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.

[Nicholas Novak]

Not sure about multi family but there is a lot of regentrification going on in those areas, but it is still spotty and a mixed bag of tenants and populous. I would definitely drive the areas to see if you are in the path of development or not. There are a lot of people (virtual mostly) that don't really understand the area, and selling things with inaccurate descriptions that they feel are close enough.  I had a deal sent to me that was marketed as tremont that was on the wrong side of the interstate. Basically reducing its value to about 10% of what it would have been worth if it was actually on the right side of the highway.  Hope I helped rather than just ramble on, good luck to you!