I would look to a community bank and instead of a residential equity line look into a commercial equity line. You may have an opportunity taking that approach. ALso, if you use other types of lenders besides a bank you can likely get some type of equity line.

I was trying to sell my house in Cleveland Heights by owner, without much luck.  As we are in a pretty bad time of the year for selling, I'm thinking I'll try and rent it out (not that the rental market would be super hot right not either).  I just listed it on Case's off-campus housing site, but does anyone know where else I should list it?  Any experience on craigslist?  I haven't listed it there yet as I am somewhat skittish after hearing so many craigslist horror stories.

 

Craigslist is where we list all our units and we have over 100. It is the place to look if people are looking for a rental now. Just make sure you refresh your posting every 3 days to keep it on top

Some places over-refresh and turn craigslist into a wasteland though.

Population increases predicted for Ohio's cities by 2030:

http://www.naidesco.com/PDFs/Whitepaper_Where_Pop_Growth_2020_2030_9_14.pdf

 

500,000 new residents each for Columbus and Cincinnati MSAs.  If just 50,000 (1/10th!) move into the Cincinnati city limits we will see many of the wilted neighborhoods completely revived.  Mt. Auburn, Walnut Hills, Avondale, and the West End.

Sounds like a good time to pick up rental property in Ohio

One of these sorts of articles:

 

https://www.mainstreet.com/article/no-youre-not-throwing-money-away-5-reasons-renters-are-smarter-than-buyers

 

Never once does this writer slow to ask the question...who wins in the end -- the guy paying rent or the guy collecting it?  Good grief. 

^The entire article is geared to show that the renter has the advantage, in the authors belief.  How do you not read that?

I get that.  My point is that a giant mythology surrounds ownership of single-family homes.  Of course it's a toss-up as to whether you're going to come out ahead living in a single-family home for ten years, but if you're collecting rent every month you're going to come out way ahead even if you sell the property for less than you bought it for.  And the glamor of taking high-paying jobs in expensive cities distracts from the fact that you could retire with a higher net worth and more income by assembling a small army of rental properties.

Jake - I think the common myth we have all be taught is that your home is your biggest and best investment and that is not necessarily true from a monetary perspective. Rental property is a different animal and is just another investment vehicle like the stock market. It is like buying a mini business if you run it correctly. Most people do not understand this as they only see the cash flow or sometimes lack there of that a property throws off, they do not see the hidden return of having the tenant pay your mortage

I thought the article was geared towards those people who would be frightened to even own their own home.  To justify for them that it is okay if they live as renters.

 

People who are afraid to own their own home could not even comprehend the act of being a landlord.

Bump.

 

Those who have actively sought out places to rent out rather than just kind of falling into it: Did you look at going in with other people in a partnership?  If so, any advice or experiences to share?  Scary as it is to hear myself say this, I've looked at picking up a few rental properties here in Akron, and at least in my head, I actually like the thought of owning, say, 12 properties with 4 people rather than 3 by myself.  I actually noticed this when I was out house-hunting (and ended up in the house I'm in now): there actually really aren't that many rental houses in Akron at all.  And there are some neighborhoods in Akron that I think are actually fairly attractively priced for how low the cost of capital is now.  (And if you think I'm an idiot for thinking about leveraging to start building up properties, let me know that as well--I know a lot of people are just putting down cash, but I don't think I have quite that kind of nest egg that I'm willing to commit to this.)

Not crazy.  I'm not sure what the 12 properties with four people gets for you.  As someone who is about to marry someone with a property that is going to transition from being a half rental to a full rental (a duplex), I can honestly say that you will have enough issues to deal with in the tenants.  It seems like taking on partners would only multiply the headaches, as well.  (All this assumes that you can afford to buy a property or three (whether leveraged or not) without taking on partners.) 

