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.
