Ohio markets not really cash flowing! Am I missing something?

Rental Property Investor · North Wales, PA · Member since 2021 · 5 posts · 12 votes

Hello, I'm new to investing out-of-state. I live in PA (northeast of Philadelphia) and was looking to invest in Ohio markets due to their lower prices and appreciation. I connected with an agent and analyzed lots of deals. But considering all the expenses (PM, leasing fees, cap reserve, maintenance, taxes, etc), it has been showing as negative cash flow.

Am I missing something in my calculations? Am I too late to the game? There are lots of SFH and MF units coming on sale but they don't seem to have a positive cashflow. I'd appreciate guidance and a different perspective.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

they dont cash flow because your not paying cash or your not putting enough down just put more down or pay cash and you will get positive cash flow.. very simple solution.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
they dont cash flow because your not paying cash or your not putting enough down just put more down or pay cash and you will get positive cash flow.. very simple solution.
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4 Reply
Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
@Dhruv Patel, deals are what YOU make of them NOT what is advertised.
1. Many properties may sell near asking price, but some may sell for well UNDER asking price. So, you may be able to negotiate a better price.
2. There may be value-add opportunities. You may be able to do some rehab work and raise rents. You may be able to reduce expenses through energy savings, appealing assessed values, shopping for utility providers, etc.
3. You are estimating using financing at today's rates, BUT over time you will likely be able to refinance to a lower rate. "Marry the property, but date the rate!"
4. You may be able to find off market deals with distressed sellers. Any distressed condition is a potential opportunity. For example, an owner headed to foreclosure might sell you a property "Subject-To" where you take over their loan at a LOW LOW rate which changes the math a LOT when analyzing a deal!
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Dhruv Patel
OP
Rental Property Investor · North Wales, PA · Member since 2021 · 5 posts · 12 votes
2y
Quote from @Kevin Sobilo:

@Dhruv Patel, deals are what YOU make of them NOT what is advertised.
1. Many properties may sell near asking price, but some may sell for well UNDER asking price. So, you may be able to negotiate a better price.
2. There may be value-add opportunities. You may be able to do some rehab work and raise rents. You may be able to reduce expenses through energy savings, appealing assessed values, shopping for utility providers, etc.
3. You are estimating using financing at today's rates, BUT over time you will likely be able to refinance to a lower rate. "Marry the property, but date the rate!"
4. You may be able to find off market deals with distressed sellers. Any distressed condition is a potential opportunity. For example, an owner headed to foreclosure might sell you a property "Subject-To" where you take over their loan at a LOW LOW rate which changes the math a LOT when analyzing a deal!

This is great! Thank you for the insight. Because I'm new to out-of-state investing, I'm just bit overwhelmed with everything that might be required. Working on connecting with people and gaining knowledge and understanding of the processes. Thank you for your feedback.
3 Reply
Jessie Dillon
Investor · Hopedale, MA · Member since 2021 · 321 posts · 213 votes
2y
in many markets you have to go OFFmarket to find the deals that cashflow. the MLS can be picked-over. this is obviously more work. there are markets that cashflow just fine even the picked-over properties. single-family is also USUALLY going to cashflow way less per unit vs multi, with LTRs.
2 Reply
Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
2y
You can look at it as being too late to the game. But you can also look at it as being. too early. Priices don't remain this high above the inflation adjusted level for long.
1 Reply
Philip Polski
Member since 2024 · 9 posts · 12 votes
2y
I tend to get more than what the average PM considers market rent. Making your property better than the competition can help make better yields. I often hear from my tenants that they didn't question my rent price because the others they looked at were not well maintained. I also invest from 1500 miles away from my market and self manage.
look for ways to add value to your product and you will stand out and get a little more for your rental unit.
1 Reply
Andreas W.
Durham, NC · Member since 2013 · 502 posts · 215 votes
2y
It is a difficult time to have a rental property make financial sense. Even if you end up making a few hundred dollars cash flow on a SFH, it does not mean that you will make any money in the bank on it. And should you be new to the real estate game, starting with out of town rentals is a high risk proposition. And don't forget, you currently can get 5.25% interest with lending money to the federal government.
3 Reply
Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Yes, you're missing something.
It's Detroit, and it's just a bit north of Ohio.
There's still solid cash flow in Detroit if you know what you're doing, and the potential for appreciation is very strong as well.
1 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@Dhruv Patel
if you're in eastern PA why not invest there?
1 Reply
Austin McClainBusiness Member
Real Estate Agent · OH · Member since 2021 · 348 posts · 602 votes
2y
If cash flow is your main goal, I'd recommend looking into Dayton, Washington Court House, or Cleveland.
[email protected]614-710-4827
3 Reply
Dhruv Patel
OP
Rental Property Investor · North Wales, PA · Member since 2021 · 5 posts · 12 votes
2y
Quote from @Austin McClain:

If cash flow is your main goal, I'd recommend looking into Dayton, Washington Court House, or Cleveland.

