Cleveland is not the “Mistake by the Lake” – It is the Opportunity on Erie!

February 13, 2013 — Leave a comment

Last weekend, I spoke at the Tax Free Wealth weekend seminar sponsored by Equity Trust and the Great Lakes REIA.  I have to admit, this was the first time I had been to Cleveland, and I was not too excited to go there in February.  The thought of flying to the Great Lakes region during a massive East Coast blizzard was not appealing to this Texan.

As I do before I go to any new market, I hopped online and started researching the market.  Sales volume is down, the average price is down, but the median home price is up.  I have always focused on the Median Home Price above all indications.  The Median home price tells you if people are paying more.

Then I started to look at the outlying suburbs.  I learned this a long time ago.  Although the population of the City of Cleveland has decreased significantly since the economic downturn, the MSA as a whole is only down half a percent.  What this tells me, is that the demand in the area has not really changed, the location of the demand has moved.  As a real estate investor, this is the magic pill.  You see, success in real estate comes from an understanding of supply and demand.  If you are going to try to fix and flip, you need to understand the retail buyer (demand).  Then you need to find the supply (houses) that the buyers are looking for.  You can simply find the product, rehab the product to a level the buyers expect for that area, and then market it towards the demand.

All of this about supply and demand was spurred by a conversation I had on Friday with an investor that had fallen on hard times.  We were meeting to discuss how we could work together to build out my HomeVestors team in Cleveland.  After the first ten minutes, I knew he wasn’t my guy.  He spent our “get to know you time” telling me how bad Cleveland was, and all of the problems.  He told me about the population decrease of the inner city, and the problems you have rehabbing houses in the Inner Ring Suburbs.  I listened, took notes, and then gave him the solution.  I said, “Buy somewhere else”.  He looked at me, almost confused.  It was as if he was only focused on the problems in areas that he was once successful in.  He allowed this to create a negative projection about the market, and the possibilities.  I pulled out my iPad, and showed him some of the suburbs I had found that had done nothing but increase in value, even in the housing crisis.  He was bewildered.  He said, “Sure, those are hot areas.  You can’t buy houses there”.  After that statement, he and I were done.

You see, I am an achiever.  I believe anything can be done, with focus.  I believe in marketing to find houses by diversification.  At HomeVestors, we use billboards, TV, internet, and direct mail in conjunction with each other.  It is difficult to control where the mass media generates a lead, but direct mail can be easily targeted.  I challenge you to find WHERE your investment strategy can succeed, and then focus you advertising there!  Don’t admit defeat before attempting to achieve victory.  If you never start, or try, you will never get where you want to be.

TimHerriage

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I started at the bottom, worked hard and am now one of the top Real Estate Investors in the business. I learned from some of the best, excelling early as an acquisitions manager and then moved on to partner with other skilled investors to create my own portfolio of productive rental properties and later to mentor others to do the same. I am still actively involved in Real Estate, giving a current awareness to the training I share. My wife, Jennifer, and I live in Rockwall with our sons, Alex and Will.