Bellevue, NE · Member since 2015 · 25 posts · 5 votes
I've been receiving emails from Holton-Wise for the past few weeks, and it seems like there are some pretty good deals that may cash flow around 2-300 bucks per month with decent cap rates (10-12%). Couple questions though.
1) I am seeing properties that cost around $60K that will produce gross rental income of $1-1.4K per month. Is this realistic or are these inflated rents? Would this indicate a property needing a lot of rehab or cap ex? Generally, are these prices/rents in decent neighborhoods?
2) Is Holton-Wise actually a decent property management company or not? I looked at their BBB rating and it is not great. Are they just a turn-key scam company? If not, I see they will do some rehab. Does anyone know how this works? Would they be a good option for an out of town investor? Do you know what percentage they charge? Any other property management companies you would recommend? Same questions as above for other companies. I am looking to build a team in Cleveland (I'm out of town).
3) What is the biggest pitfall in Cleveland?
4) What areas should I avoid?
5) Are there any specific locations I should look in? Great streets / neighborhoods?
I appreciate the help? Hopefully I'll be able to network with some of you moving forward.
I can give you my impressions. I flew out to Cleveland to check the area out, meet various realtors, property managers, etc.. this included Holton-Wise.
I just closed on a small apartment complex with them and they are managing the property. So I can't speak to the quality of property management yet.
In general Cleveland is seeing a lot of outside investment. Money is flooding in and it is changing the town quite a bit. In my meetings with residents most were optimistic about things and felt good about their jobs etc. This seems to be supported by data i was able to gather from various sources on unemployment, job growth, etc.. BUT incomes in the area are quite low compared to other cities in the US and the city feels like it is finding a new identity. The city is separated by east/west with West is often considered safer and a better investment. People often don't cross from one side to the other from what I'm told. I however drove around and felt fine.
As an investor I think you have to look at the job growth and how sustainable those jobs will be. Will the jobs created today be there in 10 years and how will the pay change? The biggest employers are hospitals, universities and some financial services companies i think.
As for Holton-Wise... they are very aggressive so I can understand why you might have the "scam" concern.They have only been around for 2 years or so. Most of the team seems quite young and hungry. This shows because you see their signs all around town. I had a brief meeting with James Wise and he certainly was not lacking in confidence and clearly knows how to sell. My agent (Anthony Aviles) was a bit more measured and was very thoughtful. He was responsive but not pushy and gave me good feedback throughout the process. I'll likely use him again to purchase another complex after i stabilize my recent purchase. It was a smooth transaction etc... If i was to sell anything , like ice to a Eskimo.. or a property, I'd probably run to James :)
I would suggest that if you're serious about investing in the area you get out there and shake some hands. Talk to the people who live there and get to know the area a bit before investing. This is also helpful because if you do have a problem with a management company like HW you can have a backup ready to take over. I certainly do :) I'll try to remember to post a review of their management service 6 months from now
Every prop management company i spoke with charges roughly 10% of gross rents for apartments.
If you want some other options I'd talk to Adam at Lokal if you are doing single family.
All I can say is when you have to evict tenants for non payment of rent they are not always the happiest and will review you badly even thou they are the ones breaking terms and conditions and we are just trying to collect monies for the investors
You are always welcome to come out to Cleveland and experience it first hand and see what this market is offering
I can give you my impressions. I flew out to Cleveland to check the area out, meet various realtors, property managers, etc.. this included Holton-Wise.
I just closed on a small apartment complex with them and they are managing the property. So I can't speak to the quality of property management yet.
In general Cleveland is seeing a lot of outside investment. Money is flooding in and it is changing the town quite a bit. In my meetings with residents most were optimistic about things and felt good about their jobs etc. This seems to be supported by data i was able to gather from various sources on unemployment, job growth, etc.. BUT incomes in the area are quite low compared to other cities in the US and the city feels like it is finding a new identity. The city is separated by east/west with West is often considered safer and a better investment. People often don't cross from one side to the other from what I'm told. I however drove around and felt fine.
As an investor I think you have to look at the job growth and how sustainable those jobs will be. Will the jobs created today be there in 10 years and how will the pay change? The biggest employers are hospitals, universities and some financial services companies i think.
