Cleveland cash-flow screen: 421 of 2,036 listings passed. What stood out.

Investor · Member since 2023 · 127 posts · 63 votes

@Thomas Cruz Fragoza Nice work, and thanks for posting the assumptions. That's rarer than it should be.

The stat that jumped out is the 336 listings that met the 1% rule and still lost money. That's 44% of the 1% passers, which is a good argument for retiring the rule in a county with Cuyahoga's tax rates.

The other thing I'd test is the margin. A median of $134 a month is about $1,600 a year, so one furnace or a slow turnover wipes out the year. In the ZIPs at the top of your list I'd add a bad-debt line on top of the 8% vacancy, since unpaid rent and empty units aren't the same thing. How many of the 121 strong deals survive 5% for bad debt?

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Thomas Fragoza
OP
Member since 2020 · 15 posts · 2 votes
2d
Good question, Hossein. With 5% bad debt on top of the 8% vacancy, about two-thirds of the strong deals still clear the bar, but margins get a lot thinner. The small multis hold up much better than single family. Being honest about collections changes the picture fast.
- Thomas
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Diana KhanPro Member

Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 631 posts · 217 votes

3d

Quote from @Thomas Cruz Fragoza:

I wanted to know how much of the Cleveland market actually cash-flows at conservative terms, so I screened every active for-sale listing in Cuyahoga County this week (Oct 20).

Assumptions: 25% down, 7% / 30-yr, 3% closing, 8% vacancy, 7% repairs, 8% capex, 10% management. Rent = 85% of HUD Small Area FMR by ZIP, with an extra haircut in low-price ZIPs and a cap at Zillow's rent index.

What came out:

- 2,036 listings evaluated, 421 positive cash flow (~21%), and 121 "strong" (at least $200/mo and 8% cash-on-cash).

- Multi-family dominated: 52% of 2–4 unit listings passed, vs 11% of single family. Condos and townhouses: 0%, because HOA dues kill it.

- The 1% rule misleads: 757 listings met it, but 336 of those still lost money once real expenses were in.

- Passing listings had a median price around $110k, vs $165k for the whole market. Most passers were in the $100k–$150k band (185), then $75k–$100k (102).

- Median cash flow among the passers was only ~$134/mo (CoC around 5%). Most "deals" are thin, and the strong ones are the exception.

- The most passers were in ZIPs 44105, 44108, 44110, 44112 and 44104.

Caveats: these are screening estimates from list price. They don't include rehab, actual taxes after reassessment, or real comps, so walk and underwrite anything before an offer.

Curious what local investors see: do the rent numbers match what you actually get in those ZIPs?

Disclosure: I'm with Row Home Solutions, which built the screen. Happy to share the full method if anyone wants it.

@Thomas Cruz Fragoza, I think your findings show why the numbers need a closer look before making an offer. I can't speak to the actual rents in those Cleveland ZIP codes, but with a median cash flow of just $134 a month, I'd want to verify the rental income and look closely at any existing leases, unpaid rent, and property issues before moving forward.

I'm a real estate attorney and investor based in Maryland, and I work with clients on property transactions, lease agreements, and landlord-tenant matters. One thing I encourage is reviewing the actual lease terms and property records, not just the projected income. Those details can make a big difference when buying an occupied rental.

I appreciate you sharing the numbers and your assumptions, @Thomas Cruz Fragoza. It's a helpful discussion for investors, and it connects closely with the real estate work I do. Happy to stay connected!

[email protected]240-266-0291

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Thomas Fragoza
OP
Member since 2020 · 15 posts · 2 votes
1d
Thanks, Diana. Agreed that once you get to an offer, the actual leases and rent rolls matter more than any projection.
- Thomas
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Lorelai Germain

Real Estate Consultant · Seattle, WA · Member since 2026 · 12 posts · 2 votes

2d

What I find interesting is how much the ranking of these deals could change with relatively small changes in the assumptions. At $134 a month, a slightly higher repair rate, longer vacancy, higher insurance cost, or lower actual rent could move a property from positive to negative pretty quickly. I’d almost want to see a sensitivity range beside each property rather than a single projected cash-flow number. That would show which deals are actually resilient and which ones only work when most of the assumptions go right.

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Gladimir Lobo

Real Estate Broker · Cleveland, OH · Member since 2023 · 235 posts · 84 votes

1d

This is weird.

Don't know what experience is behind it. Don't know what data points are being pulled or where they came from. Don't know how all of this has been aggregated.

But it wouldn't be unfair to say it doesn't have more resources than Zillow. Doesn't know more than Zillow. And we all know Zillow was wrong.

That's the problem with assumptions.

