All Forum Posts by: Andrew Weiner

Another consideration is that secondary markets get hit harder by drops in employment and they take longer to build back up.  If they are already at 16% vacancy now then I would be worried what it would look like after an eviction moratorium is lifted.  

What your looking for is theoretically possible but keep in mind that there are other costs.  You could be looking at 5k + in closing costs just to get the property.  Also you will need some money for initial repairs, possible initial vacancy, and general reserves.  If the property looks really clean then ~5k in reserves would be sensible.  You won’t have any equity in the home to use in case of emergency for a few years so you need to have the funds to cover the unexpected.

Last thing is that most lenders I have spoken to are at 25% down on rental homes right now.  If you have someone at 20% let me know.

Although the tech is better with the bigger banks I have appreciated the customer service of some of the smaller brokers/banks.  Also as your portfolio grows and you want to get into some commercial lending products, that’s where the small banks will really shine in my opinion.  If you just plan to have one to three properties it shouldn’t make much of a difference.  

Hi @Julio Silva,

If you are in Ohio you should check out Cleveland.  The properties here have a lower entry price point than some other markets and produce good cash flow.  There are parts of town to avoid but several of the suburbs have very strong rental markets.  

There are many homes that are older and have been kept in great shape and they are not money pits.  There are many that need to be demolished and there is no profitable way to bring them back to life.  Getting a home inspection will help you look into those items and you can ask the inspector to try to point out some of those items and give you an idea of cost or longevity.  Also make sure to budget for some preventative maintenance (this isn't just for older homes), driveways, roofs, hot water heaters, furnaces, and AC's all go bad even in much newer homes.  You can have the sewer reviewed with a camera that will give you insight on one of the more costly plumbing repairs.  Also focus on masonry, it gets very expensive and there is no return on investment, driveways, steps, and tuck pointing are the big items for this.  With proper due diligence buying older should not be a problem.  

I have been very successful with cash flowing properties that average over 10% in the stable areas of the Cleveland suburbs. If the COC is too high then you have to watch out, it is probably too good to be true. I think there are several areas in Cleveland that can provide very good long term returns but it really depends on they types of properties you want to invest in and the amount of capital you have available.

I highly doubt it, with properties getting top dollar prices and cash offers there isn’t much incentive for a seller financed deal.

Hi Bob,

I would just like to reiterate that in many cases you can buy a property that looks good on paper but has such large outstanding repairs that the amount of time it would take to recoup the expense that it doesn't make sense.  Many of these houses need to be demolished as there is no reasonable route to bringing them up to standard.  Also finding qualified tenants for those units can be difficult for those types of properties.  We do screen Section 8 tenants and make sure that they still meet our overall criteria even if there is guaranteed rental income, Section 8 will not pay for damages and if someone falls off of section 8 you still have to deal with them as a cash paying renter.  

I invest in and manage properties in Cleveland and we have seen fair growth of rents, property values, reasonable entry price points, and a very robust renter market.  The City of Cleveland has some areas to avoid and some that are have great returns but in the suburbs there is a good combination of cash on cash return and stability.  I am more of a fan of cashflow, I'd rather have my money in hand today and use it to go buy more properties or just to have on hand.  Depending on what your personal goals are you should be able to find one or several properties that will help you meet them.  I would make sure to write down what you are hoping to achieve, some examples would be longer term wealth, replacement of income, supplement income, better returns than cash sitting in the bank, retire early, etc.

One thing to add is applications.  I find that keeping applications are VERY important and help if you ever need to collect money or file for evictions.