Market Selection-Ohio-Population/Rents/Property Values

Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes

I am choosing to invest in the Ohio markets. I like the cashflow aspect of it and the affordable prices (which lowers the barrier for a newer investor like me who doesn't have a lot of 1031 funds/equity to work with).

But I'd like to know why others are choosing the Ohio markets? Especially considering the stagnant/declining population, low rent growth, low property value growth, etc...(compared to other markets). Are you concerned about these factors when doing a long-term hold (5-10yr+)? This would be for small multifamily (2-15 units).

Being open to investing out-of-state is great as it opens up so many market options, but it's not so great, because too many options makes it overwhelming.

Would love to hear other investors thoughts on Ohio's population/rent/property value situation and outlook-is anyone concerned about these things, or see it as a negative? Or does the cashflow and affordability aspect of it outweigh any negatives?

Thanks!

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Account Closed

Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes

Quote from @Shilpa Matlock:

Being open to investing out-of-state is great as it opens up so many market options, but it's not so great, because too many options makes it overwhelming.

Thanks!

Population is not declining

Price and rent growth is not low, my Toledo duplexes purchased in 2019 for 80k renting for 1200 are now selling for 125k renting for 1600.

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Stephen Brown
Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
4y
My out of state investors have chosen Toledo because of its superb stability as a rental market. Over half of our city rents and it has been like that for years. The rent to price ratio is better than the majority of the country as well. In regards to population decline, as it is certainly true, you must remember that there is still demand for housing in submarkets of each market. For an example, in Toledo, no one wants to move into the 43608 zip code. Most houses in that area are vacant and will be torn down in the distant future, but in regions like 43623 near the mall, we have seen significant growth and demand for housing, especially in multifamily.
I think Ohio is a great place to park your money. There will always be cash flow investors buying here, so you have an exit strategy if your main concern is property value decline. I think it's also a forgiving market for the out of state investor because the cash flow is so strong that you get a great taste of what it is like to invest from afar without worrying about losing money.
If population growth is your main concern I would go to Columbus.
If cash flow is your priority, I would choose Toledo or Cleveland.
Happy to help if you need it :)
9 Reply
Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
4y
Quote from @Shilpa Matlock:

I am choosing to invest in the Ohio markets. I like the cashflow aspect of it and the affordable prices (which lowers the barrier for a newer investor like me who doesn't have a lot of 1031 funds/equity to work with).

But I'd like to know why others are choosing the Ohio markets? Especially considering the stagnant/declining population, low rent growth, low property value growth, etc...(compared to other markets). Are you concerned about these factors when doing a long-term hold (5-10yr+)? This would be for small multifamily (2-15 units).

Being open to investing out-of-state is great as it opens up so many market options, but it's not so great, because too many options makes it overwhelming.

Would love to hear other investors thoughts on Ohio's population/rent/property value situation and outlook-is anyone concerned about these things, or see it as a negative? Or does the cashflow and affordability aspect of it outweigh any negatives?

Thanks!

Population is not declining

Price and rent growth is not low, my Toledo duplexes purchased in 2019 for 80k renting for 1200 are now selling for 125k renting for 1600.
10 Reply
Andrew Overby
Rental Property Investor · Austin, TX · Member since 2020 · 24 posts · 11 votes
4y
Quote from @Shilpa Matlock:

I am choosing to invest in the Ohio markets. I like the cashflow aspect of it and the affordable prices (which lowers the barrier for a newer investor like me who doesn't have a lot of 1031 funds/equity to work with).

But I'd like to know why others are choosing the Ohio markets? Especially considering the stagnant/declining population, low rent growth, low property value growth, etc...(compared to other markets). Are you concerned about these factors when doing a long-term hold (5-10yr+)? This would be for small multifamily (2-15 units).

Being open to investing out-of-state is great as it opens up so many market options, but it's not so great, because too many options makes it overwhelming.

Would love to hear other investors thoughts on Ohio's population/rent/property value situation and outlook-is anyone concerned about these things, or see it as a negative? Or does the cashflow and affordability aspect of it outweigh any negatives?

Thanks!

I've been wondering some of the same questions recently! I'm eager to follow along as people provide input.

