Posted almost 3 years ago

Cleveland Cash Flow 2 - The Essentials, Price and Neighborhood Map

Normal 1574723257 Cuyahoga County Grade Map

Welcome to Cleveland investing!

Before jumping in, invest the time in familiarizing yourself with the neighborhoods and price points, it’s far too easy to overpay for property from afar.

For the local investor, a short trip to the subject property, a drive around the neighborhood, and some familiarity with market values is enough information to pull the trigger and make an offer. For the out of towners, it’s not so easy. A trip into town is not a must, but it is recommended.

The Essentials, Price and Neighborhood map was created to help investors better understand and maneuver the Greater Cleveland market in 2019. It is the starting point for all in search of properties to purchase, and a go-to guide for anyone uncertain about the price point and neighborhood of a specific property, some of my clients call it “The Map”. It was created with an unbiased, market and data driven approach based on average sales prices. It is not to sell you on one neighborhood over another, nor is it intended as a redlining or steering away from any specific neighborhood. Knowing where you’re investing and at what price point is crucial to a successful buying spree of Cleveland properties. The Map is detailed, however it does not nullify the need for property specific market analysis and a deeper dive into nearby comparable sales. Average sales price is influenced by owner-occupant buyer sales, which typically increases the median in comparison to investor sales.

There are 7 different color coded sections within The Map. In theory, the higher the price point, the more stable the investment. The lower the price point, the more volatile. If you’re interested in a larger image file with the ability to zoom in and view street-level grades, click here.

A Grade (Dark Green) - with an average single family price point of $200,000 or greater, A neighborhoods attract the highest paying pool of tenants, and contain some of the most stable investments. These neighborhoods are in constant demand, and property here is often priced too high for the smaller investor to profit. Owner occupant buyers dominate the single family market here, you may find great opportunities in multi-family and commercial investments. An argument can be made that during economic downturns, A neighborhoods take a hit due to lower disposable incomes, and more price sensitive consumer (tenant).

B+ Grade (Light Green) - with an average single family price point of $180,000, B+ neighborhoods are the holy grail of fix and flip investing. These are the ultimate neighborhoods to buy, fix, and flip, as price points allow for some margin of error, and the price point is still affordable for the end buyer. End buyers here are well qualified to purchase the home at retail prices. For the buy and hold investor, B+ neighborhoods can be profitable, however keep in mind this tenant is much closer to becoming a homeowner, and the prices are still steep. Like A Grade neighborhoods, B+ offers tremendous opportunities in multi-family and commercial properties.

B Grade (Yellow) - at a $126,000 average price point here, this gets more exciting for investors. B Grade neighborhoods offer a solid middle ground for price point and stability. B neighborhoods tend to have strong and steady rental demand at all times, even during economic downturns, as most A and B+ occupants scale back and move into the more affordable B areas. These neighborhoods are comprised of a mix of owner occupied homes and rental properties, with owner occupants a majority. The resale market is healthy and the margins are large enough to allow for fix and flip opportunities.

C+ Grade (Orange) - by far my favorite place to invest, a true C+ neighborhood offers the best bang for the buck. Average single family home price points are $105,000 here, which is highly influenced by the owner occupant buyers, while investment properties trade for far less. The tenant profile here is a well qualified working class resident prone to stay long-term. The tenant pool is not quite capable of purchasing a home yet, but desires features like those in B Grade rentals. A nicely renovated property here attracts a long-term qualified tenant, strong rents, and the price point is still affordable.

C Grade (Blue) - The most popular market for buy and hold investors, with an average single family home price of $78,000, this market is a common starting point for many local and out of town investors. It’s an affordable market, with an abundance of distressed or underperforming properties. It’s not uncommon to find sub $50,000 properties in C areas, but these will require improvements to bring up to quality rental standard. Properties here were built 50-80 years ago, and come with deferred maintenance, galvanized pipes, and knob and tube wiring. Your C grade tenant is often paying $900-1,050 in rent per month.

C- / D Grade (Navy) - The most commonly sugar-coated neighborhood grade by wholesalers and turnkey providers, C- / D areas are home of the “too good to be true” deals. Few experienced local investors may do well here, but these area are a challenge for the out of towners. With an average single family home price of $49,000, it’s no surprise new investors are inclined to purchase. I regularly receive wholesale deals in D area in the $30,000 range, that require some repairs. Sounds great, right? Not really. Cash flow looks great on paper, but is nearly non-existent here. Average rents dip below the $900 range per month, thus leaving little room for capex and maintenance. If the cost of roof replacement stays the same regardless of the neighborhood grade, wouldn’t you want higher rents to cover these big expenses? Below $900 in rent is where I draw the line on single family property investing.

D- / F Grade (Red) - $43,000 average single family price point, 80+ year old properties, and lower market rents tell it all. This neighborhood grade is full of distressed property, dilapidated housing, and slumlords. If you choose to invest here, pack a large cash reserve for repairs and focus on improving housing to quality standards. I will stay out of controversial topics like vandalism and tenant horror stories on this post, but know that this neighborhood will come with a lot of challenges, and very few property management firms operate here.

Proper due diligence is recommended on all properties of interest. To start, it helps if you have a reliable agent with experience in investment property, contracting, or a mix of both. Vetting active agents on investor websites such as BiggerPockets is a good start. There are other sources to find investor-friendly agents, start by talking to agents working under a property management firm, agent that are active flippers themselves, or those with several investment property listings on online real estate sites.

