All Forum Posts by: Shiva Bhaskar

 Also, I do agree with the concern others have raised regarding turnover/vacancy. 1 beds and studios often mean single people, students etc, so turnover can be a real issue. Now, you can try to find ways to minimize that (I have a single family property here in Los Angeles for which my agent signed some solid tenants on a 3 year lease, so ti is possible), but it's trickier for apartments like this. 

 Hi Tyson, one thing to consider is to what degree these expenses can be reduced - not saying they are high, as I don't know what they run for a comparable property in your market, but the utilities would be a concern (what that is exactly), taxes are decided by locality/state but get the number obviously from landlord themselves. Also, are the units individually metered for utilities, or how does that work? If they were each paying utilities, I'd assume they were, but just want to clarify. 

Also, I assume that this is an outside property management company? Is it possible to get better rate/costs from them, or are there others in the area who could do a decent job for a lower price? Something to research in my view. Additionally, how long is their contract for, i.e. are you buying the place with a commitment that they will be retained as the property manager for a certain amount of time? If so, how long. You want to find that out as well, because if you can reduce expenses effectively, obviously you've increased your NOI.

I have heard (and not seen for myself, but from a buddy who looked) that it might be possible to cash flow on duplexes or triplexes in some parts of South LA and Compton, but again, whether you want to live in that area is a factor of individual preference. Overall, if cash flow is more your goal, I'd look into the Midwest, as others have noted. I invested locally (in single family) but also working on moving into Cleveland shortly, and seems like there are quite a few LA folks moving into other markets. Worth it if you want the cash flow. 

 Hey Brian. I guess it depends on the rent you are earning, or could earn, with carpet vs, a different type of flooring. With that said, I would go with laminate or vinyl (depending on rent, quality of property), 9 times out of 10. Carpet gets damaged easily, and looks bad very quickly. Yes, you could get a good cleaner to come help make it look better, but it's not built to last for that long. Also, I will bet that in most cases, the bump in rent from changing floors, and the addition to property value, definitely makes it worthwhile. 

 Liz, that's awesome! Yes, I'm seeing lots of people doing well with cash flow and in general I think the market has some promise for now. Hope you make it to the tour, looking forward to meeting more folks investing in CLE in person. 

 Great question. I haven't invested there yet (my investments thus far are in LA County, where I live). You are right that the market in CLE took a big hit since 2000, and certainly 2008, but there are lots of areas where I think prices have fallen quite a bit, and I don't think the fundamentals bear them going lower, and the cap rates are some of the strongest in the whole country. Cap rates can often be an illusion I suppose, but I know someone else from CA, and a few local folks, who have invested there in the past few years and done very well on cash flow.

 Cleveland is very neighborhood specific (some areas are a money pit I'm sure), and with the expansion of Cleveland Clinic and medical facilities in general (and you are starting to see some health care tech companies sprout up), there are several areas that are really revitalizing and appreciation is happening (not like you might get in LA or Austin or Denver, but it is there). Also, areas like Maple Heights, Garfield Heights, Euclid, all offer great cash flow and aren't bad areas, from what I hear from folks who've done it, stuff over there is renting fine (plenty in the range of 800 to 900 or more). For the prices you pay, these are great deals. Also, and I know this isn't for everyone, but as Brian said, there are some folks making good money in Cleveland with Section 8 tenants, since what Section 8 will pay in rent allows for very strong returns in many areas. Again, there are plenty of horror stories with it, but I also know people who've done great with the program, so that's something to consider. 

Will I stay investing in CLE for the next two decades, the way I would in LA (or CA in general)? I don't know, maybe, maybe not. We'll see how things go, which is why I'm starting small over there. But some stronger cash flow wouldn't hurt, and Cleveland offers a chance to do that, and the risks are ones I am OK with. 

 Thank you. I hear a lot about them, definitely going to reach out to them and look into it. 

 As it happens, I have the same issues with turn key as you do! We signed up for it mainly because it's a quick one day way to get an overview of the areas. Not really planning on buying through these guys. 

Actually going to be flying out there several days before the tour to meet some agents I've connected with, and a couple investors from BP who are local, and hopefully contractors as well. Hoping to get referrals for property managers too, if you have any you like, would be super appreciated. Thanks again for the feedback!

Regarding RE vs. other investments, I think a lot of it is personal. I enjoy properties, looking into renovations, dealing with folks who might rent it etc. I have buddies who don't feel that way. They prefer buying stocks, index funds, cryptocurrency (I'm wary of that one), and so on. They think it's too much hassle, and if they feel that way yes, they shouldn't do it, because life is too short to do things you don't like.

The tax benefits (deprecation), the fact that your tenant pays off your mortgage and makes you extra $$ (depending on cap rates where you invest), the reality that there is so much potential to appreciate, all of these are huge positives for RE. Also, I like that you have some degree of control over the trajectory of the investment. I mean, you can add value to build equity (BRRR strategy etc), you get to choose tenants (obviously both depend on market, but it is not entirely up to someone else).

I do see your wife's point though. I don't think it's all or nothing. You can do real estate and put some of the money into the things she mentioned, which are lower management and lower risk. If anything, real estate will give you more money to put into those assets as well.  

 Hi Brian, we've been making use of the guide to plan the trip out! It is great. Would love to chat sometime about your experiences investing there, trying to learn all that we can.