Emerging markets in Cleveland

[Jaime Chandler]

My husband an I are beginning our opportunity investment careers this year in the Cleveland area. 

After just finishing lindhaul's "Emerging Markets" book we would like to direct our 20k start up money toward areas that are emerging. 

Any feedback/opinions from more experienced investors about markets in Cleveland would be much appreciated. We are aiming for multifamily properties, that are ready for cash flow in an emerging market. 

Does anyone agree that the following are areas are emerging?

Gordon square (btwn w.30th and w.60th) 

Tremont (btwn w.11th and w40th)

Clark/Fulton area 

Ideally we will find C properties 

In C+ or B- areas which are already occupied. Any advice greatly appreciated

[Michael Swan]

Hi Jaime, 

I started investing in Cleveland suburbs in 2014.  I have built up my holdings to 5 apartment complexes and 4 single family currently in NE Ohio and sold all my pricey San Diego RE that doubled in value since first purchase in 2011 and 1031 exchanged for greater cash flow.

I love this stuff!! We are currently repositioning David Lindahl style 3 apartment complexes.  We have two other apartment complexes that we have already stabalized and are currently experiencing excellent cash flow and are yield deals.  We sold two dogs, 8 unit in Shaker Heights and a 10 unit in Cleveland Heights in Dec.  I explained briefly in Podcast 238 how those two dogs went bad really fast.  Currently cash flow is sitting at $160,000 cash flow. If we did not make those two mistakes, we would have been at approximately $200,000 cash flow.  To think, those 10 little single family condos in San Diego were throwing off only $50,000 total cash flow and now we are forcing appreciation on 3 apartment complexes, increasing rents, increasing cash flow, and exponentially increasing the value of these apartment complexes at the same time.

I really like the true Multifamily business model, where, increasing NOI from what one originally purchased is the primary driver of value of property for refinancing and not comps!!!

That is huge!! A few of these apartment complexes we have increased the NOI moving forward, so much thati in year three, four, or five of ownership, we could refi and take back all money we invested or 1031 Exchange for a much larger complex, further deferring taxes.

Now, if I am reading this new tax law just approved, any income we take that we have not offset by depreciation etc... extra, I can deduct an additional 20% off starting in 2018.  

America!!! What a country!!!

Swanny