All Forum Posts by: Rereloluwa Fatunmbi

Hello,

I recently closed on a newly renovated, 900 sq ft single-family home with 3 bedrooms and 1 bathroom in the 44306 zip code of Akron, Ohio. I initially listed the property for rent at $1100 but had to reduce it to $1000.

Unfortunately, the only serious applicants I've received either have a criminal history, poor references from previous or current landlords, or have faced evictions in the past three years.

With almost two months of vacancy, I am growing increasingly concerned.

Should I consider lowering the rent price further, renting to these concerning candidates, or pivoting to a short-term or mid-term rental strategy (considering I live out of state)? Any advice is much needed and highly appreciated.

Thank you!

Quote from @John Underwood:

Not trying to be mean but you should have found out the regs before looking for a place not when your about to close on a property.

Now I would call the county and find out what the requirements are and see if you can even make this a STR.

Also 5k seems way too low to properly furnish a house.

I think 20k would be more realistic even if you bargain shop.

I bet I would need 30k to replace everything in my 3 bedroom STR.

Thanks for the response, John. I agree I'll probably need to spend more to get the house set up for STR/MTR. I did not find out about the regs before I went under contract because I primarily was pursuing this house for LTR. But my original estimates on cash-on-cash is coming down to 17% which I know will likely be lower when I factor in unexpected repairs. I like to be close to 20% so I am in a safe spot for contingencies. This why I am looking to improve my cash flow position by considering STR/MTR. Are you also an investor in Akron?

Quote from @Sarah Kensinger:

No saturation at all because Arkon is not a huge STR market. Depending on the neighborhood and how you design and market your property, will depend on the STR revenue. For your location, I would highly highly recommend you do MTR in the property, and establish a relationship with the hospital so they know you have lodging for traveling medical professionals. I do wonder at your monthly PITI and I'm suspicious the home is not in the best of neighborhoods.

Akron is working on setting up a permitting process for STR, but it has taken longer than what was expected. If you call the city and ask about STR permit they can give you an update on what is happening so you can plan ahead for that.

I know the Akron STR market, so if you have any more questions feel free to reach out!

 Thanks for the detailed information, Sarah. I'll connect with you right away as I definitely have a lot to learn!

I am in the process of closing on a 3-bedroom, 2-bathroom, 1600 sq ft single-family home in Akron (zip code 44305). My plan is to furnish it and list it on Airbnb for short-term or medium-term rentals (STR/MTR). The property is conveniently located 1.6 miles from the University of Akron and 2.2 miles from the Children's Hospital. I have allocated a budget of over $5,000 for furnishing the house, and my monthly payments (PITI) amount to $790.

Given that I reside in Austin, TX, I am a bit worried about managing remotely. However, I am familiar with managing short-term rentals, as I currently operate two in Texas (one of which is 3 hours away from my home- so I manage that remotely). Additionally, I already have a long-term rental property in Akron, situated 2 miles from this new acquisition which I also self manage. However, I would like to inquire about local regulations I should be aware of in Akron. Moreover, I am curious if the market for short-term rentals in the area is already saturated. Any insights, ideas, or suggestions would be immensely appreciated.

Thanks everyone for the very helpful responses. Learned a lot already. I reached out to Jeremiah (@Jeremiah Sullivan) offline and he provided further clarifications and answers. I'm pasting them below so it can be beneficial to the rest of us:

1. Did I make a good deal and the right choice?

If you're making 550 sounds like you made a great choice.

2. Should I have opted for a property that needed work to create forced equity?

I think buying a turn key is a great way to start. Learn the management then learn the work. There's several ways to create forced equity or appreciation. I usually only buy turn keys and if i get the right properties with little to no work have been able to refinance them for 90 k plus. Purchase price 60k.

3. How do you estimate renovation costs and time for fixer-uppers? Do you bring a contractor during inspections?

Yes i have someone walk the property a gc and an engineer and they tell me if it's worth it.

4. Is it wise to buy properties needing work, considering they might not qualify for conventional loans and require high-interest hard money lending? Is it too risky?

I usually don't. If you're good at it there's money to be made i think Akron is really tough for brrr the margins are to slim. As well yes high interest rates make it a lot harder hard money is 10-12 percent.

5. How can I find a contractor ready to start right after closing?

I can refer you to a few but to get them to make you a priority you need to create a relationship. Be polite pay in full on time.

