All Forum Posts by: Robert Matelski

There are plenty of people who don't actually live in Cleveland "NOW" but still know the market extremely well. I am an out of state investor who lives 2000+ miles away, but I am pretty sure I know the market far better than you.

Originally posted by @Jay S.:

Hi,
Planning to buy a property in South broadway neighborhood of Cleveland, Ohio, zip code 44105.
Ultimate guide has this zip code in C and F neighborhood.

However below says its C class neighborhood: Would like to what class the property is really in and if it's worth buying there? Thank you.

It does vary quite a bit from street to street, but no matter how you slice it, it's a gamble in that area. If you are totally new to investing in the Cleveland market (which I suspect you very much are), stick to better areas for your first investment. Good places for your first investment property as a newbie out of towner include suburbs like Euclid, Parma, Garfield Heights, Cleveland Heights, Maple Heights, and Bedford, or possibly certain parts of better neighborhoods in Cleveland proper (Old Brooklyn, and the eastern-most part of North Collinwood). Buying some property in South Broadway/Slavic Village just because the entry price point is low and the price to rent ratio looks tempting will ultimately likely cause you to either lose money, lose sleep, or both.

Everything Ryan Evans said is spot on. The houses that have sold for more than $100K are either SFRs and therefore not valid as comps for your duplex, or they are simply not comparable from a location standpoint.

I am familiar with pretty much every property that has sold in the past decade or so in my areas of interest (the Cleveland Euclid border area being one of them... I challenge pretty much anyone, including licensed agents, to know the market better than I do... though Ryan could probably give me a run for my money at this point), and I know how to navigate public records (https://myplace.cuyahogacounty.us/,https://recorder.cuyahogacounty.us/, etc.), MLS listings (including sold), etc. so it was extremely easy to see that your property is on Mozina since you own it in your own name. Yes, your property is charming (I love those solid brick duplexes from the 1920s) and I don't doubt that you've done a nice job of making it solid and inviting inside since you bought it... but the location you're at is still not going to command the same price point as a similar duplex right off of Lakeshore. If you plopped your house onto a street like East Park or Neff, a block or less from Lakeshore, then sure, you could reasonably get $120K... but not presently where you are (directly across from a bar, basically right at a busy intersection, and with a view of a freeway on-ramp from the yard). But why sell it at all?! If you pull out ~$75K your payments will be under $400/mo., and you can use that to pay cash for another house, or put a down payment on a small apartment building even. Keep the Mozina property as a long-term cash flow machine. Even if you just keep buying another duplex, fixing it up, pulling the cash out, then moving on to the next one and doing it again and again, you'll have enough cash flow to retire in a decade or two.

Before you move out, you might consider buying the land bank property next door to yours (http://www.cuyahogalandbank.org/sideYard.php). You'll need to get current on your property taxes (which is something you will need to do before you apply for a mortgage on it anyhow), but once you do, it's likely that you can greatly expand your lot size (and therefore your property's market value and appeal) for next to nothing. 

That size of house on that stretch of Neff can possibly command $125K... but Mozina probably can't break $100K now IMO.

I believe it is definitely a stretch to think that it's worth 2x what you've got into it... $120K would be a really hard sell on Mozina. You could probably appraise pretty easily at $90-100K though, allowing you to pull ~$75K out, which you could then use to pay cash for another property or even make a down payment on a small apartment building. I am bullish on Cleveland and especially Euclid and North Collinwood (values still are not yet quite back up to their 2006 level for most properties/streets but they are heading there), and you'll likely see further value increases if you hold onto it and keep letting it cash flow for the long haul. Assuming you've got good credit, you can lock in a super low fixed rate for 30 years now (and btw, refi now, while you are still living in it, to get the best rate).

Great question Dan! I actually started investing in Cleveland waaaay back in the late 1990s when I was a college student there! It was the beginning of the no-money-down easy-money mortgage era (the application process might as well have been a pulse check), and banks seemed to have no objection to giving an inexperienced 19-year-old a ton of money to buy several 100+ year old houses in rough neighborhoods with just some signatures. Unsurprisingly, I made some major mis-steps, and the whole endeavor ended rather poorly after a few years. But I learned some great lessons along the way.