They're subjective.

Take a property in Cleveland.

You can look at the current price. Make an assumption about rent/insurance/CapEx/maintenance/vacancy/management.

But all of those are variables.

And many of them are highly speculative.

These are 100+ yrs old homes. Automatically, there's potential for value-add simply because of age.

Then you get into the actual condition of the property. Again, potential for value-add.

And only after you determine what improvements are going to be made can you begin to determine what the actual rent may be.

The rent is not based on data points alone.

It's based on actual made improvements.

Then vacancy/CapEx/maintenance assumptions change.

And that's before getting into experience. Lack of experience vs a lot of experience can produce completely different outcomes from the same property.

And yes, it doesn’t touch lead cert/LAIC/tax re-assessments/insurability factors/or the differences from one street to the next.

When you take a 30k ft view, you miss the nuance.

We have 1bed renting for $1.7k while other investors are struggling to rent a 3-4 bed house for $1.5k.

Can you see it?

So what does this 30k ft exercise actually serve?

You can't make decisions from there.

That's dangerous for new investors looking for a crutch or a shortcut when there is no shortcut.

In the end, it's just an exercise and if it doesn't lead to a productive outcome, why do it?

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Thomas Fragoza
OP
Member since 2020 · 15 posts · 2 votes
1d
Fair points, Gladimir, and you know these streets far better than any screen does. You're right that it can't see condition, lead certification, reassessed taxes, or the gap between a renovated 1-bed and a tired 3-bed. It isn't meant to pick deals. It's a first filter for where to spend time, and the real numbers come from a walkthrough, a contractor and someone local. The 336 listings that met the 1% rule and still lost money is the part I'd most want a new investor to see. What rent range do you see for a rehabbed 3-bed in 44105 or 44108?
- Thomas
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Gladimir Lobo
Real Estate Broker · Cleveland, OH · Member since 2023 · 235 posts · 84 votes
1d
lol. don't take it personally. I don't argue with fools 😂
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Thomas Fragoza
OP
Member since 2020 · 15 posts · 2 votes
1d
No offense taken, Gladimir. Your first comment was useful, and I'd still like to hear what a rehabbed 3-bed rents for on the east side if you ever want to share. - Thomas
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Lorelai Germain

Real Estate Consultant · Seattle, WA · Member since 2026 · 12 posts · 2 votes

1d

The $134 median cash flow is probably the number I’d pay the most attention to. With margins that thin, I’d want to know how many of those 421 positive deals stay positive after relatively small changes to the assumptions. A little more vacancy, a higher repair bill or slightly lower achievable rent could move a meaningful number from positive to negative. The sensitivity of the result may tell you as much as the initial screen does.

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Thomas Fragoza
OP
Member since 2020 · 15 posts · 2 votes
1d
Agreed, Lorelai, and a sensitivity range is a good idea. When I added 5% bad debt on top of 8% vacancy, about a third of the strong deals dropped out, and the small multis held up much better than single family. At $134 a month there isn't much room for error.
- Thomas
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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

9h

Cleveland Overall Housing Vacancy: 15.7% (compared to the Ohio state average of 8.1%) according to regional housing data. Your vacancy rate of 8% is virtually half of market reality.

15% maintenance/cap ex is far too low at those rent points, Where did you obtain the 7% and 8% numbers?

Cleveland has a reported rental delinquency rate of above 50% (Hemline).

Cleveland population has fallen every decade since the 1950s (us census).

Cleveland appreciation for this century is 2.44%/year (neighborhoodscout) which is below the inflation for this century implying that residential real estate has lost value in inflation adjusted dollars. Rents have performed even worse via inflation.

Even if the $134/month cash flow was reality (it is not for the reasons cited), it is not enough to justify the poor liquidity, effort, and risk of residential RE.

Make sure to do thorough and conservative underwriting before investing in any market.

Good luck

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Thomas Fragoza

OP

Member since 2020 · 15 posts · 2 votes

6h

Dan, fair push on the assumptions. Cleveland's published vacancy and delinquency run higher than the 8% I used, and at these rent levels repairs and capex can eat more than a flat 7% and 8%. Those percentages were a screening starting point, not a claim that every Cuyahoga ZIP collects like that. When I added extra bad debt on top of vacancy earlier in the thread, a meaningful share of the "strong" deals fell out and the thin ones look worse. I agree a median around $134 a month isn't a reason to buy in a soft-appreciation market. The screen's only job is to cut the list before a walkthrough and real underwriting. Appreciate you putting the harder numbers on the table.

- Thomas

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Cleveland cash-flow screen: 421 of 2,036 listings passed. What stood out.

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