Why Invest in Cleveland in 2019?

Cleveland Price-to-Rent Ratio Among the highest in the country

The Price-to-Rent Ratio (P2R) is the ration of cost of a property (price) vs the Rent that same property would earn.  To put it simply: in the Greater Cleveland investment real estate market you’ll get more return (rent) on your investment dollar (price) buying investment property here than anywhere else in the country.

Rapidly Increasing Prices & Appreciation

While the Coasts and primary markets across the U.S. have reached their pre-recession peak real estate values, and in many cases have far exceeded those past peak values and are incredibly over-heated markets, Cleveland is just getting warmed up!  What has been long favored as the fundamental real estate investment haven for cash-flow is now also being regarded and a great place to substantial appreciation due to the timing of a later-than-most market correction!

January 7, 2019 – Forbes article describing attractiveness of Cleveland real estate in 2019, click here to read their article.

From Cleveland.com

“After 12 years underwater, house prices in the Cleveland metro area finally are nearing their pre-recession peak, according to nationally watched real estate indices…”


“… Compared with a year before, Cleveland-area prices were up 5.1 percent in June. That compared with a 6.2 percent annual gain nationwide. Chicago, New York and Washington, D.C., posted slimmer growth than Cleveland.”

From Cleveland.com

“After 12 years underwater, house prices in the Cleveland metro area finally are nearing their pre-recession peak, according to nationally watched real estate indices…”


“… Compared with a year before, Cleveland-area prices were up 5.1 percent in June. That compared with a 6.2 percent annual gain nationwide. Chicago, New York and Washington, D.C., posted slimmer growth than Cleveland.”

 20/20 Real Estate's  Cleveland  Site Map

Cleveland Welcomes Two New AMAZON Locations!

Growth is being fueled by investments such as Amazon’s two fulfillment centers totaling 3,000 brand new jobs right in the heart of our Turnkey Operating Areas!

  • New North Randall location (Maple Heights / Warrensville Heights, Bedford Heights) with more than 2,000 brand new jobs!
  • New Euclid location (Euclid / Cleveland Heights / Richmond Heights / South Euclid / Wickliffe / Willowick / Eastlake)
  • Amazon has announced plans to open its fifth fulfillment Center in the Buckeye State, this one will be built in Euclid.
  • Amazon has committed to opening a massive fulfillment center in the Cleveland suburban village of North Randall, where more than 2,000 people could find jobs.

AT 20/20 REAL ESTATE, WE SUPPLY CLEVELAND AND AKRON TURNKEY PROPERTIES IN THE THREE BROAD DEMOGRAPHIC LEVELS:

Class A investment properties typically range in price between $100,000 and $175,000 and are located in suburbs where the neighborhoods are predominantly owner occupants and are in better school districts.

Class B turnkey rental properties typically range in price between $65,000 and $100,000 and are located in suburbs where the neighborhoods are a mixture of tenants and owner occupants.

Class C real estate investment properties typically range in price between $30,000 and $60,000 and are located in suburbs where the neighborhoods are predominantly tenant occupiers in subsidized housing.


CLASS A RENTAL PROPERTIES

Location: Suburbs where the neighborhoods are predominantly owner occupants and are in better school districts.

Property Values: Typically range between $100,000 and $175,000.

Monthly Rents & Cap Rates: Rents range from $1,200 to $2,000. Cap rates typically range between 8-10%, with higher cash on cash return when leverage is applied.

Refurbishments: Finishes are of a higher quality to suit the occupant level and demographic.

Tenant Pool: Tenants in these residential investment properties are often  middle-class families with above average income. Class A tenants tend to be very stable, non-transient and tenancies are often renewed over many years.

Financing: Our Preferred Lenders currently offer financing on Class A assets.

Exit Strategy: These tenants can typically qualify for mortgages and thus be converted to end-buyers. Lease-option strategies are also popular and such arrangements present a mutually beneficial strategy for both parties. Alternatively, upon turnover, Class A assets can be prepared for retail sale and so achieve top market sale prices.


CLASS B RENTAL PROPERTIES

Location: Suburbs where neighborhoods are a mixture of tenants and owner occupants.

Property Values: Typically range between $65,000 and $100,000.

Monthly Rents & Cap Rates: Rents range from $850 to $1,200. Cap rates typically range between 10-12%.

Refurbishments: The value added work and finishes are of a higher quality rental grade. We systematically use the popular paint color, carpets, flooring, finishes, etc, on all Class B assets - which helps to attract good tenants and fast tenant placement.

Tenant Pool: Often lower middle-class income level families. Occupants are non-transient, where tenancies average 3+/- years. Tenants in these turnkey rental properties are often middle-class families with average income levels. Class B tenants tend to be non-transient.

Financing:  Our Preferred Lenders currently offer financing on most Class B properties.

Exit Strategy: Class B assets are investor favorites due to their location in solid neighborhoods and the relatively high local rents that they command. By the very nature of their performance, these assets will continue to be popular and the rental returns can attract other investors at market prevailing cap rates in years to come. Also, as lending guidelines continue to loosen, this tenant base may also convert to first time buyers, as a mutually beneficial exit strategy.

Lease option strategies can apply.


CLASS C RENTAL PROPERTIES

Location: Neighborhoods which are made up predominantly of tenant occupiers.

Property Values: Typically range between $30,000 and $60,000.

Monthly Rents & Cap Rates: Rents range from $650 to $900. Cap rates typically range between 12-14% or more.

Refurbishments: Mechanicals and major items are typically addressed. Finishes are of lower quality rental grade – enough to pass a section 8 government housing inspection.

Tenant Pool: Tenants in these rental investment properties a often low income and government subsidized.

Financing: N/A. Cash only.

Exit Strategy: Class C assets typically offer the lowest entry price and can offer the highest cap rates, if managed properly. As such, they can attract investors at market prevailing cap rates in the future.


WHAT ABOUT PROPERTY MANAGEMENT?

The key to a successful real estate investment, particularly for busy professionals and those who are distant owners, is to contract a property management company that delivers exemplary services. A good management company helps to maximize the investment return by identifying appropriate rents, aggressively advertising properties and utilizing robust tenant screening processes. Expert property management service will also help to navigate state landlord/tenant laws. State of the art management software systems are a huge advantage to property owners, especially with regards to professional monthly and year-end reporting.

We have teamed with such a property management company in Cleveland, Ohio and management reports can be obtained remotely online via a dedicated User portal. As real estate investors ourselves, we also understand and require the peace of mind that comes with effective property management. Our properties are currently managed by this management company and their services are certainly available to anyone who wishes their management to continue upon transfer to new ownership. Uninterrupted management services are also important as in most cases the tenants residing in the properties are unaware of any change in ownership – their contact remain the same.

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