All Forum Posts by: Luka Jozic

Of course they're not all bad. But I do think that the overall quality is very low compared to the rest of the US. Median individual income is 25K a year, and the median rent is $1200/mo. That tells me the majority is gonna struggle to pay rent. 

See since I've been doing BRRRR, thats generally what I have been doing but somehow something always manages to come up. But the main issue has been tenant quality. I've just realized Cleveland is not the right place for me so Im getting out.

That might be true but that doesn't mean they're moving to Cleveland or Detroit. Data suggests that both of these places have been on a decline for years. I don't think you can say a place is doing "very well" when they're among the poorest cities in the US and has among the highest foreclosure rates in the country. That to me suggest anything but "doing very well"... Maybe have a look at reventure.app and see what the data says about these places.

Neither, both will be a headache and neither will make you rich.

Cleveland looks good on paper, but its not as good in reality. It is one of the poorest places in all of the US. Tenant quality is extremely low even in so called C areas. How does anyone expect people in a place with an average income of 25K a year to pay an average of $1400/mo rent? I would highly recommend to look somewhere that people actually want to live instead of where they have to. 

Thats great but how has the income changed over the past 8 year? Not too much. Cleveland is still one of the poorest cities in America with a median income of around $37K per household! How are they supposed to pay $1600/mo in rent? You don't need to be a genius to see how that is an issue. It sounds like you've made it work well in Cleveland, but for rookies I think its better to go elsewhere. 

Id say after 2 years of investing in Cleveland, I wouldn't recommend it. Better go somewhere where people actually want to live and not everybody is broke. It has one of the highest poverty rates in the country, declining population, and not much going for it. It looks good on paper, but its not in reality. A higher quality property in a better neighborhood in a better city is gonna outperform any Cleveland property in the long run. We just get to focused on cashflow and can't see it. I've been through several property managers and properties in various areas and its always the same ****, late or no rent, expensive turnovers, and just lots of headaches..

 For me it is. Im buying these properties so that in several years from now, they can provide solid cash flow that I can live off of. This is my substitute for 401K. So yeah the sooner they're paid off the sooner they will cashflow better, and I'd rather have that happen in 21 years rather than 30 so I think it makes sense. 

I understand that doing bi-weekly simply means you are doing 13 mortgage payments a year as opposed to 12. So you get one payment each year that goes straight to principal. I've read other threads on the topic and it seems like the obvious answer is that it depends, as doing bi-weekly pays off your mortgage faster but means less available cash for other investments.

Say we have a typical Cleveland property worth around 150K, assume the monthly PIMI is $1000 and that annual cashflow is $5000. According to my lender, if I do bi-weekly I would pay off the mortgage in 21 years as opposed to 30, shaving off 9 years. That means in 21 years I will have a fully paid off property, and can now cash out refi and buy X more properties. However, by doing so, I'll be paying $1000 extra each year towards my mortgage, reducing my cashflow to $4000/year. So after 21 years I will have either:
1. $21K extra to invest (not even enough for 1 down payment really) if I do monthly.
2. A fully paid off property which now should be worth at least $300K with appreciation, I can access 75% of that with a cash out refi so roughly $225K - refi costs.

To me, its a no brainer to do bi-weekly IF you plan to keep the house for that long AND you do not plan to refinance (rate or cash out). So the follow up question is, does it make sense to keep a property for that long and not dig into its equity for 21 years? What are your thoughts on this?

 So how do you get stable properties in "the hood"? What is it that your team does? I mean yes you do good rehabs of course. But how do you get solid tenants in there? Do you only do S8 or do you screen them in a specific way? What's the magic formula Bob?