All Forum Posts by: P.J. Bremner

@Remee Martin

I started out in California and looked elsewhere as well once the pricing got too crazy here. Especially in LA and the Bay area, it's very hard to make any cash flow here.

Just a few words of wisdom from someone who has made a lot of money AND lost a lot of money in Cleveland - Be very careful who you work with. Biggerpockets is an amazing place to network and find people with similar trajectories as you, but it's terrible at vetting people. Do TONS of research before you sign up with anyone, especially for property management. I've gone through 3 companies and self-managed for a stretch before finding a good one. Even with a small portfolio (less than 10 units) a bad PM can cost you tens of thousands of dollars per year. My advice is get referrals from different places and don't rely on a referral that the company you are vetting gives you. They will give you a cheerleader, which is worse than getting no-referral. I like to ask the referral for other people that use the company so that I get someone who isn't prepared to give a good report. Or, you can just hop on here and start a post about a specific company and you will get all sorts of responses.

It sounds like you are well on your way to doing great things in Cleveland and I wish you the best of luck! Keep in touch, I'll be happy to chat about deals we are both working on.

@Alexander M Stanton

Some great points you bring up, I think you are in the right path of questioning here to make a smart decision. I don't know your area so I can't comment on that specifically, but I've been managing student housing room rentals since 2012 so I'll be happy to share my experiences that may pertain to your concerns.

Occupancy concerns are definitely valid, however I have not come across any issues nor do I know anyone else running the same setup who has had issues with the city. My suggestion there regardless of being within county guidelines or not is to keep your neighbors happy and don't give the city ANY excuse to look at your property. Keep the parking under control, keep the yard clean and well manicured, keep noise levels down at night and get all of your construction/permit work and inspections done before tenants move in. I also think the class of the neighborhood makes a big difference - C class areas generally mind their own business. B and A class areas will be all up in your cool aid so if it's a nicer area, you have to be extra careful not to draw attention or the ire of your neighbors. Even if your rental is legit, they can still complain and have your business license revoked if your rental become a nuisance. I give my personal cell number to all neighbors and have them text me immediately if there are concerns. It's annoying, but better to deal with annoyances than a house you can't rent out anymore.

Also just a comment on the utilities - I prefer to include everything in the rental price. I manage about 30 tenants, so collecting rent plus all the utilities would be such a pain, it's not even worth the time. I've always included furniture, house supplies, house cleaning, etc. and can charge a premium to cover all of it. Just a basic example, rental comps for one of my rentals would be $2k - $2.2k. I currently collect $4,900 on that house and pay an extra $800 in expenses, so I collect more than double but pay about 33% of the increase in expenses which means I still net out much more.

I hope this helps and I wish you the best of luck with your student housing adventure!

@Itay Heled

I'm not a turnkey provider per se, but we have a couple tenant occupied single family properties listed as well as some larger multifamily and it doesn't seem that much different from that last couple years. I think you're spot on about owner-occupied stuff as those are selling within a month or so if it's priced right. We are getting lots of offers on the larger MFH, but single family tenant occupied is mostly sitting at the moment. I think the Cleveland market is generally like that anyhow, but I could be wrong as I've only been in the market for about 3 years and mostly on the buying side of things.

@Remington Lyman

My first three duplexes were in Lakewood, Shaker Heights and Cleveland (on the border of Lakewood, so not a terrible area). I have since expanded to other parts of Cleveland and a 20-unit property out in Elyria. I hear it said on here often that you have to go block by block to know the good areas and I would have to agree with that statement in general. There are some really scary streets in Cleveland that you wouldn't even go down in the middle of the afternoon, but you go a couple streets away and you are in $300k+ single family home average area that would be safe for a stroll at mid-night.

I really liked Columbus when I looked at the market there a few years back. It seems like a great place to live, but for what I was looking for the price points were a little higher than where I wanted to end up. I went from house-hacking California homes and making 20% - 25% cash on cash (even had my first house that was an FHA loan that is doing 110% cash on cash) to looking at 10% or less for the exact same property 4 years later. So when I looked out of state, I wanted the potential CoC to be similar to what I was used to and found Cleveland was the place for it. Looking back on it now, I think it probably wouldn't have matter much if it was Cleveland or Columbus or buying another CA house hack. More importantly now to me is focusing on consistent returns that have less risk associated with it, which you can get in any market depending on which areas you buy in.

I'm curious to hear your thoughts on the difference between the two markets since you are an expert in Columbus?

@Joseph Mah

I was in the same boat as you a few years back. I started my investing career in California, but the prices kept shooting up higher and I started to look elsewhere and stumbled upon Cleveland.

I started out with 3 duplexes in B class areas and then worked my way up to about 70 units now in 3.5 years.

I can just tell you from experience, it's scary as hell buying stuff out of state in the begging, but once you get over that first one it's no big deal. The team is extremely important, for sure. My opinion, your property manager will make or break you 100%. I've gone through several over the last few years, some of who were recommended above and they have cost me in the tens of thousands, so please just make sure you get good references. I like to get a reference and then ask the reference for another reference (so you get someone who isn't biased or preloaded to give a good review).

My wife and I just had our first baby this year and between my California rentals and my Ohio rentals I spend more time on the Ohio ones, but it's all from home so I get to spend more quality time with the family, so that's another benefit one you get a few under your belt.

I'll be happy to chat sometime and share a few stories, just PM me. Best of luck!

@Katja Jeschke

When I first started out, I was buying in California (2012-2016). Like you, I decided to look out of state thereafter because the numbers were looking rough for anything local.

