Cleveland OH investing?
Seattle, WA · Member since 2013 · 70 posts · 33 votes
I'd like to hear from anyone investing or invested in the Cleveland rental market. I'm looking into purchasing a duplex or two in the Cleveland area for long term rentals.
I came to Cleveland from Key West, Fl. I met my wife here and didn't even know where to begin in terms of work until I saw a month later after being here that I can buy a duplex for 8k to 30k in a high rental area, in Fl you won't buy anything decent for under 200k, so here I am now and I actually put together a really nice portfolio in less than 2 years being here!
For you guys out there wanting advice for Cleveland props, I learned this market from a very successful woman that got very wealthy here doing this!
Rule number 1. Don't make the mistake of buying ANYTHING on the east side! I almost made the mistake but listened and saw it all go down, they will destroy everything, steal your water tanks, furnaces, fixtures or anything that they can get a dollar for!
I decided to invest in the areas in the west side which is just a tad more money (8k to 35k) and this area includes west park, west side, old brooklyn. I was a contractor in Fl for a long time so I rehab my own with a couple 12.00 hour guys as helpers so my rehab costs are lower than most since I do alot myself. I buy mostly duplexes and im renting 2 bedroom units from 585.00 month to 600.00 per month. 3 bedrooms from 600.00 to 675.00, expect to pay 125.00 average per month in water & sewer since owner pays that in multi-unit props. Now here is what nobody like to hear, Cleveland tenants are somewhat unstable and like to move alot, they also mostly all like to have pit bulls as pets, they will come to look an apt and give you a deposit and then a week later after you took apt off the market, they call you and want deposit back, so you just lost time & money! Also the local help is garbage so repairs can be expensive by qualified people. Also they love to pay late ( they live paycheck to paycheck ) and some are dirty and bring bedbugs in to your house and it costs us money to correct issue.
Well there is good and bad in every business but i'm happy with this here, I actually ended up with 25 of these duplexes and making good money overall! I'm selling a couple of my properties now to buy something in Avon Lake as new personal home, so if any of you guys out there interested in some nice turnkey props, let me know and I can even manage for you if you buy it. For those of you looking for a property manager, I offer this service for only west side investors and my rate is 15% of gross rents, i'm a bit higher than others but my experience speaks for itself, my company does it all from rehabing to placing tenants, we do it all in house so we don't call roto-rooter to snake your drains, we do it at a rate where you making money and so are we.
Good luck guys! Any info needed? I'll be happy to entertain
J-
@Sunny D., one thing to take a look at are the property taxes. I recall OH is one for huge property taxes for investors. There are a handful of states that have property taxes where you'd spend 3-5months of annual rent just to pay taxes.
Chheang I would encourage you to look at CLE, the taxes are not nearly as aggressive as you have noted. Many neighborhoods around NE Ohio that offer a very favorable tax rate, that is easy to bear and offers a good balance of risk and cash flow.
Thanks for the note @Steven Gesis. Any neighborhoods you'd suggest? I see Pharma, Euclid and a few others that people are flocking to. During my eval of a few of the homes that the turnkey companies were advertising, I looked up tax info and it was pretty steep. I recall like 3k to 5k for a 60k home that'd rent for 900/month. Are there areas that you'd suggest? I appreciate the advice and help. Thanks!
Chheang, I know I am going to start a storm here:
I think its not only about neighborhood, you have to consider the sub markets within the neighborhoods, it certainly helps to better understand your plan. Are you seeking to be somewhat hands-on or simply a remote investor looking for good consistent cashflow?
Once you truly answer that question, I think you can better define area and sourcing. If you want something hands-off I always encourage a consideration to Turnkey, many argue you are paying a premium, no premium is a real turnkey, this is a market driven price if you are financing, the value will be provided through the appraisal, so it will be evident quickly whether the home is being sold at a premium or not. The reason I present this situation, is that you want a full accountability, especially if you are out of town, so simply buying something off the open market off the MLS, with a Property Manager partner, you are missing the most critical component, the physical construction support and maintenance support, that is not real true turnkey. Most Turnkey is off market, no premium, real Turnkey is not a process it is a cash flowing property with an existing tenant, no placement fees no realtor fees on acquisition, this is real turnkey. Now that is out of the way, we can talk about the neighborhoods.
I am not a West Side of Town guru, I am however an East Side of Town guru :) What I know about the West Side is if you want to play in the similar neighborhoods, you will not get the same value and rent rate as you will on the East side, based on my experience. West side is nice, East side is pretty amazing though, a lot of generational wealth, major shopping hubs, all major hospital systems are on the East side (Cleveland Clinic, University Hospital) - all major Universities are on the East Side of town, as well as the greater majority of the fortune 500 companies. Cannot get the same values/rental investor ratios in good quality neighborhoods on the West side as you can on the East Side of town.
I do not play in the lower spectrum of neighborhoods or home prices such as $40-70K with under $1,000.00 rent, just not my cup of tea, I have several homes in my portfolio remaining from that novice/beginner time point in my investment life, but as I have evolved, so have my properties, in category and quality. The biggest lesson learned to date has been the standardization of the construction materials, quality and methodology. To layer that a little deeper, its all about resilient materials, most important NO CARPET!!!!
