All Forum Posts by: John Koster

Cleveland is a great cash flow market, but you really need someone who knows the area to provide guidance.   Neighborhood quality can vary street to street in some areas and there can also be stark differences in tax rates and city ordinances in some suburbs.   Tax rates are adjusted every 3 years and can run anywhere from 2 to 4.5% which can significantly affect cash flow from property to property.   For instance Cleveland Heights & Shaker Heights are historically around 4% and above while Cleveland proper is usually 2.78% or so.   Many of the eastside suburbs also have POS ordinances which can make transactions a little tricky depending on the property and municipality.   I have only dealt with Point of Sale inspections with one property though.  I am sure someone else on here with more experience in this area will chime in on that.   Good luck!

For a duplex in Cleveland, one new tenant every three years is wild optimistic.   It is possible of course, depending on the property, but one new tenant every year is closer to reality.

Rentometer says the median rent for that area/size house is $1400.  It is always harder to rent toward the end of the year in Cleveland, but I agree the place looks like it is from the 70s.  More specifically, it looks like only a Grandma would live there.   A huge remodel is not necessary though.  Sometimes just getting rid of old fixtures and draperies and replacing them with neutral modern looking items makes a difference.   Also, it looks dingy.  Brightening up the color of the place would work in your favor.  Brown and tan doesn't excite.  And a few of the pictures presented are not flattering.  The carpet appears worn, spotted & wrinkled in spots.   Good purchase though.  Small brick 3br houses are great rentals.   Good luck!  

I agree, the rents are a little optimistic.   Also, it was purchased for 110K in 2020.   Most properties in the area are not selling for 160K.   It could easily be worth less right now, and if not, could easily revert to that 2020 evaluation in the near future.  

All duplexes in Cleveland look great on paper, but in my experiences the single family homes all perform much better. The turnover rate is higher with duplexes and the costs of the turnover quickly eat up whatever COC advantage duplexes appear to have.

Just off the numbers alone, I would not pull the trigger on any investment that does not immediately cash flow, unless future appreciation or immediate equity grab (i.e buying at a discount) is guaranteed.  Right now, future appreciation is definitely not guaranteed in any market.   There are cash flowing deals out there and you will find one.  Good luck!

Nice job!

With the passing of California Bill SB9 which goes into effect on 1/1/22, you would be able to split the property into two parcels and be able to build up to two units on each parcel, provided that the parcels are close to the same size (I believe up to a 60/40 split), and each parcel is at least 1200 feet.  Other caveats are that the units can not be used as short term rentals (must be at least 30 day rentals) and the owner must occupy one of the units for at least 3 years.  Your local jurisdiction will have all of the details.

In Cleveland taxes are assessed every 3 years based on the assessed value of the property.   Since the market has gone up drastically in the last few years, your new tax rate will reflect that.  If we have a correction in the market soon, you will probably see your taxes lowered in another 3 years.   

@Chad Weston I agree with @Dave Stokley 's advice.  Another thing to know about the Cleveland market is that tax rates vary widely throughout the county.   They range from 2 to 4.5% of assessed value and reset every 3 years.  For example, the city of Cleveland is around 2.87% and Cleveland Heights is 4.03 %.  

We might be having another meetup for LA investors interested in Cleveland soon.  Let me know if you are interested.