think. I am only qualified to speak on the strength of the apartment market but occupancy is high, cap rates are still in the double digits and properties are moving across all multi-family property classes.  It is true most Cleveland properties do not see double digit annual appreciation, but our caps are much more desirable than most areas of the country which in my opinion makes up the difference and keeps out of state investors coming back for more.      

if you are interested in Cleveland, many BP investors have found this link helpful:

Cleveland Neighborhood Grades

Jake,

You will find several BP members are from Cleveland property management companies. Not all of them will manage in all areas of Cleveland.

I have a property in East Cleveland which is considered by some as to rough but the management company I use has no problem and I am happy to recommend them. I you are interested, drop me a note and I will send you the contact info or even make an introduction.

@Jake Oreskovich Speaking in generalities, the ratios in this area make sense. Median home price / median income / rental price are all in line with each other.  You may not find the appreciation of other markets, but in the rental game stability has a value.

No matter what point in the cycle we are in, In my experience, if you have the nicest product available in a given class you will have no problem filling units.

There are plenty of folks who deal in low/no income areas of the City, as the majority of the residents rent.

@Jake Oreskovich Hi Jake, just to reiterate what the others have said there are some areas that are very rough, and management companies that will not manage in certain areas.. I would recommend HWPG in Parma, but the home prices are a bit more there, and they work strictly the west side of Clevleland. I have had two vacancies on two of my properties in three different suburbs, I have seen 2-3 month vacancies, and a drop in rents from what we were expecting. As a side note, all vacancies were in the fall or winter, so seasonally hard to fill. PM if you have any other questions

Jake

You might find it interesting to note that there are about 84,000 rental properties in Cleveland proper.  Plenty more in inner ring suburbs.  So by any standard, there is a lot of rental activity here relative to the population, which is close to 400,000 in Cleveland proper. I manage some units in Maple Heights, Cleveland Heights, Garfield Heights, South Euclid, Euclid but I much prefer the west side where I focus on West Park... 44111, 44144, 44135. Parma & Lakewood are also great west side choices. Tremont, Ohio City, Gordon Square and Detroit-Shoreway are all interesting in their own way.

I was just talking to someone today about investing in rentals in Cleveland. I referred him to BP, as there are a ton of helpful posts here.

By reading the forums, it looks like East Cleveland (zip codes 44108, 44112, 44118) should be avoided. However, the East Side of Cleveland is considered a good investing area. The West Side & Cleveland Heights are also desirable. (I think the CNBC show Cleveland Hustles focused on Cleveland Heights.)

Is the above still true in today's strong market?

Thanks,

Steph 

Cleveland market is still strong. One of the few cities where investors can meet the 1% rule 

In some of my rentals I hit the 2% rule

I receive offers for similar SFH in Birmingham and Cleveland. Any investor who could advice if one city is preferable to the other?

Originally posted by @Steph C. :

I was just talking to someone today about investing in rentals in Cleveland. I referred him to BP, as there are a ton of helpful posts here.

By reading the forums, it looks like East Cleveland (zip codes 44108, 44112, 44118) should be avoided. However, the East Side of Cleveland is considered a good investing area. The West Side & Cleveland Heights are also desirable. (I think the CNBC show Cleveland Hustles focused on Cleveland Heights.)

Is the above still true in today's strong market?

Thanks,

Steph 

Yes, it is very strong still to this day. You can see some 16-18% ROI CoC returns in Cleveland Heights. It is well sought after for both investors and tenants which makes for some higher rents, unlike other areas that have become over saturated with rentals.

Thanks, @Tom Ott . Very helpful.  I have also referred others to your website as well.

Steph

Sorry to butt in-Does anyone know how much a 5+ unit MFR in a B-ish neighborhood in Cleveland is going for these days?

40-50k per door 

Originally posted by @Jake Oreskovich :

Hello BP,

Can anyone give me some insight on the rental market in Cleveland. I have been seeing a lot of things come up in Cleveland area. Clearly the real estate market is still in the dumps there. However, is there a decent market for rental properties? 

I have experience in remodels, flips, buy & hold however, I know very little about Cleveland. How is the homes to tenants ratio? I would like insight from people who are actively investing in Cleveland rentals or rehab properties. 

Are there any places to stay out of? The bulk of my rentals are in very low income/poverty areas so I'm not afraid of that market but in some places it simply won't work. Any management company recommendations? 

Thanks!

 I recommend giving The Ultimate Guide to Grading Cleveland Neighborhoods a read.

Originally posted by Account Closed:

Sorry to butt in-Does anyone know how much a 5+ unit MFR in a B-ish neighborhood in Cleveland is going for these days?

 There are not many 5 units available. The inventory that we have out this way will consists of many single family homes, duplexes and then it will jump up to many brick 6 unit buildings. In Cleveland proper which is going to be a C-CLASS neighborhood your going to pay about $200k-$230k right now. If you go up to a B-CLASS suburban property expect to be in the $250k-$285k price point.

Thank you so much @James Wise ! I'm off to read your article on neighborhoods.

@Jake Oreskovich

There's a lot of investment activity in the Cleveland area, presumably because rents are strong but acquisition prices are still low. Some investors stick to suburban areas where they are finding mostly "B" caliber neighborhoods. Others go into the city where they deal primarily with "C", "D", or "F" neighborhoods. The returns can be higher here but these investments come with their own unique challenges and risks. If this is the strategy you choose, I'd recommend coming to town to get a firsthand feel for your target areas. Feel free to PM me with any questions.

@Bob Collett I'm looking to invest in Cleveland areas in the areas you manage properties. My husband will be in Cleveland next week to meet with people and to see neighborhoods. We are looking for RE, PM and contractor contacts. If you are available to meet, let's connect!

@Anne Whalen . I would be happy to meet with your husband.  If his travel plans are not locked in, I recommend he stay in Independence. Its a great suburb located at i77 & i480... no more than 10 to 20 minutes to drive to just about anywhere. Hotels range from about $50 to $100.

The "Bob Evans" is a popular meeting place as is the Panera.  Let me know. I am licensed real estate agent and property manager. I have good contractor contacts that we use in the management of our rentals and our flips.

@Bob Collett thanks for the recommendations! I just requested to connect with you through here. let's chat!

@Jake Oreskovich   I'm an investor/agent here in Northeast Ohio.  I prefer the west side also mainly because it's closer to home.  However, we've also had success in Garfield Heights.  I like to stay in the suburbs, but if you're willing to go into the inner city the returns can be even higher.  PM me if you want property management and contractor contacts.  

Case study. I saw yesterday an offer for a C+ grade area. A SFH offered at 59000. Sold in 2013 at 40000. Since the three tenants. Last one in two months ago. Net performance 5489$ or 9%. But if there is a need to have a cosmetic renovation of 2000 till 5000 at each end of tenancy, this seems quite a terrible investment. No real appreciation possible in this area. This model seems common to all offers. Am I missing something? I fail to see the interest?

What is the going price per unit and cap rates and expense per unit in the Cleveland height and shaker heights area?  Any update would be great.  Recent sold updates would even be better. Thanks for your replies in advance.