Virtual Assistant · Scottsdale, AZ · Member since 2016 · 13 posts · 2 votes
I am making a potential move to Cleveland Ohio. I am looking to purchase an investment property and there are so many areas to choose. I have really been looking at 3 areas and all will work for my location to work since I personally am able to work from home. I like the area and rental rates in Lakewood, I love the homes in Shaker Heights but property taxes are dreadful and I have found Cleveland Heights to be a nice area as well. Someone please give me some ideas on these locations, what areas are great for rental return. I am also worried about purchasing older homes for investments because of all of the warnings you hear to not purchase a home older than 10 years as an investment. Thanks!
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
9y
@Brandon Weisser Generally speaking, you would like to see newer houses, but we all own older houses and are just fine. Early 1900's can be a pain, but people invest in them all day long. 1950's bungalows are built like tanks, 1970's split levels can have wood siding or other features that aren't as desirable as an older house in a different setting (not wooded, for example) or they could be great. You could also buy a newer house that was thrown up by one of the production builders that is only twenty years old, but was built very cheaply, and is going to have expensive issues long term. You can buy a 1915 A frame in Lakewood that was a low end build with no insulation in the walls, a dungeon basement and 3 degree lean or a 1915 house where the people had money when they built it, ornate and standing strong. Age is only one factor among many.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
9y
Brandon Weisser as far as good areas for rental returns, the lower you go, the better the short term return (hypothetically). That doesn't mean that that is best course of action.
As far as homes over ten years old, that will be the entire city, basically, as this area was built out a long time ago. As the city developed, it built outwards, so you will find the further you are from the city center, the "newer" the property will get. Unless you buy infill development, which you may find here or there, but it would be tough to build a model around that.
A rough cut on neighborhoods would be to check the great schools ratings. You will find areas (normally old high end neighborhoods near the city) where the schools are no good but the area is in demand, but that is more the exception than the rule. People in these areas just assume the cost of private schools when they buy or rent there. There are a few areas of the city that have this, but I see more examples in Akron and Cincinatti.
Long term demand and growth areas of this city will have a direct correlation to the school's ratings, in general.
Look for the most appropriate balance between short term return, upfront cost, and long term growth. The "appropriate" part will be specific to each investor.
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
9y
@Brandon Weisser All 3 of those neighborhoods that you mentioned are nice and in high demand for tenants as well as owner occupants. Of the three I myself am partial to Lakewood as it's on the west side. You see there is a great East & West Divide in #TheLand. If you are in going to go with Shaker you don't want to be on the side that is part of the Cleveland city school district.
Virtual Assistant · Scottsdale, AZ · Member since 2016 · 13 posts · 2 votes
9y
@Ryan Arth I really appreciate your feedback. I completely understand the building structure of the greater Cleveland area and that it is an older community with older structures. I am moving to the area because I like that style of architecture. I just wanted to know from an investors standpoint is it putting myself and my investments at a greater risk because they are older. I actually think most older homes were built better than new homes with the exception of windows, seals, things of that nature burn the bones of the house are better built. I am centering my hold stategy on man you factors but I am considering schools, location, educations level in the area(high school degree, college, graduate degree) as well as crime statistics for the area she and making my own A,B,C rating system. I just like to see how my evaluations look in comparison to others who are current investors. Thanks again for all the insight.
Virtual Assistant · Scottsdale, AZ · Member since 2016 · 13 posts · 2 votes
9y
@James Wise thank you for your information. I really like Lakewood and currently have someone looking for some multi fam rentals for me. I love shaker but maybe it's more of where I will buy after 5 years or so just because property taxes are extremely high and I think it will crush potential profits or cash flow from an investment. (Would LOVE someone to tell me otherwise) I love the area but buying rentals isn't about the homes I like it's about good areas in high demand that will also allow my investments to grow and cashflow.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
9y
@Brandon Weisser Generally speaking, you would like to see newer houses, but we all own older houses and are just fine. Early 1900's can be a pain, but people invest in them all day long. 1950's bungalows are built like tanks, 1970's split levels can have wood siding or other features that aren't as desirable as an older house in a different setting (not wooded, for example) or they could be great. You could also buy a newer house that was thrown up by one of the production builders that is only twenty years old, but was built very cheaply, and is going to have expensive issues long term. You can buy a 1915 A frame in Lakewood that was a low end build with no insulation in the walls, a dungeon basement and 3 degree lean or a 1915 house where the people had money when they built it, ornate and standing strong. Age is only one factor among many.
