All Forum Posts by: Robert Matelski

Brian, just because your valuation goes up by 30% does not mean your tax bill will go up by 30%. Ohio property taxes are structured in a somewhat complicated manner. Yes, the property values are reassessed triennially (every 3 years) across the board, but they also adjust the effective tax rate when they do so (they use the term "mills" to describe and calculate this), so in most cases if your property is just sort of keeping up with the value trend for its area you will see a fairly minimal tax increase. Here is a document that touches on it a bit: https://tax.ohio.gov/static/co...

In terms of why some properties may get significant increases in assessed value and others may get a negligible increase, it comes down to what the sales price trend has been in that particular area. Here is a document that shows the high level price increase trends going into value reassessments for 2021: https://fiscalofficer.cuyahoga...

It's worth noting that the areas that have the largest increases were also the areas that were generally hit the hardest in the real estate value crash 10+ years ago (e.g., Cleveland, Euclid, Garfield Heights, etc.), so it makes sense that they are basically still in more of a catch-up mode than some of the areas that saw very little decrease in value in the crash (e.g., Solon, Westlake, etc.).

Wow... If Buckeye Shaker, Saint Clair Superior, North Broadway and South Broadway are your definition of B grade areas in Cleveland, I am almost afraid to ask what might constitute C grade or lower!! 

Hey Eric... you should definitely reach out to Swanny @Michael Swan -- he is doing great in the suburban areas outside of Cleveland and is usually open to helping newbies out. Also... as a side note, be wary of advice you might get from agents/brokers/PMs in a thread like this or elsewhere... while they do have experience and knowledge, in most cases they stand to make $$$ from you whether you make a killing or lose your shirt! The best advice you'll receive will usually come from other investors (especially if they have a few losses under their belts in addition to the wins).

I am not an agent or PM myself, just an investor. I have been investing in the Cleveland area for years, and I know the market exceptionally well. I've gathered a ton of information on investing in the Cleveland area as well. I would be happy to share it if you are interested. It includes, among other things, a comprehensive map of the Cleveland area, grading each census tract from A+ down to F, using a consistent, objective and transparent methodology using publicly available data (not subjective and arbitrary), which should help to get some legit intel around the risk level of any given specific location to really help you see what you are getting into. Feel free to add me as a connection and/or drop me a private message!

I have my M.Arch and I am a Licensed Architect in the State of California!! That said... I have not actually practiced architecture since 2010. I ended up getting an MBA and all-in I now make like 4x what I made in architecture lol. I do think that the architecture background has been pretty helpful as a real estate investor though. 

Down the road I would like to become a developer, and I will likely start with a few single family houses (which I will design, of course), most likely in Texas!

Spot on, re: Florida and Georgia. Texas though... anecdotally, I have found that the property taxes in Texas, as a percentage of the total value of the properties, are actually less than those in Ohio (at least for central TX, where I recently started investing, compared to the Cleveland area, where I have been investing for many years). I'm definitely not knocking Ohio as a good state for real estate investing... I'm just objecting to the claim that Texas taxes are "insane". Here's a Roofstock article that actually did some math as it relates to property taxes (for smaller metros as well as large metros)... and it seems that OH and TX are not really all that far apart tax-wise... https://learn.roofstock.com/bl...

Also, TN and AL appear to be decent states to pursue for rental properties currently. I have a colleague who has been doing pretty well with her Tennessee rental properties, and I may pursue that market myself in the next 12 months.

Mike, I'm with you 100% at looking at data to drive the quantitative aspect of one's analysis for any given market. Interesting that you mentioned per capita GDP, and still land at the conclusion that Cleveland isn't a particularly strong market though. 

