All Forum Posts by: Christopher Spear

Hi Dianna,

I might too late to help you on this, but I agree with David's comments. If you are still in need, PM me. I am familiar with the area (as a matter of fact, I just bought a building that I am renovating 5  minutes from Euclid). I might be able to help you with the inspection and I can refer you to an excellent PM.

Best,

Chris

Hi David,

Call Chris Okeson at Busha-Okeson Insurance Agency. 216 766-6300

Investment Info:

Other buy & hold investment in Cleveland.

Purchase price: $123,000
Cash invested: $30,000

This is a mixed use property consisting of two storefronts, four apartments and one freestanding garage. We purchased and renovated it during Covid. It took longer and cost more than expected (shocker) but now that it is stabilized, it is cashflowing nicely.

@Benjamin Sulka

Hi Ben,

I’m an investor here in CLE. As you probably know by now, our area is known for value, not appreciation. My questions to you are: are you handy, and are you willing and able to get your hands dirty? I have found success by buying off-market value-add properties. Because of my skillset, I buy slightly larger multifamily/mixed use properties in need of major renovation. However if you find the right multi family building (let’s assume a 2-4 unit, which will still qualify for a conventional 30yr mortgage) buy at a discount and are willing to put in some sweat, you should be able to gain 10%-20% immediate equity through cosmetic improvements, such as paint, carpeting, lighting, etc. This should solve your post-move-out cash flow problem. And you could theoretically rent one or more suites out (which will pay some or all of your monthly mortgage and expenses) while you fix up the other suite(s). Just one alternative way to look at it.

Hello BP!

As I understand it, Tenant Improvement budgets make sense in A and B Class buildings/neighborhoods where the price and length of the lease should provide a reasonable ROI/breakeven for the landlord. My question is: Are TI budgets ever offered for D Class buildings where the rents will be lower, the length of the leases may be shorter? I know a TI budget is negotiable, but what is the "norm"? Thanks for your comments!

Investment Info:

Commercial investment in Cleveland.

Purchase price: $123,000
Cash invested: $30,000

This is a mixed use property consisting of two storefronts, four apartments and one freestanding garage. We are currently renovating the building and once stabilized, intend to do a cash out refinance, leaving about $30k in the deal. After all expenses and debt service, we expect to have about $1,100.00 monthly cash flow.

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

The building met our criteria. We look for distressed B- to C- properties at a discount. This property was definitely distressed! Only two of seven units were rented, and the building needed major attention.

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

Off market, through a wholesaler.

How did you finance this deal?

Paid cash, currently refinancing.

How did you add value to the deal?

We are renovating the building, then stabilizing it (getting it leased up).

Investment Info:

Single-family residence fix & flip investment in Cleveland Heights.

Purchase price: $78,000
Cash invested: $35,000
Sale price: $158,000

This was a 2 story 3/1 home. It already had a new detached 2 car garage and driveway. We removed two 40 yard dumpsters of debris from home. Installed a new kitchen; renovated the full bath on the 2nd floor; added a 1/2 bath on the 1st floor; general remodel/cleanup. Cleaned up the landscaping.

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

I found it off-market. I didn't know any formulas at the time, but the price sounded good. As it turns out, it was almost exactly 50% of ARV, which is what I look for these days!

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

I found it through a friend of a friend. The purchase price was what she needed to satisfy the bank.

How did you finance this deal?

Cash, private money and a local bank construction loan.

How did you add value to the deal?

It already had a new detached 2 car garage and driveway. We removed two 40 yard dumpsters of debris from home. Installed a new kitchen; renovated the full bath on the 2nd floor; added a 1/2 bath on the 1st floor; general remodel/cleanup. Cleaned up the landscaping.

What was the outcome?

My agent found a buyer before he even listed the property. We sold the home to her, paid the private lender and the bank, and walked away with a nice profit.

To BRRRR a property correctly requires you to buy that property significantly under it's ARV. There are not a lot of true "deals" on the MLS these days. If you run the numbers through a calculator like the ones here on the BP website, you'll see that most of the time you will have to pay too much to make a BRRRR deal work. Look for properties that are off-market, or at least get creative with the way you conduct your MLS searches. If you search the BP Podcast episodes, you will find dozens and dozens of ways of finding off market properties. Good luck!

Absolutely. I recently offered on a property in a very highly taxed suburb of Cleveland. When I ran the numbers, I quickly realized that while the property was an excellent flip candidate, it would have made a terrible rental, because the taxes were so high. I got outbid in the end anyway, so it didn't matter!

Hey Tanner,

Tax value is important if you are planning to keep the property as a rental, because high taxes drag down your cash flow. But for flipping, it is less important.