Investor · Lakewood, OH · Member since 2016 · 158 posts · 49 votes
9y
Cary Ferguson Jr what parts of Lakewood do you think are the best? Im house hacking now looking for my second deal but failing to find any positive cash flow that I think is worth my time. I'm seeing nice houses but the rents are only $600 for a side and it just doesn't make sense
The average rent in Lakewood is actually $750. If you have a nice kitchen and newer appliances, you can get up to $950 for 1,000 sf. My friend just rented an 850 sf, one room apartment in Tremont for $1275. If you have a double in Lakewood that's >1300 sf and has at least 2 spacious bedrooms, than you can get north of $1250.
Many Landlords don't keep up on their rent increases. It's also true that most landlords undervalue their rent and overvalue their property.
Let us consider a hypothesis. It may be true that the landlords that are most likely to sell are the ones with the lowest rents. Because they do not know how to keep rents in line with the market, they experience less profit. Because they experience less profit, they have more incentive to sell.
I would look at low rents as an opportunity to add significant value. If you can bring rents up to $800 from $600, then you've significantly increased your revenue. If you can somehow lower expenses as well, then you're well on your way.
Let me know if you'd like to discuss Lakewood further.
Investor · Lakewood, OH · Member since 2016 · 158 posts · 49 votes
9y
Cary Ferguson Jr
What are some of the steps you would take to increase the rent from $600 to $800?
As said before I am house hacking but a tenant came with it.
Is it as easy as buying the property and making them sign new leases with the new rate? Also would that be worth it with the possibility of them leaving?
I am completely new to this so any advice would be helpful. Still reading articles on real estate but haven't gotten to the landlord part.
Thanks for your advice in advance
New York City, NY · Member since 2016 · 470 posts · 348 votes
9y
@Mitchell Litam If they are below market rent you can raise them to market rates. Or you can renovate the property to increase rental rates - do your homework first though to ensure you're making the proper renovations to increase rent!
It's not as easy as simply changing the lease. Your unit is a product in the marketplace for rental units. You have to make sure that your unit is comparable to other units in the desired price range.
For example, if the average rent for a 1000 sf unit in Lakewood is $750 a month, then you have to have a better product if you're going to receive $800 a month. To increase the rent you have to consider what tenants are looking for. Tenants want to see nice wood floors, a decent paint job, okay lighting and a decent kitchen and bathroom.
If you offer a unit with brand new bathroom/kitchen, then you can get a very nice premium on the rent. Similarly, if your unit needs a ton of work and your price is high relative to the competition, then nobody will rent from you.
The best way to increase rent is to do rehabs on the kitchen and bathroom. Decent wood floors and decent paint are par for the course. View this problem in terms of your competition and you will quickly learn what you need to do to increase rents.
Investor · Lakewood, OH · Member since 2016 · 158 posts · 49 votes
9y
Cary Ferguson Jr
The thing that scares me is I have no rehab experience. I need to work on estimating costs of hardwood floors or kitchen renovations. Do you typically do them yourself or hire people?
I work about 65+ hours and Saturdays.
I recommend downloading the app Thumbtack. There you can push out projects to contractors and get multiple bids back. Then you review their ratings and select a contractor.
I do not do rehab work. I'm good with numbers. I have an amazing painter & floor guy and an excellent granite contractor that I'm guessing are looking for more right now.
I also have a very strong portfolio lender. Shoot me a message if you want to get connected with anyone.
Virtual Assistant · Scottsdale, AZ · Member since 2016 · 13 posts · 2 votes
9y
I am glad this thread is still trending feedback. My move to Ohio is getting closer, I am about 6 months out and will be looking to purchase a few properties when I get there. All of this is helping tremendously. @Cary F. I am going to keep your information if you don't mind as I will also need contacts for flooring/granite and other jobs.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
9y
Don't get all panicked about not knowing what certain things cost. Google, search the forums, call people, check out J Scott's book.
No one knows everything, you will know more later, start accumulating knowledge now.
