Quote from @Hector Espinosa:
Hi BiggerPockets Community,
I'm a new investor based in San Diego, CA/, exploring the Cleveland, Ohio and Columbus, Ohio market for my first multi-family property investment and would love to get some advice from experienced investors. I'm mainly looking for duplex, triplex or quadplex.
Market:
I’m looking for although not sure what would be the best neighborhoods:
- Properties priced around $150,000 or less.
- Areas with low vacancy and crime rates.
- Neighborhoods where rent prices are stable or increasing.
- I'm mainly looking for properties which are tenant occupied.
Key Questions:
- Neighborhood Insights: What has been your experience with these areas? Any insights on market trends, potential pitfalls, or things I should look out for? What are the better neighborhoods in Cleveland/Columbus that I should consider for multi-family units?
- Financing: I’m planning to use conventional financing for this purchase. What’s the best way to approach financing for a first-time investor? Any recommendations on lenders who are experienced with multi-family properties in Cleveland?
- Risk Mitigation: What strategies do you use to mitigate risks when investing in older properties in Cleveland, especially in terms of unexpected repairs or property management?
- Rent-to-Price (RTP) Ratio: I’ve been looking for properties with an RTP ratio of 0.60 or higher. For those who’ve invested in Cleveland, is this a realistic target for multi-family units in the neighborhoods I’m looking at?
Investment Goals:
I’m interested in create steady and consistent cash flow with a long-term appreciation with this investment. I would prefer prefer neighborhoods that are showing signs of population growth and economic development but open to recommendations.
Would love to hear from anyone with experience in the Cleveland market or similar! Thanks in advance for any insights.
Thanks in advance,
Hector
Cleveland, Ohio is a great market to focus on for cash flow and specific pockets have gone up 2x and upwards of 4x in the last 5-10 years even!
Examples:
44109 (median home price went from roughly 50k to 125k in 8 years)
https://www.zillow.com/home-values/77009/cleveland-oh-44109/ 44102 (median home price went from roughly 30k to 120k in 8 years)
https://www.zillow.com/home-values/77002/cleveland-oh-44102/ 44106 (median home price went from roughly 100k to 200k in 8 years)
https://www.zillow.com/home-values/77006/cleveland-oh-44106/ It has the highest rents on average in all of Ohio for major cities and the median home value is not even in the top 3. That creates a really nice price / rent ratio which is favorable for investors looking for cash flow. The median home price is also very low nationwide which creates a low barrier to entry. You can get solid cash-flowing single families in the 90-120k price range and duplexes in the 130-180k price range. There are cheaper one’s in D/F areas but I would be careful as those can create a laundry list of additional issues. In 2022 the rents increased 12.1% year over year which was the 3rd highest in the entire country per https://www.axios.com/local/cleveland/2023/02/14/cleveland-rent-prices.
Here are pockets I focus on for cash flow:
West side - West boulevard, Cudell, Clark-Fulton, Jefferson, Bellaire-Puritas, Old Brooklyn
East side - Fairfax, Buckeye-Shaker (the north side), Waterloo Arts District, Garfield Heights, Maple Heights, Newburgh Heights, Lee-Miles (the north side), Bedford
Here are the areas that I focus on for appreciation:
West side - Lakewood, Edgewater, Old Brooklyn, Ohio City, Tremont (above 490)
East side - Buckeye-Shaker (the north side), Waterloo Arts District, Fairfax
*I have a graded neighborhood map of these areas as well if you would like to check it out.
