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Reviewing Parma, OH for Investment Opportunities
I started spending a lot of time researching new rental markets for myself and recently came across Parma, OH. In this post, I'll share some insights based on my findings and some data to showcase why this market is a great opportunity. Feedback is wanted and greatly appreciated!
About This Market: Parma, Ohio, boasts a stable population driven by affordable housing prices relative to national averages. The local economy is supported by several diverse sectors, including healthcare, manufacturing, and retail, which sustain employment levels and underpin rental demand. Additionally, Parma's proximity to Cleveland enhances its appeal, offering easy access to urban amenities and employment opportunities without the higher living costs associated with larger cities. This combination of affordability, economic stability, and location makes Parma compelling in my research.
Taking a deeper dive into the rental market here, I thought this could be a unique investment opportunity because, despite a seemingly low occupancy rate of 23.90%, the rising rental rates highlight a robust demand for single-family homes (SFH), presenting a lucrative avenue for investors like us.
The Key Growth Indicator: A significant uptick in SFH building permits during 2022 and 2023 screams a burgeoning market ripe for investment.
Property Highlight: Zooming into the zipcode 44134, let's examine a promising investment with this single-family home.
3104 Liggett Dr, Parma, OH 44134
On this property, I calculate an ARV estimated between $107,000 and $115,000.
If you make a strategic offer of $70,000, complemented by a rough $30,000 renovation investment, you position this property as a prime rental candidate and can command rents between $1,100 and $1,200 monthly.
This scenario forecasts a potential 9.85% cash-on-cash return for an all-cash investment.
Additionally, with a more extensive renovation, the property's resale value could surge above $200,000.
This is just one example, but the above data showcases its potential as an excellent market for single-family home investments. As I've peeled back the layers through data-driven insights on more homes, the opportunities for substantial returns are clear. Happy to share more at some point!
Thanks for reading - I would love to get feedback on this. Please and thank you!
@Frank Barletta this is really great. It is really difficult to pinpoint the best locations (dependent on strategy) and I love that you are using really hard to find data and putting them together, especially adding in the permits. Parma is a great place and has continuously grown so definitely check it out.
Quote from @Jonathan Foux:
@Frank Barletta this is really great. It is really difficult to pinpoint the best locations (dependent on strategy) and I love that you are using really hard to find data and putting them together, especially adding in the permits. Parma is a great place and has continuously grown so definitely check it out.
Thank you, Jonathan. Great feedback!
Frank,
Looks like you really did your homework! Great analysis. I have 2 rentals in Parma and it has always been a good rental market. To make the numbers work, you have to buy right!! The property you referenced is the only one on the MLS under $100k, so in the last couple of years, it's been more difficult to find deals like these. What also stands out is the property is 3 bedrooms but only has 750 square feet, but I double checked the auditor's website and it says the same...so I guess they are probably very small bedrooms.
Reach out to me or connect if you have any further questions.
Good luck.
Thank you @Michael Hayes.
My goal was to share some of my research with a sample of data to showcase the need for units. That one property was an example, and I wouldn't ever regard a 750 sqf unit as a 3-bedroom (unless we're talking about NYC).
Quote from @Frank Barletta:
I started spending a lot of time researching new rental markets for myself and recently came across Parma, OH. In this post, I'll share some insights based on my findings and some data to showcase why this market is a great opportunity. Feedback is wanted and greatly appreciated!
About This Market: Parma, Ohio, boasts a stable population driven by affordable housing prices relative to national averages. The local economy is supported by several diverse sectors, including healthcare, manufacturing, and retail, which sustain employment levels and underpin rental demand. Additionally, Parma's proximity to Cleveland enhances its appeal, offering easy access to urban amenities and employment opportunities without the higher living costs associated with larger cities. This combination of affordability, economic stability, and location makes Parma compelling in my research.
Taking a deeper dive into the rental market here, I thought this could be a unique investment opportunity because, despite a seemingly low occupancy rate of 23.90%, the rising rental rates highlight a robust demand for single-family homes (SFH), presenting a lucrative avenue for investors like us.
The Key Growth Indicator: A significant uptick in SFH building permits during 2022 and 2023 screams a burgeoning market ripe for investment.
Property Highlight: Zooming into the zipcode 44134, let's examine a promising investment with this single-family home.
3104 Liggett Dr, Parma, OH 44134
On this property, I calculate an ARV estimated between $107,000 and $115,000.
If you make a strategic offer of $70,000, complemented by a rough $30,000 renovation investment, you position this property as a prime rental candidate and can command rents between $1,100 and $1,200 monthly.
This scenario forecasts a potential 9.85% cash-on-cash return for an all-cash investment.
Additionally, with a more extensive renovation, the property's resale value could surge above $200,000.
