As the end of 2017 approaches, investors will be starting to plan out their strategy for the New Year, from where to sell and when to buy. This year, the USA has remained the number one destination for overseas investors on TheMoveChannel.com, receiving more enquiries than any other country. While that has been primarily driven by the familiar markets of Florida and Detroit, with demand also climbing for Texas, Philadelphia, Chicago and New York, one rising star to watch for in 2018 may be Cleveland.
The state of Ohio was the seventh most popular state in 2017 on TheMoveChannel.com, with our research revealing that enquiries for property in the area doubled in Q2 2017 compared to Q1. Since then, interest has dipped, but begun to rise once more as the end of the year approaches.
Part of the USA’s appeal to British investors, despite the weak pound against the dollar, has been the more welcoming investment conditions: in the UK, tax changes and rising house prices are squeezing buy-to-let margins. New research by Totally Money ranked Cleveland in the UK as the fifth highest-yielding postcode in Britain, behind Liverpool and other regional towns, but Cleveland’s namesake in the US may well prove more favourable, and more profitable.
Located in Northeast Ohio on the southern shore of Lake Erie, Cleveland is often known for its famous sports teams and continues to expand and develop its riverfront. Its job market, too, continues to grow with a sizeable push from the health care industry, as well as large companies such as Cleveland-Cliffs Inc. Forest City Realty Trust, KeyBank and NACCO Industries.
Indeed, the city is home to the HQ of 11 companies on the Fortune 500 list, both industrial and non-industrial. With unemployment at a 10-year low, an above-average GDP per capita, 27 colleges and universities in the area and tourism attractions that include numerous sports teams and the Rock & Roll Hall of Fame (543,000 visitors in 2016), the result is a housing market with a 95 per cent occupancy rate in downtown Cleveland, according to the Downtown Cleveland Alliance.
While there are higher-yielding hotspots in the USA, Manchester-based firm Global Investments Incorporated highlights Cleveland as a “balanced investment that provides steady cash flow”. Alongside reliable rental demand, the city also promises stable capital growth, with prices rising 4.3 per cent year-on-year in September 2017 to an average of $172,910, according to the Ohio Association of Realtors.
The key to success in Cleveland, though, is choosing the right neighbourhood: with the correct part of the city, investors can earn up to 10 or even 25 per cent on a rental investment, says Global Investments Incorporated CEO Mike Moodie.
The firm has been trying to find a good supply of income-producing homes for some time.
“It is really important that we do our due diligence on the supplier and also the areas and neighbourhoods that the properties are in as there are many companies out there with a lot of stock but in the wrong type of neighbourhoods,” Moodie explains.
Now, the company has teamed up with Keller Williams to bring “a consistent supply of good homes in good neighbourhoods to the market”. The homes are updated, the tenants are vetted.
“Our partnership enables us to deliver exclusive properties not for sale anywhere else and that will start around the $20,000 price range. These properties will give our investors net returns of between 18 per cent and 29 per cent,” he adds.
As the end of the year looms, Cleveland’s confidence remains strong: 37 per cent of Realtors in Ohio say they are seeing an increase in demand from consumers wanting to rent property, while 47 per cent say it is staying the same – only 16 per cent say it is decreasing. 62 per cent of Realtors also expect house price of 0 to 5 per cent over the coming 5 years, with 20 per cent expecting house prices of greater than 5 per cent.