All Forum Posts by: Bob Collett

@Albert L. I would recommend that you keep the existing tenants for now if they are paying the rent and not causing too much drama. The Cleveland real estate market begins to slow down from Halloween until Super Bowl Sunday.  Think about rentals... what kind of tenant wants to move between Thanksgiving and New Year's day.  Of course there are a few exceptions such as job transfers, or insurance claims... but most often people moving during the holidays are getting kicked out of their current place.  

Moreover... keep a paying tenant during the winter if only to keep the utilities on.  A burst pipe can cost 10s of thousands of dollars.  

Cleveland is a great place... but people do not stand in line for rentals here with 700 credit scores in the B minus to C type neighborhoods. Its a challenge to find a good tenant, especially in the winter.

As Victor said... make repairs that prevent additional damage to the property or are essential to safety... leaky roof, broken windows, storm windows, furnace filters, smoke alarm batteries, furnaces & hot water tanks well beyond their useful life, repair holes in foundation or walls to prevent easy critter egress, repair gas leaks, repair dripping faucets, etc.

Bob Collett, PM

@Gil Ganz

Hi again Al... I agree that @James Wise article on grading neighborhoods is a great place to spend some time if you are an out-of-towner.  Although, still, its only a tool.  For example, I would typically put 44111 and 44135 higher than several of the neighborhoods listed a "B" neighborhoods... but I can point to areas in 44135 and 44111 that are not nearly as nice as the further west addresses.  My point is not to find fault with James' article... its excellent... but simply to say it is a starting point in your analysis, not the end point.

Good luck

Bob

@Gil Ganz

Albert, these kinds of generalities with respect to neighborhoods can be somewhat unreliable.  For example, I have a property under management on Glenmont in Cleveland Heights a block from Coventry and have not had any serious issues other than someone using our treelawn to dump some trash.  

On the other hand I had a property under management on Selwyn in Cleveland Heights where the neighborhood folks broke in and stole an old hot water tank... two weeks later they came back for the new one; and next door (some other owner), they came and took the hot water tank and the furnace. This was an organized effort and the cops advised me that this goes on every night... often more than once a night.  The cops went so far as to ask me how well I knew my plumber!

In "trendy" neighborhoods such as Ohio City and Detroit Shoreway; where property values are going from next to nothing for a "handyman special", to skyrocket prices for a full rehab; I find that valuations (and neighborhood values) can vary not only street by street, but even house by house.

The bottom line, is... probably not a good idea to rely on Rentometer... probably not a good idea to rely on anyone who does not live in the northeastern Ohio... and probably not a good idea to rely on anyone who is not intimately familiar with the neighborhood.  This includes me... I grew up and lived in Cleveland my entire life, and I sell real estate all over Cuyahoga County... but I would not consider giving the kind of advise you are seeking, except in areas that I really know well... as in I have lived there... walked the neighborhoods... have friends there... know the shopkeepers... etc.

Albert, this is a good reason to use a real estate agent who has bought or sold a dozen homes within blocks of where you are "hunting"

I get a lot of out of state investors... and also many out of state investors who ask me to do property management for them... then they go on to lecture me on how great the neighborhood is where they bought their ghetto property.

Lots of investors come here because homes are so inexpensive, but they do not realize that the tenants who will live in these areas live with credit scores in the lower 500s, and whose track record seems to indicate that paying bills is optional.

$1500 is probably high for Colony... and a 4 BR / 2BR will draw large families. Since you are not permitted to discriminate based upon family size, take that into consideration when purchasing a 4 BR as a rental.

Important... find out what school district the house is in.  

Hi Amy

What street and zip code is your property? I am curious why you changed PM in April (no names please)

Why did you switch PM the second time?

I am curious... how did you select your PMs. Were they both licensed real estate agents?

You would not have to prove forgery... only that you did not get paid. How do you receive payments? How do you track payments?

Looking forward to learning your answers. I will offer some opinions on the answers. 

Bob Collett

@Jeffrey Boyce

I generally find that most investors do not really understand what ROI is, so you will hear them say things like I want a $15,000 return.

When I do a "flip", I target a 35% ROI, or 35% profit. I have generally found the actual profit on my deals to be higher, but I am extremely conservative, and I target 35%. I would typically only do between one to three deals a year.

I find that many investors are happy with 21% or 22%, and instead go for volume often doing a dozen or more per year. 

Whatever your required ROI, the cost basis should include total acquisition cost, total renovation cost, total holding costs (taxes, insurance, etc.), and total transaction costs (real estate agent fees, paid inspections, title costs, marketing costs, legal fees, etc).

I always use total purchase price and avoid the temptation to instead use cash invested (down payment), because if the deal goes poorly, you are on the hook for the entire purchase price. I totally ignore the idea of "COC Return".

You will probably find lots of interesting opinions here on BP.

Best of Luck

Bob

You are welcome 

The HUD website is www.hudhomestore.com to search for the HUD properties.

A real estate agent can get you inside or preview it for you. Owner occupants get the first shot before investors. Expect lots of competition and often dozens of offers. HUD does not disclose or repair defects.

Cash is best.

Bob

What is address?

Who is your attorney?

@Austin Tam... 8” is fine if you don’t mind looking like a slum landlord with a vacant house... and the occasional $200 fine from the city... $500 fine if you are a business.

By the way, in Cleveland, grass grows faster in the cooler months of Spring and Fall, so it looks like you have your schedule backwards. You can get away with every two weeks and occasionally every three week in a long dry summer... but then you risk loosing your landscaper.

Bob