All Forum Posts by: Andrew Weiner

Quote from @Oliver Pham:

Good evening, I would like to ask for all your opinions about this property as an agent recommended me in Cleveland Height, Ohio. It already rehab and already have tenants living in. Is this a good buy and hold property? 

Thank you very much and have a great day.

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I would love to buy anything in Cleveland Heights for $115K that get an $1,850 rent, that doesn't seem reasonable to me.  Also the taxes are a little bit low.  Your maintenance and capex are generous which is good, also if you are ever able to refi at a lower interest rate it would help a good amount.  If you are able to get a house in CH for that price that doesn't need a lot of upfront Capex and will rent for $1,850 that sounds like a good deal.  Also check the school district because parts of the city go to East Cleveland schools which drops the rent price significantly.  

Quote from @Cole Puterbaugh:

Under contract for a 3-unit mfr in Cleveland. My first purchase. 

Purchase price is 177K.

Appraisal is 138K.

I cannot make up the difference with cash since I'm already at the top end of my purchasing ability.

Is ordering another appraisal worth it? Comps in the area seem to support the appraised value...

I'm trying to understand why you would purchase a property so far over appraisal if there aren't supporting comps?  It sounds like you are overpaying unless I'm missing something.  Also I would be suspect that they have cash offers.  If the offers were close most sellers would take a slightly lower cash offer over having to deal with a mortgage.  

Sometimes a bad appraisal ruins a decent deal, sometimes it stops you from making a bad deal.  

There is no specific formula on which is better or worse as its based on each individual property, you need to underwrite each property. Another way to do it is to create a few models that you can use to weed out properties that won't fit so you don't waste time. The amount of deferred maintenance, age of home, age of mechanicals/major components plays a big role in your controllable variables. Using these you might find the best deal in either SFH or MFH. I would be flexible and look for the best overall deal combo of location, price, and condition and pursue that, you don't want to pass on a great opportunity because you eliminated that entire category of properties.

As far as your big concern, I have seen really great condition multifamily homes and recommend that you visit the market and walk a few houses.  If you are able to come try writing down what you see in pictures before you get to the property and then compare it to what you see in person, it will help sharpen your eye for issues that might be visible in pictures.

I would check out Tremont and the Detroit Shoreway in Cleveland.  There are a lot of options within your budget that should be fully rehabbed with high end finishes.  There is a huge health care industry with the Cleveland Clinic and University Hospitals.  As I am writing this I just thought about another option being Little Italy in Cleveland which is walking distance to University Hospitals and Case Western Reserve University.  Like most others I would agree to focus on where you want to live and do some market visits.  

One word of caution is as an investor that having a 0 down payment home means for a while you have no equity that you can tap for anything that comes up so it’s even more import that you have good capital reserves to ride any tougher periods.  

Check some crime stats to be sure but generally you can do a quick zillow search and based on the property prices it will start to steer you away from certain neighborhoods.  Most areas are fine to do a quick drive through in the morning.  I would suggest finding a Cleveland based agent that can meet you and go through some properties with you.  In this market there is a lot that has to be learned hands on.  I think that all of my clients that have done walk throughs of the different neighborhoods always felt that it was very beneficial and helped guide their final investment decisions.  

In terms of my investing strategy I always recommend anything that ends in "Heights", these are suburbs and most of them are decent if you can find something priced well in those areas.

The banks are bidding up to a number because the money they bid is coming back to them anyway. Also they may have insurance policies through FHA or other programs that mean they would lose money if they don't get the property back and complete the conveyance process. It might not make logical sense for us but they have other considerations beyond simple cost of property and resale value.

There are also other institutional investors out there that are buying up properties because they need to deploy capital, it feels like they are playing a numbers game that if they buy enough that meet certain criteria they will come out ahead on average.  

If you don't have a current rental registration you cannot get an eviction judgement.  The city will charge you for back years of unpaid registrations if you do need to register and haven't paid it for prior years.  Last item is if a tenant has an issue and complains to the city they can come back and cause you much greater problems, with the current judge they could become quite escalated. 

It is a lot of process, and waiting.  Once you find a tenant you submit their pocket and wait for a rent determination, once you accept the rent amount (they tell you what the rent amount will be) then you wait for an inspection.  If you pass then its a usually a few days until move in, if you fail you have to correct and reschedule the inspection, rinse and repeat.  Then they pay their portion each month in the first few days of the month and the tenant pays their portion directly to the manager.  

Cleveland Heights is doing interior inspections for POS.  

$2,800 is VERY high for just testing.  If there are lead "repairs" that have to be made then it is possible that it could be $2,800.  Someone locally actually filed a lawsuit against the housing court that they could not require lead clearance for an eviction to proceed and they won that case.  So now you do not need lead clearance to process an eviction (check with your attorney to be sure on your specifics), some property managers may not be aware of this updated rule yet.  You do still need to get lead clearance testing completed though, the law is still on the books even now that it is not holding up evictions.