Advice on investing in small multifamily rental properties in Cleveland Ohio?

[Michael Lam]

Hi All, 

I'm an out of state investor looking to start a rental portfolio in the Cleveland area for small multi families (2-8 units). My plan is to mainly focus on cash flowing properties that make the 2% rule. What are your thoughts on Cleveland as a place to begin investing and What areas would you recommend I begin looking at? Any advice you would give to someone first starting out?

Would also love to connect with experienced Cleveland rental investors.

Much Thanks

[Joshua Janus]

Quote from @Michael Lam:

Hi All, 

I'm an out of state investor looking to start a rental portfolio in the Cleveland area for small multi families (2-8 units). My plan is to mainly focus on cash flowing properties that make the 2% rule. What are your thoughts on Cleveland as a place to begin investing and What areas would you recommend I begin looking at? Any advice you would give to someone first starting out?

Would also love to connect with experienced Cleveland rental investors.

Much Thanks

Cleveland, Ohio is a great market to focus on for cash flow and specific pockets have gone up 2x and upwards of 4x in the last 5-10 years even!

Examples:

44109 (median home price went from roughly 50k to 125k in 8 years)

https://www.zillow.com/home-values/77009/cleveland-oh-44109/

44102 (median home price went from roughly 30k to 120k in 8 years)

https://www.zillow.com/home-values/77002/cleveland-oh-44102/

44106 (median home price went from roughly 100k to 200k in 8 years)

https://www.zillow.com/home-values/77006/cleveland-oh-44106/

It has the highest rents on average in all of Ohio for major cities and the median income is not even in the top 3. That creates a really nice price / rent ratio which is favorable for investors looking for cash flow. The median home price is also very low nationwide which creates a low barrier to entry. You can get solid cash-flowing single families in the 90-120k price range and duplexes in the 130-180k price range. There are cheaper one’s in D/F areas but I would be careful as those can create a laundry list of additional issues. In 2022 the rents increased 12.1% year over year which was the 3rd highest in the entire country per https://www.axios.com/local/cleveland/2023/02/14/cleveland-rent-prices.

Here are pockets I focus on for cash flow:

West side - West boulevard, Cudell, Clark-Fulton, Jefferson, Bellaire-Puritas, Old Brooklyn

East side - Fairfax, Buckeye-Shaker (the north side), Waterloo Arts District, Garfield Heights, Maple Heights, Newburgh Heights, Lee-Miles (the north side), Bedford

Here are the areas that I focus on for appreciation:

West side - Lakewood, Edgewater, Old Brooklyn, Ohio City, Tremont (above 490)

East side - Buckeye-Shaker (the north side), Waterloo Arts District, Fairfax

I have a graded neighborhood map of these areas as well if you would like to check it out.