Experience of OOS investing in Cleveland after 1.5 years.

[Luka Jozic]

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

[Jay Hinrichs]

market does not really matter You bought C class  which some of them were probably really Ds its the tenant base most all the time..

I have a very good client that does a lot in Cleveland but wont touch anything that is not B so they get the next level up on tenant..

U go into C D in any city in the mid west rust belt quote un quote BRRR market or cash flow market and you will experience the exact same thing very time.

[Christian Styles]

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

[Jay Hinrichs]

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

I think many investor miss the very important concept that real estate prices for risk.. And or they simply dont understand their target renter market as they have never lived in those type of neighborhoods and just have no experience with the life long renter.

[Luka Jozic]

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

One is in Toledo, the Cleveland ones are in Homeworth Ave 44125, Huntmere Ave 44110, W 68th St 44102, Bryce Ave 44128, and Walton Ave 44113. 

They're cash-flowing well on paper, but not in reality because I just keep getting hit by expenses. My last turnover for the Toledo property was over 6K, and the property was left in pretty good condition.

And to respond to Jay, I'd love to be in B areas, but those properties are rarely suitable for BRRRR and always go for top dollar, in my experience they're just not viable for BRRRR unless you wanna be cashflow negative. So its a catch 22.

[Jay Hinrichs]

Quote from @Luka Jozic:

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

One is in Toledo, the Cleveland ones are in Homeworth Ave 44125, Huntmere Ave 44110, W 68th St 44102, Bryce Ave 44128, and Walton Ave 44113. 

They're cash-flowing well on paper, but not in reality because I just keep getting hit by expenses. My last turnover for the Toledo property was over 6K, and the property was left in pretty good condition.

And to respond to Jay, I'd love to be in B areas, but those properties are rarely suitable for BRRRR and always go for top dollar, in my experience they're just not viable for BRRRR unless you wanna be cashflow negative. So its a catch 22.

well I guess you pick your poison then your cash flow negative now with your BRRR .. and nothing says anything that break even or a little bit of negative for high quality assets is a bad investment. Not sure why every one thinks they have to be positive cash flow then invest right into very difficult to manage assets..  and i speak from experience on this end I bought over 250 C Ds coming out of the GFC in the mid west and deep south.. it was as you describe 2 steps forward one backward.. after two years and coming to same place you are today I sold out to my partners and let them take it. And re deployed.  very few if any get wealthy on small 200 a month cash flows the wealth is created with your tenants paying off your property over the long term and Appreciation . At least from what I have seen and experienced.. AS you say market is robust in those areas for others wanting those assets might be time to sell and reload into something that is easier on you ???

[Christian Styles]

Quote from @Luka Jozic:

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

One is in Toledo, the Cleveland ones are in Homeworth Ave 44125, Huntmere Ave 44110, W 68th St 44102, Bryce Ave 44128, and Walton Ave 44113. 

They're cash-flowing well on paper, but not in reality because I just keep getting hit by expenses. My last turnover for the Toledo property was over 6K, and the property was left in pretty good condition.

And to respond to Jay, I'd love to be in B areas, but those properties are rarely suitable for BRRRR and always go for top dollar, in my experience they're just not viable for BRRRR unless you wanna be cashflow negative. So its a catch 22.

We do significant business in 44102 and 44113 and occasionally there is a "bad egg" but typically tenants that we place and do not "inherit" with the property are great and leave the property in good condition. I never want to knock a particular neighborhood but 44110 can be a very tricky place to do business, I imagine turnover expenses there will always trend a little higher. 

Since you're out of state, if you ever need a sanity check from someone local on anything let me know I'm happy to help! 

[Jad Boudiab]

Quote from @Luka Jozic:

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

One is in Toledo, the Cleveland ones are in Homeworth Ave 44125, Huntmere Ave 44110, W 68th St 44102, Bryce Ave 44128, and Walton Ave 44113. 

They're cash-flowing well on paper, but not in reality because I just keep getting hit by expenses. My last turnover for the Toledo property was over 6K, and the property was left in pretty good condition.

And to respond to Jay, I'd love to be in B areas, but those properties are rarely suitable for BRRRR and always go for top dollar, in my experience they're just not viable for BRRRR unless you wanna be cashflow negative. So its a catch 22.

 Luka - all of those Cleveland zip codes are 80-100 years old, you will likely have higher than normal maintenance for another year or two before things start to stabilize. This is usually the case if past owners did a poor job maintaining, and just hired the cheapest neighborhood handyman to patch everything. Turnkey (renovated) units will do better and need less, generally, from the get-go.

On your collections, Cleveland is a renter town, you renters will pay, you just need a good PM with a collections process. I would also suggest going the section 8 route on a few of the units in what I would consider more challenging neighborhoods.