I mean these are in negative cash flow and not even $100-$200 cash flow or even break even.
0 Reply
Samuel DioufBusiness Member
Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
2y
How much cash-flow are you looking to get. Your expectations may be too high. When your leveraging.. anything above $200/M is pretty great in my book.
Make sure your agent is finding you good deals off-market as well.
[email protected]614-662-1652
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Carlos Valencia
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
2y
Wow Dhruv I just went to a meetup that hosted a speaker and was sharing how Ohio is a great market to invest right now because you can actually cashflow. He did mentioned to look for off market deals and thats usually the case when finding these potential Cash flowing deals. Just like anything else right the goal is to buy as low as possible and sell it for higher or in this case be able to rent something and get monthly cashflow. If it was only that easy right?

@Albert Bui @Matthew Kwan
3 Reply
Trenton Brown
Real Estate Agent · Waxahachie, TX · Member since 2022 · 40 posts · 32 votes
2y
Quote from @Austin McClain:

If cash flow is your main goal, I'd recommend looking into Dayton, Washington Court House, or Cleveland.

Agreed. I purchased a turnkey duplex in WCH and it's cash flow positive. More potential here with Fix & Flips however.
3 Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Dhruv Patel going to guess your a newbie to real estate investing period.
You probably connected with an agent that only knows how to sell MLS properties to owner-occupants and is clueless how to work with investors.
-BTW: this is 95% of agents!
An investor doesn't pay asking prices or waste their time trying to negotiate 5-10% off asking price.
An investor calculates an offer price based upon what price it will take to make their ROI target number work!
-Yes, you may have to look at LOTS of properties and make many offers, but that's how you make the numbers work.
Why don't you contact us to learn how to invest the right way?
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Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
2y
Quote from @Michael Smythe:

@Dhruv Patel going to guess your a newbie to real estate investing period.
You probably connected with an agent that only knows how to sell MLS properties to owner-occupants and is clueless how to work with investors.
-BTW: this is 95% of agents!
An investor doesn't pay asking prices or waste their time trying to negotiate 5-10% off asking price.
An investor calculates an offer price based upon what price it will take to make their ROI target number work!
-Yes, you may have to look at LOTS of properties and make many offers, but that's how you make the numbers work.
Why don't you contact us to learn how to invest the right way?

Ain't that the truth...

Flogging any property off the MLS just to get a commission.

Referring a "trusted" contractor for the rehab that kills you on price (Receive illegal kick back).

Refer a "trusted" property management company that's "investor friendly" and that nickel and dimes to death (Realtor receives referral fee).

🤷‍♂️
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2 Reply
Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
2y
Quote from @Jay Hinrichs:

they dont cash flow because your not paying cash or your not putting enough down just put more down or pay cash and you will get positive cash flow.. very simple solution.

Story of my life mate.
- Buy with cash and only invest what you don't need for any emergency.
- Build with cash and slowly for a strong foundation.
- After 3-4 years, look at using leverage to speed up portfolio growth.
- Always own 50% of portfolio with cash owned properties.
Portfolio should then be secure and cashflow positive.
Just my opinion 😁
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2 Reply
Tanner Lewis
Lender · Austin, TX · Member since 2021 · 448 posts · 441 votes
2y
Quote from @Jay Hinrichs:

they dont cash flow because your not paying cash or your not putting enough down just put more down or pay cash and you will get positive cash flow.. very simple solution.

