All Forum Posts by: Andrew Duna

Hi Owen- Most others have covered the specific areas to consider. I would just add that the West Eighties neighborhood is bound to experience some appreciation with being sandwiched between the Tremont and Edgewater neighborhoods. 

Some other things to consider with investing in Cleveland are these two topics... 

Certain neighborhoods will have what's called a POS or Point Of Sale inspection. Basically the city sends their own inspector out who compiles a list of items that are required to be fixed usually within 3-6 months of taking ownership. 

Sometimes when placing an offer --  the POS is not yet available - and when you place an offer you can make your offer contingent upon approval of these items... although in order to have a competitive offer in this seller's market you are basically forced to "assume" the pos violations once they become available (usually 2-3 weeks after it's been ordered) -- you should be able to tell if anything more serious might come up on the POS via your own personal inspection. 

A good rule of thumb -- if the neighborhood has "Heights" in it- then it will usually have a POS. For example: Maple Heights, Garfield Heights, Shaker Heights, Cleveland Heights, And Euclid is a sneaky area that also has a POS. As @Patrick Drury mentioned- the West Side does not have any POS areas (besides Lakewood, but it's only needed for previously non-owner occupied/rental properties) 

Something else to consider in Cleveland proper is Lead Safe Testing .. @James Wise has a great video explaining this: 

As an investor focused agent with boots-on-the-ground here in Cleveland- I would love to help you find and purchase a solid property!

Hi Marc - Congrats on the properties so far! 

In general I'm not sure where you might be seeing properties for $5-30k with ARVs of $180k. If you see those frequently then please let me know as I'd love to flip them lol! Usually the price range I recommend for single family is $85k - $110k. Duplexes-- $120-150k-- if a duplex is under $120k there is usually a very good reason for it (bad location, bigger issues, low rents/bad tenants). 

The general inventory of well-priced and attractive properties typically flies off the market within 3-5 biz days. If a property lasts more than 15 days it's usually because it's either overpriced or has a larger issue (or both!)

I'm generally unsure of what other metro Cleveland might compare to-- but I do know there is a lot of interest and it seems we are in the middle of a wave which I feel will lead to a lot more appreciation than the Cleveland market usually experiences over the next 5 years.

I am an investor focused agent here in Cleveland and I'd love to answer any other questions you may have! 

Hey Jake -- congrats on already having invested in two other areas!

Cleveland is a little bit of a mixed bag. The reason it's currently known for its cashflow is because the properties are cheaper because they are in slightly less desirable C-class areas. In general you can definitely secure a great tenant but there's always the chance you get a bad egg. Just like any area- it really comes down to how well you vet your tenants. 

With that being said - the best areas to consider for a single family home for cash flow is going to be on the West Side and if you look at google maps these neighborhoods will appear if you zoom in/out -- Detroit Shoreway, West Eighties, Cudell, West Boulevard, Jefferson, Bellaire-Puritas, Brooklyn and Old Brooklyn. These are all C class areas and typically cashflow quite well 

Old Brooklyn is currently the most desirable out of those and has the best chance at future appreciation. At a close second... the West Eighties area is set to appreciate with being sandwiched in between the gentrified Tremont and desirable Edgewater neighborhoods.

If you're really really going for cashflow you might consider buying a 3+ bed SFR in the eastern end of the Clark Fulton Area (currently D class) and going the Section 8 route... because the Metrohealth hospital in the Eastern end of it has pledged $1 Billion dollars to revitalizing the area and there are many housing projects going up in the area. So it's one of the rare times a section 8 property has a great chance for appreciation in CLE.

There is also the "Heights Belt" - Garfield + Maple + Warrensville Heights that essentially always have a decent single family property to pick up. 

You might also consider the Lorain market which is considered to be a part of Cleveland's western orbit. You can typically always find cheaper properties with less property taxes -- just remember that if you intend to purchase more properties in Cleveland -- that your property manager may not service both areas since it is half an hour away. 

I hope this helps and as investment focused agent here in CLE --  I would love to help you find a solid property to consider! 

Hey Amy, Welcome to the Area! With a normal FHA loan you would be expected to occupy the property within 60 days of closing.

An FHA 203k loan- on the other hand- does not specify when the owner would have to occupy the property. You would just be expected to move in within a reasonable time frame of completing the renovation. And definitely legally have to occupy at least one unit for at least 12 months at some point.

I'm an agent who used to be a loan officer and would love to help with your property search! 

Hey Manwell-- Congrats on already having two good performing assets!

In general I have heard good things about the Geneva area. My partners bought 62 units in Madison Ohio (only about 11 minutes away driving/one town over) in Dec of '21--  and they surpassed their proforma rents and general projections -- in a good way. 