It's probably better to team up with other landlords to share knowledge, time and showings rather than pooling actual money with them. Say one of your fellow landlord friends is tied up with work or family and can't show a property, pick up building materials or let a contractor in. You do it instead if you're available and they'd do it for you.

edit

 

 

 

Edited March 30, 20205 yr by jmecklenborg

I'm actually speaking with a local bank about that on Monday, and I would definitely also be planning on using a property management company (I'm actually on the board of one as of a few months ago, which is another reason why I'm suddenly feeling a little bolder about trying this).  But a 2-year rental history would be problematic for many of these properties because the neighborhood I'm in is full of older, long-time owner-occupants who are starting to move to assisted living and wouldn't generally mind seeing younger people come in (which necessarily means being slightly friendlier to renters).

 

My debt to income ratio should be fine.  My debt to assets ratio could be slightly more problematic if they don't count retirement assets (and don't count the assets that will actually form the down payment on the houses in question).

I have an LLC that has one small retail property and there are multiple partners of the LLC (family and friends I got to invest).  The partnership agreement is structured such that one other person and myself have all the voting shares.  I think it's a good way to go - having partners - so long as everyone is clear about what their role and rights are.  If the investors are going to be passive, limited, you can structure something that gives you a higher ownership % (even if they put in the same amount of money), which is added compensation for you for being the active partner.

 

I'm not a fan of all cash (don't have the money anyway).  Best teacher I ever had was a real estate finance guy as CSU.  He tought leverage leverage leverage (of course this was before the economy tanked).  There's nothing wrong with leveraging property - so long as you aren't TOO leveraged i.e. shouldn't be over 80%. 

 

Rental history can be tough for lending - especially if the previous owner kept cash off the books.  I've got my eye on a small single tenant retail building that is vacant.  I was just talking to my lender and it's not an easy finance for them as it is vacant with no rental history.  It will likely require a personal guarantee on the loan.

 

I am in same boat as you - debt to income is fine, not so much for debt to assets (they told me they don't count my retirement accounts).

Cincinnati Related:

Could anyone recommend a realtor in Cincinnati that does work finding, vetting and drawing up legal contracts for getting a renter for a property?  In the past we went with a company that did a lousy, lousy job and charged us $3000 for the their efforts.  We started trying to do the work on our own, but we've found it is a bit of a pain finding serious potential renters via Craigslist and Zillow/Trulia.  Specifically, we're trying to find a company experienced in finding renters for an Over-the-Rhine apartment.

Cincinnati Related:

Could anyone recommend a realtor in Cincinnati that does work finding, vetting and drawing up legal contracts for getting a renter for a property?  In the past we went with a company that did a lousy, lousy job and charged us $3000 for the their efforts.  We started trying to do the work on our own, but we've found it is a bit of a pain finding serious potential renters via Craigslist and Zillow/Trulia.  Specifically, we're trying to find a company experienced in finding renters for an Over-the-Rhine apartment.

 

Realtors, Real Estate agents really should not draw up contracts. They are not lawyers. That is DIY deal or hire a lawyer. I am sure that there are some agents types that put apartments for rent on the mls or their websites, but I have to think that from a time energy perspective they lose money doing that kind of work. Good luck.

Regarding investing or getting financed ....an alternative to traditional lendors,

www.realtymogul.com,

 

Finance your real estate transactions. Online

 

Regarding investing or getting financed ....an alternative to traditional lendors,

www.realtymogul.com,

 

Finance your real estate transactions. Online

 

Have you used them?  How do their rates compare?

Regarding investing or getting financed ....an alternative to traditional lendors,

www.realtymogul.com,

 

Finance your real estate transactions. Online

 

Have you used them?  How do their rates compare?

 

Good question Smith. I have not used them. To find out more about rates surf their site as financing various between non owner occupied 1-4 residential and commercial loans/equity. I checked their executive Bios, they have hired and are hiring the right kind of people. They have around 40 Million of seed investment money. I am sure they take calls also.

Regarding investing or getting financed ....an alternative to traditional lendors,

www.realtymogul.com,

 

Finance your real estate transactions. Online

 

Have you used them?  How do their rates compare?

 

Good question Smith. I have not used them. To find out more about rates surf their site as financing various between non owner occupied 1-4 residential and commercial loans/equity. I checked their executive Bios, they have hired and are hiring the right kind of people. They have around 40 Million of seed investment money. I am sure they take calls also.

