How can I get over my hesitance putting in offers?

Question

Hi BP,

I have studied Cleveland-neighborhood-grades for awhile now, but I am still not feeling confident understanding what I could get for rent in certain areas with a duplex.

My original search was based solely in Lakewood and I was confident I knew how much I could get for rent in regard to area/condition because I have a close friend with a few under his belt there, but I have now expanded my search as far west as the Lakewood border down to north of Middleburg Heights.

I understand checking out Zillow, Hotpads, etc., but I am becoming hesitant putting in offers in areas like Brooklyn/Old Brooklyn/Parma/Parma Heights/Puritas/Detroit Shoreway/Kamms Corner because I just don't have as much of a connection and I feel those areas are not as sought after as the more hip North of route-90 areas.

Advice? Or a better resource for info?

Thank you everyone!

Matt Motil · Answer

Use aggregated data from sites like rentometer to get a comfort level of the rents you can get in specific areas. Also, that neighborhood grades link is like 3-4 years old at this point. Many of the neighborhoods have shifted in the lower areas, so I wouldn't really rely on that too much.

As for getting over putting in offers, what's the worst that happens? You get a deal under contract and in due diligence decide it's not a good fit?

Austin Tam · Answer

The pool of renters in Cleveland is huge. There's no lack of demand in any of the areas you listed. In my experience, the thing that's most variable is the class of tenant and applicants. If you offer a nicer product, you'll get a larger pool of applicants - good and bad. If you have a subpar product (old, dingy looking unit) your applicants will be the type that can't be selective (poor credit, lack of stable income, etc.). It's likely because they've been rejected from the nicer units in the area.

I have two similar duplexes in Old Brooklyn; one was renovated substantially nicer than the other. I don't have issues generating interest with either of them. It was a little more difficult, however, filling the lesser property with a qualified tenant.

Brian Garlington · Answer

Just be safe in the knowledge that if you have an inspection contingency and appraisal contingency in your offer, you can take  the steps to back out of the offer if things are too hairy for you. You'll be fine man.

Gino Tomba · Answer

Don't worry. That is one thing that will NOT happen. I will NOT change my mind on this. I am lucky to have time on my side (moved out of my cushie downtown apartment to my parents while waiting for the right house) so I'm not sitting on a lease worried about a time-frame that I NEED this to happen.

Gino Tomba · Answer

I appreciate your devils advocate input! I also look at it from my perspective; do I want to live somewhere for 12 months? If I don't want to, why would others?

Michael Noto · Answer

@Gino Tomba You have gotten some good advice from local investors in this thread from the sounds of it. Are you working with an agent that knows the neighborhoods like this also? If not, I would find one. Makes the home buying process, especially for multi families, a little bit less stressful.

Dan Sarao · Answer

Gino, I am not a coach or anything like that, but it sounds like you have put some thought, research and time into this.  Again, not a coach, but you need to make a decision whether you want to TAKE ACTION or you don't want to take action at this point.  The only way to get going with anything in life is to do enough research to feel confident (not enough to paralyze yourself) and jump in with 100% commitment knowing that you won't have 100% of the information and knowing that things might not go 100% perfect.  Taking action is the only way to break your fear.  Taking action is the only way to learn and improve.  You are either going to do it and TAKE THAT ACTION, or you are going to continue to sit and analyze for the foreseeable future with no progress being made.

If you are not comfortable enough to jump in by yourself for your first investment then find a partner who is experienced that you can learn from.

Michael Forbes · Answer

Personally, I want to live in a place that I like. Some people will house hack in an area they don’t want to live in so they can squeeze every dollar. If you want to live in a particular area, that’s what I would look at first instead of returns. Don’t get me wrong, it has to cashflow after you move out but live in a place that you’ll enjoy. Invest for lifestyle, don’t sacrifice lifestyle (too much) to invest.

When looking at cashflow for 12 months in the future after you move out, definitely look at the aggregated data like Matt said. Also, call around to ads and even go look at places to see how much they charge and compare that to the specs of the place. That exercise will help you get more comfortable in your target area.

Gino Tomba · Answer

Hi Michael!

I appreciate the advice. I have currently been looking at some duplexes in Parma/Parma Heights. I feel like at face value there are way different opinions on these cities compared to your Lakewood/Tremont/Ohio City or even West Park/Kamms Corner.

I've been a renter for years and I'm planning on owner occupying this place for the first 12 months and I'm trying to think on my end if I would want to live here or how much I would pay if I was the potential renter. That's probably a bad way to go about it since everyone values different things, huh?

Michael Forbes · Answer

Hey Gino - You would be crazy to not be a little hesitant on your first deal. It’s good that you’re being a little cautious so don’t feel bad about it.

Stick to the areas you are comfortable with and/or get some local people in your corner to help educate you on areas you want to learn more about. Working with a good person or two that are actually investing should give you a lot of confidence.

Lastly, if you’re so tight on cash that the house could become a curse, maybe it’s best to wait a minute while you save a little more money. Take action but don’t be in a hurry. Cardone is all about massive action but sometimes that means hustling to pile up cash before you make your move. Patience can be the massive action sometimes.

Let me know if I can help in any way. Even if you are already working with an agent and need a second opinion or want to chat, I’m always down to talk shop with investors.

How can I get over my hesitance putting in offers?

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