All Forum Posts by: Stephen Knapp

As other members have stated, house hacking is a powerful strategy for a first-time investment. Vacancy risk is lower. Access to owner occupied financing. If you have never owned before, it is helpful to deal first-hand with the maintenance issues and learn the quirks of the property before moving on and outsourcing to a property manager.

My other $0.02, narrow down your search to one or two neighborhoods. Real estate is local. Plan out your criteria: price point, rent to price ratio, employment centers, etc. and start whittling down to your target neighborhoods. Then go out and look at every property you can in those sub-markets, be it a listed property, a property for rent, a garage sale, estate sale, etc. When you see the right property, you will know it pretty quickly. If the property is not for sale, talk to the owner, you never know what you'll learn.

Best of luck with your search!

Wave is a nice hybrid system. It functions as a double-entry accounting system, a la Quickbooks, but also has the auto bank feeds that Quicken possesses. I was a fan of Quickbooks desktop but find the online product lacking. End of the day, everything will get the job done, key is to stay diligent with bookkeeping. Which reminds me...

@Ari Hadar

SFH will tend to have lower turnover than Mulit. In university areas, turnover happens annually during the same months (move out May-June; move-in July-August); so you plan and budget for it. But it means you need a rock solid marketing and leasing program in place, year-after-year.

Not every good (or even great) deal is going to fit the 1% rule. I use it more as an analysis tool than a mandate. The price to rent on Class C in Cleveland might look appealing on paper, but make sure rents adequately cover maintenance, CapEx (deferred and future) and a healthy vacancy buffer. 

@Ari Hadar

Ha. California winters are nice; but I enjoyed all the seasons in Cleveland, especially fall. My main reason for moving back to California was that I got married, had a baby and we wanted to be closer to family.

As an out-of-state investor, personally, I would want to target long-term tenants. Find areas with less turnover, less turn costs, etc. When I lived in Cleveland, I targeted an area that catered to university grad students and medical residents (Cleveland Heights). It was a great market, but the turnover was very high (40%-50%/year). Later, I also targeted a more long-term tenant market (Shaker Heights). Here you had long-term professional tenants, people downsizing from SFH and a smaller mix of medical residents. A somewhat similar market on the Westside would be Lakewood. Two transitioning markets that have received a lot of investor (and developer) interest are Ohio City and Gordon Square.

There’s a lot of nuance there. Before I invested, I would at a minimum, spend 3 days on-the-ground checking out different neighborhoods and find an area that fits your comfort zone. Best of luck!

Hello. Do you know which part of Cleveland you want to invest? Or are you still exploring areas? I was active in investing and property management in Cleveland for five years. Please feel free to DM me and I can try to refer you to someone for the area you are looking in. Wishing you all the best! 

I have five years of recent multifamily experience in the East Side of Cleveland (Cleveland Heights and Shaker Heights). Cleveland is really a tapestry of smaller sub-municipalities: Beachwood, Shaker Heights, Cleveland Heights, Ohio City, Lakewood, etc. Each municipality has its own property tax rate (and income tax!) and they net high. This is one of the drivers for lower asset prices. Most buildings are between 100 and 60 years old, maintenance is always ongoing, and owners usually pay for heat with a central system.   Overall population growth in Cleveland has been flat. Besides city and federal employment, hospitals are the largest employers (Cleveland Clinic is largest and growing!). In class B, rents have stayed relatively flat, maybe keeping pace with inflation. Asset prices have been increasing. Many of the municipalities have been committed to reinvestment, and those investments have been paying off. 

If you are thinking of moving there, quality of life is great. Happy searching! 

Thank you for the post and Congratulations!

I liked the part about the "hoarder" filled basement and your not making it a sticking point and agreeing to clean it out for the seller. Picking your battles and risk/rewards is key. A buyer can create extra value to the seller by taking care of a "problem" for them.

Wishing you all the best with the 6 units and beyond!

Hi Paul, 

As an investor, a real estate agent is part of your team. There are many ways to source deals, and an agent will provide you several channels, but by no means an exhaustive pipeline. You as the investor will be utilizing your time exploring other deal channels and most crucial, deal analysis! The agent can send you a narrow or wide array of deals, but you will need to make the final analysis if the deal works for you. 

Before I obtained my real estate license, I worked with many agents when purchasing investments. On most deals, I ended up finding the deal off-market, but the agent helped me get a good sense of a particular market, and of course did most of the heavy lifting during escrow. 

Sending out multiple offers should not be a big issue, but as an investor, you should be able to justify each offer you make.  

Best of luck with your search!

Stephen