As for Holton-Wise... they are very aggressive so I can understand why you might have the "scam" concern.They have only been around for 2 years or so. Most of the team seems quite young and hungry. This shows because you see their signs all around town. I had a brief meeting with James Wise and he certainly was not lacking in confidence and clearly knows how to sell. My agent (Anthony Aviles) was a bit more measured and was very thoughtful. He was responsive but not pushy and gave me good feedback throughout the process. I'll likely use him again to purchase another complex after i stabilize my recent purchase. It was a smooth transaction etc... If i was to sell anything , like ice to a Eskimo.. or a property, I'd probably run to James :)
I would suggest that if you're serious about investing in the area you get out there and shake some hands. Talk to the people who live there and get to know the area a bit before investing. This is also helpful because if you do have a problem with a management company like HW you can have a backup ready to take over. I certainly do :) I'll try to remember to post a review of their management service 6 months from now
Every prop management company i spoke with charges roughly 10% of gross rents for apartments.
If you want some other options I'd talk to Adam at Lokal if you are doing single family.
I don't have experience with Cleveland but I know that @Michelle Watt is focused on that area. Michelle, figured you'd benefit from seeing this post. Perhaps more good Cleveland info to come on it for you.
Johnathan Norman Thanks a lot for sharing your first hand experience. I started researching the Cleveland market a couple of weeks ago and been looking at listings in that area - very helpful so far. But looks like Parma is one of the better (updated?) cities around there- what are your thoughts about it? Also is there like some way to classify A/B/C type neighborhoods around there - something which would help identify pockets that are good to focus on ? Also, looks like you are local here in Seattle- would you like to meet up for coffee and chat?
Parma has been a very reliable market with a good stable tenant pool. Rents range from $850-$1,200 or 1,300 depending on the area of the city and the size of home. A general rule is that the north side around Brookpark Rd is the lower end of the range.
Other similar areas you may consider would be Lakewood, Bedford Heights or, for a bit lower price point, Garfield Heights.
I've been receiving emails from Holton-Wise for the past few weeks, and it seems like there are some pretty good deals that may cash flow around 2-300 bucks per month with decent cap rates (10-12%). Couple questions though.
1) I am seeing properties that cost around $60K that will produce gross rental income of $1-1.4K per month. Is this realistic or are these inflated rents? Would this indicate a property needing a lot of rehab or cap ex? Generally, are these prices/rents in decent neighborhoods?
2) Is Holton-Wise actually a decent property management company or not? I looked at their BBB rating and it is not great. Are they just a turn-key scam company? If not, I see they will do some rehab. Does anyone know how this works? Would they be a good option for an out of town investor? Do you know what percentage they charge? Any other property management companies you would recommend? Same questions as above for other companies. I am looking to build a team in Cleveland (I'm out of town).
3) What is the biggest pitfall in Cleveland?
4) What areas should I avoid?
5) Are there any specific locations I should look in? Great streets / neighborhoods?
I appreciate the help? Hopefully I'll be able to network with some of you moving forward.
Hello Chase,
My biggest advice to you when searching for turnkey companies anywhere is to make sure they are a true provider. Some of these companies mainly act as "middle men" meaning they are simply agents. They find a home they feel is a turnkey and present it to you. A true provider actually owns the home and does all the renovations themselves. This way you can hold them accountable for the work done to the home, and you can actually take them on their word this home is a true turnkey. I'd suggest checking out, How to Find the Right Turnkey Real Estate Investment Company for You to get a little more info.
In terms of Cleveland, yes the market can have amazing ROIs. Just make sure to do some research on where you are investing. Some suburbs or neighbors might look great on paper, but they can be a risky investment. The city is growing and so is the surrounding area. We have seen some of the largest growth over the last few years.
Feel free to send me a message if you have any questions. I'd be happy to help.
I haven't used HW, but I can give you my thoughts on your other questions.
I moved to the Cleveland area this past summer from a pretty expensive part of the country (Triangle area of North Carolina, and before that Virginia), and was shocked at investment property prices here. I, too, wondered if the numbers were for real... So I spent a couple of months looking at properties, driving around, reading and talking to people.
What I found was that yes, the numbers are for real- properties are ridiculously cheap, you can get rents of $1,000 for a $50K house or $1,300 for a $60K duplex. There are definitely areas to avoid (lots of info on BP about this) but also great areas. The consensus is that Western suburbs of Cleveland are pretty consistent and safe to invest in (Parma, Lakewood, Brooklyn). I have bought in the east, which is a little more unpredictable, because it is closer to where I live- I have properties in Cleveland Heights and Garfield Heights. I would say the property prices and rents in the safer pockets and suburbs are comparable on both sides of the city.
