All Forum Posts by: Andrew Weiner

@James G.

I buy and hold in the eastern suburbs of Cleveland and have been very happy so far with duplexes.  I have had some appreciation however I am in it for the cash flow.  My experience has been that screening is the biggest factor in minimizing my expenses (turn, vacancy, damage, maintenance).  You can set some additional criteria for your applicants that will help identify tenants who are most likely to be successful long term renters.  I will caution you that if you aren't very well versed with tenant/landlord law that you should review your criteria with someone who is or an attorney to make sure that you do not inadvertently violate fair housing laws.  If you want to reach out I'd be happy to discuss some of my thoughts on screening.

Lately I have been looking and I haven't found any SFHs that generate enough cash flow for me to put in offers, I think that SFH sellers are looking for retail buyers and Duplex owners are more realistic in pricing units knowing that the next buyer has to make money. Your best chance for SFHs will probably be after the freeze on foreclosures in Cuyahoga county is lifted.

One last thought is that the additional cashflow on the Duplexes will be good for recapitalizing once you have a few properties.  There are lenders around that will lend based on rents and cashflow on a group of properties together as opposed to a pure residential appraisal for individual properties.  The rates and fees are higher on those loans but they don't have caps on number of mortgages or cap you based on w2 income to debt ratio, its just the cost of growing beyond your first 2-3 houses. 

I wish you the best of luck and as a local Clevelander would be happy to help you in any way I can.

Andrew

I would try USA property management in beachwood 

Are you looking for a specific area of Cleveland?  Especially since you plan on moving into the property the location is even more important.  I would look for an agent who is also an investor, I have found that many agents don't fully appreciate how to evaluate an investment property unless they are investors themselves.  I have a lot of contacts in the east side suburbs of Cleveland, if you want to reach out I could put you in touch with them.  

There are private lenders that will take rental income into account.  They sometimes charge higher fees or interest rates but it’s the cost of being able to scale.  Also as you grow your portfolio there are lenders that will lend on a portfolio, so for example you can buy ten properties and take out one loan on that group.  Again these have disadvantages but it helps investors recapitalize and continue growing.

Hey @Prakash Saraf, locally here in Cleveland most of the flips that I see are from foreclosure sales that happens in person only. You can check for online auctions or at the fanny, Freddie, and HUD websites. The best ones do tend to go fast though so be ready to make offers.

My searching has shown that Cleveland is a tough spot to get a flip property at this exact moment, although I expect that to change once the foreclosure auction opens back up.  The rental market is very strong right now and you might want to consider a rehab, rent, and refinance in Cleveland.  You won't necessarily have the big pay day but you can build some cash flow while identifying key vendors that you can use in the future.  If you are not local I would recommend going through the area with someone who has personally flipped a few houses, neighborhoods can vary vastly from block to block and its worth having a an experienced local investor walk you through some of your top areas.  I personally run most of my properties by a couple friends in the business to make sure that I am not missing something specific to the area or property type. 

I agree with @Jacob Repreza.  I generally like to bring in my own tenants because I run a tight ship and many landlords are more flexible on things like payment terms, pets, annual rent raises, etc.  I have found myself honoring rent payment agreements that end up taking up more of my time than starting with a new renter (possibly at a higher rent) and with all of the rules stated and upheld from the start.  If you cannot raise the rent much then it’s almost always worth it to keep a tenant.  When looking at the units try to do a simple calculation on what it will cost to do the turn and how much you can raise the rent, if you can make the money back in a few years then it’s worth it.

Good luck!

Hi Keyla,  I would recommend reaching out to USA Property Management in Beachwood.  They have a separate division that flips or sells value add properties.  They can possibly help you out with identifying specific areas and would be able to do some or all of the rehab, rental, and management.  I own a few duplexes in South Euclid and like that area, if you want any information on a specific area feel free to reach out.  It's worth getting a local opinion as neighborhoods and values can vary greatly even within the same zip code.

Andrew

Hi Phillip,

Here are a couple of thoughts as another native Clevelander and investor.

1.  Make sure that you are clear on what your goal and time line for the investment are.  Is this a 2 year play and then you move on to a single-family and keep this as an investment, or do you plan to maintain this long term?  I am very big on being intentional with the plan and speaking it out up front. If you try to do too much, you might not be able to find the right property.  

2.  When living in one while renting the other two, it will be hard to cause any real damage.  Your personal comfort and being in a neighborhood that you want to be in will be more important than overall cash flow/return.

3.  Make sure that the area that you are in will attract the kinds of tenants that you want as neighbors.  Being in the same building as your tenants can make things like charging late fees and addressing neighbor-to-neighbor disputes challenging.  I have a friend that had a tenant in this situation who wouldn't walk away from his front door until he agreed to drop the late charge.

4.  Be ready with a maintenance plan.  Issues will come up; heat/AC, hot water heater, etc.  This is where being an independent manager can be difficult. The management companies have staff and commercial accounts, and can buy labor and material much cheaper than you can.

5.  I have recently become more of a fan of having a third party management company.  They do cost, but they tend to demand higher rents and have the will to hold out for them (I caved a few times and left a lot of money on the table). Tracking down some of the maintenance vendors became such a headache and took me away from my day job, that it was worth it to hire a third-party management company, rather than have to deal with the unexpected.  Depending on where you are in Cleveland, there are lots of options for management companies. Some will even help you get your house and might prevent you from making some mistakes. 

Personally, I would recommend USA Property Management in Beachwood.  They can advise on potential deals while you are looking and will give you some market insight for free.  

Good luck to you!

As an investor in Cleveland I have recently purchased a few duplexes that meet all your criteria. There are several neighborhoods where these properties are available. Personally I won't buy without a potential 14% COC return since things come up and I actually net closer to 10%. Feel free to reach out if you want any additional info on the Cleveland market.