All Forum Posts by: Matt Thompson

Quote from @Justice Rutanhira:

I have just bought a duplex in Cleveland (January 2022), only to find out that my property was due for lead-free certification in June 2021 and the previous owner did not get it done. My PM said she can't put a tenant in the vacant unit until it gets certified. However, there is a backlog getting someone to do the certification (i guess because a lot of folks are trying to get it done). Does anyone know if: 

1. it is true that I can't get it rented out till it is certified, and 

2. Is there a way to get the certification expedited? or does anyone know someone who knows someone who could help me with the certification? 

1. The only way Cleveland enforces the law is by requiring landlords to show proof that the house passed lead paint testing to file for eviction. You don't have to test the house prior to placing a tenant, but it's a lot easier to test and remediate a house while it's vacant.

2. Don't think so apart from calling multiple companies and seeing who has the earliest availability. It will take a few weeks to get results back from the lab.

Laura Volpini of Volpini Law in Strongsville is excellent. I've also heard good things about David Streeter.

I used Holton-Wise a few years ago. They did a decent job, but were expensive. They charged 10% of monthly rents, $295 for lease renewals, and a full months rent to place a tenant. Those are relatively standard fees in Cleveland. However, they also had high reserve fund requirements. Since I left, I've also heard that they added a $295 one-time account set up fee and a $295 annual accounting fee. Those are not common.

The worst part is that they refused to bill tenants for water and sewer bills. In Cleveland those bills are ultimately the owner's responsibility, but that doesn't mean that a PM can't pay the bills upfront than bill the tenant to reimburse the owner. My current PM and many other PMs that I interviewed do for a charge of $5-$10 per bill. In multi-family properties, PMs often charge a set amount per occupant for water and sewer per month when there aren't separate meters for each unit. Not billing tenants for water and sewer reduces net rental income, especially if you are unlucky and get tenants that use an excessive amount of water.

Originally posted by @Axel Meierhoefer:

@Matt Thompson Thank you Matt. Have you worked with them or how did you learn about them and them meeting the criteria?

I agree with your point but I am looking for them with a certain strategy in mind where I could make it worth their while to find properties in B-class neighborhoods. I am looking for long-term partners to buy from, not just a one-off deal.

I haven't worked with either of them. I heard about them through this site.

Smartland and Martel Turnkey are the only turnkey providers in Cleveland that I'm aware of. You might find a one-off property from either of them in a B class neighborhood, but they almost exclusively operate in C class neighborhoods. Once turnkey providers markup the sale price to account for their time finding and renovating properties, there isn't be much profit for landlords in A & B neighborhoods. To make the numbers work in A & B neighborhoods, you almost need to find properties and manage the renovations yourself.

I generally agree that homes in Cleveland should be tested for lead. However, the dumbest part of the law is that you can't file for eviction until you show proof that the house passed the lead safe certification. If a house doesn't pass, the city is forcing you to allow a tenant to stay in an unsafe house until it's been remediated. It would be safer to get the tenant out ASAP. Getting the tenant out would also make remediation logistically easier.

@Andrew B. Not yet. I attended one in January just to observe the process. Between January and March I planned to bid on two sheriff sale properties, but they were withdrawn by order of the court before the sale occurred. In March I placed an offer on a fixer upper that appeared on the MLS. It got 20+ offers in the first 24 hours. My no contingency offer was about 10% over ask. It ended up selling for about 18% over ask.

There is high demand, but very little supply.

It's especially hard to find properties for the BRRRR strategy right now due to the coronavirus. Foreclosures, either on the MLS or through sheriff sales, are often the best source for discounted properties. Sheriff sales haven't occurred since March 16th in Cuyahoga County. I check the county's website at least once a week to see if they post any upcoming sales. Not as many foreclosures are appearing on the MLS due to banks and property owners being unable to evict tenants or owners because of court closures. Also, mortgage forbearance is allowing many to get by longer before needing to foreclosure. Fixer uppers that do go on the MLS get bought by owner-occupants that can pay more.

I have multiple mortgages through Huntington Bank. I don't have a HELOC on any of my rentals, but an employee previously told me that they offer HELOCs on rentals. The interest will be higher than a HELOC on an owner occupied residence.

I'd continue making payments. If you need money to fund future properties, do a cash out refinance on the duplex. Home equity loans often have higher interest rates than cash out refinances.