All Forum Posts by: Adriaan Sierra

I think the declining population and the risk mentioned here are exactly the reason why I invest in Cleveland. Any out of state investor can go to a small city and purchase a unit. This means that prices can be pushed to an unreasonable degree. Yes, units will appreciate, but would it be enough to upset your initial cost? All the while you are accruing negative cash flow with the expectation that things get better. To me, this is not better than buying shares in a company, essentially an appreciation gamble. 

As with everything, the devil is in the details, while the average prices have been going down, it doesn't need to be the case for your property if chosen correctly. I bet the best properties in Detroit kept appreciating during all the mayhem.

The answer is that it all depends on your investment thesis / risk profile. A great place would depend on what you want to get out of it. 

Most people that invest in Cleveland are all about cashflow and low entry cost. Our group focuses on up-leveling and holding units in A/B neighborhoods, so different than most. 

So while there are no good areas, there are definitely bad areas to avoid. You don't want to end up owning units in neighborhoods full of blight.  Check the Cleveland grading guide from Mr Wise above, that would be a good starting place.

Good luck

There has been some adjustment, but the prices are currently too high on areas we have traditionally invested on. What is surprising is that the houses are still selling on this high prices.

I have seen turnkey units that go for prices that would imply negative cash flow under a 20% mortgage. I'm assuming that those are people that go for house hacks or do it for speculation.

I hope the next months validate your thesis 

Hi Benjamin,

You are obviously going to get overwhelmingly positive views on owning a house in a real estate forum. Make sure that you analyze the other side of the coin too. Even though I own multiple investment units, I am currently renting the house I live in. There are particularities as to why (I move between cities a lot),  but the point is that it is not always the optimal economic choice to own your home.

Depending on the interest rate you pay on your current loans, it might be a better idea to invest in paying them. That is a guaranteed return on the upcoming year, which you shouldn't take for granted.

On the flip side, putting all your money on a single asset can hurt you. If you do a small downpayment and the market turns on you, you might be underwater (negative equity). If you are underwater and  you can't make a payment you will have a guaranteed big loss. 

What to do depends on particularities. Just make sure you get both sides a fair shake.

Good luck

I took a while back a bootcamp. It was helpful.

Making a decision of how passive you want to be in the endeavor is key. Usually the more hands on you are the better the potential return, though the hassle increases.

Where are you finding investment accounts that give 12% return on this day and age ;)

I doubt a potential tenant would be deterred by the "ugly" exterior. I know I wouldn't 

Are your rents proportional to similar units in the area?

Are your expectations on qualified reasonable to the area?

It's more likely that those things are amiss if you don't have experience in the area 

Good luck!

What is exactly awkward about it?

Seems like two adults came to a reasonable outcome given the circumstances.

Where you invest might not be where you live. Live where you can have your best live and invest where you can make the most money :)

 Just make sure that you can cover your costs going forward. If you are cash negative then you are banking on appreciation to make your money's worth. This can obviously work, but you are front-loading the risk. 

I respect the hussle though, hope you do well :)

My opinion, so make of it what you will: 

It sounds like your communication has been subpar on many fronts.

If you are doing the PM's work, you need to either fully own it or find someone that would.

If you have grounds for concern about illegal activities why not contact the tenant directly instead of making assumptions. Same goes for work / school, though what people make on their time shouldn't be your business (provided they pay).

If the tenant is clearly communicating a problem (ants), given the observations above, I wouldn't be surprised if she has not received proper information on how to resolve the problem.