This is just one example, but the above data showcases its potential as an excellent market for single-family home investments. As I've peeled back the layers through data-driven insights on more homes, the opportunities for substantial returns are clear. Happy to share more at some point!
Thanks for reading - I would love to get feedback on this. Please and thank you!
You missed Parma by 6 7 years. I have done 100s and 100s and 100s in ALL of the Cleveland markets, NONE well maybe one or two in Parma. Oh YES, I recall one where the low life tenant knocked the garage down with his car, YES took it down because he was being evicted LOL. Better numbers elsewhere. I just closed literally 30 min ago, ALL IN 3/1 65k, value about 100- 110k. rented sec 8 for 1300, THATS a deal. Closing this week on a duplex all in 85k, rented for 20k , again :) . Sure you can find one or two in Parma but requires a lot of work. Also, if you're going sec 8, PARMA SEC 8 well let's just say, their terrible. I will not work with vouchers from there.
BTW you are working much too hard. I have never read online stats about any area of Cleveland (doing vs reading) and have been buying and selling there for about 10 years, Look how it all worked out :)
All the best
Quote from @Frank Barletta:
Thank you @Michael Hayes.
My goal was to share some of my research with a sample of data to showcase the need for units. That one property was an example, and I wouldn't ever regard a 750 sqf unit as a 3-bedroom (unless we're talking about NYC).
I would bet the attic is the 3rd br so it's really about 1k- 1200 sq ft overall. 90% of the props in all of Cleveland have converted the attic to make it a 3 br. NO nobody ever tells the city
Quote from @Jonathan Foux:
@Frank Barletta this is really great. It is really difficult to pinpoint the best locations (dependent on strategy) and I love that you are using really hard to find data and putting them together, especially adding in the permits. Parma is a great place and has continuously grown so definitely check it out.
All due respect it's a waste of time. I am NOT trying to be an ***. EVERY city in ALL of clev, has doubled, tripled or much more over the last 10 years on top of the 25- 35% net caps. What does the internet/ research tell you about East Cleveland and N Collinwood? Run-away right, well its 100% incorrect. Try buying a MF in E Clev, good luck there is no inventory for a reason :) Again I am going by my 10 years of doing 100s and 100s of deals there, 1ks or reno/repairs, 1ks move in and outs working with all the govt agencies. Again, I never once read online stats, doing vs reading.
All the best
Quote from @Bob Stevens:
@Bob Stevens - Thank you for taking the time to reply.
The same can be said about many markets, so I want to ensure we see the same thing.
If you look at the increase in rental prices, the lack of supply, and the increase in building permits, you could say there is an opportunity here. Of course, at the same time, I can make a more informed decision on if this market is one to consider.
Quote from @Frank Barletta:
Quote from @Bob Stevens:
@Bob Stevens - Thank you for taking the time to reply.
The same can be said about many markets, so I want to ensure we see the same thing.
If you look at the increase in rental prices, the lack of supply, and the increase in building permits, you could say there is an opportunity here. Of course, at the same time, I can make a more informed decision on if this market is one to consider.
You are WAAAAAY overthinking it. We buy props everywhere, its all about numbers. How many do you have there?
Hi, great job yes, Ohio is the place where you want to invest in real estate. I have to admit that as an Ohio Realtor. Please feel free to give me a call if you have any questions. Thanks!
Regina Blake-Ohio Realtor
I'm just reviewing the data but I appreciate your passion for the topic.
Quote from @Frank Barletta:
I started spending a lot of time researching new rental markets for myself and recently came across Parma, OH. In this post, I'll share some insights based on my findings and some data to showcase why this market is a great opportunity. Feedback is wanted and greatly appreciated!
About This Market: Parma, Ohio, boasts a stable population driven by affordable housing prices relative to national averages. The local economy is supported by several diverse sectors, including healthcare, manufacturing, and retail, which sustain employment levels and underpin rental demand. Additionally, Parma's proximity to Cleveland enhances its appeal, offering easy access to urban amenities and employment opportunities without the higher living costs associated with larger cities. This combination of affordability, economic stability, and location makes Parma compelling in my research.
Taking a deeper dive into the rental market here, I thought this could be a unique investment opportunity because, despite a seemingly low occupancy rate of 23.90%, the rising rental rates highlight a robust demand for single-family homes (SFH), presenting a lucrative avenue for investors like us.
The Key Growth Indicator: A significant uptick in SFH building permits during 2022 and 2023 screams a burgeoning market ripe for investment.
Property Highlight: Zooming into the zipcode 44134, let's examine a promising investment with this single-family home.
3104 Liggett Dr, Parma, OH 44134
On this property, I calculate an ARV estimated between $107,000 and $115,000.
