All Forum Posts by: Vadim F.

 PM will be 10% not 2%, Vacancy should be 10% as well and other expenses such as capex should be at least 10%.

@Jonathan Feliciano if this your first property in the Cleveland market I would look elsewhere. There are pockets that are ok, but otherwise it can be really rough. There is no way you can manage them yourself. You need to build a competent team on the ground who know how to work with the tenants in the area. 

 I would stay away from East Cleveland if its your 1st property in the Cleveland market. Like I mentioned in my previous post getting a PM who will actually manage your property properly will be very hard. Also, just because you will be renting to S8 tenant does not reduce risk.....yes the tenant may be on a voucher and it will cover 70% at the least of the rent but the tenant quality will be low. And even if the tenants chooses to stay in your property for 2yrs, the damage they may cause will eat away all of your cash flow and leave you potentially upside down. A lot of investors who succeed in EC know the tenant base very well and a lot of them self manage. Having said that, there are some pockets near the RTA off Superior and those that border Cleveland Heights can be ok but the rest of it, stay away.

 Hi @Lily Wong. I am curious why you chose to invest in East Cleveland? Is this your first investment property or are you a seasoned investor? East Cleveland can be really difficult to get quality tenants and you will need a PM who knows the tenant base of that area really well......many PMs do not want to work in certain parts of that area. Regarding S8, the leases are 1yr only, but S8 tenants tend to stay longer vs cash paying tenants. Unless you have a very strong team on the ground, I would not recommend investing in EC.

What is the land zoned for? Is it landlocked? Are there restrictions for what you can do on it?

The tenant process for S8 and cash paying is the same....you do the same exact background checks. The only difference is more paperwork and inspections. 

 There are people drinking tons of kool-aid from all these online gurus. Have no idea what they are doing. 

@Bob Stevens keep crushing it! Anyone who says that S8 doesn't pay more in lower class areas has no idea what they are referring to. Also, why in the world would someone but higher end finishes in a D class area thinking they'll get higher rents? Cheap and functional is all it needs to be. Us S8 investors know that investing in lower class areas, come with higher risk. This is the exact reason why we go with S8, so we get guaranteed rent and not chasing it. The rehab are almost the same, yes the inspectors will usually ding some minor stuff that and usually you'd need to replace a few windows if they can't be repaired. In the end the process is the same as a cash paying tenant, except that inspections can take a bit of time unless you know people at CMHA, etc.

Doing a BRRRR in today's market is very difficult. 9 times out of 10 you will be leaving $$ in the deal if you want any cash flow. You need to find deals well below market to start and that alone is almost impossible today unless you have solid connections with wholesalers. You will need a solid PM and have a contractor who will do solid work at reasonable prices and timelines.

Don't drink the S8 kool-aid. Even though I myself have a S8 rental, what you hear online is completely false. C class and lower areas is only where S8 beneficial and that tenant base can be a headache. You will also need a team that knows how to work with CMHA, which in itself is a huge pain to deal with.