SARTRE took a position in Cuyahoga County (Cleveland Area) residential housing for the following reasons
- Case-Schiller studies showed foreclosures could be purchased at an average of 39% discount to retail re-sales.
- Virtually no new home construction exists in this region.
- Realty Trac statistics demonstrated the “Shadow inventory” (loan delinquencies moving toward pending foreclosures was five times LOWER than in Las Vegas, the largest relative “shadow inventory” in the country. This relationship should afford some price stability.
- The Cleveland Clinic, one of the nation’s premiere hospital complexes, provides a stable employment base and demand for housing within the city. Six local universities also support the market.
- Local municipal escrow deposits are required for renovation. The additional capital requirement creates a barrier to entry for most local, lesser capitalized competition.
In 2009 and 2010 a team was formed and committed to this effort employing dozens of licensed contractors and sub-contractors to facilitate SARTRE’s goals. At time of inception approximately 10% of SARTRE’s resources were deployed towards this opportunity.
This effort was initiated as a short-term buy and sell strategy. As the rental market strengthened throughout 2010, SARTRE has applied its attention toward longer term investments focusing on multi-family and student housing income opportunities.
We continue to explore possibilities surrounding income producing real estate in Cuyahoga County, as we have formed strong relationships with municipal development interests. Cleveland is a “diamond in the rough” for SARTRE, and good opportunities are still available in this region.