Help understanding low priced Cleveland Multi-family

[Jagdish Bajaj]

Hello everyone,

I've been reading some of the posts and knowledge being shared on BP for the past couple of weeks. 

I am thinking of investing in Cleveland and have a decade of renovation management expertise. Looking for multi-family investment opportunity (have rehabbed one in Toronto with good success). There seem to be many low-priced buildings that appear to offer great returns after improvements. Some are entirely vacant, others not.

Located in and around University Circle, close to the Cleveland Clinic, one would think that people working at CC would like to live close by, have a better than average income, thereby affording and paying higher rents.

CC, by virtue of its global brand recognition and continued success in the medical field, would only attract more growth, staff and therefore -- housing demand.

What am I missing here?

Obviously I realize that the older the building, the higher the deferred maintenance expenses... the worse the neighbourhood, the higher the rent collection challenge, evictions, damage, etc. etc. But, what if a building was upgraded to a higher level than it's neighbours -- would it attract a better, higher-paying tenant? Are tenants willing to pay more for an upgraded kitchen, potlights, granite counters, etc.?

What am I missing here -- please help me understand.