 

Interesting.  I'm looking to refi a commercial property.  Maybe I'll give them a call.

 

EDIT - Looks like they have a $1M minimum on permanent debt. 

Their rates look a little on the high side for residential, which is where I'd be looking:

 

https://www.realtymogul.com/residential-loans

 

Not to mention the expected LTV is 70%, and even most mainstream commercial banks or S&Ls will do 75%.

 

The offers I received from a Northeast Ohio regional bank were as follows:

 

- Basically the same as a personal residential mortgage for up to 5 residential properties, which could be placed in my name for a split-second and then transferred to my company.  20% down and non-owner-occupied 30-year fixed rates at right around 5%.  After 5 properties, you've reached the limit for what they'll put in your personal name.

 

- On the commercial side, they wanted 75% LTV (25% down) and a 5-year ARM on a 20-year amortization.  I wrote this off immediately.  No way am I signing an ARM in this interest rate environment.  I'd have to have a really short term memory to do that, particularly given that non-owner-occupied rates still start off higher than residential to begin with (this would have been about 5%).  And while maybe the ARM would jump to 6% in a few years, there's no stopping it from jumping to 9% or 10%.

 

Yet even that would still be below the rates that RealtyMogul is asking there for interest-only one-year loans.  I see that they have no limits on portfolio size, and will do 90% LTV for fix and flip, but that's still a lot of risk to take on even for someone who's comfortable with the level of volatility and risk inherently unavoidable in real estate investing.

Their rates look a little on the high side for residential, which is where I'd be looking:

 

https://www.realtymogul.com/residential-loans

 

Not to mention the expected LTV is 70%, and even most mainstream commercial banks or S&Ls will do 75%.

 

The offers I received from a Northeast Ohio regional bank were as follows:

 

- Basically the same as a personal residential mortgage for up to 5 residential properties, which could be placed in my name for a split-second and then transferred to my company.  20% down and non-owner-occupied 30-year fixed rates at right around 5%.  After 5 properties, you've reached the limit for what they'll put in your personal name.

 

- On the commercial side, they wanted 75% LTV (25% down) and a 5-year ARM on a 20-year amortization.  I wrote this off immediately.  No way am I signing an ARM in this interest rate environment.  I'd have to have a really short term memory to do that, particularly given that non-owner-occupied rates still start off higher than residential to begin with (this would have been about 5%).  And while maybe the ARM would jump to 6% in a few years, there's no stopping it from jumping to 9% or 10%.

 

Yet even that would still be below the rates that RealtyMogul is asking there for interest-only one-year loans.  I see that they have no limits on portfolio size, and will do 90% LTV for fix and flip, but that's still a lot of risk to take on even for someone who's comfortable with the level of volatility and risk inherently unavoidable in real estate investing.

 

Well I'm sure from RM's perspective, they feel there is a lot of risk for them, thus the higher rates.  I like those interest rates you are hearing from that regional bank although I definitely don't want an ARM either.

I saw this as a promoted tweet...but apparently Cleveland City Council wants to limits the number of days you can utilize home-sharing (e.g. AirBnB) to 90 days total per year, among other things. I wonder why limit it at all?

 

https://act.airbnbaction.com/page/speakout/help-support-home-sharing-in-cleveland?js=false

 

(Also wasn't sure if this was the best thread or not for this....)

I saw this as a promoted tweet...but apparently Cleveland City Council wants to limits the number of days you can utilize home-sharing (e.g. AirBnB) to 90 days total per year, among other things. I wonder why limit it at all?

 

https://act.airbnbaction.com/page/speakout/help-support-home-sharing-in-cleveland?js=false

 

(Also wasn't sure if this was the best thread or not for this....)

 

Because government feels the need to be involved in everything.  Necessary or not. (usually overwhelmingly the latter)

Well it's damaging the hotel industry, obviously.  Hotels are taxed and those tax revenues are often earmarked for convention center debt and things like that.  So a city risks defaulting on bonds due to an unforeseen, illegal competitor.

