Originally posted by @Mike D'Arrigo:
@James Maradits Cleveland is a popular cash flow market due to its affordable prices. In evaluating any market however, you should be considering not just short term cash flow but also long term asset value. Markets with strong economic and demographic fundamentals such as population growth and job growth will perform better over the long term than those with weak fundamentals. Although Cleveland does cash flow it is the 5th fastest shrinking large city in the U.S. and has been shrinking since 1950. That's something you need to consider in your evaluation. There are a lot of cash flow markets in the Midwest. What led you to Cleveland?
I'm not sure if your post was meant to be directed at me or the original poster.
I invest in Cleveland because I'm from Cleveland and the numbers make sense. Obviously I am somewhat biased because of this, but I've had a lot of success in the area.
Our residential real estate market is suffering from an inventory shortage as is much of the country. Rents and home values have gone up significantly over the last few years, so it's not like there is no appreciation on the table when buying here.
I don't think that looking at a singular data point, likely one that came from a google search or "buzz feed" type article, about the population is an end all be all way to evaluate a market.
It's no surprise that Cleveland and other Midwest Cities that boomed in the industrial age (STL, Pittsburgh, Detroit) were over built and have made big course corrections as these industries have largely left the region and moved overseas. These cities will never be the New Yorks or Londons of the world, but people are still going to live there and I think we're closer to approaching an equilibrium of population in the market rather than a complete exodus and the city falling off the face of the earth.
The population of the MSA has been a lot steadier than the City of Cleveland itself and is still in the top 30 highest population markets in the country. I suspect a lot of the population shift is people moving from the old/functionally obsolete housing stock in Cleveland proper (the older neighborhoods that popped up during the industrial age) into newer built homes 10 minutes down the road in the suburbs because the land simply isn't available within the city limits.
We have some major economic drivers in the academic and medical fields. The Metro health system is underway on a near billion dollar expansion project, which is just one of many development/redevelopment/infrastructure projects going on in the area. I would have to believe the powers who signed off on projects of this magnitude had a little bit more time and research invested into the market than you or I do before making this type of decision.
With all of that being said, who knows... I could be completely wrong, but I'm going to keep buying. I'll dog ear this thread and check back in a few years to eat my words if needed. Who knows, with as bullish as the Columbus crew on BP is, we might just be annexed as "Columbus on the Lake" sooner than later.