On maintenance bids being high, negotiate everything. Your Toledo PM can probably do better than $6k on a pretty light turnover if you ask for it. GC's typically build in a healthy margin, and if your PM feeds them most of their business, they will definitely lower prices when pushed. Happy to chat offline, the market is not the easiest but there's definitely room to operate well and make it profitable.

[Michael P.]

Brooo I told you that toledo one was a D area

[Bob Stevens]

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

' 

 I TRIED to help you but you " know better". I get on avg 800 per month NET income 15- 20% NET (based on cash purchases) on SF, and more on my duplex's. My maintenance is little to nothing as we do the reno correctly. I also tried to help you with PM I'm aware of them all 99% are terrible and will charge you 3k to replace a furnace when the real cost is about 1600. I just got $900 for a 1 br in East Cleveland. I'm going to get 1500 for a 3 br in Lee Harvard, fully renovated all in 75k, do the math :) 

All the best 

[Bob Stevens]

Quote from @Michael P.:

Brooo I told you that toledo one was a D area

 Irrelevant what area it is, Its ALL about price, screening and doing the reno correctly 

[Bob Stevens]

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

 Impossible to cash flow in Cleveland? Im closing next week on another SF nicely renovated, newer everything. Rented for $1450 , all in 75k. Closed last week on Glendale 4 br rented for 1500, all in 75k , not really sure you can get better cash flow anywhere Buying everything we can in parts of EAST CLEV. yep EAST, as we know what's coming. 

All the best 

[Luka Jozic]

Quote from @Michael P.:

Brooo I told you that toledo one was a D area

 You did but the mistake I did on that one was to put an unqualified tenant in there for higher than market rent, that one is pretty solid now. But yeah, not my best deal overall. 

[Luka Jozic]

Quote from @Bob Stevens:

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

' 

 I TRIED to help you but you " know better". I get on avg 800 per month NET income 15- 20% NET (based on cash purchases) on SF, and more on my duplex's. My maintenance is little to nothing as we do the reno correctly. I also tried to help you with PM I'm aware of them all 99% are terrible and will charge you 3k to replace a furnace when the real cost is about 1600. I just got $900 for a 1 br in East Cleveland. I'm going to get 1500 for a 3 br in Lee Harvard, fully renovated all in 75k, do the math :) 

All the best 

Im not interested in buying turnkey and also not buying cash, I would run out of money real quick. I need to be doing BRRRR thats the only way to scale somewhat fast. Im glad you're doing good.

[Jay Hinrichs]

Quote from @Luka Jozic:

Quote from @Bob Stevens:

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

' 

 I TRIED to help you but you " know better". I get on avg 800 per month NET income 15- 20% NET (based on cash purchases) on SF, and more on my duplex's. My maintenance is little to nothing as we do the reno correctly. I also tried to help you with PM I'm aware of them all 99% are terrible and will charge you 3k to replace a furnace when the real cost is about 1600. I just got $900 for a 1 br in East Cleveland. I'm going to get 1500 for a 3 br in Lee Harvard, fully renovated all in 75k, do the math :) 

All the best 

Im not interested in buying turnkey and also not buying cash, I would run out of money real quick. I need to be doing BRRRR thats the only way to scale somewhat fast. Im glad you're doing good.

but if your negative cash flow your bleeding your money anyways.. instead of buying a property in a better local that is rehabbed better than you can do. And actually being cash positive instead of negative at least your post says your cash negative not making any money so you are eroding your cash by feeding these.. not to mention the incredible risk you take with remote rehab and the time involved .. If your paying cash to buy and rehab then refinancing I get that.. but your still paying for two closing costs. And if you finance the buy then you have money there.. just some things to think about.

[Luka Jozic]

Quote from @Jay Hinrichs:

Quote from @Luka Jozic:

Quote from @Bob Stevens:

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

' 

 I TRIED to help you but you " know better". I get on avg 800 per month NET income 15- 20% NET (based on cash purchases) on SF, and more on my duplex's. My maintenance is little to nothing as we do the reno correctly. I also tried to help you with PM I'm aware of them all 99% are terrible and will charge you 3k to replace a furnace when the real cost is about 1600. I just got $900 for a 1 br in East Cleveland. I'm going to get 1500 for a 3 br in Lee Harvard, fully renovated all in 75k, do the math :) 

All the best 

Im not interested in buying turnkey and also not buying cash, I would run out of money real quick. I need to be doing BRRRR thats the only way to scale somewhat fast. Im glad you're doing good.

but if your negative cash flow your bleeding your money anyways.. instead of buying a property in a better local that is rehabbed better than you can do. And actually being cash positive instead of negative at least your post says your cash negative not making any money so you are eroding your cash by feeding these.. not to mention the incredible risk you take with remote rehab and the time involved .. If your paying cash to buy and rehab then refinancing I get that.. but your still paying for two closing costs. And if you finance the buy then you have money there.. just some things to think about.

