How To Analyze a Rental Property (Cleveland Duplex Example)
Episode Summary:
Investing in rental properties can be life-changing—but only if you know how to analyze a deal correctly. In this post, we’re diving deep into a real-world example of analyzing a rental property in Cleveland, Ohio. Whether you're a first-time investor or a seasoned pro, this guide will teach you how to break down the numbers, assess market trends, and determine if a property is worth the investment.
Why Cleveland?
Cleveland is an attractive market for investors due to its affordable property prices and strong rental demand. However, not all neighborhoods are created equal. Areas like Lakewood and Parma offer great rental opportunities, while others require careful due diligence to avoid potential pitfalls.
Key Takeaway: Define Your Buy Box
Before analyzing a property, you need a clear “buy box”—the specific criteria for the type of property you want. For this analysis, we focused on multifamily properties in the $150,000 to $200,000 range, targeting B-class neighborhoods with good schools and stable renter pools.
Qualitative Analysis
We started by pulling up the property’s listing on Redfin and conducting a street-view analysis. Does the area feel safe? Are neighboring properties in good condition? For our example, we found a four-bed, two-bath duplex built in 1973, located on Cleveland’s west side. The property showed promise, but we noted concerns like a boarded-up house next door.
Pro Tip: Work with an investor-friendly agent familiar with the market to evaluate neighborhoods and avoid bad deals.
Deal Analysis
Once the property passed our qualitative review, we dove into the numbers using my custom-built rental property calculator (available for free download). Here’s a snapshot of our analysis:
Purchase Price: $190,000
Down Payment (25%): $47,500
Estimated Monthly Rent: $2,100 (two units at $1,050 each)
Key Assumptions:
Property taxes will increase after reassessment.
Operating expenses include reserves for maintenance, vacancy, and capital expenditures (4% each).
Rent growth: 2.5% annually.
Initial Results:
In year one, the property broke even after accounting for expenses and reserves—a solid outcome for a newer property in a stable neighborhood. While the cash-on-cash return wasn’t stellar, the long-term ROI, including debt paydown and appreciation, was over 11%.
Lessons Learned
Be Conservative: Always overestimate expenses like property taxes and repairs. This prevents unpleasant surprises and ensures your investment is sustainable.
Long-Term Perspective: Year-one cash flow isn’t the whole story. Focus on how your property will perform over 5, 10, or 20 years.
Leverage Local Experts: Partnering with an experienced agent can save you time, money, and stress.
Final Thoughts
Analyzing a rental property doesn’t have to be overwhelming. With the right tools and approach, you can confidently evaluate opportunities and build a portfolio that generates wealth for years to come.
Want to Take the Next Step in Your Real Estate Journey?
If this post resonated with you, let’s connect! Find me on Instagram @cashflowsaga to chat about your financial freedom goals—I’d love to help however I can.
Looking for more resources? Download my free investing tools or explore my 1:1 coaching program, Rental Property Investing 101, to fast-track your success.
Stay committed to the journey, my friend. Your future self will thank you! 🚀