2 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
4y
@Shilpa Matlock just curious, why not invest in MN? If Minneapolis is too expensive, I have to think there's a market within 2-4 hours of you that is more affordable.
1 Reply
Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Stephen Brown That is a very good point you mention about there being demand within submarkets, so that's where having that local knowledge becomes so critical. Also great to know I would have an exit strategy by being able to sell to other cashflow investors. I really appreciate the info, and may reach out if I'm considering the Toledo market, thanks!
1 Reply
Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Account Closed Wow those are some impressive numbers, 80K to 125K, and rents 1200 to 1600 are great! It's encouraging to hear the numbers are working out so well, thanks for sharing!
1 Reply
Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Nicholas L. That's a great question, I just don't feel that the same opportunity and returns exist here in Minneapolis/St Paul, as in some other markets, and yes the Twin Cities is too expensive for me right now. Plus there's a lot of regulation including the rent control among other things, that have me feeling a bit apprehensive. I don't want to enter a market that's too small either, I was considering Des Moines, which is only 4 hours away, but it's still a much smaller market than some of the others I've been looking at, though I'm not writing it off entirely at the moment.
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Jeff SchemmelBusiness Member
Real Estate Agent · Saint Paul, MN · Member since 2014 · 384 posts · 401 votes
4y
Quote from @Shilpa Matlock:

@Stephen Brown That is a very good point you mention about there being demand within submarkets, so that's where having that local knowledge becomes so critical. Also great to know I would have an exit strategy by being able to sell to other cashflow investors. I really appreciate the info, and may reach out if I'm considering the Toledo market, thanks!

@Shilpa Matlock I'm in saint paul and represented a non owner occupied investor on a 1% duplex @400k price point last month. I have also seen more than one listed at 1% on the MLS sub 350k in the last month or two. This is a deeper conversation, but just wanted to inform that investing as a cash-flow investor in Minneapolis/Saint Paul has been a thing and will be for a while.

Along that note, most of the money I made so far in real estate has been through forced equity and appreciation. The rent is awesome, and I'd never recommend buying a non cash-flowing property, but for someone who's worried about barrier to entry it shouldn't be your first primary target. Long-term, the cash flow will come, but I certainly would not write-off Minneapolis/Saint Paul in favor of out-of-state deals, especially on your first one or two given you haven't quite learned how to be a property manager or how to manage tenants and contractors yet. I think it's seriously worth considering partnering with a great local team and getting your feet wet where you have a lot of control.

Finally, as someone from small-town Minnesota, I have considered investing in SW Minnesota for a while now, but vacancy is a concern and I don't want to build another team to try and sleep at night about doing a deal there - at least not yet. I think that's just so much work, but that's a lot of opinion from me in one post so I'll leave it there :)

I'm always happy to have a chat about the local market, DM me if you'd like to connect.
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
4y
@Shilpa Matlock that all makes sense. I just think that folks sometimes underestimate how hard it will be to get started OOS. If you pick a market you can drive to... you can do everything in person.
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Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Nicholas L. Yes, really good points, and I agree there's way more assurance in being able to see your properties and easily visit them when needed. The difficulties of long distance investing is definitely something I will be mindful of for sure.
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Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Jeff Schemmel That's great to know that the 1% rule can be found in our area. And I'm definitely open to doing forced equity or BRRRR deals, as I understand that's a much quicker way to scale a portfolio. I am admittedly nervous about all the regulation in our area, especially around rent controls and other landlord/tenant rules, and would probably benefit from a deeper discussion around how to navigate these things if I were to invest in my area. Thank you for the offer to connect, I will take you up on that!
0 Reply
Lori Williams
Developer · Youngstown, OH · Member since 2019 · 129 posts · 121 votes
4y
I am in Youngstown and am creating my own market. Examples: 1st house rehabbed and rented in 2017: bought for 38k, rehabbed for 40k, currently renting for 1200.00 (discounted rate for disabled vet). Last house I rehabbed and rented in September 2022: bought for 23k, rehabbed for 60k, currently renting for 1600.00.

I am targeting a class of renter no one else seems to be targeting, which is kind of making me the only game in town for this class of renter.

And investors entirely overlook Ytown - all they see is some noise on the internet and they don't really know the area. So they look to Akron and Cleveland and Toledo, under the impression we're still all about steel mills.