Johnathan Norman Thanks a lot for sharing your first hand experience. I started researching the Cleveland market a couple of weeks ago and been looking at listings in that area - very helpful so far. But looks like Parma is one of the better (updated?) cities around there- what are your thoughts about it? Also is there like some way to classify A/B/C type neighborhoods around there - something which would help identify pockets that are good to focus on ? Also, looks like you are local here in Seattle- would you like to meet up for coffee and chat?
You know how Bellevue compares to Seattle? Parma is like that for Cleveland, just smaller and closer. High incomes, nicer area etc... i would say it is an A/B type area. But i personally don't like focusing solely on A/B properties mainly because I'm mostly focused on income. I find that C type areas often yield tenants who stay for long periods of time. The property has just purchased has 1 tenant who has been in the building for 20 years and many who have been there for 10.
I do feel Parma is a great area to purchase a single family home if you get it at the right price and you are focused on equity growth. Brooklyn/Old Brooklyn is not far and some areas are not quite as nice but it is also an area that has potential.
Also if you can find a deal in Tremont that is reasonable you should consider it. It is the trendy new spot for all the hipster types. .. once again comparing to Seattle think Capital Hill.
But as I said before i would strongly encourage anyone who invests to visit first. Get to know the area and the people. When you tell them you're an out of town investor make sure they know you plan on taking care of whatever properties you buy etc...
i'm up for coffee in a week or so. crazy busy this week. just send me a message.
p.s. Cleveland folk.. please don't take offense to my descriptions.. and feel free to correct me :) i was only there for a week.
@Chase Webster I am investing in Cleveland and yes the ROIs can be pretty good. As stated above you need to take a trip out there and check it out for yourself. I have been out there and looked at properties and I made a couple of purchases. Nothing substitutes for putting your own eyes on the neighborhoods and the houses.
@Patsy Waldron Just wondering, in general, what burb are you able to find those properties for $50-$60k that rent for $1000-$1300? And secondly, are these properties in horrible neighborhoods and/or need $35-50k in rehab?
@Johnathan Norman : Thanks for those Seattle analogies :)- totally helps to size-up things! I agree, income/cash-flow is the key factor for me as well and the B-/C type areas totally help realize that goal. I will look into the other areas you mentioned as well to gauge what is out there. Thanks!
@Kristopher Hanks : agree with you and Johnathan- getting out their and seeing things is absolutely important- that's what I plan to do soon :)
Johnathan Norman Thanks a lot for sharing your first hand experience. I started researching the Cleveland market a couple of weeks ago and been looking at listings in that area - very helpful so far. But looks like Parma is one of the better (updated?) cities around there- what are your thoughts about it? Also is there like some way to classify A/B/C type neighborhoods around there - something which would help identify pockets that are good to focus on ? Also, looks like you are local here in Seattle- would you like to meet up for coffee and chat?
You know how Bellevue compares to Seattle? Parma is like that for Cleveland, just smaller and closer. High incomes, nicer area etc... i would say it is an A/B type area. But i personally don't like focusing solely on A/B properties mainly because I'm mostly focused on income. I find that C type areas often yield tenants who stay for long periods of time. The property has just purchased has 1 tenant who has been in the building for 20 years and many who have been there for 10.
I do feel Parma is a great area to purchase a single family home if you get it at the right price and you are focused on equity growth. Brooklyn/Old Brooklyn is not far and some areas are not quite as nice but it is also an area that has potential.
Also if you can find a deal in Tremont that is reasonable you should consider it. It is the trendy new spot for all the hipster types. .. once again comparing to Seattle think Capital Hill.
But as I said before i would strongly encourage anyone who invests to visit first. Get to know the area and the people. When you tell them you're an out of town investor make sure they know you plan on taking care of whatever properties you buy etc...
i'm up for coffee in a week or so. crazy busy this week. just send me a message.
p.s. Cleveland folk.. please don't take offense to my descriptions.. and feel free to correct me :) i was only there for a week.