Estimate high and get multiple bids when you are closer to action. Invest some time into filling in the blanks.
As far as increasing rents, it is a function of location desirability and product desirability. People will overlook one a bit if the other is strong.
What has served us well over the years is being at the top of the curve for the market/product.
There is a discerning renter in your market that is willing to pay for the best product available. The additional cost to present this product is less than the extra 10%+ that you will get in rental income. You will have less vacancy, better tenants and on and on. There are many benefits here, long and short term.
Focusing on short term profit over long term gains is what many landlords do, you can rise above the rest without great difficulty.
That higher rate will help in DTI financing as well, as the bank normally only recognizes 75% of your income. There are other ways to enhance this as well.
Someone said once and it stuck with me, "in my market I have no competition". It is more a mentality than a matter of fact, but it sums up our approach pretty well.
Denver, CO · Member since 2017 · 13 posts · 2 votes
9y
Hi Everyone,
I have been interested in investing in the Cleveland area for about a year now. However, when I went to visit the city in September, it was even better than I expected. I currently live in Austin, TX. Austin is a great city, but it's getting very expensive. I am looking to make my first real estate investment in the next few months. I think Cleveland would be a great first step since it's relatively inexpensive and on the rebound. However, I am concerned about investing out-of-state for my first purchase.
I have definitely heard from many people that Lakewood is a great area to invest. I am mostly interested in multi-family and think a duplex would be a good starting point.
Had a few questions. What utilities are landlords in the Lakewood area usually expected to pay in order to remain competitive? What must a unit (consider a duplex) have in order to have rents >$750? Is there any difference in rentability for a side-by-side duplex compared to a top/bottom level duplex?
I am interested in speaking to any realtors and property managers in the area so please feel free to PM me. Thanks!
Property Manager · Cleveland, OH · Member since 2016 · 260 posts · 162 votes
9y
Lakewood has proved to be a great community for our clients. Since the water & sewer are not separately metered in a duplex and, therefore, remain in the owners name you should account for that cost. Gas and electric are the tenants responsibility.
The side by side is more rare but certainly adds to the value of the rent. The top/bottom is the standard but seems to rent out just fine. The cities values for rent, in a very general sense, start lowest on the east and highest on the west side.
Denver, CO · Member since 2017 · 13 posts · 2 votes
9y
@David Terbeek Thank you for your prompt reply! Any suggestions on how to keep the water bill to a reasonable level? Last thing I need is for the tenant to do is open a car wash and me being required to pay the water bill.
Are you familiar the North Ridgeville area? I have read more companies are beginning to move there. Is there good growth there? Is it rentable?
On the topic of manufacturing, political views aside, are people in Ohio optimistic that there will be more jobs soon with Trump in office? Are you seeing any evidence of this?
Additionally, does anyone know what the progress of the Opportunity Corridor is? Do you foresee redevelopment in this area soon?
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
9y
@Jeff Brenot North Ridgeville is out there, geographically. It is on the edge of the county, but many people from there will work downtown or on the West side.
Anywhere is rentable, reasonably speaking. North Ridgeville has 31,000 people and is directly next to other populated suburbs. If you can offer a quality product that your ideal tenant can afford to pay for you should not have problems with demand.
You will be receiving your water bills monthly, so an issue should be quick to catch. A clause in your lease charging an overage for water usage above X per resident should help you out.
Manufacturing will always be a focus in Cleveland. There are three large manufacturing advocacy groups in Cleveland that actually provide quite a bit of support. They provide resources for innovation while also providing support to the existing businesses. You also have a city full of experienced, generational, tradesmen and women.
The push for years has been to get younger people into trade programs or basically interested in manufacturing as a career path because the manufacturing companies here cannot find enough people and the experienced workforce is aging.
Property Manager · Cleveland, OH · Member since 2016 · 260 posts · 162 votes
9y
@Jeff Brenot To control water, it is standard for us to disable/remove exterior spickets. We also think very carefully about the benefit of having laundry hook ups vs not having them. The higher end the tenant the more likely they will be responsible with laundry. On the lower end we have seen the unit become the laundry mat for family and friends. Keep an eye on the bill, if you see a trend up get out there and check for leaks. Unfortunately, no fool proof secrets just preventative measures.