Ditch Arizona and invest in Ohio?

32 Replies

I'm currently pre-approved for up to a 400k loan amount in Arizona. I've been looking at properties and the nicer ones do sell quickly and typically get overbid by others. Although these multifamily properties that I'm looking at are nice, the cash on cash return is pretty low. The real estate agent and investor that I'm working with is from this community and he recommends expanding my price range from 400k-600k. I know appreciation is important but I'm heavily weighted towards cash on cash returns and evidently it's just not that strong in Phoenix or in the surrounding area. My question is do I just forget Arizona because the prices are too high and look into other places like Columbus Ohio where the prices are more reasonable and have a higher chance of getting a better cash on cash return? How do people feel about this? All comments are appreciated.  

$400k can go pretty far in Columbus. You can get appreciation still but also cash flow. Seems like an easy decision for you if you’re not finding anything that works for you there. Best of luck! 

Arizona won’t even be habitable soon with global warming. Ohio’s rough winters of the past are way milder now.

Hey Kyle,

I'm by no means a seasoned investor, but I wanted to weigh in on this one as I'm finding myself in a very similar situation. I recently moved to Phoenix (originally from IN) and have noticed the same competitive market you described. I would recommend you readdress your goals and why you want to invest in real estate. Appreciation is a great bonus with a large-growth market, but if cash flow is your concern and will help meet your goals I think the midwest is a great option.

Best of luck to you,

Logan Reeve

Kyle, we invest in Columbus and you can find solid properties, but columbus prices have spiked also. You should focus more in secondary markets like Dayton OH and places similar. We have hundreds of properties in Dayton that are cash flow monsters. We still buy quads turn key in Dayton for 110-140k. We pick up brrrr quads for 60-70k needing 20-30k rehab. If cash flow is your goal, secondary markets are a better option. Most of my realtor clients in Dayton, Cincinnati and columbus have really good success 

Seems like you might have answered your own question. If the numbers aren't there and you aren't local to be able to cut costs and find better connections then it might be worth looking elsewhere. Columbus has a very strong rental market right now. @Kyle Johnson

Originally posted by @Kyle Johnson :

I'm currently pre-approved for up to a 400k loan amount in Arizona. I've been looking at properties and the nicer ones do sell quickly and typically get overbid by others. Although these multifamily properties that I'm looking at are nice, the cash on cash return is pretty low. The real estate agent and investor that I'm working with is from this community and he recommends expanding my price range from 400k-600k. I know appreciation is important but I'm heavily weighted towards cash on cash returns and evidently it's just not that strong in Phoenix or in the surrounding area. My question is do I just forget Arizona because the prices are too high and look into other places like Columbus Ohio where the prices are more reasonable and have a higher chance of getting a better cash on cash return? How do people feel about this? All comments are appreciated.  

 I feel very good about real estate investing in Columbus, Ohio. I started 3 years ago and have enjoyed it every step of the way!

I believe your 400K budget will go a long way here in columbus. I got started with a 165K duplex and it has been great so I bought 2 more. In B neighborhoods you can find duplexes from 125K-300K depending on bed count and rehab status...

@Logan Reeve @Kyle Johnson

There was an article in the Phoenix Business Journal this morning projecting 7% average appreciation in Phoenix for 2021. I am

of the opinion that $200/month in Ohio will never touch $28k in appreciation on a $400,000 home in Phoenix. I have been the beneficiary of the 11.7% appreciation experienced here in the last year on a portfolio of rentals over $1M so maybe I’m biased? 🤷🏼‍♂️

If you’re looking for cash flow you need to hook up with my wholesalers. I get 30 deals emailed to me every day that are off market with varying viability and returns. They are out there, but with the appreciation as a bonus my money is staying here in the valley for the time being. If you want to chat about all the insane growth we are seeing from employers and migration, you know how to find me.

@Kyle Johnson dude you are in a fantastic growth market with great fundamentals. Cheaper is not always better. If immediate/short term cash-flow with moderate appreciation growth helps you reach your goals consider Columbus. If overall longterm returns are your primary objective stick with Phoenix. You can’t beat a local market with population/job growth and strong property/rent appreciation longterm. Local is also more efficient as you can leverage trusted local help, personal contacts, etc. My $.02

@Kyle Johnson congratulations on entering REI! Long distance investing will require a strong core four real estate tram that you will have to rely on heavily and select dutifully. Imo, your first deal should not be long distance and instead should focus on learning acquisition and operational principles on a local unit. As Brandon Turner says on the BP podcast, your first deal isn't meant to be a home run and you shouldn't always be looking for home run deals. A lot to be said for grinding out the first property with something that breaks even and trains you before the market cools down and deals are more plentiful. Best of luck!!

@Kyle Arendsen good advice! One of the few things I disagree with @Brandon Turner with........You need to ALWAYS be looking for the home run, but have criteria for what your willing to accept if you can’t find that homerun! There are still plentiful deals out there despite everyone talking about the right market. You just have to work and acquire differently and it takes a little more grind.

