All Forum Posts by: Henry LiChi

Furthermore, unless you're looking in nicer neighborhoods like Beachwood, University Heights (some areas), Lakewood, or Detroit Shoreway, don't count on appreciation.  Cleveland is majority a buy and hold kind of investment.  I know people that flip houses in Lakewood and Detroit Shoreway and make a ton, but they know when it's time to move on.  One thing for sure is to examine carefully the absurd property taxes there.  It is my key factor in making offers on properties.  I even get my acquisition team there to get extensive estimates on future appraisals and how it will affect the increase.

I invest in Cleveland and have a full team (realtor, property manager, GC, construction team).  The numbers I get from Cleveland is far superior than Columbus.  But I would say it is more challenging than the Columbus market.  I've visited both areas recently and Columbus is more attracting visually, but the numbers keep pulling me to Cleveland.

I would stay away from carpet as everyone mentioned.  Carpet is just high maintenance and in the long term, more costly.  Like @Mindy Jensen said, this would depend if you're willing to maintain the carpet.  I would advise looking at 10-12mm thick laminate wood like floors.  Don't ever get the thin laminate flooring.  Some laminate flooring these days have a 50 year warranty and are highly water resistance.  Most typically use tiles for kitchen but if you get the right laminate flooring, you can have a cohesive flooring throughout your house.  I am still not convinced with having it in bathrooms yet, better to have similar looking tile for bathrooms for better waterproofing.  There are local warehouses that sell these laminate flooring as long as a dollar per SF, of course it would cost more for installation than carpet, unless you do it yourself.  I personally hate tiling the whole house because it has a cold feeling, regardless if it's wood looking.

Thank you, @James Wise and @Tom Ott.  Will definitely do more due diligence and visit the neighborhoods in person before making further offers.  I plan to fly there in a few weeks.  Will definitely try to get in contact with some locals to possibly meet up.  The seller of the 30k property accepted another offer anyways.  

I'm definitely interested.  

Thanks for all the input.  I agree that a duplex for 30k sounds rough.  I would definitely go see it in person before making a final decision.

The one in my posting is one I am about to get under contract.  I am always looking for more!

Hi all,

I’m a new real estate investor with an architecture background and development experience. I’ve been researching and talking to property management and realtors in Cleveland. Even made a few offers but something always happens where the seller backs out.

I’d like to meet some locals to learn more about the area, particularly ones that are investing in Cleveland. I already have a great property manager that has been answering all my questions and even inspected a few properties for me.

I am currently offering on a duplex at 30,000. It is owner occupied with a long term tenant downstairs. Taxes are low, no back taxes, roof only few years old, new furnaces, new water heaters, updated electrical, no plumbing issues and great condition hardwood floors throughout. I’ve budgeted to have additional 5k for cosmetics and fixture upgrades.

Downtsairs is currently paying $500 a month

Upstairs will be delivered vacant, is a 3 bedroom 1 ba. My PM estimate a $500+ as a conservative number.

Total will be $1000 gross and I would pay cash for the property. After expenses (water/sewer/trash, landlord insurance, property tax, property management cost, and capex savings), I estimate about 400 net as a conservative number. I’m allowing about 300 per month for capex savings. Some say 40% rule of gross, but I broke down the figures for exactly how much each expenses will cost me then put 30% for capex. It may be excessive, but better safe than sorry.

I would greatly appreciate any advice given. I know a lot of people don’t like the Cleveland market, but I am not afraid of rehabs and know how to value engineer a property to be a long term rental.

I’m planning on flying out there sometime soon to see a few potential properties. Any suggestions for handyman and GCs will be greatly appreciated as well. My goal is up to 4 properties this year.

Thanks.

I haven't flipped or invested in any buy and holds YET! But working in the architecture field (high density residential to as low as high end single families), I deal with spec'ing and coordinating with manufacturers directly, all the time.  BP had a podcast on similar topic about remodels for flips vs buy and holds.  Flips purely depend on your comps.  Buy and holds is about engineering the property with a balance of longest lasting while maintaining above market appeal.  Understanding durability and maintenance of material is important, may cost a little more upfront but in the end it is worth it.  

Thicker drywall (5/8s instead of 3/8)

Stain resistant paint or at least easy to clean up paint (this may vary cause in most causes tenants put so much holes and dents in walls, the turnover for rentals usually require repainting anyways)

Easy to clean back splash (less grout = less stuck dirt, so consider the size material)

Countertop type (granite and marble stains and require to be polished and resealed eventually; quartz is stronger and stain resistant, but cost twice as much)

For appliances, I suggest going to local appliance stores not big box stores.  You'll get a better deal especially if buying in a package.  Also will get better customer service and get quality answers to your questions.  I always suggest for rental properties, get electric stove tops, never gas.  Don't EVER let tenants deal with anything gas related, just so much liability.  Get durable but affordable products.  I know that's a contradicting statement, but don't go spending 10,000$ on appliances that you know tenants won't take care of.  Balance it with reputable brands and quality product that will require less maintenance.

Floor tiles depends.  If you want your property to have a good flow, you would ideally get same material as your living room, but putting wood floors in your kitchen is a terrible idea for rentals.  At least go with the wood look long planked tiles that could imitate similar look while providing durability.

If you can fit a standard 10x10 or 12x12 kitchen layout, it will save you money as many smaller cabinet stores have deals for those.  Home depot, Ikea, any big box store cabinets are cheap products, affordable, but cheap.  You can honestly get real wood cabinets from small cabinet stores for comparable price.

Rentals = ENGINEER ENGINEER! Think durability.

Flips = depends on your comps, no reason to put 20k into a kitchen that will only raise the value a few thousand.

Can you, sure... Should you, no.  That's the short answer.  It is about proper construction and quality over time.  Thinking short term and quick fix, yes it will save you money and time.  Thinking long term, the wood paneling can warp, peel, or rot, resulting in the dismantling of your tiles.