Cash Flow in Cleveland

We Found A Keeper

For those of you who have been following, we've been acquiring quite a few assets in the state of Ohio. Even though I was born and bred a Texas Ranger fan, I'm definitely cheering for the Indians at the series. Last month we closed on five mortgage notes and contracts for deed in the Midwest. We found this sweet little duplex in West Cleveland. It was on a tape that I was perusing and I asked my realtor about it. She told me to get it. She even went by the property and got the lowdown from the neighbors. She saw the new Montessori school around the corner. She also saw half a dozen construction jobs going on one street over. So when I was told that I could pick up this note for $10,000, I was elated and put my bid in. Then someone else snagged it from us. A few weeks passed and guess what showed up on the next tape. The duplex in West Cleveland. We decided to pay a little bit more for it, so we bid $12,000. Then the whole tape was locked up by a big buyer. Turns out it was a big buyer without any money because in the end we closed on this asset at the end of September. There is one more tidbit of information on this property. The borrower passed away sometime last year and there is not an estate. Mediation has already been done and it has been cleared for foreclosure. Isn't it great what you can find on the public records at the County of Cuyahoga. That's what due diligence is all about. You gotta get up close and personal with your notes. So once the assignments are done, our lawyer says we'll have the property in about a month. Now here is the breakdown of what makes this so good. 
Investor contribution is $23,450. Rents are $750 each in an upward trending neighborhood. If we annualized that and take out expected costs, we are left with close to $11,000 in profits. We expect some rehab work to make it a solid property, but even with those costs, we anticipate over a 30% ROI for year one. Year two profits are close to 50%. Nothing but cash flow. This property will stay on our books for quite some time.

 We are always looking for JV partners.

If you want to learn more about a Joint Ventureship



Type: Nonperforming 1st Mortgage
Property: Duplex 2 x 2/1
Fair Market Value: $35,000
After Repair Value: $55,000
Unpaid Balance: $48,000
Monthly P&I payment: $250
Investment: $23,450
Monthly Rent: $750 x 2
Unpaid Taxes: $2,240

Summary of investment opportunity:

We are buying this asset from a hedge fund. This is a 1st position mortgage for a Duplex in Cleveland. The property is a 4 Bedroom, 2 Bath, 1324 sq. ft. house built in 1928. It is located in an upward trending neighborhood with lots of rehab construction in the area. 

We'll have to foreclose on this property as there is not an executor, however most of the process is already completed. We do not anticipate it to be contested. The property is occupied by tenants. The expected ROI for year 1 is close to 30% because of rehab. Year 2 and beyond we expect closer to a 50% ROI.

 We are always looking for JV partners.

If you want to learn more about a Joint Ventureship