Well it's damaging the hotel industry, obviously.  Hotels are taxed and those tax revenues are often earmarked for convention center debt and things like that.  So a city risks defaulting on bonds due to an unforeseen, illegal competitor.

 

So tax AirBnB at the same rate hotels are taxed.  Problem solved.

 

Or, government should intervene to protect the hotel industry from AirBnB and protect the taxi industry from Uber and protect the cable industry from Netflix and protect the VHS industry from DVDs and protect switchboard industry from telephones and protect the wagon industry from automobiles and protect the spear and stone tool industry from iron.

 

Edit: Also, how on earth has AirBnB become an "illegal competitor?"

Forked from the Peak Oil thread (http://www.urbanohio.com/forum2/index.php/topic,2706.2625.html#ixzz46UCnuhiH):

 

I've had good luck investing in single stocks, but I don't advise it for just everyone.  I really enjoy the numbers game, and I'm comfortable with financial statements and most of the fundamental value metrics (though when you start getting into the Greeks of options trading, I'm a little shakier).  I'm also a paid subscriber to the Motley Fool and spend a fair amount of time reading and learning there.  While it isn't quite at the level of a part-time job for me, I estimate I spend about 20 hours a month on portfolio management.  Not an inordinate burden, but most people won't even do that.

 

I've also looked at real estate investing, but that really did start to look like a full time additional job.  And at least one banker I spoke to about this when I was exploring it said that you really aren't going to get the kind of income that lets you quit your main job until you own something like 20 properties, and since I can't exactly make that happen all at once, there would at least be a while when I would own maybe two or three properties.  From the standpoint of a business owner, the notion of control is appealing, but from the standpoint of someone whose touchstone is equity security investing, real estate ownership and management is insane: you're sinking large sums of capital into highly leveraged, fixed, illiquid investments with ongoing carrying costs in the form of property taxes that have no stock portfolio analogue.

 

Given that I'm not particularly handy and therefore don't have much in the way of opportunity to add sweat equity to a real property portfolio (if only just to stave off actual depreciation, as opposed to tax depreciation), I've thus far told myself "no" on getting into this field, though I certainly might try it if my financial situation is better in a few years.  (Though of course, compound returns being what they are, the investment decisions you make young are far more consequential than the ones you make later.  Your choices at 25, when you're likely at your stupidest, are the most consequential, and your choices at 55 when you know better are too late to make much difference.  One of the greatest injustices of math.)

Forked from the Peak Oil thread (http://www.urbanohio.com/forum2/index.php/topic,2706.2625.html#ixzz46UCnuhiH):

 

I've had good luck investing in single stocks, but I don't advise it for just everyone.  I really enjoy the numbers game, and I'm comfortable with financial statements and most of the fundamental value metrics (though when you start getting into the Greeks of options trading, I'm a little shakier).  I'm also a paid subscriber to the Motley Fool and spend a fair amount of time reading and learning there.  While it isn't quite at the level of a part-time job for me, I estimate I spend about 20 hours a month on portfolio management.  Not an inordinate burden, but most people won't even do that.

 

I've also looked at real estate investing, but that really did start to look like a full time additional job.  And at least one banker I spoke to about this when I was exploring it said that you really aren't going to get the kind of income that lets you quit your main job until you own something like 20 properties, and since I can't exactly make that happen all at once, there would at least be a while when I would own maybe two or three properties.  From the standpoint of a business owner, the notion of control is appealing, but from the standpoint of someone whose touchstone is equity security investing, real estate ownership and management is insane: you're sinking large sums of capital into highly leveraged, fixed, illiquid investments with ongoing carrying costs in the form of property taxes that have no stock portfolio analogue.

 

Given that I'm not particularly handy and therefore don't have much in the way of opportunity to add sweat equity to a real property portfolio (if only just to stave off actual depreciation, as opposed to tax depreciation), I've thus far told myself "no" on getting into this field, though I certainly might try it if my financial situation is better in a few years.  (Though of course, compound returns being what they are, the investment decisions you make young are far more consequential than the ones you make later.  Your choices at 25, when you're likely at your stupidest, are the most consequential, and your choices at 55 when you know better are too late to make much difference.  One of the greatest injustices of math.)

