All Forum Posts by: Luka Jozic

Here is the best advice you're gonna get here, don't invest in Cleveland at all. You're most likely gonna regret it and if cashflow is what you're after, real estate is not it. To truly make any money, especially in a market like Cleveland, you'd need quite a bit in reserves when you consider capex, repairs of these old Cleveland homes, tenants issues and not to mention that pretty much any turnover is gonna cost you like $5K minimum. It looks good on paper, but its not in reality. You missed the train. 

Its because real estate is a dying game if cashflow what you're after. Even for STR. Don't fall for it but you're about 4-5 years late to the party. Look into buying a small stable business instead. The same headache but MUCH more return.

My goal was always cashflow, and what I've realized is that since like 2020, real estate is a terrible vehicle for cashflow and if you look at the avg rent vs avg home price trends, you can see its only getting worse. The only markets left with any type of cashflow are markets like Cleveland, that for the most part have old home with lots of issues, and a very unstable tenant base. With the minimal cashflow available, capex, repairs of old homes, and tenant issues and how expensive turnovers are in areas like Cleveland, I think the odds of actually having a successful rental these days are extremely low UNLESS you have been doing this for years and have access to amazing deals that others dont, with systems in place. 

Additionally, to reach any meaningful income you'd need 30-50 units. Even with a PM, thats a lot of work. If Im gonna deal with all that headache, I might as well buy a blue collar business. With SBA leverage goes further, and a business cashflows 10-20x more than a rental does. For $100K you can buy 3-4 properties in Cleveland and cashflow maybe $5-10K a year best case. For the same money, you can buy an $800K business and cashflow $200K a year. Its a no brainer for me. 

 Look I've had inspections done that pass fine and then still get screwed months later on things that just were missed. For the typical property cash flowing around 2-400/mo, when you consider turnovers, repairs, capex and all that, its just not worth it. I haven't really come along any recent day investors that are truly cash flowing. 

Personally Im gonna pivot to small business acquisitions. I can tell you more about that if you're interested. 

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.