Newbie investor here but a Cleveland native for all 25 years of life!! I would agree with everything you'really saying, especially Tremont! Personally I think it's a gold mine if you can get in at the right price. The only correction I would propose is that Parma is a solid C+ to B+ area but not A class. Some may consider certain pockets, but I would personally say you have to go as far out as Broadview heights/Brecksville (south), north Olmsted (west), and rocky river/bay village (northwest) to get into solid A neighborhoods on the west side.
With that said I wouldn't take anything away from Parma. The west side dosnt change street to street as much as the east side so focusing on a city as a whoke would be more appropriate than on the east where you should definitely have intimate knowledge of a potential property and the surrounding area. Personally if I planned on investing on the west side I would be in south Parma and west Lakewood.
*** My Disclaimer: I grew up in a solid A neighborhood on the east side. And have also lived in F Cleveland proper neighborhoods.
I have bought in Cleveland Heights and Garfield Heights. Not horrible neighborhoods (B). One was $35K and in need of about $10K cosmetic repairs, another was $20K and needs a new roof and exterior paint, for $12-15K total repairs. The $60K with $1,300 rents are for a duplex in GH, $650 per side for a 2 bed, 2 bath. Pretty standard, actually, in any suburb of Cleveland. If you look hard enough, there are deals like this everywhere. It kills me that I need to wain until I have stabilized these properties before I can buy more.
@Chase Webster I've wrestled with investing in Cleveland for the last 3 years as I was born and raised there and I still consider it home. There's a ton of excitement in the city and positive energy that simply wasn't there before. You can definitely get strong returns (stronger than most markets in the country), but the one downside is still a lack of growth. Certain parts of the city have certainly seen a resurgence (Downtown, Tremont, University Circle, etc), but the population is still declining, albeit at a slower rate. In all of Northeast Ohio, the three cities seeing the largest decline in population are Cleveland, Parma and Lakewood according to estimates from the Census Bureau.
The city is definitely divided into east side and west side. I'm from the east side and I was 20 years old the first time I went to the west side. The Holton-Wise team focuses on the west side and has a pretty good operation going. I've only met with them and did not actually invest, but had positive convos with James Wise. We were exploring an apartment building, so can't really speak to the turnkey rental side. Ultimately, I decided to purchase an apartment building in Chicago, but continue to monitor Cleveland and Cincy for future opportunities.
I work as a Realtor in Cleveland. There are some areas on the East side I personally wouldn't invest in. West side is more desirable in general. Lakewood and Ohio City are incredibly popular and affordable neighborhoods. I hope that helps!
@Chase Webster I agree with some of the others on here. Some great cities to look into might be Garfield Heights, Cleveland Heights, Shaker Heights, Euclid, Lakewood, or even Bedford. They have some amazing ROIs.
@Chase Webster As has been pointed out in various threads on BP before, 1) know your tax rates, 2) know your POS inspection requirements, 3) know your rental inspection requirements. These things can vary wildly from town to town within Cuyahoga County & can make or break you!
I've been receiving emails from Holton-Wise for the past few weeks, and it seems like there are some pretty good deals that may cash flow around 2-300 bucks per month with decent cap rates (10-12%). Couple questions though.
1) I am seeing properties that cost around $60K that will produce gross rental income of $1-1.4K per month. Is this realistic or are these inflated rents? Would this indicate a property needing a lot of rehab or cap ex? Generally, are these prices/rents in decent neighborhoods?
2) Is Holton-Wise actually a decent property management company or not? I looked at their BBB rating and it is not great. Are they just a turn-key scam company? If not, I see they will do some rehab. Does anyone know how this works? Would they be a good option for an out of town investor? Do you know what percentage they charge? Any other property management companies you would recommend? Same questions as above for other companies. I am looking to build a team in Cleveland (I'm out of town).
3) What is the biggest pitfall in Cleveland?
4) What areas should I avoid?
5) Are there any specific locations I should look in? Great streets / neighborhoods?
I appreciate the help? Hopefully I'll be able to network with some of you moving forward.
It depends if you're looking to generate a return from the appreciation of your assets or not.
Personally, I wouldn't invest in Cleveland, Chicago, and any northeast markets. They are not growing in both population nor job growth like the west and south.
I invest and look to generate a 12% from cash flow alone (COC), but the appreciation of my assets are a nice icing on the cake and usually represent a very large percentage of overall return (est... 75% of return comes from appreciation).
@Chase Webster, I purchased a SFH through Holton-Wise almost a year ago (time flies) thru @Federico Gutierrez and have been very happy with the process to date.
