Househacking in high property tax areas, your thoughts?

[Amber Moelter]

Hi all, I'm new to BP and REI. My spouse and I moved to Ohio last year and we're currently renting in Akron, with the goal to househack by the end of the lease, or sooner if we find the right property.

We've been going to duplex open houses in Cleveland & Akron and a few showings with our agent who has more experience in the Akron area, to learn about neighborhoods, price, quality, etc. Setting expectations. 

We're leaning toward Cleveland, gravitating to the Cleveland & Shaker Heights B neighborhoods, both for ourselves and for family/professional leaning tenants. I'm curious why those areas aren't recommended in the forum. Is it the high property taxes? Is it the POS? We've seen some lengthy POS with $15K+ escrows and we've seen others that will come with completed POS. We're incorporating the prop taxes & POS costs into our overall calculations.

Buy box:
Location: Approx. 30 min drive to Boston Heights, for work
Neighborhoods: Decent walkability score - not far from shops/restaurants/trendy neighborhoods
Ideal tenants: Close to hospitals/universities/schools for professionals/students/families
Budget: $175-250K - Buying w/conventional loan, 5% down/ approx 20K reno.
Property type: MFH 2-4 units - preferably side-by-side, with a yard we can fence for our dog
Units: 3+/1+ - better if 1.5/2 bath per unit
Timeline: Plan to live there for 2 years, but possibly only 1 year if we find another investment opportunity
Goal: Focus on appreciation - would like to see cash flow in year 2-3 (the year we move out), including overhead (Vacancies, Maintenance, Utilities) and budgeting in PM if eventually we don't manage ourselves
Value add: Opportunity for some forced appreciation, but not a full reno - cosmetic upgrades and updating kitchens/baths while we live in one unit. If vacant, upgrade the other unit before leasing. We have $20K for immediate reno, and would continue in our unit over time.
Parking: 2+ car garage (ideally 1 spot per unit)
Personal taste: We gravitate to historical details (wood floor, built-ins, and curb appeal) and don't like flipped vibe, with LVP and grey paint. We'd paint, regardless, and prefer wood floor that may need refinishing. We tend to gravitate to long-term owner-occupied properties, which are overdue for aesthetic updating, but well cared
What else? What are we overlooking?

When looking at neighborhoods the main test for us is would we want to live there for 1-2 years? We're balancing areas that will see some development for appreciation, while also being decent enough to live there now and attract desirable tenants. Cleveland Heights so far has been checking those boxes with hospitals/universities. Shaker seems a bit more restrictive with POS and taxes, but more family-oriented for the schools. 

Thanks in advance for your feedback, for either advice on Cleveland neighborhoods or first time househacking, or anything else we might be overlooking.

[Nadeem Alamgir]

Welcome to BP Amber!

You're right Shaker Heights and Cleveland Heights have some of the highest property taxes in Cuyahoga County. The required POS inspections become one added layer to closing a deal, but as you’ve seen, some properties come with completed POS, while others require repair escrows that can add up to around 10-20k. If the seller handles the repairs, it’s usually not an issue, but you want to verfiy what your lender requires.

Cleveland Heights checks a lot of your boxes (hospitals, strong tenant pool, walkability, and appreciation potential). It also tends to have larger, well maintained duplexes compared to other areas. Shaker Heights is great for owner occupants but is generally pricier and has more restrictions on renovations.