Investing in East Cleveland

[Vadim F.]

I know there are a ton of naysayers out there about East Cleveland saying the area is a lost cause but that is what is enticing me to the area. Usually when people say the area is the worst of the worst, it gets revitalized and gets too expensive to invest in like UC. Browsing the web, I came across https://neo-trans.blog/2022/09... which will be huge for the hard hit city/town. I am also picturing UC moving East since that is the only way it can go where properties haven't exploded in price yet. Question to those who are potentially in the know/currently investing in the area, what else is in the works for East Cleveland? I know the area won't change overnight and not everything can be found on the internet. 

[Todd Jones]

I was raised in East Cleveland so I can provide some insight. In summary, it’s complicated.

Sorry if this is lengthy but I feel I should inform.

Background:
East Cleveland was the home to John D. Rockefeller who invested quite a bit into the city including the historical Rockefeller homes. This area is whisper quiet and rivals even the better areas. Most of the homes are extremely large and there is a fair share of duplexes. They officially got a mayor in the 1980s. Prior to this, it was a commissioner and a city manager. Several officers were arrested for basically stealing city funds. When Mayor Davis left, he (allegedly) destroyed the office. Mayor
Onunwor was pretty good and kept pointing out how funds mysteriously disappeared (e.g., the park's water fountain fund) but he got arrested for corruption in relation to contract hiring. Mayor Brewer managed to have the city of Cleveland handle the water, which was HUGE benefit. The current mayor is maintaining things "ok" but the city council won't budge regarding progress/change. Watching the city council is pure entertainment (i.e., Councilman Forbes would very intentionally rustle papers on the mic when someone else spoke).

When you combine (1) city officials taking money for decades per police reports and mismanaging the area, (2) high city tax of 2.5% city tax w/ no credit unlike other cities, (3) the loss of Huron Road hospital which was the biggest income, you now see why East Cleveland is like this now.

Issues:

- Roads: Horrific. Need proof? Drive down Terrance Road between Lee and Noble...ok, don't. Please don't. Your car doesn't deserve potholes the 1 ft deep.

- People: The culture is "keep to yourself" in most cases. Shaw does produce highly educated adults and they have embedded vocational training. The population has dropped to 17k, down by 37% since 2000. They used to have several events such as the Love Festival on Euclid Ave, which was popular w/ 0% violence, but it was shut down. Now, they feel the city won’t make a comeback and the police will be 1 hour late to calls.

- Area/Homes: Several businesses have left hence the abandoned commercial buildings. The folks who have businesses are dying off. In several cases, homes are not boarded up. Demolition companies don't want to deal with them based on their unprofessionalism. I have family in demolition. You can get a home for $5k-$15k easily or more so take care of the unpaid taxes.

- The city has been in a fiscal emergency for over 10 years but the state ok'ed a plan to get them out. Check out their service department building.
https://www.ideastream.org/new...

- Crime and drug problems? Yes.

Summary:

So...should you buy in East Cleveland?

Depends.

You will have tenant issues (miss rent payments), finding a property manager would be extremely hard, pay higher taxes, have to do major rehabs, and fix up the place after each tenant leaves. However, the homes are very large, made out of "old school wood", you can purchase a substantial amount of land, and always have cash flow and large CAP.

If you are willing to deal with the potential headaches, then go full steam. Just don't slumlord as the tenants will react very strongly. Expect to keep them as selling will be practically non-existent.

The future? UC will only take over so much as the cemetery is a clear demarcation. Every once in a while there are talks to combine EC with Cleveland they don't want it.

Hope this helps!