All Forum Posts by: Andrew Duna

Quote from @Vadim F.:

Quote from @Andrew Duna:

Hi Vadim. If you'd really like to invest in a cheaper area and you are okay with decent risk then I would recommend investing in the Clark-Fulton Area. It's currently D class and has a great chance for appreciation. Go for section 8 for now in order to mitigate some of that risk and then wait for that appreciation to trickle in. In my opinion-- something monumental would have to occur in order to pull East CLE out of the spot it's currently in.. whereas Clark-Fulton already has a lot of promising potential  

Here is a link for further info on the housing developments in the Clark-Fulton area: https://www.clevelandcitycounc...

 @Andrew Duna I am aware of the investment in Clark Fulton and prices are already reflecting the possible changes to come. The way I see that area now is potential appreciation vs cash flow due to gentrification. East Cleveland is pure cash flow with minimal appreciation for the time being but if and when University Circle does expand the prices may boom. East Cleveland to me looks like an area that is prime for live-work lofts. All the abandoned brick buildings can be restored to beautiful loft spaces. But that does need a lot of time and money invested.

 Yep it is somewhat annoying that the prices in Clark Fulton are already factoring in some of the projected appreciation. While many properties are priced this way--  they oftentimes simply do not sell -- and go for lower than asking. 

I think there is some merit to investing right on the doorstep of University circle with the right expectations -- but otherwise the rest of East Cleveland is a large area that is a long ways away from investment dollars. So just like any investment strategy in these kinds of areas- paying attention to the specific street you invest in matters- as I'm sure you've already factored in. Wishing You All The Best 

Hi Vadim. If you'd really like to invest in a cheaper area and you are okay with decent risk then I would recommend investing in the Clark-Fulton Area. It's currently D class and has a great chance for appreciation. Go for section 8 for now in order to mitigate some of that risk and then wait for that appreciation to trickle in. In my opinion-- something monumental would have to occur in order to pull East CLE out of the spot it's currently in.. whereas Clark-Fulton already has a lot of promising potential  

Here is a link for further info on the housing developments in the Clark-Fulton area: https://www.clevelandcitycounc...

Hi Nicholas- welcome to the REI world. I am part of a team that has raised money to purchase 250 units of multifamily in the area and I would love to connect and offer any advice. I am also an investor focused agent here in CLE and could be your boots on the ground 👍🏼

Hi Mary  - What kind of percentages are you projecting for your expenses? 

Sometimes clients assign a percentage for both capex at 8% AND repairs at 5%. Capex stands for capital expenditures which essentially stands for repairs. So if you account for both of these in your underwriting then you will be left with frustratingly low and uncompetitive underwriting. My team runs the numbers at 5% of gross rent going towards repairs -- with a flat $250/unit going towards Capex per year.

One other thing I occasionally see is that investors interested in CLE will also include a fee for trash in their underwriting- although small - an extra $25-50 a month does add up. In Cleveland and in most surrounding suburbs- the taxes cover garbage collection. 

In general you could expect a COC ROI to be around 8% -- with 10% being a solid deal -- and a property with returns at or above 12% possibly being an indicator of being in a worse area/less desirable area -- AKA typically too good to be true.

I am an investor focused agent here in Cleveland would love to connect about your goals as well as share my underwriting spreadsheet. 

Quote from @Abi Horton:

Quote from @Andrew Duna:

Hi Hanna - here is the rough breakdown if you are looking for solid returns on a long term buy and hold investment.

The majority of the bread and butter of CLE RE investing is on the west side. Take a look at the 44111 zip code and that will give you a great idea of the "epicenter" of the solid areas to invest in. Here are the main neighborhoods that you would want to consider investing: Detroit Shoreway, Cudell, West Boulevard, Jefferson, Bellaire-Puritas, Brooklyn and Old Brooklyn. All of these neighborhoods are labeled on google maps. These are all C/C+ class areas. With Old Brooklyn being the most desirable and having the best chance at future appreciation. 

If you wanted to get into a little bit of a higher end neighborhood then consider Lakewood. It's a mix between B/A class. The rent to price ratio here almost matches the RTP ratio of the C class areas but the main trade off you experience with access to better tenants is that the taxes are higher. 

As Shane mentioned- There is also the "Heights Belt" - Garfield + Maple + Warrensville Heights that essentially always have a decent single family property to pick up. You won't find multifamily properties and the houses are generally smaller (which is great for lower maintenance cost).  

I am an investor focused agent here in Cleveland and would love to help you find a solid property to consider investing in! I also have all the resources and referrals you might need in order to make and maintain your investment

 You said “you won’t find multi family in the Heights Belt”, I am considering the shaker heights area, looking at multi family for MTR around Lomond, any advice on that? 

