Almost in escrow on a house in Cleveland. Would like input.

[Ryan Rock]

I am in the final stages of negotiations on a house in Cleveland. I have owned many rentals in California, but since I reached the conclusion that my beloved state is not the best place to invest at the moment, I started to look for opportunities in different states. My first idea was to find a sf property close to a university and rent it room by room to students. With that working premise I began to narrow my search to 4+ bedrooms, less than 20 years old and less than 1 mile from a university. I may have found the only 10 homes in the country that fit that description for under $150k. 

I became fascinated with Ohio, but while searching there I decided to consider unmarrying from the student rental. Anyway, the property I am about to buy is 2262 E 73rd Street, Cleveland. A few things I like about this property are that it is 20 years old, has a legal basement making it a 5 bedroom, and it is currently being rented room by room.  The current landlord does not allow pets, also a plus.

With 5 bedrooms available, 70% occupancy, and $400 per, I only get a cap rate of 6%. That's with $250/month toward maintenance and $200 pm. Hopefully I can beat the occupancy, room rent and maintenance, if not the pm.

We have agreed on $128.5k. The AC needs a $3000 repair. I will be paying cash.

There are currently two tenants paying $400/month each. The seller has offered to place a 3rd during escrow, but I declined. I want to vacate the basement, which currently has one of the tenants, and put in a door to the outside. Then I would like to make this an abnb apartment. In my view there are needs for strs in nearly every area. I won't be shooting for a sky high occupancy, just enough to net more than the $5-600 I could get with a longer term tenant.

If anyone wants to evaluate my idea I'd appreciate it.

Ryan
 

[James Wise]

Quote from @Ryan Rock:

I am in the final stages of negotiations on a house in Cleveland. I have owned many rentals in California, but since I reached the conclusion that my beloved state is not the best place to invest at the moment, I started to look for opportunities in different states. My first idea was to find a sf property close to a university and rent it room by room to students. With that working premise I began to narrow my search to 4+ bedrooms, less than 20 years old and less than 1 mile from a university. I may have found the only 10 homes in the country that fit that description for under $150k. 

I became fascinated with Ohio, but while searching there I decided to consider unmarrying from the student rental. Anyway, the property I am about to buy is 2262 E 73rd Street, Cleveland. A few things I like about this property are that it is 20 years old, has a legal basement making it a 5 bedroom, and it is currently being rented room by room.  The current landlord does not allow pets, also a plus.

With 5 bedrooms available, 70% occupancy, and $400 per, I only get a cap rate of 6%. That's with $250/month toward maintenance and $200 pm. Hopefully I can beat the occupancy, room rent and maintenance, if not the pm.

We have agreed on $128.5k. The AC needs a $3000 repair. I will be paying cash.

There are currently two tenants paying $400/month each. The seller has offered to place a 3rd during escrow, but I declined. I want to vacate the basement, which currently has one of the tenants, and put in a door to the outside. Then I would like to make this an abnb apartment. In my view there are needs for strs in nearly every area. I won't be shooting for a sky high occupancy, just enough to net more than the $5-600 I could get with a longer term tenant.

If anyone wants to evaluate my idea I'd appreciate it.

Ryan
 

1. It's in the hardcore ghetto. See all those vacant lots? That means fixing up the houses would cost way more than they are worth so owners walked away. Then the city eventually tore them down as vacant houses like that get used as trap houses and places to hide dead bodies etc...

2. You are paying way too much for it.

3. Rent by the room means your tenants are transient junkies, felons or hookers.

4. Getting a quality property management company to work for you in this neighborhood will be next to impossible. All of the bigger firms, (mine included) would turn down this putting this property in their portfolio. Neighborhood is too crappy, makes it too hard to retain employees when you are sending them into bombed out slums.

5. There is nothing good about you making this investment other than the fact that you'll probably call me to sell it at a loss in 6 months.......That's not really all that good for you, but it's great for me so I say go for it lol.