Fast forward a decade or so, to the downturn and real estate crash -- I had relocated to the San Francisco Bay Area a few years prior, and for those first few years found myself lamenting that I could not afford to even get a foot in the door in the local real estate market, where slummy houses in some of the roughest parts of Oakland were selling for $300-400K. What happened from 2008 and onward for the next few years, however, was amazing, as I saw properties selling for 25-50% (or less) of their peak (~2006-2007) values all over the Bay. Alas I had my chance to jump into the market. Though it was still fairly tough to snag decent properties (lots of them were tore up from the floor up, or were short sales that would get lost in the bank shuffle and ultimately never get approved), I managed to get a couple of properties in the East Bay for less than a quarter of their peak value (I still live in one of them -- and it's now worth about 6 times what I paid for it less than a decade ago). 

By the time I was ready to start looking at buying more properties again, in 2014, I found that the Bay Area prices were soaring and it was harder than ever to get into the market unless you were paying cash and were first in line whenever a new listing came up. But in my endless online searches I realized that Cleveland prices were still lingering in that 25-50% of peak value range in lots of very decent areas at that time, and decided to explore investing in properties there again. It was a market abnormality that seemed ripe for the taking, since Cleveland's economy was showing really strong signs of promise (particularly in healthcare), rising rents, and stability overall (the blue collar exodus that spanned a few decades finally seemed to have subsided). Having learned so much from my college-era investing fiasco, I knew what to avoid, what to look for and how to properly handle things this time around in order to mitigate risk and actually find success with investing in this real estate market. 

Over the past five years, I've bought properties in Euclid, Bedford, Garfield Heights, Mayfield Heights, Cleveland Heights, and Cleveland proper (North Collinwood neighborhood, near Euclid border) -- all of these properties have been acquired for considerably less than their previous peak values, which were not even unreasonable/inflated to begin with, so I have a fairly high degree of confidence that the values will be back at that level and higher before much longer. Cleveland real estate investing has been an interest of mine for a REALLY long time, and it's something I know a ton about -- I'm passionate about sharing what I've learned through these experiences, and this has even led to me starting an informational unbiased website on Cleveland real estate investing this year, and also a YouTube channel on the topic. Though there aren't as many great deals now as there were a few years back, I challenge anyone to find another major city, with a robust and diverse economy, that can provide such a solid price to rent ratio as Cleveland and still offer some upside potential for price/value recovery/increases!

Zip codes are seldom homogeneous enough to say "zip code X gets a grade of ___", "look in zip code Y" or "avoid zip code Z" (with occasional exceptions, like 44145 in Westlake, where it's about as homogeneous as can be). I've found that a deep dive into the neighborhood or suburb, usually down to the census tract level, will give you the best indication of the caliber of the specific area. Within both 44118 and 44106 there are census tracts that trend lower income/lower education/lower owner-occ rates, and then census tracts that are almost off the charts the other way (solidly into A territory). Dig deeply into it, and don't just assume that everything in a given zip is good or bad. In addition to looking at the census data for the tract, literally look at the block and the surrounding area using google maps (including street view) -- you can gauge a lot by how the houses and yards are maintained, what kinds of vehicles are most commonly seen in the street/driveways, etc.

For example, within Cleveland Heights, there are some streets off of Mayfield (e.g. Eddington) that are in 44118 that are nearly all multi-family rentals, with fairly low median household incomes, and but in that same zip code there are postcard-worthy mansions on streets like Fairmount. Additionally, portions of 44118 extend into South Euclid, University Heights, and Shaker Heights.

44106, on the other hand, straddles the Cleveland and Cleveland Heights border, and has everything ranging from opulent houses (on streets like Harcourt, in Cleveland Heights) where surgeons and law-firm-partners live, to areas where there are dumpy and cheap houses (on streets like Ansel, in Cleveland) and you'll be lucky to find/retain even a decent section 8 tenant.

I've created a grading map that takes a variety of factors into account to grade each census tract in Cuyahoga County... if anyone wants it, they can send me a private message and I would be happy to share.

 Congrats!!! Keep up that momentum =)

He must not have ever really had many (or any) dealings with born-and-bred Cleveland people before if he thought you'd just back down and scutter away with your tail between your legs LOL 

@Brandon Bartlett - I will shoot you a message on here with the link

@Vince Lucas - The channel is called Cleveland Investor Primer