All Forum Posts by: Tyrell Perry

@Alan ZeeCurrently I have an 8-unit apartment building, 6-unit apartment building, 3 triplexes and 3 duplexes. The two properties sold were duplexes. I'm selling another duplex now in the event you're interested.

As for financing, I had a solid paying W2 job and I reinvested the funds from the rent and the properties sold. None of my properties are financed, I own them all free and clear. 

Thanks @Brian Garlington and keep plugging and chugging along as well. Right now I'm eyeing a property in the 44105.

@Sean Yehuda In the short term, I'll be doing light rehab flips in Cleveland. If the US real estate market takes a nose dive, I'll look at NYC and other higher priced markets.

@Michael Plante Checking in means requesting and retrieving a property update. The updates are primarily through my Property Manager. From time to time, my contractors will alert me of an issue. 

@Alan Zee Not intentionally. I pursue the qualified first come/first serve having both the security deposit and 1st month rent. Definitely not invested in B neighborhoods and I may have something in a C or C- area. The grading at times can be subjective. Additionally, just because it's a grade "F" neighborhood, doesn't mean it's a grade "F" street. 

@Dillon Eversole I think Cleveland is the best lower end market given its sound economy, market rents, available inventory and low entry point. When I evaluate comparable low-end metro markets (Detroit, Kansas City, Milwaukee, Indianapolis, etc), I look to see how their attributes stack up to Cleveland. Kansas City, Milwaukee and Indianapolis may have economies that are more solvent than Cleveland, however, Cleveland outperforms these markets in the remaining metrics. When it comes to non-metro markets, there may be cities with better deals than Cleveland but chances are, Cleveland has a stronger economy. Canton and Akron have low entry points (not as much inventory as Cleveland) but there are far less employment opportunities. 

@Alan Zee Only 1 of my units is Section 8. I assist a few buddies and one of their tenants is Section 8. I've went through the process twice. For my unit, I had an inspector cite cobwebs in the basement. The follow-up inspector thought the deficiency was ridiculous and could care less. The key is having a contractor or Project Manager that is familiar with the Section 8 code. Section 8 like most things in life comes with a little in-air turbulence followed by a smooth landing. In regards to my Property Manager, I communicate primarily via text. My contractors typically come through other owner referrals. When I scout or buy a property, I ask the owner of the contractors in place. I ask a few questions to gauge the contractor's workmanship and price. If they pass the initial gauge, I'll give them a small job. If they're good, I keep them in the rolodex. My existing contractors and Property Managers are other sources for referrals. There are times when I have to go online but I keep that to a minimum. 

@James Wise Thanks. Neighborhoods are Glenvile, St. Clair-Superior, E. Cleveland, Union Miles

It’s been some time since my last conversation starter and a lot has transpired since then. Below is an update to assist investors on whether Cleveland’s low priced multi-family market is compatible with both their personality and lifestyle.

After acquiring my first triplex in April 2016, I proceeded to buy 8 properties totaling 30 units. I sold two of the properties so now I have 7 properties totaling, 29 units. Current occupancy rate is 86%.

All of the properties are in Cleveland, OH with the exception of one triplex which is located in Canton. I’m not thrilled about Canton but it was too good of a deal to overlook. I bought it for $8K and the monthly rent now totals $1,425. To date, it’s the sweetest deal I’ve done.

On my first property sold, here are the numbers:

Net Purchase Price: $15,806
Net Rental Income: $2,781
Seller's Net Proceeds: $29,846
Total Income: $32,627
Return: 206%

If you understand numbers, don’t buy a stinker and know how to manage, you’ll make money. I say “know” because you must manage even if you hire a Property Manager. I look at my properties as children. They’re birthed at acquisition, rehabbed during infancy, stabilized throughout the teens and sent off once they are ready for college and LIFE UNIVERSITY. Even when you have a Property Manager, you must check-in periodically just as you would with a daycare. The property will dictate your check-in frequency. My properties with 2-3 units require bi-weekly or monthly check-ins whereas my apartment buildings require weekly attention. Apartment buildings are often glorified but they require much oversight, at least in Cleveland’s lower tier market.

