All Forum Posts by: Robert Matelski

Originally posted by @Art Perkitny:

@Frank Montero

The address you have provided sits in a small B class enclave within Garfield Heights.

The surrounding blocks are going to lean more towards a C or D class rank

Your maps are awesome. I used a similar approach to grading each census tract in Cuyahoga County, but mine was a far more manual process it seems. Does your mapping tool have the entire USA? It's really quite impressive at first glance.

Welcome to the RE investing world Penny! I am not an agent or PM, just an investor. I have been investing in the Cleveland area for years, and I know the market better than just about anyone. I've gathered a ton of information on investing in the Cleveland area as well. I would be happy to share it if you are interested. It includes, among other things, a comprehensive map of the Cleveland area, grading each area from A+ down to F, using a consistent, objective and transparent methodology using publicly available data (not subjective and arbitrary), which should help to ease the fears and really help you see what you are getting into. Feel free to add me as a connection and/or drop me a private message!

Hi Maya! You're correct that the bill stays in the owner's name. The owner is ultimately responsible for the bill, and if it goes unpaid it would eventually be tacked onto the tax bill for the property (along with penalties and fees).

Quite a few landlords do pass along the water/sewer charges to tenants. Some will just tell the tenants to open the bill when it comes and pay it directly each month (which I would not advise as it seems like an unprofessional approach), and others will bill the charges back to tenants. Personally I go with the second approach and it works fine. There are some PMs out there who will tell you this is not a good idea (e.g. James Wise), but there are even more who do this successfully and think it's the best way to go. One thing to note is that if you are dealing with A to C grade tenants, it will usually work well... and if you are dealing with lower than C grade tenants they may or may not end up paying the bill (and you could potentially have a hard time collecting from them). The grade of tenant you will attract is a function of the area and the property itself. (For example, if you have a really dumpy "D" grade property in a "B" grade area, you would probably attract mostly "C" grade tenants).

The monthly bill amount range varies tremendously from property to property. I have some where it is as low as 50/mo and another where it is as high as 200/mo. I would say the average is about 80/mo though. It will depend a lot on how many people live in the house and whether they are home a lot vs. always gone at work/school.

In most cities, there are two separate bills... one for water (Cleveland Water) and one for sewer (NEORSD). There are a few suburbs who do things differently though... in Euclid for instance the sewer charges are actually included on the water bill (which is billed through Cleveland Water), in Cleveland Heights they use Cleveland Water, NEORSD, and ALSO a third billing agency specific for Cleveland Heights, in Bedford you just get one bill from the city of Bedford that includes everything. In all cases you can pay online and/or via ACH (automatic draft) so it is relatively painless to keep up on the bills.

Also one more item of note... you did not mention multi family at all, but if you do go that route, most multi family properties do not have separate water meters for each unit, so costs would need to be built into the rent, with no specific back charge possible to tenants.

Feel free to add me as a connection or send me a private message. I have compiled tons of information that many investors find useful (I am an investor myself, and not an agent or PM), and I would be happy to share it.

Cheers,

Rob

Hey Bob, welcome to the site! I have been investing in Cleveland for years. I am not an agent or property manager, but I know the market extremely well. I'd be happy to advise. 

Hey Don, welcome to the site! I have been investing in Cleveland for a number of years (from a distance... I live in the San Francisco Bay Area), and I have gathered tons of info that you might find useful if you are interested in that market. I focus on buy and hold residential rentals. Feel free to add me as a connection or PM me!

I have property in each of those cities and both are decent places to invest. 

There are some nuances to be aware of though. First off, it's hard to just call Euclid "B" and leave it at that. Euclid is larger and less homogeneous in terms of income levels, housing quality, etc., and there are areas ranging from high "D" all the way to low "A" (based on an actual objective assessment). If you're looking at cheap townhouses then you're not looking at an area that will attract the best tenants generally.

Bedford is more homogeneous, and is much smaller overall. It's high "C" to low "B" throughout the whole city. Bedford does not have a POS inspection any longer, but they do have an extremely strict rental inspection, so that might be something to watch out for.

Feel free to shoot me a private message and I can show you how I came up with these ratings/grades, and also other info about both Euclid and Bedford.

If I were to buy another property in one of those two suburbs this summer, I would probably buy in Euclid, honestly. I think its lakefront presence makes it more appealing for the long run.

Congrats on the new property! Bedford is a solid place to invest. I use Re/Max Haven Realty for my house in Bedford as well as my other Cleveland area properties. Their main office is actually not far from Bedford either.

A few areas that could be good for a VA duplex as your first investment would be Euclid, Lakewood, Cleveland Heights, Parma or Garfield Heights. Could also consider some Cleveland neighborhoods with a 'C' grade, such as some parts of Old Brooklyn or North Collinwood.

I've created a comprehensive Area Guide with dashboards on the most common areas (neighborhoods and suburbs) for investing in the Cleveland area -- it includes grades for each census tract (objectively scored, only using publicly available data, and with a fully documented methodology). It's considerably more thorough than the other grading maps and guides out there (most of which were created by brokers) -- this should help you see the full picture of the areas on your radar... https://www.clevelandinvestorprimer.com/area-guide/

Yes, you’ll get a separate bill each month from Cleveland Water and NEORSD (sewer). Sewer will typically be a bit higher than water. $86/mo for sewer is a little high but not crazy. It’s really quite a crap shoot and varies tremendously from tenant to tenant and house to house. 

You might consider installing water saving features (replace old toilets, install water saving shower heads, etc.) and actually asking the tenants to please try to conserve water (if you have a good relationship with them). 

They can elect to either pay the tax on the gains all up front, or pay the tax on the gains in each year that you make the payments to them -- This is called an installment sale...  https://www.irs.gov/publications/p537

Also, you could have your parents look into doing a 1031 exchange, if they are open to reinvesting their money in another real estate venture (this basically just defers the tax on the gains to a future date, when/if the new property is sold... unless they do a 1031 again, which could allow them to defer the taxes basically forever if done over and over). Could be any type of real estate in any location. If they are considering eventually moving someplace else this could be a good move... do a 1031 exchange to buy a condo in Scottsdale, rent it out for a couple of years, then eventually move into it.

Finally, you did not mention if your parents live in the duplex now... I am assuming they don't. But if they do, and have lived there at least 2 years, then up to $500K of the gain will be tax free most likely. (Which, in Cleveland means all of the gain would probably be tax free, unless it is some very high end duplex in Ohio City or Tremont or something perhaps.)