Cleveland’s Housing Boom: How Investors are Winning While First-Time Buyers Struggle
Cleveland’s housing market is evolving rapidly. Investors are reaping the rewards, neighborhoods are undergoing transformations, and gentrification is steadily making its mark. But where does that leave first-time homebuyers?
As investment capital pours into the city, Cleveland’s neighborhoods are changing. Some areas have benefited from revitalization, but rising home prices—up 15% year-over-year—are making affordability an increasing challenge. For many first-time buyers, the dream of homeownership is slipping further out of reach.
This isn’t just a Cleveland issue; it’s part of a broader trend across the U.S. The share of non-qualified mortgage (non-QM) loans—alternative financing designed for investors and self-employed borrowers—has risen from under 3% in 2020 to 5% in 2025. This shift is reshaping how properties are financed, offering more advantages to investors who can bypass traditional lending restrictions.
Eli Mongold, a mortgage originator and real estate investor with experience in private equity, commercial lending, and construction management, has witnessed this transformation firsthand. He’s at the forefront of Cleveland’s changing real estate landscape and provides insight into who’s winning in this market—and who’s being left behind.
The Investor Advantage: How It’s Shaping the Market for First-Time Buyers
For first-time buyers, affordability remains the biggest obstacle. Many rely on FHA loans and seller-covered closing costs just to get a foot in the door. But funding for renovations? That’s even harder to come by.
“First-time buyers don’t have the ability to do the renovations required to fully update a neighborhood and increase property values,” Mongold explained.
To address these challenges, local initiatives like the Cleveland Real Estate Mutual Fund (CHIF), backed by a $38 million investment, aim to support mixed-income housing and homeownership programs. The “Locals First” rule was also created to prioritize local buyers over out-of-state investors for vacant and foreclosed properties. But are these programs enough to level the playing field for new buyers?
Enter the investors. They’re taking on the financial burden of revitalizing neglected properties, boosting the long-term value of these neighborhoods. But in the short term, they’re also driving up prices, making it even more difficult for buyers to compete.
“At the end of the day, first-time buyers will win,” Mongold said. “They’ll come out ahead in five years when a lot of these private equity firms exit.”
The Shift in Financing: Non-QM Loans and Their Impact on Investors
The financing landscape has undergone a major shift, favoring investors. Traditional mortgage lenders typically require tax returns and employment documentation—criteria that often don’t apply to investors. Non-QM loans, on the other hand, provide more flexibility by focusing on the deal itself rather than the borrower’s income or job status.
Mongold explained, “The savvy investor might be rich in their bank account but ‘broke on paper.’ With these kinds of loans, they’re essentially getting bank statement loans based on the strength of the deal, not the person.”
While this approach raises some concerns—drawing comparisons to the risky lending practices of 2008—Mongold reassures that the process is vastly different now. “It’s not about no income, no job,” he said. “We care more about the deal than the person, and the underwriting process is much more thorough.”
This new financing model is enabling investors to secure funding for properties that traditional banks won’t touch—often in the same neighborhoods where first-time buyers are trying to get a foothold.
The Bridge to DSCR: How Investors Are Staying Ahead
Investors aren’t just purchasing homes; they’re using a meticulously structured approach to maximize their returns. This strategy starts with short-term bridge loans and culminates in long-term financing, all while avoiding the traditional banking system.
“A lot of people call it the BRRRR method; we call it the bridge-to-DSCR strategy,” Mongold said. “They buy properties, fix them up, rent them out, then refinance after 3-6 months to cash out and move to the next one.”
This approach is helping investors thrive in areas where traditional lenders shy away, due to properties requiring significant work before they’re habitable.
“The 30-year fixed-rate guys don’t want to touch these properties because they need so much work to make them livable,” Mongold explained. “That’s where we come in.”
The demand for this kind of funding is exploding. “Last year, we were averaging about $5 million a month in loans,” Mongold said. “This year, we’re up to $8.5 million a month.”
Out-of-state investors, many structuring purchases through LLCs, are driving much of this growth. “They just come to us with an LLC and a foreign qualification here in Ohio, and we can get them the loan they need,” he added. International buyers—particularly from Canada and Israel—are also taking advantage of these loans.
What First-Time Buyers Need to Know
First-time buyers might not fully realize how much the lending landscape has changed. Mongold stresses that education is key—especially in a market dominated by investors. Understanding the differences between non-QM and QM loans is more important than ever.
“The number one thing is helping first-time buyers understand non-QM mortgages,” he said. “They need to know how to evaluate properties before they even apply for a loan.”
In a market increasingly shaped by investors, first-time buyers need to adjust their expectations. While the investor advantage is strong today, opportunities still exist—especially if buyers are willing to learn how to navigate the new financing terrain and play the long game.
