Investing in Cleveland for renting purposes

[Guillaume Jean Andre Palomba]

Hello everyone,

short introduction: i am a French citizen ,37, currently working in China, looking to do a first real estate investment. (pardon in advance for any language mistakes)

After collecting informations , i found out that investing in Cleveland seems a very good option.

Houses are cheap, rentability is high (around 10% after charges, taxes etc...), the city seems to have a solid economy (healthcare, and new techs?), a young demography with good jobs/salaries , and renting rate of 98% (i mean that 98% of the available houses/appartments for rent are occupied).

1) Can you guys confirm these facts ?

2) any recommendation about established and reliable agencies, offering property management services?

3)i found 2 agencies run by french people, one is called " USA immobilier", the other "Invest US". their offers seems very attractive, maybe too good to be true. did you guys ever heard about these agencies ? any feedback would be much appreciated. their advantage for me would be the language and they help with local/national regulations such as taxes, LLC, property management etc...

4) by consulting local listing i found many houses with the mention "call for price'' , "1$", or some ridiculously low prices ... does it mean that these houses come with an unsafe deed ? is it golden rule , for beginner and long distance investor like me , to always buy a house coming with "general warranty deed" ? if a house is cheap, and needed renovation is light, does it worth it?

5) do you think that holding a property in Cleveland for long term 10, 20,30 ,40 years is safe ?

6) any advice, recommandation, remarks are more welcome

Thanks for reading, and even more thanks for your reply

Guillaume

[Drew Sygit]

@Guillaume Jean Andre Palomba

Cleveland is a lot like Detroit - there are a lot of crooks trying to sell ignorant out-of-state and out-of-country investors, Class C & D properties like they are Class A or B.

So, unless you take time to do your research about who you work with and where specifically you buy, you will get burned.

Here's some other considerations:

Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799