I agree. In my opinion, many of these higher cash flow, lower valuation markets make a lot more sense as all-cash investments. That way, you can also pull on the funds in the future if needed. If you are in a more appreciation-focused market, or prices are $200+ for an SFR, then it starts to make more sense to leverage on these properties.
2 Reply
James Back
Rental Property Investor · West Chester Ohio · Member since 2019 · 44 posts · 45 votes
2y
I live and invest in and around Cincinnati Ohio. All the deals I have found the last two years have been off market. If you are buying MLS listed properties with only 20% down, and having to use a property manager for upkeep and leasing then you will likely never find a property that will cash flow. I manage myself and can barely find any on the MLS that will cash flow. It sounds like you need more cash, or you need to look into property in the market you live so you can self manage. If you want true "Passive" income in real estate, you need to have a lot of cash to put into it.
4 Reply
Simon Ashbaugh
Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
2y
Hey Dhruv, this generally depends on which part of Cleveland you're looking at. Focusing on B and C areas in Cleveland with their lower entry points and higher relative rents can help you find cash-flowing properties. I got the whole city mapped out by their neighborhood class. I'd be happy to connect if you wish to know more.
2 Reply
Sam McCormackBusiness Member
Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes
2y
Quote from @Dhruv Patel:

Hello, I'm new to investing out-of-state. I live in PA (northeast of Philadelphia) and was looking to invest in Ohio markets due to their lower prices and appreciation. I connected with an agent and analyzed lots of deals. But considering all the expenses (PM, leasing fees, cap reserve, maintenance, taxes, etc), it has been showing as negative cash flow.
Am I missing something in my calculations? Am I too late to the game? There are lots of SFH and MF units coming on sale but they don't seem to have a positive cashflow. I'd appreciate guidance and a different perspective.

It can depend on the city, and the suburbs in those cities. Cincinnati will cash flow normally up to a B grade area, but B+ on is going to break even or be negative
[email protected]859-443-4952
Sam McCormack Realtor
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Marc RiceBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
2y
Quote from @Dhruv Patel:

Hello, I'm new to investing out-of-state. I live in PA (northeast of Philadelphia) and was looking to invest in Ohio markets due to their lower prices and appreciation. I connected with an agent and analyzed lots of deals. But considering all the expenses (PM, leasing fees, cap reserve, maintenance, taxes, etc), it has been showing as negative cash flow.
Am I missing something in my calculations? Am I too late to the game? There are lots of SFH and MF units coming on sale but they don't seem to have a positive cashflow. I'd appreciate guidance and a different perspective.

How are you running your numbers? You can analyze deals in a spreadsheet all day and never buy anything. If you're overestimating numbers and not accounting for the other soft benefits of owning real estate (appreciation, tax benefits, etc) then of course you'll never buy anything.
With 25% down on a 2-4 unit, you'll need to be in a B- to C- area to see cash flow day one. Rates are 7.5% now. If they go down, then prices will go up, and you'll regret you didn't buy more.
[email protected]614-363-2787
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Account Closed
Accountant · San Diego, CA · Member since 2019 · 1k+ posts · 552 votes
2y
Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

they dont cash flow because your not paying cash or your not putting enough down just put more down or pay cash and you will get positive cash flow.. very simple solution.

Story of my life mate.
- Buy with cash and only invest what you don't need for any emergency.
- Build with cash and slowly for a strong foundation.
- After 3-4 years, look at using leverage to speed up portfolio growth.
- Always own 50% of portfolio with cash owned properties.
Portfolio should then be secure and cashflow positive.
Just my opinion 😁

interesting perspective not touted very often. Advice here is usually leverage to the moon and speculate on rates because "real estate go up!"
0 Reply
Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
2y
Quote from @Account Closed:

Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

they dont cash flow because your not paying cash or your not putting enough down just put more down or pay cash and you will get positive cash flow.. very simple solution.

Story of my life mate.
- Buy with cash and only invest what you don't need for any emergency.
- Build with cash and slowly for a strong foundation.
- After 3-4 years, look at using leverage to speed up portfolio growth.
- Always own 50% of portfolio with cash owned properties.
Portfolio should then be secure and cashflow positive.
Just my opinion 😁

interesting perspective not touted very often. Advice here is usually leverage to the moon and speculate on rates because "real estate go up!"

Cash is King, Cashflow is Queen. Leverage is the peasant lol
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Andreas W.
Durham, NC · Member since 2013 · 502 posts · 215 votes
2y
If you plan to buy a barely cash flowing property with mostly cash, the whole real estate argument goes out of the window. The unique advantage of real estate as an asset class is the leverage you can apply using other people's money. Once this falls of the cliff, you are better of with buying a REIT at the stock exchange and have real passive income. It is very liquid and you have zero tenant troubles.
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