 

I agree with some of your sentiments but I also feel real estate investing has a lot of hidden potential for better growth than you can manage with stocks. I started investing in apartments 9 years ago starting with a duplex and have built up a decent sized portfolio. The reasons: 1) (and this is just my preference) is that you purchase a stock and, no matter how much you may do your homework, unless you have enough money to purchase a significant stake in a company, you are essentially a free rider and cant control the factors that would lead to the profitability of the business. In addition, you are at the end of the line to know when bad news happens because the larger institutional investors can move the market with their purchases a lot easier.  2) With real estate I have full control 3) Real estate is an inefficient market and you can use inside information to your advantage (this has helped us on a number of purchases) 4) Real estate is a great inflation hedge 5) There are tax advantages and shelters in real estate to help your returns that you cannot take advantage of in stocks. 6) I like owning a tangible piece of property where I can help make things better for my tenants by providing them a quality place to live and looking out for their interests. and 7) Your tenants will pay your mortgage for you.  Yes it is some work, but on every property we own or have owned, we are getting returns in the 25-50% on our money on a year over year basis when you factor everything else. I treat real estate like a stock in a mature corporation. It is essentially a dividend paying stock in a company that also has the ability to grow in value like a growth stock (if it is the right property) and if you plan right, can be sold with little or no taxable gain.

Did you hire a third party property manager? Are you doing both the office-management work and the maintenance work yourself?  Returns in the 25-50% range (especially towards the 50% level) sound too good to be true, honestly, but of course, if a lot of that is essentially a substitute for wage income realized in a different form (but ultimately flowing from either office work or maintenance work done in-house), then it sounds a bit more reasonable--but it goes back to what I said about it being essentially a second job.  My current 12-month stock market return is about 12%, but I'm not working anywhere near as hard to get that, and I also don't have the leveraged exposure of real estate.

We just hired a property manager for apartments but we had one for our commercial stuff a few years ago. We have never used a 3rd party firm because it takes away a lot of your cash flow.

 

When I say those returns, they were over a 5-6 year period and a return. Buying a cash flowing property at say an 8-11 CAP with around 20% down and a 20 year Amort. You can get a 20-25% return on your cash over that period if you manage it properly and work to raise revenues. Over 5-6 years you pay your principal down by 25-30% and if you raise your revenues by 20% you raise your sales price considerably too. This is how you can get those returns. Also, it can be done in a tax advantaged way too upon the sale. If you hire a 3rd party manager, it will eat away all your cash flow. We have our manager in house so the costs are much more manageable (we just pay her salary not additional profit margin for the manager).

 

Even before I hired a manager and had my day job, I never did any maintenance work myself, it was easier for me to get a handyman and pay them or a plumber to pay them to do the work than for me to do it. I outsourced lawn care. I did the leasing and often met people after work or on my lunch hour. I never took calls in the middle of the night and I very rarely had to do an eviction. Yes, it was an additional 5-10 hours a week as I got more units but I am sure you spend that much working on your stocks.

We just hired a property manager for apartments but we had one for our commercial stuff a few years ago. We have never used a 3rd party firm because it takes away a lot of your cash flow.

 

When I say those returns, they were over a 5-6 year period and a return. Buying a cash flowing property at say an 8-11 CAP with around 20% down and a 20 year Amort. You can get a 20-25% return on your cash over that period if you manage it properly and work to raise revenues. Over 5-6 years you pay your principal down by 25-30% and if you raise your revenues by 20% you raise your sales price considerably too. This is how you can get those returns. Also, it can be done in a tax advantaged way too upon the sale. If you hire a 3rd party manager, it will eat away all your cash flow. We have our manager in house so the costs are much more manageable (we just pay her salary not additional profit margin for the manager).