Based on the data in the article linked below, it seems that the Cleveland metro has a pretty solid per capita GDP (I was surprised myself at just how solid it is). Higher than Charlotte, Las Vegas, Orlando, San Antonio, Phoenix, and even Cleveland's young competitive sister, Columbus. Probably largely because quite a bit of the economic activity in the Cleveland area is situated outside of the city proper, in the dozens of suburbs around it, it belies the stereotype that Cleveland is a dying old city without much of financial engine left in it. Granted, the article is from 2020, and I have not dug into the raw data personally, I do trust that academic research using data from the US Bureau of Economic Analysis, assembled by an author associated with a very established newspaper (The Plain Dealer) is probably pretty sound.

https://www.cleveland.com/data....

 
I also wrote a blog post about this topic a while back! Plus I made a YouTube video about it too (just had to one-up you there haha). 

Generally speaking, I think the 1% rule is a good starting point to look for in cash flow markets. I do, however, find it very concerning to see potential investors (usually newbies, who lack familiarity with the Cleveland area, or other cash flow markets in general) thinking they’re finding a great deal because it meets the 1% rule, when it’s actually a mediocre property in a rough area. I think it is important to just use the 1% rule as an initial starting point, but to adjust it as necessary once you get into the nitty gritty of an area or a particular investment opportunity. 

Investors should understand the need to adjust that rule upward (i.e. adjust your GRM expectations downward) when moving from ‘B' grade areas to lower grade areas. In essence, a $100K single family property in a decent B neighborhood that rents for $1K a month should be looked at with a very different lens than a multi-family property in a D or F grade area, for example. The higher the risk level of an area or an asset, the higher gross rent (as a % of purchase price) an investor should target... or else they're potentially setting themselves up for imprudent investment choices that might kill any hope of a decent return!

Bruhhhh... no. Those are, for the most part, not skills that are likely of much use to most investors. Don't think in terms of "skills" (rattling off skills tends to just be a lazier version of saying "hey, here is my resume, you should hire me" anyhow). Figure out what actual problem(s) investors (or brokers or lenders or anyone) might have and then demonstrate ways that you can solve said problem(s)... connect the dots for them, and make them so glad you are bringing some solutions to the table and that you can execute on them. Don't be afraid to add value for free a bit too, at least at first, to make them think "wow this kid is really useful" and get them hooked and willing (maybe even eager) to pay. 

This is stuff you can do now, while you're still in high school. I'm not saying you should or should not do this, but giving this as an example of the type of thing you might think through and try... say you observe that there's a particular property that has been on the rental market for a looong time even though it is a decent house on a decent street in a decent suburb of Cleveland (you can/should be scrolling around on Zillow and other sites to check out rental listings daily if you are taking this seriously). You've seen this one house just sit there on the market, for weeks and weeks, while other houses have been posted and rent in a few days. Dig into that listing... does it lack photos? Are the photos bad/outdated? Is the description bad? Reach out to the owner and tell him or her that you think that with a better description or photos their property could really attract solid renters fast... and offer to take the pics for them and write the description to update their ads (for free).

The sooner you get into the mode of naturally finding problems (or untapped opportunities) and proposing/executing some solutions, the quicker you will find yourself on the track for success and huge gains. Next time you are on YouTube, listen to some Gary Vaynerchuk, Mark Cuban, Patrick Bet-David, etc. They're not going to be talking about real estate (generally) but this kind of content will be outrageously valuable to you to get yourself into the right mindset to become outlandishly successful.

Just start reaching out to people (cold calls/emails/DMs). Use BiggerPockets, LinkedIn, any personal contacts you may have (family friends, neighbors, etc.). You'd be amazed how far a positive attitude and go-getter vibe can get you. Focus on learning from them, and always think about (and share, when appropriate) how you can add value to them. Get tangible. Make some videos showcasing what you know and how it can be applied to brokers, investors, etc. Don't worry about having a "good resume" as much as having a pithy answer for how you can bring value to others in a way that's mutually beneficial. Don't make them connect the dots of how you can be of service to them... make it glaringly obvious.

Typically investors find it more useful when you give them specific details, useful info, context, etc. rather than simply pasting more or less the same short message over and over and over about how you bought a TK through Martel and they should inbox you to find out more. Just a thought, in the off chance you're truly interested in being helpful.