My biggest concern was that on a month to month basis, cash flow would look great, but after a year, tenant would move out and after repairs, vacancy and release fees, that return rates would not be nearly as good as hoped for with little chance of appreciation.....time will tell, but I am more than open to buying my next property in Cleveland and it would certainly be thru Holton-Wise.
Obviously @Tom Ott prefers his companies model, but I personally liked having the ability to purchase anything available on the market (from a SFH to an apartment building) over just what is owned by a single company. I also believe you at least have the opportunity to find or negotiate a "deal" where I don't see that happening from a turn-key company, although the idea that the house has been thoroughly gone thru before purchasing is appealing...but that's what a home inspection report and budgeting for repairs is for.
If your seriously thinking about investing in the Cleveland area, I would highly recommend a trip to Cleveland which is what we and several others in this thread have done and meet with the people and look at actual properties your interested in. Also, ask for other out of state investor references (as we did). Good luck!
Thank you all for your responses. I appreciate the candid discussion. I will hopefully be able to take a trip out before too long. @Jonathan Norman, I actually am not in WA, but in Bellevue, NE. Every time I type Bellevue in online, Bellevue, WA comes up first. :)
On further question. Do these 40-60K properties typically need much CapEx before they are rentable?
Cleveland is an excellent buy and hold area if you are looking for cashflow. Due to the declining population, you're not going to see the appreciation you would in booming markets like Houston.
Holton-Wise have a strong operation out of Parma. What they do they do it well from my understanding. It is really up to you to decide how you want to invest. The Turnkey/open market route. Or buy from where the turnkey companies buy from. We sell to turnkey companies and individual investors off market deals in the Cleveland region. If you can build relationships with people who bring solid off market deals, you will generally end up in a much better equity position, but you will need to take on some rehab. Range can be very light, to full rehab depending on the property.
Either can work it just depends on your goals and priorities. I am not a huge fan of turnkey for most people, as if the market dips you are immediately in negative equity. If not in negative equity immediately upon purchase. As by the time you try to resell and pay all the costs involved, it is very easy to be upside down when buying Retail or Turnkey.
In my experience going off market puts a lot more money in your pocket, but takes a little more effort.
I went through a realization like you did with Cleveland. I'm an investor from California and did my research and decided to invest in Cleveland. Like many have mentioned the population growth is an issue, and usually go hand-in-hand with appreciation. However, Cleveland has been more lively lately.
1) I am seeing properties that cost around $60K that will produce gross rental income of $1-1.4K per month. Is this realistic or are these inflated rents? Would this indicate a property needing a lot of rehab or cap ex? Generally, are these prices/rents in decent neighborhoods?
Depends what areas you are looking. I'd say average rent is closer to 1k, rather than 1.4k for a 60k property. Many of these are old homes that need renovation.
2) Is Holton-Wise actually a decent property management company or not? I looked at their BBB rating and it is not great. Are they just a turn-key scam company? If not, I see they will do some rehab. Does anyone know how this works? Would they be a good option for an out of town investor? Do you know what percentage they charge? Any other property management companies you would recommend? Same questions as above for other companies. I am looking to build a team in Cleveland (I'm out of town).
I asked one of the Holton-wise agents for his list of B-class singles in Cleveland, and he sent me a list of currently available B-class properties. They are not a turn-key scam company, they are not even a turn-key company. If you want to buy a property through one of their real estate agents and not use them as property managers you can, you can choose to use them how you want to. If you want to use your own contractor or home inspector you can, but they have guys readily available if you need as well. As an out-of-town investor myself, I haven't had property management experience with them, but if they're not satisfying your needs, then switch to a different one.
3) What is the biggest pitfall in Cleveland?
Older houses, lower growth, cold, high property taxes in some areas.
5) Are there any specific locations I should look in? Great streets / neighborhoods?
The area I've decided to invest in through my due diligence is Parma. I like Parma because:
-Largest suburb in the state of Ohio.
-Affordable homes
-Ranked 32nd safest in U.S. per neighborhoodscout 2014 (ranking has gone down since then, but still a really safe area)
-Area is surrounded by schools: elementary, middle, high school with several amenities.
-Low vacancy rates, Parma is densely populated.
These are some of the reasons I decided on Parma, but I encourage you to do your own due diligence, let me know if you have any questions.