Dayton - a place to invest?

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Dayton - a place to invest?

Axel MeierhoeferPro Member
Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes

I will soon be having the funds from a 1031 exchange to invest in new properties. I became aware of some opportunities for small houses in the Dayton area, close to the university but now wonder if it is a good idea. Does anybody know the best property management company in the area as that is a very determining factor for me?

I am not an investor for appreciation but look for long term hold and cash flow. The biggest factor when looking at my current portfolio is the aspect of property quality (often driven by good advice at purchase and good property management) and a good, desirable area that always has good tenants, in good times and bad.

I hope the BP members can help me learn if Dayton is a good area and who to talk to on the property management end in case I buy 6-12 units

Thanks in advance for any help and input provided by the community

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Christina CareyPro Member
Real Estate Broker · Dayton, OH · Member since 2010 · 245 posts · 186 votes
7y

@Tom Ott Actually, Dayton currently has a shortage of quality housing - demand is high. Especially post-tornados. And the Dayton metro isn't as small as you think. It's small enough to be able to travel from one side to the other in about 30 minutes, but still big enough to enjoy a level of anonymity that anyone who's ever lived in a small town would appreciate.

There is a very diverse employment base here, including WPAFB, medical, biotech, defense manufacturing, and Amazon is opening a facility here soon - just to name a few. The days of Dayton as a rust belt city dependent on automotive manufacturing are long gone - a result of the recession 10+ years ago. Situated at the intersection of two of the busiest interstates in the country, this area is ripe for more business to move here.

As with any other city, there tends to be little appreciation in the C- and below areas, and the suburbs tend to appreciate modestly over time. And there are very few areas where I would be concerned about walking at night.

[email protected]937-709-3355
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  • Storm S.
    Real Estate Agent · Santa Barbara, CA · Member since 2016 · 518 posts · 283 votes
    7y

    @Axel Meierhoefer there are apartment deals here in Sb getting a 15% IRR before considering the tax benefits of owning in Santa Barbara.

    0Reply
  • Axel MeierhoeferPro Member
    OP
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    7y

    @Storm S. Yep, I am aware. problem is that the starting points are always higher than  I can afford. Sounds like you are further along in developing your portfolio. I am more in the field of $25K - $40K down payments and here I have rarely seen a deal that did not require at least $200K. Good for you. I admire people who have already gotten to where I want to go. Maybe, if you ever come to visit the area, you would let me know and we meet for a conversation about your experiences on the path to where you are. I love to learn.

    0Reply
  • Storm S.
    Real Estate Agent · Santa Barbara, CA · Member since 2016 · 518 posts · 283 votes
    7y
    Originally posted by @Axel Meierhoefer:

    @Storm S. Yep, I am aware. problem is that the starting points are always higher than  I can afford. Sounds like you are further along in developing your portfolio. I am more in the field of $25K - $40K down payments and here I have rarely seen a deal that did not require at least $200K. Good for you. I admire people who have already gotten to where I want to go. Maybe, if you ever come to visit the area, you would let me know and we meet for a conversation about your experiences on the path to where you are. I love to learn.

    You are right that most investments here require about 200,000 dollars down. The only way to invest here in Santa Barbara with amounts lower than that is house hacking or investing in syndications or real estate funds that invest here. I'll let you know if I am ever in the area. Always happy to share my experiences and helping others get to where they want to go.

    0Reply
  • Axel MeierhoeferPro Member
    OP
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    7y

    @Storm S. Yep, that's cool and if you ever like to chat about something on either skype/zoom or phone, let me know

    0Reply
  • Felipe Cortinas
    Rental Property Investor · S. Florida · Member since 2019 · 12 posts · 8 votes
    7y

    Happy I stumbled across this thread! I'm new to Bigger pockets and restate investing in general. I started getting interested January of this year, watched an unhealthy amount of BP podcasts and webinars, became a Pro member in June and have my closing on a property (2 duplex's on one deed) scheduled for August 30th.

    I picked up the property in the Dayton area and after having done the numbers on ~40 properties a month for the past 3 months I ran across this place and it all just seemed to click. Now I'm in the middle of trying to figure out if I should leave it to a property manager, or try and manage the property remotely. 

    In my searching in and around the Dayton area, there seems to be a lot of opportunity for some BRRRR investing and I'm hoping to dip my toes into those early next year once the dust settles on my first closing.

    1Reply
  • Account Closed
    Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
    7y

    @Axel Meierhoefer I considered entering this market to be able to offer more product to my investors, but the property taxes ended up being a huge killer, especially considering how low rents are out there. The cheap property values initially appealed to me, but more detailed financial analysis proved the market to be less profitable than other secondary midwestern markets which I currently operate in. 

