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.
Cleveland, OH · Member since 2013 · 150 posts · 62 votes
12y
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
Cleveland, OH · Member since 2013 · 150 posts · 62 votes
12y
@ Jason B.
Are you asking about west 110th? That could vary on that street, if your near Madison and Detroit I would stay away, some of the worst areas on west side. If your near Loraine Ave it's a pretty good are, basically you want to stay south of why 90
you can get 750.00 a month in that area in single, 3 bedroom single there would bring 850 to 900
Cleveland, OH · Member since 2013 · 150 posts · 62 votes
12y
@ Jason B.
forgot about price, prices on singles have risen a bit in that area, I have seen them sell recently in 15K to 25k range, depends on condition, I can assure you from my experience that every home I have purchased here I have had to replace most plumbing and some electrical, keep that in mind
Investor · Colorado Springs, CO · Member since 2013 · 643 posts · 280 votes
12y
@Jorge Garcia Thanks for you insight into the different areas of Cleveland. It is helpful as I continue to do my research. I might be interested in purchasing one of your properties as my "guinea pig" for the Cleveland area. I'm under contract on one here in Colorado at the moment and have a couple busy weeks coming up. But I'll reconnect with you in early November to learn more.
@Christian Carson So far you've proved yourself the most knowledgeable and active Cleveland advocate on Bigger Pockets that I have come across. Thank you for sharing your experience.
Cleveland, OH · Member since 2011 · 400 posts · 223 votes
12y
@Michael Wentzel Thanks! There's still much to learn, as this market is surprisingly diverse.
@Jorge Garcia Let me know about these Tremont and OC deals if you see them. I've been trying to buy a multifamily to owner occupy in that direction but I can't find anything that doesn't seem way too expensive. Right now I'm about to "settle" for Lakewood in a great location about 1000 ft from the shore, but still think I'm paying way too much to live in a good area!
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
12y
@Christian Carson I too was a life long Eastsider. I moved to the Westside and spent 8 years living in two places over there. Currently in Summit and learning the South end of Cuyahoga and the Northside of Akron. I found the experience invaluable for my long term investing.
But my response to everyone's questions about Cleveland is always the same. What are you looking to do? People make money here at ALL levels of the market. Some want the highest monetary return market, some are looking for land in the path of progress. Also, some are looking for a 3-5 year gig versus decades.
When people ask about Neighborhoods, it would be more helpful if they said "Bedford Heights, I am looking for a long term rental that I can manage from out of state myself, and I want to own it for 10+ years."
Investor · Colorado Springs, CO · Member since 2013 · 643 posts · 280 votes
12y
@Ryan Arth It is great to have another experienced investor from Cleveland adding input. I'm pretty new to real estate investing and certainly new to the Cleveland area. I have owned two rental properties in Colorado Springs for the last few years. I recently sold one and I'm now under contract on my first multi-family. It should close in a couple of weeks and I'm looking to purchase another property before the end of the year, either in Pueblo, CO or Cleveland.
I'm looking for long-term (10+ years) buy and hold. I'm open to single-family or multi-family. Here in Colorado, I've found 2% rent to purchase price, above 13% cap rate and 35% roi when I put 25% down and factor in 10% for property managers, 10% for maintenance and 5% for vacancy. I'm aiming for $200 to $300 monthly cash flow per door.
Here in Pueblo, I'm looking at $40,000 to $50,000 for a single-family home and $75,000 or more for a multi-family.
My question is can I get a multi-family in Cleveland for less than $40,000 that will beat 2% rent to purchase price, above a 13% cap rate and more than 35% roi?
Regarding neighborhoods, this is what I've gathered from Christian and Jorge...
Eastside-
Euclid- block-by-block
Lakewood- good area, high taxes
Bedford- ?
Shaker Heights- good area, high taxes
Westside
Ohio City
Tremont
Old Brooklyn
I would really appreciate you input on neighborhoods and whether or not certain areas of Cleveland will exceed the numbers I've found in Colorado.
Regarding your owner occupy multifamily, I think you will do just fine in Lakewood. I lived there for 4 years when I crossed the river and still own the house. I would not do an owner occupy in Tremont or Ohio City. Yes they are trendy, but unlike Cleveland Heights, if you call the police you are on your own.
I may be convinced to place my money there, but not my family.
As I stated above, everyone has their own strategy, comfort levels and ideals.
Cleveland, OH · Member since 2013 · 150 posts · 62 votes
12y
your right Christian! Lol I know what you mean, I own a house in Lakewood myself and I made the mistake to move to a nice multi-fam on west side and I regret that everyday since I cannot get my house back in Lakewood till March from my tenants. In Lakewood you call police and they are there in a flash! On west side I have waited over an hour in a situation that was seriouse! My wife warned me that I was not going to like living in west side, she was right!
West side props are great to make cash but not for us to live.
After thinking about it for a bit, I think that a sub 40K duplex in Cleveland, in an area that you will be a good investment to own for 10 years +, will be quite difficult to find. And that is with spending on marketing and waiting for awhile.