Hi Abi - good point to clarify on my end - so Shaker Heights is separate from the "Heights Belt". The Heights belt I am referencing is strictly the more South/Southeast area (Garfield, Maple, Warrensville Heights)

You can definitely find some solid multifamily in the Shaker Heights area. The only thing to consider there is that the taxes are quite high - with that being a trade-off for access to better tenants. 

Hi Hanna - here is the rough breakdown if you are looking for solid returns on a long term buy and hold investment.

The majority of the bread and butter of CLE RE investing is on the west side. Take a look at the 44111 zip code and that will give you a great idea of the "epicenter" of the solid areas to invest in. Here are the main neighborhoods that you would want to consider investing: Detroit Shoreway, Cudell, West Boulevard, Jefferson, Bellaire-Puritas, Brooklyn and Old Brooklyn. All of these neighborhoods are labeled on google maps. These are all C/C+ class areas. With Old Brooklyn being the most desirable and having the best chance at future appreciation. 

If you wanted to get into a little bit of a higher end neighborhood then consider Lakewood. It's a mix between B/A class. The rent to price ratio here almost matches the RTP ratio of the C class areas but the main trade off you experience with access to better tenants is that the taxes are higher. 

As Shane mentioned- There is also the "Heights Belt" - Garfield + Maple + Warrensville Heights that essentially always have a decent single family property to pick up. You won't find multifamily properties and the houses are generally smaller (which is great for lower maintenance cost).  

I am an investor focused agent here in Cleveland and would love to help you find a solid property to consider investing in! I also have all the resources and referrals you might need in order to make and maintain your investment

Quote from @Brian DeLuca:

Quote from @Andrew Duna:

Hi Thomas! Congrats on the first house hack! As I'm sure you're familiar - after you spend 1 year in your current duplex you become eligible again for primary residence financing (5% down). I think Steve recommended a very fair strategy of living on a budget but I personally do not want to ever live frugally, In my opinion it's just not worth it. (If possible) I would recommend finding ways to make more money by starting up some sort of side hustle or service in order to stack extra cash for your next down payment. 

I'm not sure what your buying strategy was for your first duplex but if you completed some home-reno and added some equity then you can also utilize a home equity line (HELOC) against the first duplex for your next down payment (it would just be counted in your DTI when qualifying). This way you can start building the equity in your next property and utilize that 5% down loan again as quickly as possible.

Where is this 5% downpayment loan? Is a fha?

Hi Brian - this is a owner occupied conventional loan. FHA is 3.5% down

Hi Thomas! Congrats on the first house hack! As I'm sure you're familiar - after you spend 1 year in your current duplex you become eligible again for primary residence financing (5% down). I think Steve recommended a very fair strategy of living on a budget but I personally do not want to ever live frugally, In my opinion it's just not worth it. (If possible) I would recommend finding ways to make more money by starting up some sort of side hustle or service in order to stack extra cash for your next down payment. 

I'm not sure what your buying strategy was for your first duplex but if you completed some home-reno and added some equity then you can also utilize a home equity line (HELOC) against the first duplex for your next down payment (it would just be counted in your DTI when qualifying). This way you can start building the equity in your next property and utilize that 5% down loan again as quickly as possible.

Hi Oscar- Congratulations on graduating to become a Doctor! I think it makes a lot of sense to go big (and hopefully never go home) as long as you have a team in place that you can trust. At the end of the day real estate is quite simple and obviously benefits from economies of scale! 

Really the main thing that you want to focus on in the beginning is being able to run your numbers realistically as there are plenty of sellers who are asking for way more than it makes sense to purchase the property for. I have some experience with this as I am part of a team that has purchased 250 units of multifamily in the past 3 years. In general the underwriting is quite simple and I'd be happy to share my thoughts and resources for that. 

The main play I would always recommend is going for a property that could use some cosmetic renovation in order to bump the rents- that is of course how you gain the best roi and build some serious wealth. 

I am an investor focused agent here and my team will very frequently have larger off market multifamily deals available. With that being said -- another piece I would add is that owners seem to prefer selling off market because they don't want their tenants knowing about the sale... among other typical reasons. So it's definitely important to get plugged into that side of things through networking. Wishing you all the best in your journey!

Hi Ryan- I would second what Mr @James Wise mentioned. This property is not in an area that I would recommend investing in. You could very easily purchase a good property in a typical C class area with that $131.5k. Even if you lose your earnest money --- I would recommend you get out of this contract as fast as you can... and definitely do not take the advice of whoever gave the green-light on this one. If you are looking for good advice then check out the Holton-Wise property group youtube channel. I would be more than happy to help place offers as well since I am investor focused agent here in Cleveland and like to think I have some integrity and at least enough market knowledge to not recommend an area like this.