Originally posted by @Whit B. :

@Logan Reeve @Kyle Johnson

There was an article in the Phoenix Business Journal this morning projecting 7% average appreciation in Phoenix for 2021. I am

of the opinion that $200/month in Ohio will never touch $28k in appreciation on a $400,000 home in Phoenix. I have been the beneficiary of the 11.7% appreciation experienced here in the last year on a portfolio of rentals over $1M so maybe I’m biased? 🤷🏼‍♂️

If you’re looking for cash flow you need to hook up with my wholesalers. I get 30 deals emailed to me every day that are off market with varying viability and returns. They are out there, but with the appreciation as a bonus my money is staying here in the valley for the time being. If you want to chat about all the insane growth we are seeing from employers and migration, you know how to find me.

 Have you looked at the appreciation of Columbus, Ohio?

@Kyle Johnson I’m in a similar situation. I live in CT where prices are already high and have spiked with NY’ers migrating up here since Covid but to be honest with you where CT and Phoenix likely differ is that CT has more of a bleak future so I don’t see any sustained appreciation. The economy is lousy and taxes high. With that said, my partner and I have looked at Ohio, specifically Columbus and Dayton. Where I find myself indecisive is whether to look into a turnkey company or to try to assemble the core four and take the plunge. I already have a successful vacation rental in Gatlinburg TN so I feel like I can do the long term thing but buy and hold rentals are a different beast. What are your thoughts if you go long distance?

@Jeff Piscioniere , you may want to connect with @Remington Lyman if you haven't already. If memory serves me right, he's a former Connecticut resident turned OH resident, and can probably give you some insight in addition to what you and your partner have found. 

My two first properties in Columbus each have a net cash flow more than $1,500/ month and they only required about $70k out of pocket each. Not too mention they have doubled in value. 

My suggestion is to find someone that can find you off market deals, or who can act FAST for on market deals.

@Michael P. It’s 50 degrees in Phoenix today with a high of 77 for the week. 😎 Ummmm...I mean it’s miserable...stay away.

@Jeff Piscioniere I live in CT as well and although there's plenty of money to be made here, I find the dollar can go MUCH further with as good if not better returns, lower taxes, and higher appreciation potential in other parts of the country.  For that reason I chose Florida to do my last investment but I still keep an eye out for deals locally as well, but the barrier to entry is much higher as $100K-$150K couldn't buy us a shoe box up here.  It's nice to see CT get some long overdue appreciation but time will tell if that will last...  

Keep me posted if you wind up going out of State.  

Originally posted by @Kyle Johnson :

I'm currently pre-approved for up to a 400k loan amount in Arizona. I've been looking at properties and the nicer ones do sell quickly and typically get overbid by others. Although these multifamily properties that I'm looking at are nice, the cash on cash return is pretty low. The real estate agent and investor that I'm working with is from this community and he recommends expanding my price range from 400k-600k. I know appreciation is important but I'm heavily weighted towards cash on cash returns and evidently it's just not that strong in Phoenix or in the surrounding area. My question is do I just forget Arizona because the prices are too high and look into other places like Columbus Ohio where the prices are more reasonable and have a higher chance of getting a better cash on cash return? How do people feel about this? All comments are appreciated.  

 Hi Kyle, I know someone who was in a very similar situation as yours and lived in Arizona as well, he recently closed on a duplex here in Columbus, OH, and is getting some great returns. 

@Kyle Johnson I don't see expanding your price range as the solution. It doesn't sound like your agent understands investors. Nothing in the $400K-$600K range is going to cash flow. Why are you looking at AZ if you don't live there? The beauty of out of state investing is that it gives you a multitude of choices, Since there is nothing that ties you to AZ, I would definitely look at other markets. I don't know the Columbus market well but I do know it is economically strong. I would strongly encourage you to also look in to both the Indianapolis and Kansas City markets. Both are excellent cash flow markets. If you're interested in either, I'd be happy to give you more insight and help.

@kylejohnson I personally don't think it always has to be an either/or decision.  Obviously, most of us are limited by the capital we have to work with or can borrow but diversifying into a couple of different markets has worked well for me.  I wouldn't get spread too thin and go all over because you need to build relationships by focusing on a few areas.  I have a few investments in Phoenix that don't cash flow great (still positive just not stellar) but have been appreciating by $30k+ per door per year the last few years.  To balance that out I bought some rental properties in Indianapolis that cash flow much better but aren't seeing that kind of appreciation.  You have to decide what is most important to you and develop your investment strategy around that.  Always keep in mind that appreciation can stop or go backwards very quickly at any time, so if that is your jam, make sure that you can afford to keep the properties in a worst case scenario when the cashflow is limited. 

Well, I moved from OH to Phoenix about 4 years ago, and since then have bought about $80M of property in Phoenix. Different folks, different strokes, I guess...

Good luck!