First Time Buyer looking for an advice :)

[Account Closed]

Hi everybody. 

My name is Yehiel. (Going by David mostly). I just signed up to this site today. Iv'e been following it for a while and I love it.

So i'm ready to do my first rental investment and would love to have an opinion about a property i saw.

I know it's a big risk but please tell me what do you think. it is a four plex in east Cleveland 

Asking price - $55k

Fully occupied and bring in $1,650 a month. - $19,800 yearly

Expenses - $9,000 (capital ex, vacancy, insurance, property tax, management company).

Net income - $10,800

$30,000 down and $25,000 seller finance with a 3.25% for 5 years - $5,424 a year.

Left with $5,376 - about 18% cash on cash.

Worth the risk of the area ? what would you do ? 

Oh and a small note, I live in Los Angeles.

Thank you all very very much in advance.

Yehiel (David)

[James Wise]

Welcome to the site @Account Closed

My opinion there is no scenario of profitability for you purchasing a property in that poor of a neighborhood. 

You will hear people say just get strong PM and you will be fine, this is not an accurate statement.

The strongest PM can help but the PM is not the true determining factor into the types of tenants you will get, the neighborhood & the quality of the property is the end all be all. Everything you do do combat your issues will also have negative consequences.

For example. You tighten up your screening criteria to only place the best tenant. Well the best tenants simply live in better neighborhoods so your unit sits empty. The longer it's empty the higher the likelihood it gets broken into and your footing that bill as well as the lost rent. To avoid that situation again you lower your screening criteria and place a tenant who stops paying rent, you pay to evict them and they do damage and your now footing that bill as well as the lost rent.

The stronger the property & neighborhood the more likely you are to have a favorable outcome. I recommend you give The Ultimate Guide to Grading Cleveland Neighborhoods.