Dayton - a place to invest?

48 Replies

@Kyle No, I only own my own house here. I am selling a house in Santa Barbara to use the funds in Dayton and Memphis. I just can't get the IRR here and when things have even a little issue, as a landlord I am always the villain. Compared to another investment in New Mexico, I have much better performance and half the hassle. I like to live in the San Diego/Escondido area but for investments it's not for me. I don't know what your goal or strategy is, but if you ever calculate cash flow or IRR I would be surprised if you can beat any Midwest location with your house here.

@Brent. I have not seen that but am happy to believe it. The point is to figure out what kind of people move our and who moves in. If those how leave do that because the traditional manufacturing jobs have left and those who move in do biotech, academics, military, etc., I would be happy to live with that and I suspect you would be too. Here is a link to a report I got (one of several) Dayton

Maybe something my wife and I often say when watching the flipping shows on TV: "Why are they using finishes, colors and decorations that appeal to as many people as possible when all they really need is one buyer?"

Yes, I want to own and rent more than one house, but I don't think I will get beyond 10 for Dayton in my lifetime. I am pretty sure there will be 10 people who have good use for a nice rental at a fair price with good property management. That's enough for me :)

@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.

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.

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.

@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! 

@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.

@Elliott Elkhoury 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.

@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. 

@Elliott Elkhoury 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.

@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!

@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

@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.

@Elliott Elkhoury 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,

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.

@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.

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