If you make a strategic offer of $70,000, complemented by a rough $30,000 renovation investment, you position this property as a prime rental candidate and can command rents between $1,100 and $1,200 monthly.
This scenario forecasts a potential 9.85% cash-on-cash return for an all-cash investment.
Additionally, with a more extensive renovation, the property's resale value could surge above $200,000.
This is just one example, but the above data showcases its potential as an excellent market for single-family home investments. As I've peeled back the layers through data-driven insights on more homes, the opportunities for substantial returns are clear. Happy to share more at some point!
Thanks for reading - I would love to get feedback on this. Please and thank you!
Hey Frank, I invest heavily in the Columbus market and work with out-of-state investors from both the east and west coast who love investing here. I specialize in both residential and multi-family real estate in the Columbus market. Below is a list of metrics that my out-of-state investors have looked into when choosing to invest here in the Columbus market.
Population Growth: Target cities with a minimum 1.5% YoY growth over the past 20 years and populations exceeding 100,000. (Use tools like loopnet, Costar demographics, and crime maps. Check with local governments for their economic plans.)
Job Growth: Prioritize areas with a minimum of 2% employment growth YoY for the past two decades. (Investigate the presence of Fortune 100 companies and industry diversity, using resources like metropolitan council reports and broker websites (e.g., CBRE, Colliers).)
Affordability: Ensure household income has grown at least 1% YoY for the past 20 years. Be wary if rents exceed 1/3 of average incomes.
Absorption/Vacancy: Consult National Association of Realtors for market time and inventory insights. Evaluate historical and current vacancy rates, aiming for decreasing trends.
Demographics: For younger populations, focus on proximity to parks and schools. For older demographics, consider the availability of medical centers, entertainment, and restaurants.
Buildings/Permits: Assess the city's growth compared to previous years.Determine if the city can accommodate future supply.
Government Regulations: Examine the city's efforts and the type of businesses they are targeting. Be cautious of cities that aren't proactive in job attraction; too much growth can lead to strict building regulations, affecting housing value.
Other Factors
- Favor cities with a crime index that has consistently decreased over a decade.
- For appreciation, I look for a minimum of 2.5% YoY growth in median house values over the past 20 years but I don't use this explicitly in calculations.
-
Real Estate Agent ohio (#2022006870)
- ReafCo | Ahmed Group
- 614-802-5698
- https://www.reafcorealestate.com/team/alfath-ahmed
- [email protected]
Quote from @Alfath Ahmed:Hey Frank, I invest heavily in the Columbus market and work with out-of-state investors from both the east and west coast who love investing here. I specialize in both residential and multi-family real estate in the Columbus market. Below is a list of metrics that my out-of-state investors have looked into when choosing to invest here in the Columbus market.
Population Growth: Target cities with a minimum 1.5% YoY growth over the past 20 years and populations exceeding 100,000. (Use tools like loopnet, Costar demographics, and crime maps. Check with local governments for their economic plans.)
Job Growth: Prioritize areas with a minimum of 2% employment growth YoY for the past two decades. (Investigate the presence of Fortune 100 companies and industry diversity, using resources like metropolitan council reports and broker websites (e.g., CBRE, Colliers).)
Affordability: Ensure household income has grown at least 1% YoY for the past 20 years. Be wary if rents exceed 1/3 of average incomes.
Absorption/Vacancy: Consult National Association of Realtors for market time and inventory insights. Evaluate historical and current vacancy rates, aiming for decreasing trends.
Demographics: For younger populations, focus on proximity to parks and schools. For older demographics, consider the availability of medical centers, entertainment, and restaurants.
Buildings/Permits: Assess the city's growth compared to previous years.Determine if the city can accommodate future supply.
Government Regulations: Examine the city's efforts and the type of businesses they are targeting. Be cautious of cities that aren't proactive in job attraction; too much growth can lead to strict building regulations, affecting housing value.
Other Factors
- Favor cities with a crime index that has consistently decreased over a decade.
- For appreciation, I look for a minimum of 2.5% YoY growth in median house values over the past 20 years but I don't use this explicitly in calculations.
Thank you for the thoughtful response! I agree on all the points you’ve shared and definitely use them for my research.
One question I wondered about was if people care about political affiliations (red/blue area).
Bob is right that you can get better cash flow on the east side, but I still see deals pop up over there from time to time and I don't see any rapid depreciation in those neighborhoods coming any time soon and I think if your strategy is to buy and hold in nicer areas with less risk, it's a very good area to target.
-
Real Estate Agent
- 440-781-6174
- http://www.newforestrealty.com
- [email protected]
Thank you for that @David Leggett
Glad my points were well received and can be useful for potential investments in the area.