Looking to move into the Cleveland market.... but....

[Jacob Miller]

Hello all! I'm an Ohio native who's primarily invested in Detroit, MI and doing acquisitions for larger funds doing 5-7 deals a month. I'm wanting to replicate this in the Cleveland area. If anyone has some insight into the market it would be greatly appreciated.

• What areas/zip codes are best for rentals?
• Desired cap rate from those of you investing currently?
• Month-to-Month leases or multi-month?
• The average price of a unit w/ a good tenant? Average preferred rent?

Looking forward to hearing your thoughts and connecting with you all!

[Uri Gofman]

Jacob,

We've been in the Cleveland rental market since 1995.  We like the eastern inner ring suburbs if you are looking for a blend of cash flow and predictability / stability.  Cap rates range from 6-9 in these areas.  If you are focused primarily on cash flow, consider the following Cleveland neighborhoods: North Collinwood, Lee Harvard, Old Brooklyn, and Clark Fulton.  Depending on product type and quality, you are likely looking at 8-10+ cap rates in these areas.  I would be extremely cautious when you proceed.  You will encounter what appears to be great cash flow in some other areas of Cleveland but, in most cases, it's fools gold.  If you can't rely on the consistency and predicatbility of rent collections in some of these areas and the properties are not manageable, the cap rate calculation is virtually useless.

All of our properties are rented on 1 year leases.  

Rent ranges as follows (depending on numerous factors):

1 bed $525-$795

2 bed $725-$1095

3 bed $875-$1350

4 bed $975-$1500

Let me know if you want to talk further.  I'd be happy to put you in touch with the necessary people to help execute your model.

All the best, 

Uri