    Very low rents also make it easy to underestimate maintenance and repair- a fixed cost which is often calculated on a percentage basis in pro-forma. In reality, this is not going to be accurate. A 2BR unit of 800sqft in a C+ neighborhood will have a (hypothetical) 1500 paint and carpet cost whether it rents for 550 (dayton) or 750 (usually my target potential rent). 

    I'd be glad to point you towards a handful of other secondary markets I favor out there! 

    1Reply
  • Axel MeierhoeferPro Member
    OP
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    7y

    @Account Closed Thank you

    I use % for reserves and Capex in nominal numbers for repairs. I agree that taxes are surprisingly high. Feels a little like Texas

    0Reply
  • Account Closed
    Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
    7y

    @Axel Meierhoefer very similar to Texas or Illinois, but with substantially lower rents (and prices as well, to be fair). From my (seemingly never ending) market research I rarely find a low rent area with high expense ratios that works out well, even if purchase prices are very low. Higher price, higher rents, lower expense ratios seem to check out more often. This is purely observational, however.

    1Reply
  • Axel MeierhoeferPro Member
    OP
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    7y

    @Account Closed Thanks. Looking forward to our chat and learn where your research made you land and invest

    1Reply
  • Felipe Cortinas
    Rental Property Investor · S. Florida · Member since 2019 · 12 posts · 8 votes
    7y

    @Account Closed You are so right about property taxes, I'm used to paying South Florida rates so I didn't have as much of a sticker shock when i was running my numbers. The 3 bedrooms in some areas are running at ~800/Mo which makes the numbers work out a little better.

    1Reply
  • Account Closed
    Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
    7y

    @Felipe Cortinas in which areas are 3br's running that high? B areas and above? I usually don't touch a market if C+ property doesn't work well in it. Cash flowing well in B assets and above is not extremely sustainable in 2019's market, mainly because our business has to provide a steady flow of inventory to our investors every month. 

    0Reply
  • Felipe Cortinas
    Rental Property Investor · S. Florida · Member since 2019 · 12 posts · 8 votes
    7y

    @Account Closed I've got a property under contract in Riverside, OH that's looking to go for ~800 for the 3 bedrooms, and "supposedly" has a tenant in a 4 bedroom for 900, but that tenant has been on month to month for the better part of the year.

    I've gotten copies of the lease agreements and it all looks on the up and up. Possible that I'm being bamboozled, but so far it's all looking on the up and up.

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  • Axel MeierhoeferPro Member
    OP
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    7y

    @Felipe Cortinas Sounds very interesting. if you don't mind, could you post ho your investment is progressing? I checked the map and Riverside is not far from where I was looking

    0Reply
  • Felipe Cortinas
    Rental Property Investor · S. Florida · Member since 2019 · 12 posts · 8 votes
    7y

    @Axel Meierhoefer Sure thing, I'm in early stages right now. Inspection is set to happen this Monday the 5th. Financing has already been approved so now I'm just waiting to hear back how the inspection is going to go.

    I'm considering managing the property myself. Which if I'm being honest is somewhat nerve-wracking. I think I have a handle on almost everything, except who I can use for inspections/showing units to new tenants/posting eviction notices. Additionally I plan on actually being on site for a rehab of one of the units (current owner is occupying it). I'm going to take that opportunity to meet some locals and hopefully start building up a team in that area.

    I'll post the progress here, or probably I'll start a new thread and either document how it's going, or wait till it's all wrapped up and I've been successfully landlording for a few months to write up an after action report on how it went.

    Any insight or advice would be appreciated!

    0Reply
  • Axel MeierhoeferPro Member
    OP
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    7y

    @Felipe Cortinas Sounds good. I had asked and received some contact info for good PM companies. Maybe you do the same and interview them, let them show you what they do and how they do it. I think that can be very educational and either confirm your intention to do it yourself or maybe decide to let one of them do it for you. Good luck going forward.

    My closing for the 1031 on the CA property is planned for Thursday and then the clock will start clicking. I will probably come to Dayton, so if you are close by we could possibly meet and get to know each other

    0Reply
  • Account Closed
    Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
    7y

    @Felipe Cortinas sounds like a decent deal without knowing anything about expense ratios. Mind sharing the purchase price & total number of units, for my own curiosity? Are those rents with tenants paying all of their own utilities? If so, I would imagine this is either a nicer asset or larger units. 

    2br units in Riverside in small MFR tend to go around 600 pretty consistently with landlord paying water and trash only.

