Is Cleveland The New Phoenix For Wholesaling Houses?
Is Cleveland, Ohio replacing Phoenix, AZ as the next hot and most profitable destination for wholesaling houses?
Phoenix, Arizona quickly rose out of the ashes of the foreclosure crisis and attracted global investors and huge hedge funds seeking to capitalize on the discounts on bargain priced foreclosure homes. This put the city firmly on the real estate investment map as one of the hottest markets for flipping houses.
Since then some have claimed the Phoenix, AZ market has been cooling to a more moderate speed as giant private equity and flippers have moved on and distressed inventory appeared to be shrinking dramatically.
Most recently Ohio has been frequently coming up in real estate circles. Many are dubbing the state as the next hot identify for wholesaling houses and a great choice for out of area investors. So what’s really so attractive about Ohio real estate?
There are two big draws to Ohio for real estate investors today. The first is a desire to seek out greener pastures before the big money private equity firms and hedge funds swoop in, jack up prices, create insane bidding wars and pick the market clean of deals like vultures. While these firms with bigger pockets are nevertheless focused on Atlanta and Chicago, Ohio cities like Cleveland could be open for smaller investors.
The second part of this is finding bargains. Southern California, New York and Miami may be rebounding but spreads and inventory has been shrinking. According to a new report from Distressed Pro Ohio edges had $2 billion in bank owned REOs and tens of billions in defaulting residential mortgage loans in the third quarter of 2013. This presents one of the largest pools of opportunity for real estate investors anywhere. And certainly some very sizable discounts and spreads too. Some experts claim homes here are nevertheless selling for 50% less than their past highs.
What makes Cleveland in particular attractive to many out of area investors is the city and county’s current efforts to turn the area around, keep character prices protected and avoid becoming another urban wasteland. This method billions being invested in redevelopment, new checks and balances being implemented to protect buyers, sellers and investors and ensuring contractors are living up to their responsibilities.
The downside of this can be too many regulations and constrictions for some of those wholesaling houses. Fortunately there are nevertheless deals all over the country if investors know how to look for them. Some Arizona analysts already predict the city is just revving up for round two and the biggest growth spurt in addition.