Now that you’re equipped with The Map, and some recommendations on finding the right agent to work with, it’s time for you to get started. Don’t wait to buy real estate, buy real estate and wait.

City Breakdown;

Bay Village - A neighborhoods

Beachwood - A neighborhoods

Bedford - A mix of B, C+ and C neighborhoods

Bedford Heights - C+ neighborhoods

Bentleyville - A neighborhoods

Berea - B neighborhoods

Bratenahl - A neighborhoods

Brecksville - A neighborhoods

Broadview Heights - A neighborhoods

Brook Park - B neighborhoods, C+ neighborhoods in northern parts of the city

Brooklyn - B neighborhoods

Brooklyn Heights - A mix of B and C neighborhoods

Chagrin Falls - A neighborhoods

Cleveland - A mix of all neighborhood grades, recommend a deeper dive into The Map for more street-level neighborhood details

Cleveland Heights - A neighborhoods around Fairmount Blvd near University Circle, B neighborhoods throughout the city, C neighborhoods around and north of Mayfield Rd, and D neighborhoods in the northern part of the city neighboring East Cleveland.

Cuyahoga Heights - C neighborhoods

East Cleveland - D and F neighborhoods

Euclid - B neighborhoods north of Lakeshore Blvd, C neighborhoods

Fairview Park - B+ neighborhoods

Garfield Heights - C neighborhoods

Gates Mills - A neighborhoods

Glenwillow - A neighborhoods

Highland Heights - A neighborhood

Highland Hills - B neighborhoods

Hunting Valley - A neighborhoods

Independence - A neighborhoods

Lakewood - A mix of A, B+, B, and C+ neighborhoods. The city of Lakewood is majority a B neighborhood, with A neighborhoods north of Clifton Blvd overlooking Lake Erie, B+ on the western end adjacent to Rocky River, and C+ neighborhoods on the eastern side of town adjacent to Cleveland.

Linndale - C neighborhoods, smallest village in the county notorious for its speed traps. 25 mph recommended.

Lyndhurst - B neighborhoods

Maple Heights - C neighborhoods

Mayfield Heights - B+ neighborhoods

Mayfield - A neighborhoods

Middleburg Heights - B+ neighborhoods

Moreland Hills - A neighborhoods

Newburgh Heights - C neighborhoods

North Olmsted - A neighborhoods

North Randall - C neighborhoods

North Royalton - A neighborhoods

Oakwood - B neighborhoods

Olmsted Falls - Generally B+ neighborhoods, few B neighborhoods

Orange - A neighborhoods

Parma - B neighborhoods

Parma Heights - B neighborhoods

Pepper Pike - A neighborhoods

Richmond Heights - B neighborhoods

Rocky River - A neighborhoods

Seven Hills - B neighborhoods

Shaker Heights - A mix of A and B neighborhoods, with an abundance of multi-family and large historical homes.

Solon - A neighborhoods

South Euclid - A mix of B and C+ neighborhoods

Strongsville - A neighborhoods

University Heights - Majority B neighborhoods, many student rentals around John Carroll University, some C+ neighborhoods at northern half of the city.

Valley View - B neighborhoods

Walton Hills - A neighborhoods

Warrensville Heights - C neighborhoods

Westlake - A neighborhoods

Woodmere - A neighborhoods

About the Author

Jad Boudiab is the CEO at B2B Realty, a Cleveland based real estate & property management company servicing local and out of town investors. Jad is an Ohio licensed real estate broker, a sales coach, and small to mid-sized apartment investor. He has consulted with hundreds of private clients on their investing strategies in Cleveland, and helped many new realtors and investors find their way in real estate.

Comments (9)

  1. This is a very helpful guide. Thank you!

  2. So helpful thank you.

  3. Thanks for sharing this @Jad Boudiab.  This is a great resource and easy for me to use when evaluating deals in Cleveland.  

    1. It's a solid starting point, I'm glad you find value in it.

  4. Nice map.  Looks similar to the interactive guide I threw up there a while back.

    Don't get me wrong, I didn't have any interest in maintaining it, so I don't really care.  I made the interactive map for my own use and shared it just to share it.  But it would have been cool to unify or expand upon existing resources vs increasing the # of neighborhood grading maps that exist out there.

    Would be pretty cool if all the big PM groups in the area would contribute to the same resource.  It would be very powerful (and accurate?)

    1. You make a good point. I had not come across your map on the forums but can certainly appreciate those taking the time to build a resource for the BP community. The way it's playing out, there may be 5-10 different maps floating out there, which can be discussed and consolidated into one. That would be a cool team project.

  5. following!

  6. Can you explain your methodology in how you delineated the graded areas? Some of the grades make sense, but others leave me scratching my head.

    1. Hey Robert - I'm just seeing these comments after someone tagged me in a recent one, apparently BP doesn't notify you of new blog comments.

      The map is based off of average pricing for a neighborhood. Our assumptions are as follows:

      - The more a buyer is willing to pay for a property, the higher it's valued, thus the higher the average price of a neighborhood, the higher the grade.

      We can spend long hours dissecting each sub-market and street even further, but that's not a good use of time. It works best as a starting point for all investors, coupled with a quarter-mile CMA of a subject property, a neighborhood walk / Google street view run.