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ADVANCE TO GO….

“Advance To Go” Monopoly & Real Estate

Just like there are many ways to skin a cat and in buying investment homes there is more than one way to “Advance To Go” and accumulate cash. One of our house rules of Monopoly is that you can’t purchase properties until it’s your second time around the board (it’s a thing, look it up). Since it’s our second blog we thought we’d talk more about buying strategies with your $30K.

Park Place Strategy: Our Park Place Strategy is to buy a single family or two-family home for the optimal $30K and start earning revenue. Like Park Place in Monopoly, we’re assuming an opportunity to buy this property has not left you much cash to acquire another home in the short term, but steady rent should put you on a path to be able to purchase your second home.

 Connecticut Avenue Strategy: Our Connecticut Avenue Strategy is rooted in the idea of using your $30K investment to buy multiple homes. While it is not easy to find lenders that write mortgage loans under $50K, it can be done at certain credit unions and banks. Funding aside, the current Cleveland real estate market dynamics allow potential investors to purchase a rent ready multi-family and/or single family home for $40K. If we assume a required 25% down payment at $40K for each investment property, then the down payment for all three homes will be $30K or $10K per home.

Fact: In Ohio, you’re allowed to have up to four mortgages in one person’s name

Baltic Avenue Strategy: Let’s be honest, as the cheapest property in the board game, Baltic Avenue is not the sexiest property in Monopoly but we have all lost to that person who was thinking “cash is king” (save money) and manages to also buy Mediterranean Avenue and build homes and accumulate cash quicker than any of us playing the game. Our Baltic Avenue Strategy is primarily based on the premise of you becoming an owner-occupant of one of the multiple homes you buy to take advantage of having a minimum down payment of 3.5% compared to 25% as an investor. Hypothetically, you would only have to put down $1.5K on a $50K mortgage loan and can move out in one year, if you choose. What do you do with the other $28.5K? Perhaps, save another $1.5K and do our Connecticut Avenue Strategy or only get a loan for one more home and relish the opportunity to have more cash readily available for property expenses. The bottom line is that there are a multitude of ways to “Advance to Go” and we hope you don’t take longer than that drawn-out Saturday night game of Monopoly with siblings who cheat or make up rules (we all have at least one in the family). Good luck and talk to you soon!

Helpful Link: HOW TO FIND SMALL HOME LOANS UNDER $50K

 

 

30 is the MAGIC Number

30 is the “Magic Number” when looking for investments in Cleveland

When speaking with potential investors about getting involved with the Cleveland real estate market we’re repeatedly faced with similar questions. However, the top inquiry we receive is how much money does an investor need to buy a multi-family home that is a worthwhile investment in the Cleveland metropolitan area? Indeed, most investors that want the highest cash flow will opt to purchase multi-unit homes because they usually yield a gross rent of $1k-1.2k/mo. (this is non-section 8). While our “Magic Number” is not the hard rule for every property in the area, based upon our experience and the inventory available in the market, we believe $30k is the optimal benchmark for property investments in the Cleveland market.

The breakdown of your $30k investment can be separated many ways. An easy way to think about your cash outlay is either you will buy the home for $20k and spend $10k on the rehab or buy the home for $10k and spend $20k on the rehab. Said differently, however you slice your home purchase to renovation cost ratio, $30k should be the whole pie of the total payout needed to have your home ready to start generating revenue! The bottom line is $30k should get you a house on an optimal street, with updated electrical, plumbing (pcvc or pex), newer roof and mechanicals (furnace and water tanks) (see photos below). Our next blog will be on the current market dynamics of why we believe it’s better to buy and hold than buy and flip in Cleveland.

The collage represents images of available homes that we believe fits within the framework of our tried but hypothetical investment scenario.

*New Roof *Vinyl Siding * New Water Heater *New Furnace *Updated Electrical Panels

Fun Fact: According to Freddie Mac’s 2017 outlook, with employment growth higher than population growth and wages rising, demand for multifamily units will remain robust. Rents will grow at a pace in line with 2016’s rate and remain above the historical average in 2017.

Source: Multifamily 2017 Outlook: Positioned for Further Growth

Forward

….because WE just wanted to build something. As cliche as that may sound, it is the TRUTH. Nine months ago, we didn’t exist, but BLESSED with opportunity, focus, and a tenacious work ethic we soon realized our potential to be a powerhouse. We didn’t make a conscience choice to make this our PASSION, it just took over. How did this happen ? Why did this happen? Perhaps it was the chilled gaze of doubt and skepticism on the faces of loved ones after declaring we were starting a company; maybe it was the trials of hasty tenant placement that led to the “first name basis” greetings with eviction bailiffs. Hell, it could’ve been the time we stayed out til 3am working in feces to service a sewer maintenance issue. Either way, there comes a point when you know you’re in it for the long haul and as a result, you thrive off the resolve it takes to make the VISION an unyielding guarantee. Today, we would say that unyielding guarantee birthed our PASSION. Out of that PASSION comes the DESIRE to always want to learn more as well as help colleagues and novices grow with US. Ultimately, that is the purpose of this blog; to not only GROW as a brokerage and property management company, but to inform and SHARE with the entire Real Estate Community. OUR belief (and entire life experience) has always been about how MONUMENTAL collaboration can be. With the sturdy foundation of the right TEAM, who knows what we could create.      Why not a Legacy? Why not a MONUMENT….

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