In most areas here you would have to absolutely steal it to get a duplex for 40K, or you would be in an area that I would not consider an option at all, especially for remote ownership.
Cleveland, OH · Member since 2011 · 400 posts · 223 votes
12y
@Michael Wentzel , I'm a bit confused as to what you're looking for. In Cleveland, your typical duplex will yield nearly a 22% cap rate if you bought it for $40k, assuming your gross rents are $600/unit. 13% cap lands you at around $60k, which you can find in certain decent areas.
If you're buying at 10% cap or more in a decent area near your home in Colorado, I wouldn't count on doing too much better in Cleveland. That's a pretty good return. I invest targeting a 10% cap in good areas, and 15% in questionable ones. Deals are fairly easy to find but most of them involve substantial rehab.
Investor · Colorado Springs, CO · Member since 2013 · 643 posts · 280 votes
12y
@Christian Carson Thank you for giving input to the new guy. Here's the numbers for the 4-plex we close on in Colorado next week...
Purchase price- $85,000
Financing- $21250 down (25%), $63750 at 5.25%, fixed for 30 years
Monthly rents- $1950
Monthly expenses- $1248
Tax- $31
Insurance- $55
Management- $195
Vacancy- $100
Maintenance- $195
Mortgage- $352
Utilities- $320
Monthly cash flow- $702
Cap Rate- $12648/ $85000 = 14.8%
ROI- $8424/ $23412 = 36%
Rent over Purchase price= 2.3%
Those last four numbers are the ones I'm most interested in as I try to build a portfolio of buy-and-hold properties for cash flow. Most of the multi-family properties I looked at didn't have numbers this good. I have been looking at some basic single families in the same community that I might be able to purchase for $35,000 and rent for $750 to hit similar numbers.
Just looking at the properties in Cleveland and the listing prices, it seems like I could beat the Colorado numbers. One that @Jorge Garcia shared was a duplex for $45,000 that rents for $1250 per month.
Purchase price- $45,000
Financing- $11250 down (25%), $33750 at 5.25%, fixed for 30 years
Monthly rents- $1250
Monthly expenses- $752
Tax- $101
Insurance- $50
Management- $125
Vacancy- $60
Maintenance- $125
Mortgage- $191
Utilities- $100
Monthly cash flow- $498
Cap Rate- $8268/ $45000 = 18.4%
ROI- $5976/ $13750 = 43%
Rent over Purchase price= 2.8%
So the Cleveland numbers look better than the Colorado numbers. But are they good enough for me to move into a market that is further away and that I know less about? Am I missing anything in my calculations?
Cleveland, OH · Member since 2011 · 400 posts · 223 votes
12y
Property management will probably be more expensive on a two-unit. I've seen flat rates of $79/mo/unit.
And again, you're probably not going to be able to purchase a turnkey at $45,000. To get in for that price, you'll probably have to purchase a wreck at $10,000 and put $35,000 into it. These kinds of deals are available even in good neighborhoods.
Cleveland, OH · Member since 2013 · 150 posts · 62 votes
12y
I want to point out guys that Christian is right about management, cheap is never good when it come to services in prop management. I manage some props for several investors and charge 15% of gross rents due to my dad does it but he's top notch at what he does, we manage some in select areas, basically non-headache areas.
Investor · Colorado Springs, CO · Member since 2013 · 643 posts · 280 votes
12y
@Jorge Garcia Have you had any interest in the properties you listed on October 13th? I would consider these turnkey with the rehab you have done on them and the fact that they currently have tenants. It would certainly be worth it to pay a bit extra on the property management side to get the job done well. I assume your dad would be willing to manage the properties you are currently trying to sell, correct?
@Christian Carson Thanks for the insight/ caution. I probably wouldn't be interested in buying a wreck and managing the rehab from long distance. I close on one property here in Colorado next week and will probably try to add another by the end of the year. It seems like I should hold off on Cleveland for the moment if the numbers aren't significantly better than southern Colorado.
I'll be in Ohio in December to visit family. So maybe I'll take a day or two to come up and further explore the Cleveland market.
Thank you both for you insight. You've both been very helpful.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
12y
@Matt R. W80 & Detroit = warzone. Not 100% all the time warzone, but enough that I avoid it entirely. Expect periodic acts of violence and frequent drug trafficking, and the client base that comes with all that.
By other city's standards it would be a warzone, by Cleveland's it isn't the worst. Which is why our opinions are sometimes skewed when viewed by outsiders.
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
12y
Joe,
I am not familiar with rents in that area. Reason being, I do not consider that area worth the risk. The east side of Cleveland proper is not an area that I would recommend to anyone, especially someone not familiar with this city.
Some people invest there, but it is a very specific game. You will never see an appreciation in value, you will see a decline of the asset, and you will encounter tenants that are professional at making earning a return difficult.
Proper management may be difficult to find as well.
Take a google street view drive down it. look at the boarded up houses and the housing stock.