All Forum Posts by: Robert Matelski

Jad, I appreciate the explanation, and I understand the methodology you're explaining. I question whether the map really actually reflects what you've stated though. The boundaries of the areas you've drawn don't seem to consistently align with MLS area boundaries (or zip codes, or city boundaries, or census tract boundaries), which is what causes me to scratch my head and think they seem pretty arbitrary in many instances.

An example of this is the 'C' graded area ($78k average) you've drawn, starting at the intersection of Mayfield Rd. and Euclid Ave., extending northeast along Euclid to Superior, then up Superior Hill to the edge of Forest Hill Park, then follows the boundary of the park to Monticello then up Lee, then follows Forest Hills Blvd. then Nela View, and then follows Noble back down the hill to Euclid Ave., where it again follows Euclid Ave., to about the edge of Euclid Creek Reservation, then follows Glenridge up into South Euclid, jogs down to Monticello, goes south on Belvoir, then follows Elmwood back to Noble and juts down to Summit Park, which it follows to Cleveland Heights Blvd., then continues to Montevista to Oakridge to Yellowstone to Woodridge to Edison to Taylor, then goes south along Taylor to Superior then back to Lee, and at Euclid Heights heads back west to Coventry, which it follows north through Coventry Village until it hits Mayfield, then follows Mayfield west back to the starting point. Whew, what a journey. The area you've drawn here contains portions of Cleveland, East Cleveland, Cleveland Heights, Euclid, and South Euclid (touching on zips 44106, 44112, 44118, 44121, and 44117) and seems far from sufficiently homogeneous to make it one single area as you've drawn it (assuming price is your only driver). A subset of this area (in Cleveland Heights), bounded by Coventry, Mayfield, Euclid Heights, and Lee, shows sales between $157k and $299k over the past 6 months. Another subset of this area (in East Cleveland), bounded by Lakeview Cemetery, Superior, and Euclid Avenue shows literally no sales over the past 6 months (perhaps because it's so blighted). While yet another subset of this area (in Cleveland), bounded by Euclid Ave., Belvoir, and Cliffview has sales ranging from $24k to $36.5k. And finally, just for fun, a 4th subset of this area (in Cleveland, "Little Italy"), bounded by Mayfield, the rapid transit tracks, Euclid Avenue, and Lakeview Cemetery has sales ranging from $114k to $473k. I'm honestly baffled by this area on your map (which seems to be highly specifically drawn) and its 'C' label.

Another example of an area where the data does not seem to match what you've called out is the area bounded by Lakeshore Blvd., E. 185th, Lake Erie, and Wildwood Park/Euclid Creek, which you have labeled 'C' as well. Basically the northeastern corner of North Collinwood. At least this area is actually pretty homogeneous so at least I'll give you that. I'm seeing MLS sold listings from $100K at the low end (17420 Schenely) to $130K (17824 Landseer)... so seems odd that you've labeled it 'C' rather than 'C+' or 'B' based on your scale and your stated parameters.

Have you ever talked to @Art Perkitny before? Like you, he's a smart young go-getter... if he's open to it, you might consider engaging him for a consultation on how to best use the sea of data that's out there to show what you're aiming to show and make your case about what area should get what grade based on price points. He seems to be a master at the data analysis craft, and he has some pretty cool and useful maps.

And for the record, I am with you 100% on laughing about how so many wholesalers (and sometimes turnkey providers) label their properties' location grades. They seem to be grading on a curve, where 'C' is the absolute lowest grade that is ever given out.

Emulate is a stretch for my map (though it's probably spot on for the B2B one). My approach was purely data-driven with a documented methodology and sources... I considered using my outlandishly deep knowledge of the Cleveland market to add a subjective overlay in cases where the data seemed skewed by something like a subsidized senior citizen high-rise (dragging down incomes, homeowner rates, etc. and therefore causing an undue hit to the area's grade... think the apartment buildings on Clifton in Edgewater for example) or a semi-fancy newer development surrounded mostly by rather dumpy older stuff (pulling up incomes, homeowner rates, etc. and therefore causing an undue boost to the area's grade... think Mill Creek off of Turney for example) but I decided against it mainly because I didn't want to allow subjectivity into it at all and then get accused of encouraging discriminatory practices or any bs like that.

But... at the end of the day James you do have that first mover advantage (and I commend you for making the map in the first place even though I disagree with some of your assessment), so you'll likely continue to get the majority of the traffic, at least for the foreseeable future.

Large swaths of your map are just straight up wrong, assuming you believe actual data matters more than  unsubstantiated assertions do. Yes, I agree that investors need to do their own due diligence, and also that there are sometimes cases where quality can vary on a street-by-street basis around the Cleveland area, but giving people info that’s biased and uninformed at best, and blatantly false at worst, as an agent or broker is somewhat unethical. If you want your map to be useful, then it should be more granular and based in data (with a clear traceable methodology explained, and data sources listed). 