Always remember, everyone has a different strategy, it just depends what your strategy is, and what fits your risk profile.
Sunny-
Wow, looks like you did a lot of homework on our organization, that is terrific, some of the things I agree with and some I do not :) First thank you for all the nice words!
Second, our operation is not as simple as you have put it, but that is our core to the success and our proprietary knowledge :) .
I am glad to hear that you have had success with us already to date, so we must be doing something right.
I would have to disagree with the categorization of the East side of Cleveland, in no way is it inferior to West Side of town, also keep in mind we are talking about locations in the same county. East side of town has some of the most luxurious and affluent neighborhoods coupled with very very strong school districts, some of the best in the State, along with the greater majority of the generational wealth, something the West Side does not have or offer. Additionally, the districts/neighborhoods on the East Side are not off-shoots of Cleveland proper as they are on West Side and are not tied to the Cleveland school district.
Brelion is a very cool space, you can find some of our deals being syndicated their. We have accredited investors that double dip, participate on the syndication and then purchase the assets for long term holds, increasing the rate of return while mitigating risk.
You do not get a better risk profile by sticking to the West Side, in-fact you may be increasing your risk, especially if you are talking about purchasing Cleveland proper West Side. Parma a "pseudo" west side community, is not any stronger than any average working community on the East Side. The West Side does not have the same amount of fortune 500 industry that the East side boasts, keep that in mind.
Our pricing is all dictated by market, as most investors now use some financing, the appraisers set the price not the provider, to say that the appraiser comps are weighed by investors and not owner occupants, would be false, as appraisers are able to distinguish this in their assessment. Furthermore, we do not operate in submarkets where the concentration of investor owners outweigh owner occupants, this is important also.
We do have a dedicated construction division, they are happy to serve as GC, however, our group cannot manage post construction, as we sold our retail property management division in 2014, only manage for Smartland Investors exclusively, so we are a boutique all-in-one shop, as we want to maximize ROI (consistent ROI) to the investor.
Feel free to PM me or Call me to discuss further.
just moved here from San Diego and want to connect to build my buyers list!! Any recommendations besides doing this??
Thanks!! Kevin!!
hi everyone, very interested in Cleveland area and how agent fees are structured. I spoke to someone who required a minimum payment and a contract. I've never had that in the properties I own in other markets. Is this normal in Cleveland? Please advise. Thanks!
hi everyone, very interested in Cleveland area and how agent fees are structured. I spoke to someone who required a minimum payment and a contract. I've never had that in the properties I own in other markets. Is this normal in Cleveland? Please advise. Thanks!
What are you looking to do? Are you looking to filp, buy and hold(be a lardlord) or go with a turnkey? Either way I agree, sounds odd.
@Tom Ott thanks for your response! i'm looking for buy and hold properties in B areas as investment properties. I just reread my post and I should clarify. The realtor wanted a commission guarantee for any properties purchased through her. For example, if I buy the property through her and the seller paid commission was less than her minimum, she requires that buyer pays the difference. In addition, she requires an exclusive right to represent contract.
@Tom Ott thanks for your response! i'm looking for buy and hold properties in B areas as investment properties. I just reread my post and I should clarify. The realtor wanted a commission guarantee for any properties purchased through her. For example, if I buy the property through her and the seller paid commission was less than her minimum, she requires that buyer pays the difference. In addition, she requires an exclusive right to represent contract.
That is not UNheard of, that is just not very common.
@ Sunny, I really dont know where you are getting these better ROI numbers on east side because i'm a "on the ground " investor / contractor in all of Cleveland and own homes in Cleveland heights area where it's considered a great area and paid 80k for a multi-family where my max rent is 700.00 per unit and all new rehab!
Then I own on west side where I paid 20k + 7k rehab, my total investment was 27k and im getting the same rents with same quality tenant! My turnaround is actually better on west side!
I now own 32 multi family homes in west side and 6 in Cleveland heights and wish I never put a dollar on east side!
Sunny, you forgot to mention what a pain in the a.. the building dept out there is and crazy yearly inspections where they make you spend $ on stupid stuff not needed!
I been in this game here on the ground 8 years now and ill stay on west side!
@ Sunny, I really dont know where you are getting these better ROI numbers on east side because i'm a "on the ground " investor / contractor in all of Cleveland and own homes in Cleveland heights area where it's considered a great area and paid 80k for a multi-family where my max rent is 700.00 per unit and all new rehab!
Then I own on west side where I paid 20k + 7k rehab, my total investment was 27k and im getting the same rents with same quality tenant! My turnaround is actually better on west side!
I now own 32 multi family homes in west side and 6 in Cleveland heights and wish I never put a dollar on east side!
Sunny, you forgot to mention what a pain in the a.. the building dept out there is and crazy yearly inspections where they make you spend $ on stupid stuff not needed!
I been in this game here on the ground 8 years now and ill stay on west side!