 

Even before I hired a manager and had my day job, I never did any maintenance work myself, it was easier for me to get a handyman and pay them or a plumber to pay them to do the work than for me to do it. I outsourced lawn care. I did the leasing and often met people after work or on my lunch hour. I never took calls in the middle of the night and I very rarely had to do an eviction. Yes, it was an additional 5-10 hours a week as I got more units but I am sure you spend that much working on your stocks.

 

The general rule of thumb is that the most you can manage yourself while keeping a full-time job is 20 units.  So that is some combination of houses and multifamilies.  But I talked to someone last year who works with a guy who self-manages 200 units! 

 

You touched on something in your post -- to get a property that requires minimal seasonal exterior upkeep.  So that means cutting grass and landscaping and then snow removal.  I lucked out and the first house I bought (where I live now) requires about 10 hours of exterior upkeep per year.  No lawn, no driveway.  Nothing grows in the back because it's shaded by much taller buildings on either side. 

 

 

I purchased multi-families, we are up to over 100 now but by 50 units it was becoming a stretch to manage by myself and maintain my day job. I probably could have done it, but it makes the process more challenging at the beginning when you bring on a new property. We also have a few storage and retail centers and the big thing I learned was that it is good to invest in a property management system semi-early on. The better you can systemize things the easier it is to scale.

I purchased multi-families, we are up to over 100 now but by 50 units it was becoming a stretch to manage by myself and maintain my day job. I probably could have done it, but it makes the process more challenging at the beginning when you bring on a new property. We also have a few storage and retail centers and the big thing I learned was that it is good to invest in a property management system semi-early on. The better you can systemize things the easier it is to scale.

 

Man - I want to get on your level!  That's great.  All I have is a 3,000 sf retail building and 2 single family owns, one of which I live in and and I am about to sell the other.  Looking at something next week though, so fingers crossed. 

I purchased multi-families, we are up to over 100 now but by 50 units it was becoming a stretch to manage by myself and maintain my day job. I probably could have done it, but it makes the process more challenging at the beginning when you bring on a new property. We also have a few storage and retail centers and the big thing I learned was that it is good to invest in a property management system semi-early on. The better you can systemize things the easier it is to scale.

 

What software do you use? 

 

 

For our apartments we just started using Buidium. It is a bit more robust than I really need right now (they cater to that 500+ unit market) but they were cost effective. Prior to that I used quickbooks and excel which was very effective for a smaller portfolio

Brutus, how long did you take to get to 100 units?  You mentioned 5-6 year returns but I gather that you didn't get into the property ownership/management business just 5-6 years ago.  Do you remember what your first 1-10 units were, how that grew in the early going?

Brutus, how long did you take to get to 100 units?  You mentioned 5-6 year returns but I gather that you didn't get into the property ownership/management business just 5-6 years ago.  Do you remember what your first 1-10 units were, how that grew in the early going?

 

I purchased my first 2 family in 2006. I used the proceeds and joined a partner to get a couple 4 families 2 years later. At the same time I had another partner where we purchased some 2 families on the cheap at UD to serve as student rentals. Pretty much, with the exception of small distributions, most of the income was reinvested in the next property to get a more critical mass. We have sold some small properties along the way and used the money to trade them for bigger properties that would produce more cash flow (and provide tax shelter).

 

I have had partners in these so I have not done this completely alone, so that has helped. We did not get to 100 units until this year (the 100 units is aggregate for me, as I have different partners for some of them)

 

I started out with 2 and 4 families because I felt I wanted to get a feel for multi family management (plus my funds allowed me to start there to minimize the risk) We bought properties for cash flow and had a few bumps along the way with some bad tenants but we learned that which has helped us on bigger properties. The bigger properties don't run much different than smaller ones (in fact they are easier because of the units are centrally located instead of spread out) but starting out with a larger place was also intimidating on a certain level too. It took me about 5 or so years to feel comfortable getting into larger commercial grade property.

 

With 10 units it typically involved about 1-3 hours of work a week. Again I did not do the repairs (I am pretty bad with a hammer anyway) and hired them out. Since I had a day job, I worked to schedule them when the tenant would be home to take care of it, and I would just take care of the bill. As you get more tenants, you have more requests and more time involved.

