All Forum Posts by: Matthew Hermenau

I also live out of state and my property is ~100yrs old. Make sure you have a solid team (real estate agent, lawyer, contractor, handyman, prop management, etc.). Because you will need this if doing it out of state. Also make sure you factor in 10% for the property manager and 1st month rent if that’s how you’d like to operate it. Just doing it out of state made me seriously reconsider a lot of stuff since you need to have massive trust in people you barely know and the risk of you not being a drive away to fix something if things go sideways.

Also, interest rates are climbing so curious if you got a fixed rate from the bank? Don't let them jerk you around and wait for one only to find out it's considerably higher effectively ruining your COC you calculated (learn from my mistake!)

Just looking out so you don’t have the same issues/roadblocks my friend. Happy to answer any more Q’s via DM.

@Robert Flores

Hey Robert,

I just purchased a home in Cleveland Heights and can say that you seriously need to do a thorough inspection of the property before anything.

- Are there any POS violations? Mine had a laundry list and they were “easily fixable” per the inspector. Handyman came back with an estimate 4-5x what I was expecting nearly destroying any margin for profit.

- How old are the furnace, water heater, other appliances? Don’t get stuck with old appliances and have them fail on you especially in the midst of winter. Make sure gas, water and electricity is turned on for your inspection. Many will try to leave them off especially if a property is vacant and not being used to cut down on costs/risk of pipes freezing

- Understand that the city is EXTREMELY slow! I have easily had to call daily to get them to simply tranfser title into my name and let alone get a re-inspection after fixing the violations. This will have a major impact on when you can get a tenant. Again, winter is a harder time and rent will be lower since people aren’t trying to move in the harsh winter.

@Shane Kelly thanks for the insight my friend! I will likely fix all the violations and make it beautiful again so if you have any interested buyers/investors in the next few months let me know 👍🏻

Hello BP forum!!

I'm a new investor and recently purchased an out of state property (3 bed/2 bath) in Cleveland, OH. After finishing up my deal I'm finding it very difficult to fix a few city violations at a reasonable cost and with contractor shortages leaving overpriced quotes from handymen. You must fix all violations before being able to rent. I also inherited a 30 yr old furnace and 12 yr old water heater which will probably need replacing but otherwise no other major cap exp. My loan is a 7.5% 7-1 ARM.

At first my COC was 5-7% but now it's looking like maybe 1-3% and the monthly rent will just pay off all the expenses leaving minimal cash flow ($50-100/month)

At this point I’m wondering if I should just 

1.) Wait a few years, rent and refinance to cash flow more leaving money in the property.

OR 

2.) Fix up any city violations and try to sell it (likely taking a slight loss). Wiping my hands from this deal. I am worried about this market we’re entering into as a seller and if it will burn me with less people purchasing homes. 

Thank you so much in advance!