All Forum Posts by: Account Closed

I have some properties in the area. I'm doing buy & hold or BRRRR.

Note:  That blog post is also east side focused (as evidenced in the comment thread.)  

@James Wise how about a new revision for 2017 with your new learnings about the east side integrated:)

https://www.biggerpockets.com/blogs/4704/42419-cle...

This is an oldie but goodie post about grading Cleveland neighborhoods.  Maybe it should get an update for 2017!

I personally look only in A/B neighborhoods in the Cleveland area.  Something with appreciation AND good rents.  I want to minimize the hassles that come with pursuing those greater returns in C & D areas.  To be honest, my returns are still very good because I buy stuff that isn't rent ready and put in a little money to make it so.  Usually gets me a reasonable discount.

One month out of twelve would be 8.3%

One month out of 24 would be 4.1%

One month out of 36 would be 2.7%

My folks rent out a home in the town where my dad grew up.  The same people have been renting it from them since the early 1980's, so long term renters do happen once in a while too.

If the average is 5%, that means turnover just under 2 years (every 20th month).  That seems plausible to me.  Of course, any individual will have wild swings in their averages based on their house, neighborhood, and PM.  Someone with a portfolio of 100's of units, could probably give you a very good number.  Call some PM companies in Cleveland, ask how many units they manage, if it's several hundred or more, ask them the vacancy rate in the area you are interested in.  It will probably be accurate.

I do think if people are regularly moving out of your houses every 12 months (or earlier), your house isn't nice enough and probably needs upgraded.  Of course, if you are working lower end areas, the realities are probably very different.  Stable, educated, employed, responsible tenants don't want to move every 12 months.  They want to move infrequently and live in a really nice place that is kept up nicely.

@Dmitri K. - I'm having trouble following your explanation.  I would not consider a leasing fee as "vacancy".  It's a management expense paid to your PM company, like paying them for mowing the lawn, or painting the living room.

Example: You have two properties, A & B, which are identical in every respect, and even next door to one another.  For A you are using a PM company, and for B you are self-managing.  You purchase both A & B on the same day, and sign leases and the renters move in that very day.  Both houses rent for $1000.  PM charges you $1000 leasing fee for filling house A, and there is no PM on house B.  Are you saying house A has "higher vacancy" than house B?  Or that the vacancy rate is higher?  I think both of those statements are false.

Certainly, house A would have higher expenses than house B, all things being equal, but that doesn't seem like what you are getting at.  (Or I just don't understand the question at all.:)

Cleveland is a huge area.

In the area I'm at now, which is B or better, I haven't had vacancy yet and repairs and renting is pretty fast. The last house I filled (deposit last week of Dec, move in first week of Jan) took < 1 week for them to fill it once they started advertising. It also only took a couple weeks to be made rent ready and it wasn't cleaning, they did 6k+ worth of work (new garage roof, paint everything, redo wood flooring, a ton of other junk.) To me, unless there's some weird circumstances, a regular turnover should not take a month to clean and find a new tenant. If it needs cleaning a crew can have that done in one day.

Of course, it all depends on the quality of your PM, your neighborhood, and your property.

My first tenant that's coming up on 1 year has renewed for another year, so that property isn't even getting turned over. The 2nd property is the one I just filled quickly, and we're working on a duplex that is going to be a more complicated project, but should be able to rent fast if we do it right.

@Vikas Raoot

Happy to answer questions.  I do prefer to answer questions / discussions on the forum or via private message, however.  That said, feel free to send me your questions.

I have a tentative 2016 spreadsheet for year #1 of my first property just about done.  After December is closed out and the numbers are actually final, I'll probably write a post on it.

We put #1 under contract in January.  Had it occupied in April (That probably should have been rented a bit sooner than it was, but there were quite a few repairs we did and had a bit of a slow start on that one.)  I wanted to space them out for a couple reasons.  1.) To give time for the previous home to be cash flowing before picking up the next one.  That takes several months between closing, repair/make ready, getting it leased, 1st month rent goes to mgmt company, and rent is deposited in my account at the end of the month.  2.) Because I'm working with a management company that is a few hours away, I am slow-rolling my investment relationship with them.  If they continue to do a good job for me, they will continue to get more properties to manage for me.  If they don't, I'll look elsewhere.  I do expect them to do a good job, but I'm a cautious person, so I did not feel comfortable emptying my 401k, buying a bunch of houses, and saying "Here you go, boys!"

I found the first property on the MLS with an agent who took me looking for investment properties. The second property was managed by the management company already, and the investor who owned it was selling it to move his money into another investment. It got under contract with someone else, but that deal fell apart, and my agent tipped me off that it was coming available. I snagged it before it got advertised again.

I know this thread is a bit older, but thought I'd pop back in and mention that I just signed papers on another property in Parma today.  So, I didn't quite wait until winter time, which might have been a bit better from a timing perspective.  But the property is pretty good so I had to go for it.

Reasonably close to the same deal as the one I mentioned above.  Payment is almost exactly the same.  The rents should be the same or very close.  It was less out of pocket to get into this new house though.  Both less repairs / make ready cost, and a better deal on the financing than the last lender I used so I saved money there too.  Basically getting into it for 20%+ less than the last house.

Had goal of acquiring 1 single-family home per year starting this year, with stretch goal of acquiring 2 per year.  We just signed the papers on #2 this morning.  The first deal has turned out to be pretty good so far, although it took a while to get it to where the money coming in wasn't going right back out to things like the initial property tax payment, and so on.  The second deal could (and hopefully will) turn out to be even better long term, as our out of pocket investment is about 20%-25% less on #2, even though the class of asset, area, rents, etc, should be very similar.

The tentative goal for 2017 will be to get to 4 properties.  At that point it should be a lot less feast or famine when it comes to vacancies or tax bills, or other expenses.