My Cleveland REI Plan

[Nathan Christensen]

Hello Biggerpockets,

I wanted to share my plan for jumping into real estate to get some feedback while I’m still early in my planning phase. My longtime girlfriend (25) and I (23) are planning to move to Cleveland at the beginning of 2021, we currently make a combined 90k and we have been managing to save about 2,500 a month between us after tax. We’re aiming to move with about 45,000 cash to get started. We expect to find jobs with similar salaries or slightly higher when coming to Cleveland. I hope to find a 6 month lease and start the hunt for our first house once we get new jobs.

After reading @JamesWise Cleveland neighborhood guide about 50 times, I’ve picked the neighborhood of Puritas-Longmead to get started. It seems to have attractive price points and decent rent without the crippling tax of east suburbs like Maple Heights and South Euclid, plus no POS. We are looking to get started with a 3 bed 1 bath bungalow around 1000 square feet. From poking around rental sites I’m thinking we can get 800-900 plus utilities for a nicely fixed up 3/1 depending if it’s on the west or east side. I’ve heard the West side near Kamm’s Corners is nicer. I’ve also heard to steer clear of W 130th and Bellaire. We’re hoping to get a place tucked away from those main roads for 45,000-70,000. We’re looking for a place we can come in and do some hands on cosmetic upgrades: floors, cabinets, counters, paint, appliances, landscaping. We’re thinking 10,000 worth of upgrades if we do the work ourselves. I’m fairly handy and I’ve done everything but countertops before. I was thinking we could live there while we make the upgrades. Then we’d rent it out when we move into our second property and repeat the process.

Eventually we’re hoping to work our way toward getting multi families in Lakewood. The numbers seem attractive in Lorrain, but I don’t know much about the area.

I am planning to use traditional 20% down financing, as at this low of a price point I don’t feel the need to have mortgage insurance eating my cashflow. We both have good credit given our ages, 740 and 760 Fico but our credit histories are predictably limited. I will look to get pre-approved after my girlfriend and I have secure jobs for a couple months.

I was hoping to get some feedback from those of you who invest in this area. Is my plan/numbers realistic? What kind of issues do you find in houses like this? Should I fear knob and tube wiring? What do closing costs look like? I was figuring about 4% of the purchase price. Is it difficult to find/keep good renters?

Any and all advice is welcome. Thanks in advance!