    0Reply
  • Felipe Cortinas
    Rental Property Investor · S. Florida · Member since 2019 · 12 posts · 8 votes
    7y

    @Account Closed Somewhat larger units. It's 2 buildings, each about 3k sqft. Each building has 2 units at about 1500 sqft a piece. 3 units are 3bdrm 2 bath and one is 4bdrm 2 bath this unit is either slightly more then 15k sqft or this building is slightly bigger than 3k I'll know later this week.  Tenants pay for electric (furnaces and stoves are electric no gas) owner pays for water.

    Inspection was just completed a few hours ago so I'll have the report a little later, but my realtor walked the property with him and sent some images. Most things look ok except:


    One bathroom that a Section 8 residence is in isn't working, and hasn't been for quite sometime. No water flowing to it, sink backed up all around gross looking. 

    One roof looks like it may need to be replaced in 3-5 years.

    Hvacs are new but Furnaces are original so that's a concern.

    Current owner occupied unit needs some tlc. Carpet is old worn through and has ridges in places etc etc.

    Purchase price is set at $240,000 depending on what the report looks like I may be lowering the price, or asking for closing costs, or a combination there of.

    If anyone here has some advice on renegotiating prices after inspections I'd be all ears.

    Thanks,

    0Reply
  • Alex Chan
    Member since 2018 · 5 posts · 1 vote
    6y

    @Taliah S. Please share with me some contact infor. I m ready to get in Dayton big multiple unit 10— up to 30. Some people say the company and employee no as good as in Columbus. ? Any infor will be very much appreciated

    Alex Tran

    0Reply
  • Axel MeierhoeferPro Member
    OP
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    6y

    Now that the holidays are over, I think it is time for an update. As any readers on the thread can tell, thing have taken longer than I thought but not in a bad way. My 1031 exchange has been progressing and needs to complete by the end of January 2020 to avoid the gains taxes from the original sale that occured in August.

    Since my last update I can say that I have purchased 3 of the 4 identified properties in Dayton and there is one more to close in the next few weeks. The support form the title company as well as Freedom Realty as my TK provider has been very good so far. Everything they promised during my initial visit has so far been kept and delivered.

    After closing the first property in Nov I also got the property management agreement in place, which include a clause that ensures I will be paid the agreed rent for each property even if the TK company can't find a tenant right away. That's an important part of all my PM agreements and I can only suggest to anybody considering investing in TK to do the same.

    With the PMA in place we also started using the owners portal. Freedom uses Buildium. It wills till take a little while to fully get used to it but Freedom assigned a contact person who is helping my accounting with content and to make sure all numbers and payments and rents are as planned. 

    IN case you wonder why the last property takes so long? Well, it is one of those stories that you won't believe until they happen to you. When the property was almost ready for marketing, Freedom got alerted by the police. As it turned out the former owner who lost the house he hadn't taken care of at all and didn't pay for as needed broke into the newly renovated building. The neighbors alerted the police when they heard unusual noises and he was caught. 

    He damaged a window and created some minor damage to the freshly painted walls in one room. He was arrested and is now in jail. It turned out that it wasn't his first transgression. For me, this whole thing leads to a delay and a new window. If you would pitch it as a movie you would be told its too unbelievable but it happened to me :)

    I hope the new window will be installed next week and then marketing and the path to closing will progress.

    By the middle of January, the rental process for the first few properties should get into a rhythm and this last one should close so the actual management phase will start in earnest in Feb. I will report again how the regular support after purchase will develop.

    So far working with Freedom Realty has been great and the business developments in the Dayton area encourage me to increase my portfolio there once the 1031 exchange is complete. I am happy to share more details and make introductions to my contacts if anybody is interested.

    1Reply
  • Taliah S.
    Rental Property Investor · Philadelphia, PA · Member since 2010 · 10 posts · 2 votes
    6y

    @Alex Chan Just now seeing this.  I used a contractor recommended by my property management company and was happy with the work.  It is now rented.  I don't have experience with Columbus, so I can't compare to there.

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Alex Chan:

    @Taliah S. Please share with me some contact infor. I m ready to get in Dayton big multiple unit 10— up to 30. Some people say the company and employee no as good as in Columbus. ? Any infor will be very much appreciated

    Alex Tran

    Columbus, Ohio has a crazy job growth rate

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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  • Euric Ramirez
    Member since 2020 · 14 posts · 7 votes
    5y

    @Elliott Elkhoury

    Hey bud, can we connect? I am here in Vacaville. Want to invest in Midwest

    0Reply
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