Thats fair but Im assuming there is a little bit of a learning curve before you get it right? If I buy turnkey, Im putting 25% down on any property, which is like 30-45K in Cleveland, and Im still at risk of running into issues because we all know that most turnkey properties aren't actually turnkey, they're lipstick on a pig. Im more interested to learn what I can maybe change or improve to make BRRRR strategy work, not change strategy completely where I can buy maybe 1 property a year instead of 3-4. 

[Jay Hinrichs]

Quote from @Luka Jozic:

Quote from @Jay Hinrichs:

Quote from @Luka Jozic:

Quote from @Bob Stevens:

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

' 

 I TRIED to help you but you " know better". I get on avg 800 per month NET income 15- 20% NET (based on cash purchases) on SF, and more on my duplex's. My maintenance is little to nothing as we do the reno correctly. I also tried to help you with PM I'm aware of them all 99% are terrible and will charge you 3k to replace a furnace when the real cost is about 1600. I just got $900 for a 1 br in East Cleveland. I'm going to get 1500 for a 3 br in Lee Harvard, fully renovated all in 75k, do the math :) 

All the best 

Im not interested in buying turnkey and also not buying cash, I would run out of money real quick. I need to be doing BRRRR thats the only way to scale somewhat fast. Im glad you're doing good.

but if your negative cash flow your bleeding your money anyways.. instead of buying a property in a better local that is rehabbed better than you can do. And actually being cash positive instead of negative at least your post says your cash negative not making any money so you are eroding your cash by feeding these.. not to mention the incredible risk you take with remote rehab and the time involved .. If your paying cash to buy and rehab then refinancing I get that.. but your still paying for two closing costs. And if you finance the buy then you have money there.. just some things to think about.

Thats fair but Im assuming there is a little bit of a learning curve before you get it right? If I buy turnkey, Im putting 25% down on any property, which is like 30-45K in Cleveland, and Im still at risk of running into issues because we all know that most turnkey properties aren't actually turnkey, they're lipstick on a pig. Im more interested to learn what I can maybe change or improve to make BRRRR strategy work, not change strategy completely where I can buy maybe 1 property a year instead of 3-4. 

well you might want to take a look at the new crop of Turnkey the folks i do business there are hardly lip sticks on pigs.. I know I fund the deals and pay for the rehab . my clients put on brand new roofs  new panels all new wiring new plumbing windows siding cabinets etc etc.. I mean I see it since i am paying for it to the tune of 250k to 300k a month.  but i hear ya. you do get what you pay for though and its not a race.. real estate is a long game and to me far more important to buy quality assets then taking 2 steps forward and 1 backward.. you may want to try both and see how they play out.. remote rehab simply is the most risky thing you can do in RE full stop. U have to shop for the deal and compete or deal with wholesalers thats no fun.. you have to make quick discussions etc etc.. with a nice renovated prop you get to buy it have your home inspection and understand what your buying...  Just sayin.

[Bob Stevens]

Quote from @Luka Jozic:

Quote from @Bob Stevens:

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

' 

 I TRIED to help you but you " know better". I get on avg 800 per month NET income 15- 20% NET (based on cash purchases) on SF, and more on my duplex's. My maintenance is little to nothing as we do the reno correctly. I also tried to help you with PM I'm aware of them all 99% are terrible and will charge you 3k to replace a furnace when the real cost is about 1600. I just got $900 for a 1 br in East Cleveland. I'm going to get 1500 for a 3 br in Lee Harvard, fully renovated all in 75k, do the math :) 

All the best 

Im not interested in buying turnkey and also not buying cash, I would run out of money real quick. I need to be doing BRRRR thats the only way to scale somewhat fast. Im glad you're doing good.

 Again, I tried to help, so how is not buying turnkey working out for ya :) EVERYONE is so worried about have 5kish more in equity)  they lose sight of the big picture. How much is that extra 5k worth when it takes 3, 6 months to get it rented and then you are over budget. If I recall many months ago, I said you would " not be happy trying to go it alone., " well here we are.  I even know some investors that are using seller financing with about 40k down. I'm aware of dozens that refi cash out. Who cares what the price is as long as there is equity the rent is immediate vs 3, 6 months no rent, and Reno overbudget. Its all about having reno is done correctly to prevent future repairs..  As I mentioned you know better '

Hey if you want to sell any let me know, we are always buying. 

All the best, 

[Nicholas L.]

