Single Family Rental Market in Q3 2016 SINGLE FAMILY RENTAL MARKET IN Q3 2016

rehab is $20,000,” he said, adding that in parts of the inner city and on the east side properties can be purchased for $1,000 or less. “You can buy houses for such a small amount of money and in some cases they need $5,000 to make them livable.” Forgotten Neighborhoods Stark said investors willing to bet on some of those down-and-out neighborhoods could realize a big payday down the road. “The great opportunity is to find the two or three pocket neighborhoods. … neighborhoods that are forgotten,” he said. “Work with the community, work with developers. If you picked the right pockets you will have hundred thousand dollar properties. Someone is going to make millions of dollars this way.” Stark, a longtime member of the Cleveland Restoration Society , said many of the forgotten Cleveland neighborhoods have solid, historic homes just waiting to be discovered. “There are many neighborhoods with beautifully built three- and four-bedroom colonials … that have good hardwood floor and have good roof structure. … The bones are there — just waiting for the flesh to come alive,” he said. “It is happening in some neighborhoods. Usually it’s a radiation out from an existing, viable neighborhood. … starting to annex a forgotten neighborhood to a gentrified neighborhood.”

Potential Annual Gross Rental Yields



Pct Investment Homes 2.0%

20.0% 40.0% 60.0% 70.2%

Click to view interactive visual

Meanwhile, the potential gross annual rental yield on a Cuyahoga County single family home purchased in 2016 is 11.5 percent, ranked No. 56 out of 473 counties analyzed nationwide in the ATTOM Data Solutions Q3 2016 Single Family Rental Market Report . The potential returns can vary widely even across the county thanks to widely disparate home prices, according to experts. “It’s one of the best and worst things about Cleveland,” Stark said of the cash flow opportunities available in the area, explaining that the low values are a reflection of a market where many properties have not recovered value lost during the downturn. “Home owners

need to be able to buy and see their home values rise consistently over time, as they do in stronger markets. All of these things will happen as the Cleveland area continues to realize economic and job growth.” Stark noted that unlike most other markets across the country, the purchase price of a typical Cleveland cash flow rental property is substantially below the cost to rehab that home into rent- ready condition. “Properties need so much rehab here because of … the need for modernization. You buy here for 20 grand and rehab for 40 grand. I see loans in other markets where the loan is for $300,000 and the

ATTOM Data Solutions • P21

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