Obviously it's hard to say if it will make sense over the long term.. but.. Geneva On The Lake (GOL) is a relatively popular tourist destination (with no signs of decline) and for that reason slightly more expensive- so you could expect that the workers who keep GOL going might look to rent in Geneva. 

I'd be more than happy to connect you with my partners to talk more about it. I've also run underwriting on larger (10+ unit) multifamily using a specially designed spreadsheet at least 50 times now and could assist with that as well. 

Hey Jacob - I know that Dimit Architects do a great job at interior design. They recently helped stage this higher-end apartment complex project:

https://www.treoliving.com/pho...

Hi Shuvrajit- It seems to me that you might be describing a simple turnover while also utilizing the Section 8 (S8) strategy. As Pat Drury mentioned- those neighborhoods on the west side of Cleveland is where you will find a good amount of inventory of single family properties worth investing in. 

In general you can definitely find properties within the price range/buy box that you described.

One other thing to consider is that most lenders using conventional financing have strict minimum loan amounts of $100k. So considering downpayment.. the minimum purchase price would have to be at $133k. With that being said there are a few lenders who can qualify you on DSCR standards with loan amounts as low as $55k (so ~$75k minimum purchase price)

I am investor focused agent here in Cleveland and would love to share the resources my team has built up over the past 5 years of helping out of state buyers navigate CLE RE 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Fairview Park.

My primary residence. A duplex house hack in the desirable Fairview Park Neighborhood.

What made you interested in investing in this type of deal?

The BP podcast of course.

How did you find this deal and how did you negotiate it?

It was on the market in the height of low interest rates (mid 2021) and it was the only property that wasn't flying off the market with 10+ offers. It is a unique property in that- the two units are completely separated and don't share any walls. The rear unit is a renovated one bedroom and the front unit is a freestanding 2 bed 1 bath house. The front house was cosmetically outdated and unkempt. The seller was decently motivated so they agreed to list price with $6k of seller concessions.

How did you finance this deal?

FHA. 3.5% down.

How did you add value to the deal?

Exterior renovations include: Siding + painting the foundation + landscaping.
Interior: Bathroom: New flooring, New Tile Surround, Refinished Tub ... Kitchen: New flooring, new countertop, tile backsplash, added dishwasher.
Looking into -- adding central air to the front house.

What was the outcome?

Increased rental income from the front unit. Added some equity value.

Lessons learned? Challenges?

Renovations are a headache!! Especially when completing them for the first time. In the future I would rather pay more for a primary residence and not have it need any renovations- especially considering the fact that any renovations require a lot of net-cash out-of-pocket that you likely won't see returned for a while. The very small difference in down payment for a primary residence in order to secure a cosmetically renovated property is well worth.. not only the money.. but the time as well.

Hey Sean. Welcome to the CLE RE scene! 

With the buying strategy you described I'm guessing you're going after section 8 properties? In my opinion ..going after smaller 3+ bedroom single family is one of the best ways to chase maximum cashflow. 

Here is the rental amount calculator from the Cuyahoga metropolitan housing authority so that you can do some basic underwriting:

https://www.cmha.net/hcvp/rent...

The stated rent amount is NOT the amount you would actually receive. You should expect to receive 75-85% of the stated rent amount from the Housing Authority (which is all negotiated)

Although.... I have heard through some online s8 communities that 4+ bedroom properties are in such high demand that you might be able to expect close to 100% of the state rent amount for that zip code/bedroom combo. 

In general if you provide a solid s8 rental product then the demand is through the roof. Two of my partners recently completed a basic cosmetic renovation and once listed for s8 availability they received literally hundreds of applications. 

As @James Wise mentioned -- it is very important to understand exactly what areas you are getting into. In general neighborhoods on the west side of Cleveland: Cudell, West Boulevard, Brooklyn + Old Brooklyn, Bellaire-Puritas, and Clark Fulton are all decent areas to consider investing in. Maple Heights is another spot where you might expect to find a large inventory of simple single-family to pursue.

As an investor focused agent here in Cleveland - I would love to chat about the the pros and cons of CLE RE. 

Hi Adam- Congrats on graduating and welcome to the RE game! 

The short term lender who would fund the renovation looks more at the property itself and the reserves (cash) you have available between two partners. They'll also factor in previous experience (and hope you have some)

If you don't qualify for the purchase upfront there's almost zero chance that you would qualify for the refinance on the back end since conventional lenders have to follow strict national guidelines. 

With that being said.. I do know of a lender who offers a "one close" BRRRR oriented loan product which starts more as a hard money loan and transitions to longer term loan terms after a certain time period. The interest rate will definitely be higher than a conventional loan product-- but it could be your best/only option for getting started.

As an investor focused agent who used to be mortgage loan officer - I'd love to connect and chat more about this!