So were you trying to stay in certain neighborhoods or did you simply go after the best deals that you could find when you had sufficient funds to buy another building? Do you have a mix of cheap and more expensive housing or have you stayed with the same rent level? 

Brutus - if you don't mind my asking, do you finance your properties or buy cash?  If finance, 80% debt typical on them when purchased?  Any preferred lenders you work with?

Loving this thread. I recently purchased rental property in Collinwood. Looking to get into multi-family properties.

Loving this thread. I recently purchased rental property in Collinwood. Looking to get into multi-family properties.

 

Agreed.  Who knows, maybe some of us will go in on a property together someday?

Brutus - if you don't mind my asking, do you finance your properties or buy cash?  If finance, 80% debt typical on them when purchased?  Any preferred lenders you work with?

 

To answer your question, we typically purchased 20-25% down and financed the rest. I prefer to finance my properties because you get a better ROI that way (I never do 100% financing that is not very safe)

Sometimes we purchased on land contract with owner financing where we could secure good deals. Otherwise, we typically have used bank financing. For 2-4 family properties you could get traditional 30 year home loans from Fannie or Freddie. I have heard that Fannie and Freddie are trying to phase out of this product on the 4 family side so these loans may not be as readily available and if they are I hear they are requiring 30% down. If you go this route, it really does not matter what bank you go with because they sell it to Fannie or Freddie anyway.

 

 

For larger properties, you want to use a local lender. Never use a big bank (like 5/3, USBank, PNC, Key, Huntington, etc) because their underwriting sucks and you cannot get as good of terms. They really don't want to work with you on this. Use one in the local area where the building is located. If you are buying in Wooster, OH, use a Wooster based bank. Small local banks are better because they make decisions quickly and can move through underwriting quickly. In Cincinnati, for a couple properties, we have used a bank called Valley Savings out of Reading. They are a one branch bank, but they are good at lending on investment real estate. They make decisions quickly and have good terms. We looked at a property in Adams county a year ago, and if we would have purchased it we would have used the local lender out there because they were familiar with the property. This is the key to getting the best terms on a loan for an investment property. 

 

Jake - to answer your question, we did target properties in stable working class areas of Cincinnati (Deer Park, Cheviot, Norwood, Pleasant Ridge, etc.) but it really does not matter.  We do not have the money to compete for the luxury class apartments, but there are plenty of nice apartments that are older that cater to middle class and working class individuals. The key is buying for cash flow. The riskier the property, the better cash you will make on the property. People who are buying in Westwood, or some areas of Price Hill make a great return if they manage it right, however, they are likely to have additional costs and more collection issues because of the area of town. That being said, if you price that factor into the deal, it is still able to be a successful venture. Another thing about that is on those properties, Section 8 is a good program to be involved with because you have decent tenants and 2/3 of your rent will always be deposited on day 1, which means you only have to track down a little bit. Also the tenants are good payers for the most part because if they default they get kicked out of the program. I do not do much section 8. I have done some in the past. I have a number of friends who love the program and rent most of their units this way.

 

I know you have places in Clifton. College property is very good and Clifton will always be a good location because there is always people looking to rent there. If you have 7-10 houses there, you can make a decent return, so long as you purchase them right with cash flow in mind. If you go outside of Clifton, be careful on certain neighborhoods. Norwood has inspection ordinances and taxes that make it a pain. NKY has some rules regarding trash collection taxes on apartment owners and pet liability that make it tenuous there right now. However, there are plenty of good areas in Cincy to invest if you find the right place.

What exactly does Norwood require?  I ask because my dad has one under contract there as we speak and I was unaware of any special issue.  I think the area between Reading and Carthage and north of the Lateral could get some of the spillover from Oakley at some point.  Nobody is paying attention to that part of town because it suffers from the Bond Hill/Norwood stigma, but the neighborhood is pretty well intact and is cheap, cheap, cheap.  I talked to a guy about two months ago who got a house there that needed no work for $16,000 in 2010. 