Given investor’s fascination with Cleveland and rightfully so, let me share a few things about my experience with Cleveland as it relates to the lower income communities and the high yielding properties. Let’s start with the worst first:

CONS

• Contractors cannot be trusted. Even if you do use one contractor for a large portion of your business, periodically use others for small jobs. This gives you options in the event you’re contractor goes afoul, becomes overwhelmed with work or provides a pricey quote. When advance payment is required, gradually pay in phases (15% - 25%).

• Do not give tenant leads a chance. One bad apple can ruin the batch. If a tenant has a recent or lengthy criminal rap sheet, look the other way. You’re better off having a vacant unit rather than a vacant property. In addition to losing your shirt, you’ll lose your hair.

• It will be a hassle to collect rent from certain tenants. Typically, I give tenants a 1-week to 2-week window before issuing the 3-day notice. 2-weeks is given to longstanding tenants.

• Every day is a different day. Leaks, fires, robberies, shootings, evictions, tenant conflicts…it all comes with the territory. Be equipped to handle the unexpected.

• It can be pricey to reach Section 8 compliancy The Section 8 code is strict and is subject to the inspector’s perspective. Therefore, if one inspector cites a deficiency that another didn’t list on the prior inspection, it’s back to the drawing board with another scheduled inspection. It can be tough sledding especially when you tack on CMHA’s inadequate response time.

• The water and sewer rates are OUT OF CONTROL and The Water Dept is the Cleveland Mafia. I disputed billings at one of my properties. My attorney went to the Water Board hearing and mentioned their use of numerous charts supporting their position. He said it was a waste of time and money. As the mob says, “F U, PAY ME!”

PROS

• Certain tenants are like clockwork with rent payment. Some will even pay early before the month begins. Section 8 is pretty sweet in this regards…deposits hit the 3rd of the month.

• Security deposits will save you. Be sure to charge the appropriate amount.

• For Buy & Hold investors, once a property is stabilized, the real fun begins

• Late fees make untimely payors slightly welcomed. I have a two year tenant that consistently pays $50 in monthly late fees. Even after working with him on the rent due date, he's still late. Don't really understand the rhyme to his reason...some things are best left unanswered

• You don’t have to be local…landlording only requires a phone and a computer. Initially I micromanaged from NYC, now I live overseas.

• The triplex serves as the best combination of cash flow and time commitment.

If you’re willing to allocate the time and are competitive, Cleveland’s lower end market may be a suitable fit for you. If you’re passive, timid or indecisive, steer clear or have someone qualified to micro manage your property.

Do the PROS outweigh the CONS? To me, they do. Investing in these properties have given me the freedom and flexibility to resign from my job at 32, live internationally, wake up at the time of my choosing and still get paid on the 1st & 15th. Pretty sweet options if you ask me.

-Mr. 1st & 15th

Adjacent Properties Corp.

@Terrell Washington Once you find the deal, make sure you know how to vet the deal...will make a world of a difference in your real estate investment success. 

Remember, everything that glitters ain't gold and everything that smells isn't garbage.

I'm in the same boat as @Derrick E. but like he, I too buy lower priced properties and leverage should be scrutinized differently for the lower priced structures.

Opinions will always differ on the subject as the decision is a matter of personal preference. If debt makes you lose sleep at night, pay it off, otherwise invest the money in other real estate ventures or business endeavors.

 More Money, More Problems!

As @Ali Hashemi mentioned, it's a totally different ballgame. Never owned a SFH but my small apartment buildings are much different than my duplexes and triplexes. Once you stabilize the property, operations gets smoother and less costly. My buildings are in Cleveland where it's prudent to expect the unexpected. Be strict with your screening criteria and stay on top of your financials and contractors. May be worthwhile to self manage the first building and outsource thereafter... experience goes a long way.

@Jorge Kuzmicic I'd say you need a solid and competent project manager. Strike an agreement and pay them an hourly consultant fee to comb through your ideas, vision, deal breakers, target areas, purchase points, rehab costs, quality of finishes, etc. Embed the project manager with your level of thinking so they know your investment parameters which will enable he or she to contribute to your property search, contractor selection and end product. Paying $500 - $1,500 upfront is much better than misusing $5K+ post construction commencement...all about opportunity costs my friend.