Jorge
My 3 properties are all in west side, dont have any in east side. I am assuming your properties cost 27K + loan for remainder.
No, I paid 27k total with rehab 6 years ago, no loan!
Today you can pick these up for 20's to 35k and 8 to 10k rehab since prices have come up, I sell turn key multi family homes these days for 50 to 55k to investors, they come with new plumbing, electrical, updated heating, paint, paying tenants.
Hi @Anne Whalen and @Tom Ott, I just wanted to chime in to clear a couple things up. First, it is becoming more common for agents to have minimum commissions. When you think about it, it makes complete sense. If a buyer is looking at an REO property, and the seller is only offering $400-500 commission (which is now fairly common), you're asking an agent to do a lot of work and take on liability for the transaction for a few dollars. At $500, the agent has to split with their broker, let's just say 70/30 (could be 50/50 with some brokerages). That leaves $350. Presumably the agent is looking at more than one house for that buyer, so there is overhead, gas, mileage, office expenses. Let's just call that $50 per transaction. Plus we agents pay about $1200 per year just to be Realtors. If your agent is doing 20 deals a year, that's $60/transaction. We're at $240 now. Now factor in the agent's time and liability. Have you ever heard of a Realtor taking on a sale, which could take 5-10 hours and some amount of liability, for $240? We certainly won't do it. Our minimum commission is typically $2000. If the seller is only paying $500, we ask the buyer to make up the difference, in this case, $1500.
If your agent isn't doing this, my guess is that they won't be in the business very long....
@Mike Ferrante thank you for breaking it down for me!
sent you a message. Feel free to reach out to me for more info. I have a lender who might help, but it seems I can't post phone numbers or emails here now.
HI All,
I am looking for investment properties in Cleveland for both fix & flip and Buy, Fix and Hold.
Looking for properties like Jorge Garcia is doing.
If you have anything let me know.
thanks
HI All,
I am looking for investment properties in Cleveland for both fix & flip and Buy, Fix and Hold.
Looking for properties like Jorge Garcia is doing.
If you have anything let me know.
thanks
Now is a great time to invest in Cleveland. Either a buy and hold or a flip. Best of luck to you!
@Jorge Garcia and @Tom Ott,
Thank you for putting in so much information regarding the different nuances with Cleveland. I am an out of state investor and I have 3 properties (Lakeview and Euclid) and I have been looking for multi unit properties and recently received an opportunity on a duplex on west 104th on the north side of 90 "cudell" close to Madison.
I don't know this area well as Lakeview and Euclid and most of the different heights but it seems as it may be up and coming (C class to B) but has a some sketchy areas. The problem I see is that this has been proposed as a property full rehab, 2/1 each renting at $600 for $100K but a lot of the houses in this area are still in foreclosure and sell for $60K or less. I don't mind paying a premium for this type of TK but this seems a bit rich.
Any thoughts?
V/r
Tim
@Jorge Garcia and @Tom Ott,
Thank you for putting in so much information regarding the different nuances with Cleveland. I am an out of state investor and I have 3 properties (Lakeview and Euclid) and I have been looking for multi unit properties and recently received an opportunity on a duplex on west 104th on the north side of 90 "cudell" close to Madison.
I don't know this area well as Lakeview and Euclid and most of the different heights but it seems as it may be up and coming (C class to B) but has a some sketchy areas. The problem I see is that this has been proposed as a property full rehab, 2/1 each renting at $600 for $100K but a lot of the houses in this area are still in foreclosure and sell for $60K or less. I don't mind paying a premium for this type of TK but this seems a bit rich.
Any thoughts?
V/r
Tim
Hi @Christian Carson and everyone on this thread.
I'm looking at a 3/1 SFR and 3/1 duplex 3 blocks south of the University of Akron. The cashflow on these properties look great, but I'm out of state and not familiar with Akron.
Should I stay away from this area?
Thanks for your help
looking at properties in Old Brooklyn. Does anyone have any opinions on this area from a long term rental perspective.
Also, trying to understand how much to budget for water and sewer on a monthly basis for a duplex.
Trying to determine if cash flow is doable in this area with realistic numbers and regular maintenance costs.
Any help would be greatly appreciated!
I'm wondering; did Cleveland and specially East-Cleveland got safer in the last 3-4 years or is it still the same or even worse?
I got an investment opportunity(or not) to buy a SF for around 30-35K or a duplex for around 54K in east Cleveland. Everything will be taken care off;
I saw in the thread that 3-4 years ago you could also buy in West Cleveland for these prices, but not sure if that is still the case? And how big is the chance to get into problems property vandalism?
Especially wondering what @Christian Carson and @Jorge Garcia have to say about this.
One of my clients just got shot in the back of the head earlier this year in that area. he survived with the bullet went through his neck and severed one of his vocal cords
@Jørgen T. For a multitude of reasons I'd still stay away from East Cleveland. Crime, bankrupt City Hall, depressed area... PM me with the areas you're interested in (approximate addresses so I can determine what block it is as it does make a difference on the longer streets) and I'll get you some feedback from myself and a few local sources I have who do still work the area.