Cleveland Suburb SFR analysis

[Sameer M.]

Hello friends

So I am all set to close on my first rental. This one is a 1935 built 2 story 3/2.5 recently updated (roof, paint, windows, electrical etc). The area is Wickliffe. A safe suburb with good (6, 7) schools. A mix of blue and white collar family neighbourhood.

Price: 78200 (Zestimate is 110K. County valuation 86K last year. Appraisal yet to come).

Rehab: 2700

Expected Rent: 1000 (Rentometer and conservative that the PMs estimate)

PM: 10% + half months rent

Expected CapEx in next 10 years: HVAC. Partial plumbing update. Electrical in the basement. Water heater.

Any feedback on this deal is welcome. Although I am into closing good feedback is always encouraging :) and bad feedback will keep me be real.

Thanks

[Christian Carson]

Wickliffe is OK, and Lake County is probably one of the most dynamic and growing counties in the state.

That said, this deal is way too expensive for me. Given your numbers and a few other standard assumptions for the area, it works out to be an 8% cap. Throw in the substantial risk that your maintenance will run far higher than $720 a year for a 1935 house and the deal can be a real loser. On top of that, I don't expect any appreciation in this area. 

As a rule, I will automatically discard any deal where the price is more than 60 times the monthly rent.

I would take my $78k and try to find a duplex. For that price point you can be in a B-C suburb with a duplex or triplex. Heck, you can buy two SFRs if you buy in Euclid just two miles to the west with five figures to spare - but beware the risks of doing this.