My brother-in-law, Bob, and I are friends, but there’s always that little edge in our relationship that you can have with in-laws. So, when my real estate investments in Cleveland came up at our family holiday dinner, I knew he was going to grill me thoroughly about the subject. And, of course, he did. It’s true that Cleveland’s real estate market has had a bad rap in recent years, and rightly so, but the city’s economy is poised for a comeback. As a result, this is a great time to start investing in distressed real estate. And, I was prepared to give him five solid reasons why real estate investing in Cleveland, Ohio is what he should be doing, too.

Real Estate Investing in Cleveland, Ohio?

Bob isn’t easy to convince about much of anything. To put it plainly, he’s hard-headed. That’s why, when he brought it up at dinner, I needed to have my reasons for investing in Cleveland real estate laid out squarely. It’s true that the foreclosure rate here is still pretty high—right about double the national average. But, look beyond the surface of this apparently bleak real estate market and you’ll see investment opportunity.

As an investor, I take into account two things: the pre-foreclosure market and sale price trends. I buy most of my investment properties from distressed homeowners before their house goes into foreclosure. For me, foreclosure auctions pose too many risks and red tape. The pre-foreclosure market, however, makes up over two-thirds of the foreclosures in Cleveland according to recent data. That’s a pretty good pool of potential home sellers for me to connect with and potentially buy a house at a discounted price. As an investor, I also have to consider my exit strategy, too, though. Luckily, Cleveland’s home prices are on the rise, albeit slowly and steadily, despite a nationwide cooling off of the market. That means, if you buy an investment house to renovate and sell now, you can potentially sell it at rising a market price. And, I have every reason to believe sale prices will continue to grow because we have a lot of driving forces happening here. Let’s take a look.

1. Major redevelopment projects are revitalizing the city.

New life is being breathed into former desolate neighborhoods and, as they begin to flourish, property values there are likely to rise too. For instance, the Opportunity Corridor is being created in the southeast of the city in an area formerly referred to as the “Forgotten Triangle.” The new boulevard, being completed in phases, is intended to spur growth in the Slavic Village, Kinsman, Buckeye, and Fairfax neighborhoods, which have experienced long economic stagnation. City planners envision the creation of high-tech medical research centers, skilled jobs in advanced manufacturing, and jobs in retail along the corridor.

The new jobs this redevelopment brings will draw people and families who will look to buy homes that are conveniently located for getting to work, shopping, and entertainment. Kinsman is especially poised to provide all that. It is also home to the city’s rapidly developing Urban Agriculture Innovation Zone where entrepreneurs are engaged in everything from herb gardening to fish farming. New retail, restaurants, and even a radio station has emerged alongside them. Besides creating new jobs, the Innovation Zone is creating a new atmosphere in the neighborhood and adding to its attractiveness for homebuyers. If you can find a distressed house for sale in this area, your investment is very likely to do well by your bank account.

2. New companies are sprouting up Cleveland.

New companies bring new people to the city and new money to the local economy, creating more prosperity that will enable and encourage people to buy houses. The city’s Health-Tech Corridor is attracting businesses like never before. Link59, the 62,000 square foot addition to the complex that opened earlier this year, was built on speculation, with no tenants lined up. Now it is nearly full, and development of the corridor is continuing. Meanwhile, the Downtown Cleveland Alliance’s Business Development Center was instrumental in the attraction and retention of 25 businesses.

Other organizations are drawing in startups as well. The Cleveland200 fund plans to use $160 million to fund 200 new startups in the city. The fund has invested in at least 34 new companies, many in the medical and IT fields. In addition, Plug and Play, a Silicon Valley–based early-stage investor and accelerator, opened in Cleveland this year and intends to attract healthcare startups to work with the Cleveland Clinic. The highly-skilled jobs being created will give rise to a new group of homebuyers who can afford nicely-renovated homes. If you can get a deal on a house in this area, the likelihood that you have a ready-made pool of eager buyers is increasing steadily.

3. Employment is up.

The job market in Cleveland is already becoming tighter, which is good news for the real estate market because more people with jobs means more people who can afford better housing, or even become first-time home buyers. In September, unemployment in the Cleveland area was 4.4%, compared to 5.1% a year earlier. Manufacturing, trade, transportation and utilities, professional and business services, as well as leisure and hospitality were among the sectors with big gains. In the long term, healthcare is expected to become a major source of job growth, with 85,000 new jobs expected to be created by  2025. Hot spots will be in the redevelopment areas around Cleveland in corridors that concentrate new businesses. Investment properties near these and other centers of activity are likely to find a bull market after renovation.

4. Housing prices are creeping up.

Cleveland’s economic progress is beginning to be felt in the reviving housing market. As of April, house prices were up 6.5% year-on-year. There have even been some months since mid-summer when sellers were getting more than their asking prices. Opportunities are not spread evenly, though. There are sections of the city where the price gain on houses considerably exceeds the average. By taking a close look at price trends in individual neighborhoods, I have found properties that have given me exceptionally good ROI and those opportunities will continue. This rising market only means things will get even better for returns as the year progresses.

5. Civic life is thriving.

Cleveland is becoming a nicer place to live, and this will also draw people to the city to buy houses. The Cleveland City Council voted to create the Superior Arts Improvement District to enhance the arts community with increased services. Redevelopment has converted historic factory buildings into studio, housing, and retail space, and property prices in the neighborhood are rising fast. These developments will improve the quality of life in the city, intangibly and significantly, which will encourage people to move their businesses to Cleveland, and move here to work. That, in turn, will also bolster the real estate prices.

With so much going on in Cleveland, it’s an exciting time to invest in real estate here. Redevelopment plans and business growth are driving prices up, which spells opportunity for selling your rehabbed investment property—especially if you are able to buy in one of the many up-and-coming neighborhoods. And, we know the deals are there because the pre-foreclosure market still shows a lot of activity. The trouble is: how do you find an investment house with a strong upside to begin with?

Invest with Confidence When You Have Support

By the time we were finished with our meal, Bob looked wide-eyed and he wondered out loud the very same question that many eager local investors are struggling with—finding a property for sale that is overpriced or bogged down with red tape at the foreclosure auction. Well, it’s not a problem for me. As an independently owned and operated HomeVestors® franchisee, distressed homeowners who have seen the nationally-known and trusted “We Buy Ugly Houses®” marketing call on me first when they know the foreclosure notice will be arriving in the mail any day. This gives them an opportunity to get out from under an “ugly” situation and gives me the chance to help my community by driving even more economic growth where we all love to live.

Contact HomeVestors® today to find out how you, too, can take advantage of the investing opportunities that Cleveland has to offer by becoming a HomeVestors® franchisee.

Each franchise office is independently owned and operated.