All Forum Posts by: Luka Jozic

Im not interested in buying turnkey and also not buying cash, I would run out of money real quick. I need to be doing BRRRR thats the only way to scale somewhat fast. Im glad you're doing good.

Quote from @Michael P.:

Brooo I told you that toledo one was a D area

 You did but the mistake I did on that one was to put an unqualified tenant in there for higher than market rent, that one is pretty solid now. But yeah, not my best deal overall. 

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

Purchase price is 68K value around 120K. 

Hi folks, I won a property at auction about a month ago and realized a minor mistake. As you might know, you cant access the inside of an auction property until after closing, meaning you cant do a full appraisal. I do have a few hard money lenders that can still lend with only an exterior appraisal. My issue is that when I won the property, I won it under my name, and all HM lenders I know require that I close in an LLC. I called the county today and they said if I want to switch the name to my LLC now, its will most likely delay it about 3 months. It's not the end of the world, but I am paying $12/day interest until I close. So, I thought I would post and see if anyone knows of any private or hard money lenders that can lend with only an exterior appraisal, and does not require an LLC? The property is in Cleveland Ohio.

Thank you for that response. I definitely agree with what you're saying and I think my mindset is very similar to your, which make sense as my understanding is also that Detroit is a very similar market numbers wise. And yeah the numbers you provided are very similar to what Im targeting, i.e. a little over the 1% rule. But, as I said that means Im missing out on deals. But I agree, not really worth to go through all the work with a BRRRR just to break even, especially in markets like ours where there isn't much appreciation. Later on when I might expand into a appreciation market, then I might be ok with breaking even as 5 years down the line, the appreciation might give me similar or even better returns than cash flow would in a cash flow market.

Im not able to really self manage as Im out of state. But I think I just need to learn how to find better deals. Im already exploring auctions but maybe instead of reaching out to wholesalers, I should do what they do and find off market deals myself. If I could remove the fee that wholesalers add, that would make a lot of the deals Im looking at a lot better!

 So this is another thing I've been thinking about, rates coming down. Obviously no one know if, when, or how much they might go down but lets play a scenario. Take a 120K mortgage with 7% interest, thats $639/mo in principal and interest. I think its very unlikely but say rates go down to 5%, then the monthly cost is $515, so $124/mo difference. With a refi cost around $3500 that means it would take ~28 months or 2.35 years before it starts making sense. For interest rates at 6% its close to 5 years. So I guess if you're holding long term it makes sense to refi but the only question is will the rates actually go down, and if so, how much?

 Well I case its case by case. I guess what I mean was for me, if I make a 30K mistake it will sting of course but it doesn't mean Im out of the game for years to save up again. However, if I make a mistake in a more expensive market and its like a 70K+ mistake, then yeah its gonna hurt me a lot more. 

Yeah but it sounds like what you're describing is buying dirt cheap in war zones. What Im trying to do in Cleveland is to find areas that are still cheap, but also has a reasonably stable tenant base. And that should give me the knowledge needed to hopefully avoid big mistakes when going into a more expensive market.