More than half of the city is renters. Almost all rentals are targeting lower income and section 8. That leaves non-low income and non-section 8 renters wide open markets. And contrary to what seems to be the belief, there is quite a bit of higher income earners in the city who would love to live closer to work rather than 20-30 minutes outside the city in the burbs.

The important thing is to get to know the market you want to invest in. That is the key to being able to develop your strategy and know where to buy to make that strategy successful.
2 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
4y
Quote from @Shilpa Matlock:

I am choosing to invest in the Ohio markets. I like the cashflow aspect of it and the affordable prices (which lowers the barrier for a newer investor like me who doesn't have a lot of 1031 funds/equity to work with).

But I'd like to know why others are choosing the Ohio markets? Especially considering the stagnant/declining population, low rent growth, low property value growth, etc...(compared to other markets). Are you concerned about these factors when doing a long-term hold (5-10yr+)? This would be for small multifamily (2-15 units).

Being open to investing out-of-state is great as it opens up so many market options, but it's not so great, because too many options makes it overwhelming.

Would love to hear other investors thoughts on Ohio's population/rent/property value situation and outlook-is anyone concerned about these things, or see it as a negative? Or does the cashflow and affordability aspect of it outweigh any negatives?

Thanks!

Cleveland is obviously a very popular out of state landing spot for those looking into Ohio. If you are interested in Cleveland I suggest reading The Ultimate Guide to Grading Cleveland Neighborhoods. Cleveland, like much of Ohio, is very tricky. You can make a lot of money, but you can also get killed (financially and literally) if you don't know the in's and out's on a neighborhood level.
1 Reply
Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@James Wise Thank you! This looks like a lot of great info and I will be sure to review it in detail.
0 Reply
Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Lori Williams It sounds like you have a great strategy! I like the idea of targeting a niche market. I have been thinking about Section 8 as well. I know there's a bit more regulation around it, but I also think the success of that can depend on the individual city and how they work with you on that. And also great to note how important it is to understand your market in detail. High level, people have been saying that Cleveland is a cashflow market and Columbus is appreciation. But I'm seeing there's a lot more to it as I go deeper into the submarkets, and without doing this, could possibly be missing opportunities in other cities, as you noted with your Youngstown example. Thanks for your helpful input! If I have additional questions about your BRRRR method, is it okay if I PM you?
1 Reply
Aj Parikh
Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
4y
Hi Shilpa! I am based out of Northern Virginia and I primarily invest in Cleveland and there are a lot of opportunities for small multi family and SFH. In my experience, there will always be pros and cons to each market but its important to connect with local investors in the area and see if they are still doing deals in the area. As an investor in Cleveland, I will tell you that I have been able to scale to 12 units in the past 2 years and I continue to buy in that area. Feel free to reach out and we can connect and discuss if you still have questions.
0 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
4y
Quote from @Shilpa Matlock:

@Lori Williams It sounds like you have a great strategy! I like the idea of targeting a niche market. I have been thinking about Section 8 as well. I know there's a bit more regulation around it, but I also think the success of that can depend on the individual city and how they work with you on that. And also great to note how important it is to understand your market in detail. High level, people have been saying that Cleveland is a cashflow market and Columbus is appreciation. But I'm seeing there's a lot more to it as I go deeper into the submarkets, and without doing this, could possibly be missing opportunities in other cities, as you noted with your Youngstown example. Thanks for your helpful input! If I have additional questions about your BRRRR method, is it okay if I PM you?

Cleveland and Columbus are large cities so you can find high cash flow and high appreciation in each market
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Brandon GoldsmithBusiness Member
Real Estate Agent · Columbus, OH · Member since 2020 · 1k+ posts · 1k+ votes
4y
There is still a lot of opportunities in the Ohio markets. Most of the citieshave growth and properties are cash flowing well. @Stephen Brown hit the nail on the head for cashflow vs appreciation. Just depends on your goals @Shilpa Matlock
[email protected]614-963-3340
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Lori Williams
Developer · Youngstown, OH · Member since 2019 · 129 posts · 121 votes
4y
Quote from @Shilpa Matlock:

@Lori Williams It sounds like you have a great strategy! I like the idea of targeting a niche market. I have been thinking about Section 8 as well. I know there's a bit more regulation around it, but I also think the success of that can depend on the individual city and how they work with you on that. And also great to note how important it is to understand your market in detail. High level, people have been saying that Cleveland is a cashflow market and Columbus is appreciation. But I'm seeing there's a lot more to it as I go deeper into the submarkets, and without doing this, could possibly be missing opportunities in other cities, as you noted with your Youngstown example. Thanks for your helpful input! If I have additional questions about your BRRRR method, is it okay if I PM you?

