Investing in Cleveland for renting purposes

Cleveland, Ohio
Buying & Selling Real Estate
4yFollow

Investing in Cleveland for renting purposes

Guillaume Jean Andre Palomba
Member since 2022 · 14 posts · 8 votes

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

1Reply
22 views

Most Popular Reply

Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
4y

@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

[email protected]248-209-6824
Logical Property Management4.9458 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

7 Replies

Jump to latestLatest
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @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

    [email protected]248-209-6824
    Logical Property Management4.9458 Reviews
    WebsiteView Page
    2Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    Thanks Drew for these informations.

    may i ask :

    what does OOS means ?

    how to check the rankings of a house , of a neighborhood ?

    0Reply
  • Shane Kelly
    Real Estate Agent · Cleveland, OH · Member since 2021 · 383 posts · 361 votes
    4y
    Quote from @Guillaume Jean Andre Palomba:

    Thanks Drew for these informations.

    may i ask :

    what does OOS means ?

    how to check the rankings of a house , of a neighborhood ?

    OOS simply means Out Of State, and as for rankings of a neighborhood, you can look at: The Ultimate Guide to Grading Cleveland Neighborhoods (I'm sure James Wise was planning on replying here with the link eventually anyways). And as for Cleveland, it's a great city, especially for Cashflow. Make connections, ask questions like you've done so far, and try to learn from the experts in the city as there are a lot of them. Lastly, we have some clients at the property management company that I work for that are French and they work with Invest US, however I can't speak much on how they are at working with the investors. From the PM's end of things though, it seems like they are expensive for their services, but maybe that's just how it looks from my perspective. Either way, I'm more than happy to help however I can. Don't be afraid to reach out.


    2Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    thanks so much Shane. for sure i am gonna keep reading and asking questions for the next few months .

    0Reply
  • Guillaume Jean Andre Palomba
    OP
    Member since 2022 · 14 posts · 8 votes
    4y

    what about buying a renovated condo in a A class neighborhood? making sure the building is in good shape, and that no important renovation is needed... what are the risks?

    for exemple this kind 

    https://www.realtor.com/reales...

    0Reply
  • Shane Kelly
    Real Estate Agent · Cleveland, OH · Member since 2021 · 383 posts · 361 votes
    4y
    Quote from @Guillaume Jean Andre Palomba:

    what about buying a renovated condo in a A class neighborhood? making sure the building is in good shape, and that no important renovation is needed... what are the risks?

    for exemple this kind 

    https://www.realtor.com/reales...

    The one that you had linked above I would not say is a good deal at all if the $400 a month HOA fees are accurate. As for the idea in general, while I'm sure it could work in Cleveland if the price is right, I would say that it is likely not your best idea based solely off of not being able to add any value to it and need to pay HOA.
    1Reply
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
    4y
    Quote from @Guillaume Jean Andre Palomba:

    what about buying a renovated condo in a A class neighborhood? making sure the building is in good shape, and that no important renovation is needed... what are the risks?

    for exemple this kind 

    https://www.realtor.com/reales...

    Hey GUillaume,

    I do not generally invest in anything with an HOA. Even if they aren't very active which is often some investors arguments for buying them, they can change things at anytime and you could be stuck depending on the changes. We did a flip in Shaker Heights last year and many condo buildings in Shaker do not allow renting so you would want to make sure they do and that they can't change it on you. 
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free