6. Do you recommend cash-out refinancing after renovations?
Always cash out refi asap and buy more houses as long as you have the houses cash flowing.


7. Can you share how you expanded your portfolio?

I buy rent cash out refi buy more. I also build in Florida ground up. Take that money to Ohio buy or pay down debt then refinance and buy more.


8. Have you explored short-term/medium-term rentals in your area for enhanced cash flow?

No again if you're good at
It a lot of money to be made but i have my recipe and i like it.

9. Single-family homes or multi-family – which do you prefer for investing?

Single family in Akron. Multi is few and far between. Atleast the good ones.

10. Thoughts on investing in Canton or the east side of Cleveland?
Canton is good similar market. Little lower rents. I would like to get to 500 homes before i leave Akron canton. There's a few small areas around Cleveland i want to go to


11. I'm struggling to secure mortgages for properties under $60k. Do you know of local banks or credit unions that might help?

Oucu tell them jeremiah at impact investment sent you.


12. Do you think it's a good idea for me to self manage my property since I'm out of state?

If you have all the resources and know what you're doing absolutely. I don’t think it hurts i use a pm. I would like to have a pm side to my business though.

13. By how much do you increase rents annually for your properties in Akron?

If the tenant is really good pays on time and doesn't ask for much i don’t always increase unless my expenses increase. A normal increase would be 10-30 dollars.


That's a correct thought about winters. No one moves after October. If i close on a house October or later i plan on it being vacant until at least March .

You can ask for the rent roll and see how long the tenant has been there and if they paid/are current. You can also do some things to have the tenant "reapply". But really if they pay and you have someone go inside and they take care of it that should not be a concern

We do section 8. I don’t find it harder to evict if anything it is the same process they just have to actually break the lease. The rents depend on the condition of the house i don't think they are below market. It's pretty fair value. That said you probably are not getting a section 8 tenant in the nicest house.


Do you check hud to see what the market rents are for section 8

Thanks for your detailed and insightful response, Jeremiah. I've sent you a private DM as I'll love to follow-up with you as I pursue some deals in Canton/Akron

Quote from @Jeremiah Sullivan:

Hello All, 

My partner suggested I do this and that I would enjoy the website. I have been investing in Ohio for a little bit now. I have properties with my own money, partners money as well as a fund that takes outside money. I think with scale in mind this is one of the best markets in the country for cash on cash/cash flow return. I think with a reasonable plan and the right people in place you can  compound considerably here and still buy with rates being so competitive. If the greater Cleveland area is something you're considering or just general questions, feel free to drop them here. Anything from financing, property management to cash returns and how to use them effectively. 

 I have a LTR in Akron (purchased in July). It's cashflowing great ($500) but I'm skeptical about investing into more units.

1. Aren't you worried about the population trends in Akron and if it won't become the next Detroit?

2. Aren't you concerned about the limited job opportunities? What do you think about Akron's economic outlook in the next 5 years?

I'm currently in the process of seeking approximately 10,000 square feet of land in Texas with the intention of constructing two single-family homes (each will be about $1400 sq ft). I've identified a selection of cities, including Houston and some smaller ones, where the combined costs of land acquisition and construction (estimated at $120 per square foot) are notably lower than the market prices of completed homes.

The plan is to acquire the land using 100% cash and subsequently secure a commercial or construction loan for the construction of two houses on the property. I plan to ensure the land is zoned to allow me make such a move before I close on it. The ultimate objective is to sell one of the houses and utilize the second one for Airbnb purposes.

While I have prior experience with Short-Term Rentals (STR) and Long-Term Rentals (LTR) properties, venturing into construction from the ground up is entirely new to me. I would greatly appreciate any advice regarding the wisdom of this investment path, especially in light of the current market trends. Additionally, any insights on how best to proceed would be invaluable.

Quote from @Michael Smythe:

If you have a full time W-2 job, your chances of qualifying as a Real Estate Professional are basically zero.

But what if I have a W2 job I do about 7-8 hours (8am-3pm/4pm) a day. But I spend after work hours (5pm-12am) on real estate activities. And weekends (Sat-Sun to catch up on weeks I worked less on real estate). Can I qualify as a REP?

What if I have a W2 job I do about 7-8 hours (8am-3pm/4pm) a day. But I spend after work hours (5pm-12am) on real estate activities. And weekends (Sat-Sun to catch up on weeks I worked less on real estate). Can I qualify as a REP?