New York City, NY · Member since 2016 · 470 posts · 348 votes
I'm curious if BRRRR ("fix & rent") works in the Cleveland metro area. Essentially, the ability to have your purchase price + rehab costs less than 70% of the ARV, so after you rehab you can find tenants & then refinance to get all of your cash back. I'm sure there must be some areas / neighborhoods where this works? Of course, the other requirement is that the rental income is enough to cover your mortgage + expenses on the back-end. So this tends to work best in middle class neighborhoods.
Are there any licensed real estate brokers / agents who can help me find such properties? Not interested in Turnkey btw - I'd rather buy pre-renovation (not post-renovation) to capture the equity myself.
Investor · Cleveland, OH · Member since 2011 · 603 posts · 130 votes
9y
This is my strategy and can still be found easily. I am an east sider so I cannot comment on West side neighborhoods. Depends on your budget but cities like...
University Heights, Richmond Heights, Mayfield Heights, Cleveland Heights, Willoughby
All fit the bill.
Again, this depends on the city but a typical deal for me looks like
Purchase price: 50000
Rehab - 25000
ARV - 110000
Rent: 1250
Cash out refi at 80,000 gives me a little extra cash in my pocket and the cash flow is still good.
As others have mentioned, getting a crew of contractors from a distance will be the x factor. I can do a pretty nice rehab for 25000 but it took me 5 years to find good guys cheap enough to get it done at a bargain.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
9y
Eric P. Yes, this strategy works in the CLE metro area. You just have to buy any property so that your all in is low enough relative to the appraisal to refi all of your money out.
As a formula, this can be done in all classes of neighborhood, except where the rapidly outpaces rental income, as your income won't support the refi debt.
Investor · Cleveland, OH · Member since 2011 · 603 posts · 130 votes
9y
This is my strategy and can still be found easily. I am an east sider so I cannot comment on West side neighborhoods. Depends on your budget but cities like...
University Heights, Richmond Heights, Mayfield Heights, Cleveland Heights, Willoughby
All fit the bill.
Again, this depends on the city but a typical deal for me looks like
Purchase price: 50000
Rehab - 25000
ARV - 110000
Rent: 1250
Cash out refi at 80,000 gives me a little extra cash in my pocket and the cash flow is still good.
As others have mentioned, getting a crew of contractors from a distance will be the x factor. I can do a pretty nice rehab for 25000 but it took me 5 years to find good guys cheap enough to get it done at a bargain.
Investor · North Olmsted, OH · Member since 2016 · 51 posts · 24 votes
9y
@Adam Craig That's impressive, Adam. Would love to see some before/after pics of what you do and what you budget for difference areas. Feel free to PM me, would love to chat.
Real Estate Agent · Westlake, OH · Member since 2014 · 186 posts · 165 votes
9y
@Adam Craig's formula works on the west side of Cleveland too. Berea, Brook Park, Fairview Park, North Olmsted, Parma, Lakewood all have the same sort of opportunities. If you're willing to go into the city of Cleveland itself, you'll see rent ranges of $900-$975 on a total investment of ~$50k. Solid areas where you can attract decent tenants - not war zones.
Investor · North Olmsted, OH · Member since 2016 · 51 posts · 24 votes
9y
@Don Petrasek this is the sort of local feedback I'm looking for. Lakewood is getting getting hard to find good deals and have begun expanding search but hadn't considered Berea. What parts of Cleveland are you referring to aside from what @Adam Craig mentioned? Anything west side? Maybe West Park?
It does work, but you need to be able to find good off market deals. You will have a very hard time finding that on the MLS.
I hear people say this from time to time. Its true, there seems to be less good deals and more investors then in recent year, but I am still always able to find a pretty solid deal in my 5 city search on the MLS. There are deals I would buy right now if I wasn't maxed out with 4 rehabs going on.
Really boils down to if you know how to rehab it and can get it done at a bargain.
Real Estate Agent · Westlake, OH · Member since 2014 · 186 posts · 165 votes
9y
@Jim Cran I have 4 Cleveland singles that are in the area west of W 117th, East of W 140th, South or Lorain but north of I-71. I've been able to consistently find good tenants and the overall investment is significantly lower than Lakewood, Berea, etc. 10%-11% return based on net income/total amount invested in house. I don't expect a lot of appreciation in this area - its just a quicker way to cash flow without getting into a war zone.
Agree with Adam Craig that while you might not find numerous opportunities on the MLS the first time you look, they're out there.
Brooklyn, NY · Member since 2016 · 49 posts · 12 votes
9y
@Dan Mitchen For some reason I missed your post. I am looking at distressed properties in parts of Cleveland and wanted to have a system set up before investing but I haven't found any Cleveland contractors yet through BP. The work being done would vary. If you know of any good contractors then please let me know.