I became interested in the Cleveland/Cuyahoga County market around May of this year. After several months of talking to folks on BP (and others outside of BP who have invested there or lived in the area), I decided to take a trip with an awesome fellow BP colleague, like myself from LA, and a good friend from school who also invests. He's the first one I first talked about this Cleveland idea with. I've done deals locally but am a newer investor for sure.
We booked an Airbnb in Cleveland Heights. Took a red eye flight from LA, landed early Thursday morning (10/11/18), and had our first meeting just a couple of hours after getting to our pad, and the day didn't finish until almost 9 PM. The other days were a bit less crazy but not by that much - we stayed pretty busy the entire time!
I have lived mainly in California (LA area, and SF for a bit), as well as NYC for around five years, so am very much a coastal big city person. Thus, I did not know what to expect. All I knew of Cleveland were the sports teams (let's be honest, mainly just the Cavs and Indians, lol), Bone Thugs N Harmony rap group, and I'd heard of Cleveland Clinic. Very stereotypical, I know.
Anyhow, here are some thoughts on what I learned and observed in my time there. Hope it is helpful to folks who are as new to the Cleveland market as I am.
1. If you are considering investing here, DEFINITELY visit for several days. You are spending hard-earned money in a place where you don't live. Why not take a trip, to see what you are getting in to? It is a sizable area with many neighborhoods, suburbs etc. You also need to get to know the typical ins and outs of Cleveland properties, especially basements and the issues that come with them, which I think can be a new thing for many West Coast folks.
2. Network before you get there, and try to meet with a variety of folks whom you might collaborate with, in order to invest successfully. This includes realtors, property managers, contractors, lenders, and of course fellow investors who are local to the area. BP is an outstanding resource, although people we know outside of BP who invested or lived there did help us out as well. Speak with fellow investors, to find out who they would suggest connecting with.
Also, see if you can time your visit as the same time as the local REI events. The main REI that I know of was not happening the week we went, but hopefully on a future trip we can attend. We did have a chance to hang out with some wonderful local investors we met through BP and are getting to know, and these folks have been incredibly helpful.
3. Look at a variety of neighborhoods. It seems like everyone from Cleveland has their own views on east vs. west side and different suburbs. Still, the best way to approach your visit is get to know different areas that are within your current OR future price point (especially if you were to partner with others in the future). I see some areas mentioned more than others on BP, but worth exploring a wider range of what Cuyahoga County offers, particularly suburbs.
4. I know everyone has their own view re appreciation vs. cash flow. I thought of Cleveland, at least when I started researching, purely in terms of cash flow.
After arriving though, I do think there are some areas where you'll also see good (or better) appreciation in the future, in addition to cash flow. Ohio City and Tremont are awesome hip areas, as is much of downtown. This apparently that was not the case 10 or maybe even 5 years ago? It does seem like there are other areas which are transitioning over time too. Where they will end up is something that is inherently uncertain, as with all markets. Yet, I do see potential for growth.
5. Healthcare is massive in Cleveland, relative to the size of Cuyahoga County. We did not realize how much of a footprint it has, until we arrived. Not just Cleveland Clinic either, but also UH, Mercy Health and others that seem to have a strong reputation. I like this, in that it's far easier to move factories away to another state or abroad, compared to huge healthcare facilities with significant research components, and which serve lots of patients, both locally and from farther away.
6. The data in terms of population trends is mixed, which was a concern for me. It seem that this sentiment is shared by many other investors.
However, the population of educated, somewhat younger folks (i.e. millenials, I am an older millennial myself) is growing solidly (8th highest rate nationally I read). That is positive for wherever these folks settle within Cuyahoga County, and for the local economy and real estate market in general.
Again, not making a value judgment on folks' education levels or earning potential. We all have different life experiences and opportunities. Still I think we can agree that educated and/or creative people with good paying jobs or who start businesses, is good economically for most places! I did notice several nice areas with a lot of young professionals and families.
Cleveland is not, from what I saw, Austin or Seattle or Denver as far as population trends. Then again, most markets in this country are not, yet plenty of people are making money coast to coast. Still, I think we are seeing some good things happening in Cleveland. With that said, the population here does on average seem a good deal older than you might find in the Sunbelt or West Coast. Of course, that may present other opportunities, including assisted living? Just a thought.
7. Something being cheap or having high potential rents relative to price, does NOT make it a good deal. I think a lot of us from the expensive markets see prices in Cleveland and assume these must all be solid values. I was, to a degree, one of those people, prior to my visit. Not the case now.
I did have at least one person we met, tell us he could not believe what folks from out of state were paying for relative junk. There are plenty of great opportunities, but since when is anything handed to us? Homework is key.
8. Most areas of both the city and county feel relatively safe. There are definitely pockets that appear like they could be quite rough. Statistics tells us crime and violence is sadly quite high in some of those areas. Investing in such places is risky, in Cleveland or anywhere else. However, I have been to other cities where the "bad" areas were far more dominant, and the overall atmosphere of the city was rather hopeless and tired. Cleveland is not in that category at all. Quite the opposite.
9. People in Cleveland are friendly and welcoming, both folks in the real estate world, and outside of it. This is not per se a reason to invest somewhere, but I think most of us enjoy being around people we like. Even if you went to Cleveland and did not invest (I plan to in the near future), you'll be glad for the experience.
Hope this helps!
