All Forum Posts by: Andrew Weiner

I don’t know what your realtors thoughts are, my guess is that they are more comfortable close to home and more equipped to give good advice there.  The riots in Cleveland were highly localised to a small area and only for one night, there was no rioting in any suburb.  Old Brooklyn, the Detroit shoreway, Cleveland Heights, South Euclid, Euclid, and several other areas are all good places to invest.  Your focus should be in identifying a good asset at the RIGHT price.  You can get a terrible deal in a hot area and a great deal in a boring area.  For a buy and hold long term investor focus on a stable area, hot areas don’t always stay hot.  Feel free to reach out if you want to discuss the market in more detail.

I have been seeing the same thing on the ground here.  We had a few tenants who hit rough patches but with county housing assistance, unemployment, and stimulus checks almost of all our tenants have been able to get through.  The units that we have listed recently are renting VERY quickly.  Additionally we have seen rents jump a bit more than normal recently which has been a pleasant surprise.  

Does the house have return ducts for the forced air?  AC units should have return air also, not just the supply ducts like many heat only systems.  Also just to be sure is this for all three units?  Its not a given that there are ducts going to the third floor, in many cases the heat/AC is either shared with the second floor or they have electric baseboard heat and window AC.

The $6,600 sounds like a reasonable price to install 2 central AC units, if its for three units then its too low.  Depending on the age of the furnaces you might want to replace them at the same time, the additional cost should not be too high once they are already doing all the duct work to add the A/C and it can get you a warranty.

Another option if you don't have return ducts would be to install a mini split system.  This is very popular is some other cities and its starting to grow in popularity in NE Ohio.  I am a fan of the mini splits because its an easier retrofit and you have room by room control (and can get heat included). 

Good luck with the A/C and let us know what you end up doing.

Andrew

Hi @Ryan Raider.  Welcome to investing in the Cleveland Suburbs.  POS generally speaking is not a very big deal, its just another factor to have to consider and price into the deal.  I will preface that everything I say right now is "In General", you have to review each property and conduct a proper due diligence process before jumping into anything.  

The seller can ask for a POS inspection at any time, some sellers wait until the property is in contract which can slow down the process, others will have the POS available in advance.

Depending on the city they may give you the numbers or ask you to come up with numbers which the city will determine if they are reasonable.  I have seen escrow requirements that are much more than the cost of the repairs and some that are much lower, please don't use the cities numbers as a base for how much the repairs should be.  

The owner is responsible to do the repairs in order to transfer the title OR you as the buyer can assume the violations and the seller is off the hook.

Right now most POS inspections are exterior only due to COVID so you can get a pass on interior items that might not have passed.  My experience has been that if you work together with they city that they will accommodate your time lines, they just want to see progress.  If you do happen to have money tied up in escrow it obviously is in your best interest to clear the list and get your money back.  

I see that you are an OOS investor, do you self manage? If you have a great tenant in place that will work with whoever the home warranty company sends out then it could prevent you from having to search for contractors. If you have a local property manager then I would let them do the work, you can self escrow the money and see how it works out over time and decide what you want to do on your next property.

In general I don't think that home warranties are worth the money, there are too many exceptions in the policies.  For example I have a friend that just had a plumbing leak and the home warranty company sent someone out to fix it, they did repair the plumbing but had to cut open walls/ceilings in the process.  They did not cover the drywall repairs or paint and he was still on the hook to find someone to make those repairs.

Finding a BRRRR is very difficult depending on the market. Do you have construction experience? It's very easy for a potential BRRRR to go way over cost and leave you at close to market price but doing all the work. I encourage newer investors to reconsider a 10-15% coc turn key as a first investment. It won't turn headS but it will get you a bit of credibility with agents and experience managing and doing repairs.
Most of the good BRRRR properties that I’ve seen in my market are cash deals , sight unseen, with no contingency. With many foreclosure auctions closed we see decreased inventory right now.

I don’t mean to be discouraging, I think that you could still do very well even if you can’t get a pure 100% cash out after rehab, it’s just higher risk.  

Are you a cash or finance buyer? Just so you don't have any surprises you probably cannot totle a house into an LLC if you use traditional financing, you might be able to change it afterwards depending on the lender.
As for finding deals, right now they are very scarce and competitive.  Do you have specific criteria that your trying to meet?  Could a turn key property make sense for your first investment?

The short answer is that it depends.  I can run through a number of different scenarios in which it may or may not make sense for you to have a PM.  In some cases I have been able to make my clients more money after my fees than when they self managed, in other cases if you are very handy and can do your own repairs, have the time to show the unit and get top dollar rents then you might want to self manage.  It's really a decision that needs to be made by each individual investor based on their individual circumstances.  

Due to the size you are on the small side of commercial loans.  You should be able to get a 10 year loan with a 30 year amortiziation.  This is very typical on the commercial side.  Its not ideal because you do need to refi and you don't know what the world will look like in 10 years but it keeps your payments steady and you ideally will be able to get a nice payday in 10 years.  

Parma Heights and even Parma are fine areas to invest in.  There is a consistent renter base there and as long as you buy at the right price you can make a good return.  There are other worthwhile suburbs to buy in, it will depending on if you plan to self manage or hire a manager.  If you self manage you'll want something closer to home to reduce commute time, if you hire a manager then you can pick from any city without additional headache.