I think Norwood and Pleasant Ridge are good neighborhoods for growth long term because of the spillover effect you mention. Also, Norwood has Xavier and its path of growth moves toward Norwood. My issue with Norwood is that their city council wants to try and balance the budget often on the backs of landlords. They like to do mandatory inspections of rental property to make sure you do not have a 10 people in a 2 bedroom apartment or house. They charge the landlord for these inspections and will fine you if you are not in compliance. That is my beef with Norwood.

 

I like Pleasant Ridge from their spillover from hyde park/Oakley. Fairfax has good potential too. If you are a little bit riskier, I would even consider Madisonville. If you look at it, Madisonville is surrounded by Oakley, Mariemont, Indian Hill, Kenwood, and Hyde Park.  As all these areas get more expensive, this is a prime area for gentrification because it is in the city, and presents more affordable property than the other areas, and it allows people who want to live near those areas an option that may be more affordable. That is just my opinion though.

Loving this thread. I recently purchased rental property in Collinwood. Looking to get into multi-family properties.

 

Have you thought about joining your local REIA. The Cleveland chapter was not very busy but has been re-constituted recently and they are starting to be much more active. They teach a lot of different things from wholesaling, fix and flipping, landlording, rehabbing, etc. They also teach you how to do owner financing and also other creative strategies to acquire and sell property.  I know the Cincinnati and Columbus chapters are very active. Cleveland is getting back up on its feet again but from what I hear starting to do good things.

I think Norwood and Pleasant Ridge are good neighborhoods for growth long term because of the spillover effect you mention. Also, Norwood has Xavier and its path of growth moves toward Norwood. My issue with Norwood is that their city council wants to try and balance the budget often on the backs of landlords. They like to do mandatory inspections of rental property to make sure you do not have a 10 people in a 2 bedroom apartment or house. They charge the landlord for these inspections and will fine you if you are not in compliance. That is my beef with Norwood.

 

I like Pleasant Ridge from their spillover from hyde park/Oakley. Fairfax has good potential too. If you are a little bit riskier, I would even consider Madisonville. If you look at it, Madisonville is surrounded by Oakley, Mariemont, Indian Hill, Kenwood, and Hyde Park.  As all these areas get more expensive, this is a prime area for gentrification because it is in the city, and presents more affordable property than the other areas, and it allows people who want to live near those areas an option that may be more affordable. That is just my opinion though.

 

Perhaps Norwood's financial picture will improve with the opening of the stuff at Rookwood and on the Lateral.  But I am not personally opposed to that sort of inspection in theory, but the specifics might be obnoxious.  No doubt a cursory inspection of what is going on around UC would reveal tons of people living illegally in basements, on enclosed porches, in attics, in garages, etc.  Also, there needs to be an incentive in place to encourage property owners to insulate their rentals.  Sometimes attic insulation can be very, very expensive because the house must be rewired first.  That can turn a straightforward $2,000 insulation job into a $7,500+ hit. 

 

I don't claim to have a special insight into which Cincinnati neighborhood is going to be "the next Oakley", or even the next Northside.  The later could be perpetually cheap Spring Grove Village or more likely St. Bernard, since it has a real business district.  Nice houses are ridiculously cheap in Price Hill but there's no telling when it actually turns around.  It's actually very close to downtown (2-3 miles) but a lot of the nice houses are right next to problematic apartment buildings. 

I think Norwood's main concern is Xavier students which is the need for the inspections. Some of these rules are legit from the cities but there are cases going around that challenge their ability to do this on Federal Fair Housing Guidelines. There is a case in Portsmouth where landlords sued the city in Federal Court a year or so ago fighting many of these types of provisions and the courts ruled in favor of the landlords that the city's policies were discriminatory.

http://regoddess.com/so-now-i-have-to-rent-to-felons-what-the-new-hud-rule-actually-says-about-applicants-with-criminal-records/

 

Interesting post about new HUD rules for screening tenants. IMO, I agree with her take on this. This is how we screen for qualified tenants. I am not overly concerned with someone who was convicted of a crime 25 years prior, has paid their debt, and led a clean life since then.