Real Estate Investment in the West Side (Cleveland, Parma: 2013, rental market)

[reioh]

Hi,

I'm from New York City and am interested in investing in real estate in Cleveland. My goal is to generate cash flow from my investments.

A local Cleveland based RE agent & investor suggested I look at the west side neighborhoods of Old Brooklyn, Puritas Longmead, and Jefferson.

I have looked at the available properties on Zillow and the projected cash flow makes sense. I have a few questions for people with boots on the ground:

- Are there jobs in or near these neighborhoods?
- Do the people who live here work in the area or mostly downtown?
- Has the number of jobs grown, shrunk, or stayed the same, in the past year?
- Crime rate seems reasonable on a map, but would you walk in these neighborhoods by yourself, during the day time?
- Is the local low and government friendly to landlords?
- What do you think of these neighborhoods in general?
- What do you think of the houses owned by investors?
- Do you know of any local investor friendly banks that will lend money to out-of-state investors?
- Any other suggestions or comments?

Thanks in advance for your input!

[L2DB]

Do you already invest in real estate long distance elsewhere?

If not, don't.

[reioh]

I have a rental property near Orlando FL for several years. It is managed by a property manager and it has worked out pretty well so far. The rental market in FL seems to be stable, but isn't generating as much cash flow as I would like. The reason why Cleveland interests me is that the the house prices seem to be undervalued, based on historical price values and projected cash flow. Also, there's no hurricane or rising insurance to worry about.

I actually visited Old Brooklyn and nearby areas a couple of weeks back. Although there were a lot of snow, from what I can see, the houses are old, but most seem to be well kept. I didn't see any boarded up windows. Of course, I was in the car the whole time -- too cold to be walking around. I would really appreciate your local knowledge and advise.

[L2DB]

Meh... seems like unpaid working for you instead of friendly helping people.

[tblackpcb]

Old Brooklyn would be the best bet for you. I grew up in that area and lived in others. Particularly a double. Parma may also be a good option.

[Cleverfield]

Those are pretty decent places to invest if you find the right deal. As far as Cleveland city neighborhoods go, they're among the best/safest.

[Kamms]

Originally Posted by reioh

Hi,

I'm from New York City and am interested in investing in real estate in Cleveland. My goal is to generate cash flow from my investments.

A local Cleveland based RE agent & investor suggested I look at the west side neighborhoods of Old Brooklyn, Puritas Longmead, and Jefferson.

I have looked at the available properties on Zillow and the projected cash flow makes sense. I have a few questions for people with boots on the ground:

- Are there jobs in or near these neighborhoods?
- Do the people who live here work in the area or mostly downtown?
- Has the number of jobs grown, shrunk, or stayed the same, in the past year?
- Crime rate seems reasonable on a map, but would you walk in these neighborhoods by yourself, during the day time?
- Is the local low and government friendly to landlords?
- What do you think of these neighborhoods in general?
- What do you think of the houses owned by investors?
- Do you know of any local investor friendly banks that will lend money to out-of-state investors?
- Any other suggestions or comments?

Thanks in advance for your input!

I would also consider West Park since your list includes city neighborhoods including Puritas-Longmead and Jefferson. West Park is due west of Jefferson and north of Puritas-Longmead.

[Kamms]

Originally Posted by reioh

Hi,

I'm from New York City and am interested in investing in real estate in Cleveland. My goal is to generate cash flow from my investments.

A local Cleveland based RE agent & investor suggested I look at the west side neighborhoods of Old Brooklyn, Puritas Longmead, and Jefferson.

I have looked at the available properties on Zillow and the projected cash flow makes sense. I have a few questions for people with boots on the ground:

- Are there jobs in or near these neighborhoods?
- Do the people who live here work in the area or mostly downtown?
- Has the number of jobs grown, shrunk, or stayed the same, in the past year?
- Crime rate seems reasonable on a map, but would you walk in these neighborhoods by yourself, during the day time?
- Is the local low and government friendly to landlords?
- What do you think of these neighborhoods in general?
- What do you think of the houses owned by investors?
- Do you know of any local investor friendly banks that will lend money to out-of-state investors?
- Any other suggestions or comments?

Thanks in advance for your input!

These are not great neighborhoods but not the worst either. Old Brooklyn is closest to downtown.

[bler144]

Originally Posted by reioh

The rental market in FL seems to be stable, but isn't generating as much cash flow as I would like. The reason why Cleveland interests me is that the the house prices seem to be undervalued, based on historical price values and projected cash flow.

You have to ask if the difference in value is you discovering a secret before anyone else, or if you're missing something in your calculation. Considering you're asking about Cleveland on a public board, which is more likely? (I ask, only slightly snarkily)

For example, have you taken vacancy rate into account and the likelihood of loss due to vacancy, or having to discount rental price to compete?

At least of the latest data I've seen (2013 census), Cleveland remains above the nat'l average for rental vacancy at 7.10% vs nat'l average of 6.49%. When talking about Cleveland whether you're talking about purchase price or rents, imo you have to bear in mind that it's a city that lost a lot of population over decades.

Even as that corner may be turning, there's a lot of real estate for people to move into before the slack really goes out of the market. If you're in it for the long run, that could be a good gamble - if you're banking on short term cash flow, I'd say you at least really want to make sure you're calculating your risk correctly, and have the ability to absorb a cash flow loss if that's the reality in any given month/year. And a number of properties probably need some TLC, depending on where you're shopping.

Now, are there pockets I would consider buying to rent? Sure, there generally seems to be demand and little vacancy in Rocky River. But for the metro as a whole I'd be wary of assuming you can just buy a place and assume it will be filled at your desired rental rate.

[reioh]

Thanks everyone for your input.

In regards to my investment plan, I plan to buy, rehab (if necessary), and hold for the long term. The houses that I am am looking at costs about $45k, including rehab, and rents for at least $750. Assuming half of the rent goes to taxes, water, repairs, maintenance, vacancies, etc., I still end up with $325 a month cash flow, which equals to more than 8% return on my investment.

What are your thoughts about the local job market? The news reports that the area has regained the jobs lost during the recession, but I think a local's perspective is more important.