All Forum Posts by: Jad Boudiab

@Michael Swan we're predominantly a west side firm, much of our preferred sweet spots are in Cleveland proper and suburbs. Anything not listed here I wouldn't touch due to poor neighborhood grades, ridiculous tax rates, or not enough street-by-street experience.

A neighborhood - Rocky River. Numbers are tight but attractive when there's value add opportunity.

B neighborhood - Kamms Corner, Willowick, Brooklyn, Parma, Cleveland HTS south of Mayfield Rd.

C+ neighborhood - West Park / western half of Jefferson neighborhood, NE Euclid.

C neighborhood - Old Brooklyn, eastern half of Jefferson / Puritas-Longmead neighborhoods.

My own personal go to neighborhoods are the B and C+ neighborhoods listed above. Many properties here need little elbow grease to make the numbers work for me, but I'm fortunate to have an in-house team to handle this.

@Michael Swan @Irina Belkofer couldn't agree more. Many of the deals being pitched to out of towners today are complete junk, worthless. So much for fiduciary duty.

I've said it in the past, specifically to those out of state, due diligence is not only a matter of researching the property. Due diligence applies to sellers, brokers, PMs, TK providers, and everything in between.

@Zachariah Hays @Shannon Kelly @Jason Kiner you've all come to the right place, BP is a great resource, and plenty of experienced folks on here.

@Michael Swan I looked into your building when you were selling. Tough call but better to cut losses and move onto better opportunities.

Monticello / Noble area of Cleveland Heights is filled with competing products, 8-30 unit brick buildings everywhere, and the neighborhood is nowhere near a C grade. Definitely D grade. It gets nice south of Mayfield Road.

You share valuable first hand experiences that many BP members like the newer guys on here would find beneficial. What would you say moved you to get into this deal in the first place, and what are some lessons learned?

Welcome to the site Mike, exciting journey ahead.

Cleveland's heavily rep'd here on the site, you should have no problem finding answer to many of your questions. The entire county in general is a great place to invest, look out for POS, tax rates, and war-zone neighborhoods.

The $59,900 price point is achievable in Cleveland and Euclid, not so much in Parma.

I personally like C grade Single-Family in Cleveland and Euclid, which come with more stability than multis. B grade is the way to go for Multi-Family, depends on the numbers.

With that said, here are each city's respective tax rates for 2018, subject to change next week once 2019 rolls around.

Euclid - 3.74% of market value

Parma - 2.69% of market value

@Denis Davidyuk Underwriting the deal takes a lot more than the basic spreadsheet numbers, your taxes will vary by municipality, repairs & maintenance will vary by condition, water/sewer depends on your lease, vacancy is sub-market specific, etc.

To better help you with this, what municipality is the property located in?

- If you're in Cleveland proper, your taxes should only be $1,732 per year at $59,900, not including assessments if any.

- Insurance is typically around $68/mo for an occupied SF under 60k.

- PM is 10% per month, plus any additional services required.

- CapEx & Maintenance at 17% of rents - combined, but again this depends on condition. It's minimal if property is turnkey/rehabbed, and a lot more if the property has deferred maintenance.

Vacancy at 6% is a fair assumption in SF at $59,900.

Water/sewer will depend on who's paying, if tenant then $0, if owner then $1,200 for the year

Lawncare is on the tenant. You will have to cut when unit is vacant. Budget $100 for this.

Add another $35 - 150 per year for city rental registrations, depending on municipality.

Principal and interest will vary.

@Brandon Phillips welcome to the site, great place to begin.

My team has serviced a great deal of BP members in the Cleveland market with real estate, property management, and construction services. Happy to help you get started.

@Brandon Sturgill maybe not everyone, but most Cleveland investors are drawn to one thing, cash flow.

Many good points here. Like many have already stated, look into other HMLs that may help, never rely on one source of anything. Also as @James Wise mentioned, $800 for $60k doesn't sound too exciting in Cleveland.

When you're in a pinch, get creative. What about going to family for short term funding, or maybe taking on a partner and split profits?

The longer you sit on this, the more carrying costs you'll face, move fast. Good luck.

 Moral of the story, don't buy D grade junkers.

Cleveland's got many great neighborhoods to buy in, great returns, 15% return in a solid C market is do-able with some elbow grease, but don't expect 15% returns turnkey or tenant ready on the MLS in today's. We find them for clients, but they aren't always available and usually need a serious rehab then refi to accomplish that return.

How's the Cinci market, can you accomplish over 10% without some sort of value add?

@Sherri Seldon There are plenty of bad property managers out there, and there are great ones. The one-sided contracts are common, as well as the negative reviews. It's not uncommon for an evicted tenant to go online and bash the manager. It's more concerning if the reviews read "Maintenance is non-existent" or "they never answer tenant calls."

While some of the factors you've listed above are important to consider, I recommend doing more research on each property manager of interest, talking to them directly and asking questions about their ways of operating. What matters most for an investor is for PM to keep the units filled and maintained to good standards, rents are coming in, and the manager is around if you ever have questions.

 Here are a few questions to ask and thoughts to keep in mind, if you eventually interview for the role.

- Quality over price.

- Online portals and regular reporting is a thing, and are important.

- Is the proper manager licensed with the state of Ohio? If not, pass.

- How's the turnover rate? How quickly are units turned around and ready for a new tenant? This is the biggest expense that goes unnoticed.

- Staffing, does the firm have enough team members to service the portfolio?

- Point of contact, how are owner communications handled?

- Ask for sample expense sheets, do these look reasonable and normal? Keep in mind quality over price here, the PM's service call will likely be higher than a one-man team jack of all trades contractor with little overhead and no insurance.

- Property manager is professional, and puts all agreements in writing.

- Property manager knows the market well, has managed units in similar neighborhoods, understands the asset class.

Good luck, feel free to reach out for anything Cleveland real estate.