OMG, James, I didn't realize you knew my uncle! 

Definitely appreciate the effort, and sorry to be a naysayer, but the map seems pretty flawed and arbitrary across the board. 

If I'm reading it right, you're saying this house on Neff Road off of Lakeshore in Cleveland's North Collinwood neighborhood (https://www.redfin.com/OH/Cleveland/17900-Neff-Rd-44119/home/66589005) is in the red zone (D-F grade), but this house on Elberon Avenue in East Cleveland (https://www.redfin.com/OH/East-Cleveland/1780-Elberon-Ave-44112/home/66588077) is in the yellow zone (B grade)?! This is just one of many examples that makes me majorly raise an eyebrow. (NOTE TO MODERATORS / ADMINS: I HAVE NOTHING TO DO WITH EITHER PROPERTY LINKED... THEY ARE JUST EXAMPLE PROPERTIES.)

I really do worry about out of state investors seeing material like this, presented by brokers and PMs, and trusting it blindly when they plug an address in. This sort of flawed and arbitrary content being presented to investors is what drove me to create my own data-driven map, down to the census tract level, to define the grade of each area down to the most granular level.

E. 85th and Superior is NOT a C-rated neighborhood. Based on any measurable data, this is D territory at best. This is in census tract 1122.00, which is one of the most blighted parts of Cleveland. This particular property is probably one of the most (if not the most) stable properties in the area, and rents in this building are substantially higher than any building around it. Having success with this type of property typically requires a highly specialized team who can navigate the [really tough] waters associated with a big old building (even one that has been rehabbed) with very low-income people living in and around it.

Congrats on the purchase! Looks like a solid property in a solid location. If I may make a suggestion, you should try to contest the assessed value with Cuyahoga County. You'll likely be able to knock a few bucks off of your tax bill. The county has it valued currently at $105.8K... an adjustment downward will cumulatively save you well over $1K over the next few years. You can file the complaint online for free in early 2020, and you don't need to show up in person for the hearing if you have a well-documented case for lowering the value. Feel free to shoot me a private message if you'd like advice on how to navigate it.

When my iPhone started auto-correcting "turkey" (spelled correctly) to "turnkey" over the past day, I realized I'm all in on this real estate investing thing.

Hi Ravi. I have created a grading map of the Cleveland area, ranging from A+ down to F based on objective and verifiable data, at the census tract level. That would help you see the level of risk associated with each area. Feel free to message me directly if you want me to show you the material I have compiled.

I'm going to field a guess that the house is a 1080 sf 1940s cape near the intersection of Lee and Miles in Cleveland, and that you paid a whopping $28K for it. Assuming I am right, $950 is not a realistic rent for a house like this in a location like this. Some basic due diligence surrounding rental comps should have sent up some major red flags and caused you to quadruple check before proceeding. A name like "A-Z Auto Sales" should have sort of been a red flag too. Honestly, I would not even bother with pursuing the seller... it's unlikely that you'll ever recover anything, and it will just be a time and energy suck.

You need to register the rental with the city (and pay a fee) and with the county (no fee) first off. Then provide the tenant a 30-day notice that indicates the terms of the rental going forward (probably would be wise to set the rent at a reasonable amount rather than $950). If the tenant so chooses to remain, they will have to pay rent and abide by your rental terms. Otherwise they are free to leave. If they stay and don't pay, serve a 3 day notice on day 31, then file for the eviction on day 35. Once the tenant is out, prepare to spend a hefty sum to get the house back in order and rent-ready. Or make it look really decent and make sure it will pass an FHA inspection so you can market it for sale to first-time-buyers in spring of 2020... you might actually achieve a decent gain from that. (DISCLAIMER... I am not a lawyer and this is not legal advice... it is just what I would personally do in a situation like this.)

A property that I bought in 2015 had a non-paying tenant in one of the units (it's a duplex)... was a short sale and the seller was a hot mess, so I figured there was a good chance of there being drama with the tenants, but I proceeded anyhow because it was an outrageously good deal. Turns out one of the tenants was paying, and one had not paid in ages. About 2 months into owning it the non-paying tenant ended up leaving on her own once she realized she could not stay for free anymore (eviction was about to be filed). Spent $5K on a rent-ready redo of the unit after her departure (I got off lucky), and it has been performing solidly since then.

Oh yeah, also... closing thought: Your situation is one of the many reasons why I generally only buy properties listed on the MLS, with licensed brokerages, rather than pursuing "hot off market deals"... there is a lot more accountability and credibility when someone's license is on the line.