@Luka Jozic

just curious where you live if you're willing to share

did you tour these properties yourself before you bought them?

[Luka Jozic]

Quote from @Nicholas L.:

@Luka Jozic

just curious where you live if you're willing to share

did you tour these properties yourself before you bought them?

Im in Tampa so no I didn't its obviously a challenge to be OOS. I do have a decent team but its still hard to not miss anything. Like I said one of the biggest hurdles in Cleveland is there are sooo many investors ready to buy cash with no inspections at asking price, sometimes sight unseen. So for me doing BRRRR, which requires a discount typically to work, I have almost no chance, especially if I start asking for contingencies. But then if I don't, even if I have a contractor walk it they can miss stuff, like a broken sewer line for example.

[Jack Krusinski]

Hi Luka, Cleveland has its pros and cons for sure. Where are your properties located? That will likely make the biggest difference on if it cash flows or not. I invest in Cleveland (BRRR and flip) and am a realtor. The sewer expense is a big hit. For deals I do, I try to write in under the inspection section in the purchase agreement, "any and all recommend by home inspector including but not limited to inspections checked no above." This will then allow me to do a sewer scope if/when the inspector finds a sign of a potential backup. Not bulletproof proof, but it helps!

[Dan H.]

I do not understand doing rehab value adds in cheap markets.  I just completed a rehab that adding half a bathroom added ~$50k in value.  Was adding this half bathroom way more work or way more costly than adding it in a cheap Market where it adds $10k?

Something to ponder as you ask for input on the BRRRR.

Good luck

[Bob Stevens]

Quote from @Jack Krusinski:

Hi Luka, Cleveland has its pros and cons for sure. Where are your properties located? That will likely make the biggest difference on if it cash flows or not. I invest in Cleveland (BRRR and flip) and am a realtor. The sewer expense is a big hit. For deals I do, I try to write in under the inspection section in the purchase agreement, "any and all recommend by home inspector including but not limited to inspections checked no above." This will then allow me to do a sewer scope if/when the inspector finds a sign of a potential backup. Not bulletproof proof, but it helps!

 Hey Jack, we are always looking for deals, anywhere in the Clev, markets, as is close in 10- 14 days, feel free to reach out, 

thanks 

[Luka Jozic]

Quote from @Jack Krusinski:

Hi Luka, Cleveland has its pros and cons for sure. Where are your properties located? That will likely make the biggest difference on if it cash flows or not. I invest in Cleveland (BRRR and flip) and am a realtor. The sewer expense is a big hit. For deals I do, I try to write in under the inspection section in the purchase agreement, "any and all recommend by home inspector including but not limited to inspections checked no above." This will then allow me to do a sewer scope if/when the inspector finds a sign of a potential backup. Not bulletproof proof, but it helps!

My property locations are listed in a previous message.

Could you clarify, does that mean you can do the sewer inspection before closing, or after? Cause my biggest issue with finding BRRRR deals is like I mentioned above, if I put in inspection contingencies, my offer is not strong enough and the seller picks any of the other 5 buyers that have no inspection contingency.

[Michael P.]

Quote from @Dan H.:

I do not understand doing rehab value adds in cheap markets.  I just completed a rehab that adding half a bathroom added ~$50k in value.  Was adding this half bathroom way more work or way more costly than adding it in a cheap Market where it adds $10k?

Something to ponder as you ask for input on the BRRRR.

Good luck

 Not long ago you would do a true brrrr get all your money out and have a property with strong cashflow (low rates) for “free”. Low barrier to entry with cheap midwest prices. 

[Jay Hinrichs]

Quote from @Luka Jozic:

Quote from @Jack Krusinski:

Hi Luka, Cleveland has its pros and cons for sure. Where are your properties located? That will likely make the biggest difference on if it cash flows or not. I invest in Cleveland (BRRR and flip) and am a realtor. The sewer expense is a big hit. For deals I do, I try to write in under the inspection section in the purchase agreement, "any and all recommend by home inspector including but not limited to inspections checked no above." This will then allow me to do a sewer scope if/when the inspector finds a sign of a potential backup. Not bulletproof proof, but it helps!

My property locations are listed in a previous message.

Could you clarify, does that mean you can do the sewer inspection before closing, or after? Cause my biggest issue with finding BRRRR deals is like I mentioned above, if I put in inspection contingencies, my offer is not strong enough and the seller picks any of the other 5 buyers that have no inspection contingency.

 Dude.. most deposits in the mid west are 500 to 1k.. So you put that up and you can do your inspection ( sale is not subject to it) and then do your sewer scope if its bad retrade or walk away far cheaper to lose 1k than get stuck with a 15k sewer line repair just the cost of doing business.