I decided upon Cleveland Ohio as my focus, but to be honest it could have easily been 100 other cities. I liked Cleveland because of the medically focused industries which are generally well paying and stable. The price points were attractive as well because I could splash around with multiple properties for the price of half of a property in Ca and still earn 15% or more cash on cash.

I have learned SO many lessons in that time, I could probably write a book on it lol. I'll be happy to chat sometime if you are interested, but a few key points to make that I learned:

- Focus on building your team first. Without these people, you have nothing. Most important is your PM as they will make or break you as I found out the hard way with 3 different companies. Contractor is next, then everyone else (handymen, CPA, lawyer, property tax lawyer, etc.). Also be sure to vet them with references THEY DID NOT GIVE YOU. Ask their reference for someone who also works with them to get someone they didn't want to give you as their reference. You are more likely to avoid fake references.

- Trust but verify!! Find good people to help you out, but look over every detail to verify. I like to have unrelated people looking at the same projects for me. If my PM says the roof needs repair, I want a contractor that doesn't know the PM to verify it. If my contractor says he's 50% done, I want my PM to check in on it to make sure. If your PM and contractor are buddy buddy, they could easily put you together (rip you off) and tell you what the other is saying. If you have an unrelated 3rd party helping you, the odds of them both telling you the same lie is basically zero.

- Watch. Every. Single. Penny. That. Leaves. Your. Pocket. You should know if an invoice is off by a single penny from what your bank statement shows. It's so key to know what's going on with your business to the finest detail so that you can spot problems before they become massive. And let me tell you, small problems compound into massive, bankruptcy inducing problems very quickly when you are not local. I know from experience how painful this is, so please do yourself a favor and learn excel, QuickBooks, notion, freshbooks, anything that you can use consistently to get a precise view of your businesses income and expenses on at least a weekly basis, if not daily.

- Know the market you are looking into better than anyone you are going to work with. This sucks, it's a grind, tedious, kills the fun of looking at property online, but it's very important in my opinion. I looked at the market every day for over a year before I bought my first, but I knew damn well what it was worth when I pulled the trigger and made a handsome profit when I sold a few years later (even after losing money due to mistakes). My strategy to learn was to look at one or two properties each day in a specific neighborhood, look at sold properties for comps and input this into a spreadsheet. As time goes by, you can guess what a property is worth before you do the work and then see how close you get. I also like to follow properties for sale and see what they do (flip, rent, etc). You can identify a good deal and see what the person who bought it did with it and compare to what you estimated it to be.

Like I said I could probably go on for hundreds of pages, mostly me making $#&$ ups and learning lessons lol. Feel free to PM me if you have any questions or just want to chat in general about investing as I'll be happy to share what I've learned. Best of luck!!

Turnkey Lakewood duplex for sale!  All of the hard, risky work is done - property was purchased severely distressed so most of the property is brand new.  The rehab ran north of $70k!  We have placed great tenants that plan on staying for a few years and have been paying on-time for nearly a year now.  We are currently self-managing and would be happy to continue managing it after purchase if you don't have a company to do so.  We are selling 3 duplexes in order to free up cash for bigger projects (we bought a 47 unit at auction and need about $750k to get it fixed up).  Please let me know if you have any questions!

@Mo Weis

Lol basically!  That's what I am currently working on right now.

@Ryan Evans

Yeah, likewise!  It's really sad because I have great references for everything else - contractor, junk hauling, photographer, realtor, CPA, lawyer, property tax lawyer, etc. BUT I have yet to find a PM company that I can, with any level of confidence, recommend for others to use.  I have people telling me all sorts of stories, from units sitting vacant for 3+ months to "good condition" unit still requiring $3k in rehab to get rent ready.  There is a lot of garbage out there and, as an out of state investor myself, it's really difficult to know what's really going on.

I can honestly say that the best decision I made was to partner with someone locally.  Once you have someone who has a VESTED interest (as opposed to an interest as a vendor), you will get the real story and actually have a chance to win in the long run.  For those who have found a good property manage, hold on to them tighter than your significant other lol.

@Matt Motil

After thinking about this a little more deeply, there is one thing that would have made a huge difference...  When I vetted this company, I vetted the company as a whole, not the region that I was planning on using them for.  They had sterling reviews in other parts of the US and I figured such a big company with lots of infrastructure might be better to have on my side rather than a mom-and-pop shop managing a handful of units.  My assumption couldn't have been more wrong!

So they manage tens of thousands of units across the US, but less than 20 units in the Cleveland area where I was planning on using them.  It turns out that they had ONE person managing the whole Cleveland area, which is a recipe for disaster.  The one person that had working Cleveland was awful, so they fired her.  The replacement needed a full month to get up to speed, so everything sat for an extra month.  5 to 6 months later he was fired for being bad as well, leaving me to sit for another month or two while they filled the position and trained.  Once the last lady was hired and quit, they ran out of options.  The corporate headquarters did absolutely nothing to help the local workers.  The regional manager was out of Akron and had a portfolio that was too large for a single person to manage, so he was stretched thin and couldn't help or hire/train properly.

So to recap the lesson here, be sure to vet the actual people who will be managing your properties - NOT the salesperson on the phone, NOT the corporate headquarters manager who has never been to your city, NOT the owner who doesn't even know his employee's name, you must talk to the actual person you are going to be working with.  Get references who know THAT person and can vouch for them.  Be careful of the operations who have no redundancy in place (one PM doing everything themselves will simply not work in the long run - if they get sick, go on vacation, quit, etc. you are in deep trouble).