Could I invest in the midwest (CLE/OH) without BRRRRing (turnkey)

[Mike Schorah]

How risky is it?

I learned that I could get a $20K HELOC from my primary residence. I have $15K in old 401Ks that I could rollover into a SDIRA and I have $15K in cash saved up. That's roughly $50K, but I prefer to use the cash for any personal emergencies. So that would leave me with $35K.

I hear it’s $31.5K per door to invest in Cleveland. Could I buy a $94k triplex in an A or B neighborhood with $23k down (25% down payment)? That would leave me with $12K in cash (not counting my $15K in personal emergency funds). How much cash should I have saved up for emergencies?

I figure if I can get $250 cash flow after expenses per door, that would leave me with $500 per month income and $6K/year in income. Of course, I would use the first couple of years to pay my HELOC back (if it's a mixture… not sure if it would be better to go the SDIRA route or go the HELOC route).

I’m calculating that if I put at least half or most of my rental income towards reinvesting, I could get 3 doors every year. I usually save $5k/year between cash/retirement and an additional $6-$7k/year between my house appreciating and the mortgage being paid down (leaving equity). So if I put all of the rental income towards the mortgage(s) of the multifamilys, would I have 27 doors in less than 10 years (am I missing something)? Between duplexes, triplexes, and fourplexes, I would think that I’d max out at 27 units if I have 9 buildings (bringing me to FannieMae’s 10 mortgage limit where I am including my personal residence).

Could I go turnkey in Cleveland or Ohio or the midwest or any other area where the numbers are this favorable? I hear that Cleveland’s housing stock is 1900-1950s era, but is it extremely difficult to find turnkey in Cleveland?

I was laid off from my job a month ago, but I’ve done over a dozen interviews. How long do I have to work to make this happen? A few months? A year? And is it ok that I’m a job hopper? I usually work at a job for a year or two before I find a higher paying job (I hate waiting for raises). How will this affect my ability to get a mortgage? Could I possibly get a hard money loan or other type of lending? I currently have a 705 credit score. I would imagine that some lender would look past this if my income usually grows with each job hop and I’m putting 25% down on each property.

[Bonnie Low]

We invest in OH, Cleveland and Toledo specifically. I have not seen a single A or B class triplex in Cleveland for $94k in the year and a half that we've been involved in this market. You could find a single family home in a B class neighborhood for $94k or possibly an A class but the home will need work, but it won't generate $500/mo in cash flow. The rents just aren't that high. So you will want to continue your research and adjust your numbers. Either go off market through a wholesaler or FSBO, look for a SFR or a duplex if those are the metrics you're trying to achieve, or downgrade your neighborhood expectations.