Sure thing :)

Here's the thing about Youngstown: there's almost no place in the country that's less expensive to live. Housing, food (no tax on food and if you go across the border to PA, there's no tax on clothing), taxes, etc. We were hit hard with the steel mill closings in the 1970s - 1990s, and we've had a hard time coming back. But we have minor league baseball and hockey, college basketball, baseball and football, 2 drive in theaters, 2 lakes, 2 malls, multiple golf courses, country clubs, 2 skating rinks, an ice skating rink, museums, orchestras, theaters, some amazing parks, and tons of great food - all within 5 - 30 min away. 45-60 min away you have Amish country, major league baseball, basketball and football, Lake Erie, casinos, 3 airports, etc. You can get to Cleveland, Akron and Pittsburgh in about 45 min - 1 hr and 15 min (depending on where in the cities you're going). Columbus is 2 1/2 hours away.

But best of all? No real traffic! You can drive 60 miles in 60 minutes. Convenient hwy system without traffic jams :)

People working remotely *should* move to Ytown - they can enjoy the big city paycheck, and the small city cost of living. They can easily drive or use the bus lines. Or even bike.

In my case, I'm creating my own market. I'm buying up a street. I bought some empty lots. Hope to build a small pavilion, and in the summers bring in food trucks once a week for the rental community I'm developing.

I won't do section 8. The truth is more section 8 housing is needed, but there's pretty much no housing at all in Ytown for professionals who want to live near where they work. Overall, my tenants pay on time and I have less issues with maintenance and remodeling in between tenants. I'm able to take 1st, last and security for deposits and my security is 250.00 - 500.00 more than my monthly rent amount - I can't do that on section 8. But those extra deposits create a mindset with the tenant that they want to get that money back, so they try harder to take care of things. (I'm not saying all section 8 tenants are rough on rentals, but enough are that I can't risk it. Also, my rents are about 2x what section 8 pays, so most section 8 tenants wouldn't be able to afford the rent)

All that said, there are a lot of people who make really good money with section 8.

I would call Ytown a cashflow market primarily. But because we have been suppressed on property values for a long time, we are an appreciation market, too (just at a slower pace than the cashflow). Key in this city is to find areas that are gentrifying.

4 Reply
Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Lori Williams It really sounds like Youngstown does indeed have so much potential and has so many positives going for it. And it certainly isn't as well know as Cleveland or Columbus. I also hadn't really heard of it until now, so I was curious and looked up some info. Didn't realize there's over 60K population in the city proper and over 500K in the wider metro area, so that's really quite a sizable MSA! And it sounds like you know it so well, and are super passionate about investing in the area, I think that's so cool!
1 Reply
Tracy Keffer
Real Estate Agent · Columbus, OH · Member since 2019 · 35 posts · 41 votes
4y
me and my investors invest here in Columbus OH and it has been great to us. Intel broke ground last week and that alone will change this city in a tremendous way that you dont have to think twice about cash flow and appreciation. Interest rate kills deals left and right so you have to underwrite your deals carefully. But I put 100% bet to this city vs any in Ohio. Happy to chat if you have more questions about Columbus!
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Patrick DruryBusiness Member
Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
4y
@Shilpa Matlock
I would definitely recommend Columbus OH. It's a solid hybrid market of cash flow and appreciation. Columbus has lots of job opportunities and population growth.

[email protected]614-412-4565
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Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Tracy Keffer Thanks Tracy, I appreciate the info, that's definitely exciting the news about Intel. I totally agree these interest rates are making it a lot harder to cashflow.
0 Reply
Shilpa Matlock
OP
Real Estate Agent · Minneapolis, MN · Member since 2021 · 50 posts · 23 votes
4y
@Patrick DruryYes agreed, Columbus definitely has a lot going for it! I've heard a lot of investors like going there.
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