Guaranteed 21% Annual Appreciation? Columbus, Oh?...where else?

Multi-Family and Apartment Investing
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Guaranteed 21% Annual Appreciation? Columbus, Oh?...where else?

Brandon SturgillBusiness Member
Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes

How is your MF market price appreciation?

I hear a lot of folks claiming their market is on "fire", but nobody ever supports that with data...our local MF market in Columbus, Ohio has appreciated at a year-over average of 21% in the 20 most productive zip codes for the last 5-years...the highest appreciating zip code grew at a rate of 64%...

How is your MF market price appreciation in other major metro areas?...Raleigh? Nashville? Indianapolis?....others?

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Nick B.
Investor · North Richland Hills, TX · Member since 2013 · 1k+ posts · 1k+ votes
5y

Past performance is not a guarantee of future results. 

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  • Nick B.
    Investor · North Richland Hills, TX · Member since 2013 · 1k+ posts · 1k+ votes
    5y

    Past performance is not a guarantee of future results. 

    22Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    5y
    Originally posted by @Brandon Sturgill:

    How is your MF market price appreciation?

    I hear a lot of folks claiming their market is on "fire", but nobody ever supports that with data...our local MF market in Columbus, Ohio has appreciated at a year-over average of 21% in the 20 most productive zip codes for the last 5-years...the highest appreciating zip code grew at a rate of 64%...

    How is your MF market price appreciation in other major metro areas?...Raleigh? Nashville? Indianapolis?....others?

     Can you define what you are calling appreciation? Rents? Cashflow? Values? Population? Lot's of ways you can package that.

    7Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y

    You mean to tell me that a multifamily building in Columbus, OH that sold for $1mm on 2016, now sells for $11.86mm today just through appreciation with no value add? 64% year over year growth for 5 years did not happen in the RE world. 

    21Reply
  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    5y

    @Brandon Sturgill, like the others, I am a little skeptical on these numbers.  Cincinnati was up there as of late, and reportedly had the lowest days on market in the country for single family homes up until recently.  I am thinking to some flips we sold in 2016 and what that same house would achieve today, and it is still likely a 40% increase, but I would want to see how much of that growth you are referencing had rehab component tied to it.

    I come up with a different number than Todd: $1mm grew to $2.6mm, in 5 years, if compounding, to simple interest to $2.1mm.  

    I would imagine, without knowing the numbers, that the coastal major metros saw better than that, or close, even with the current pandemic pricing accounted for.  

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  • Brandon SturgillBusiness Member
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    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    lol...good point @Todd Dexheimer

    Have you heard the phrase "your data will tell you anything you want if you torture it long enough"...95% of our local "MF market" is made up of transactions less than 5-units...the price appreciation grew exponentially in the lower asset classes...so, we are seeing 4-unit properties that traded 3-years ago at $75k trade at $250k today...cosmetic renovations or no renovations. 

    I would consider price appreciation in a commercial residential a by-product of NOI, and no...our rents have not increased 5,000% here.

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  • Spencer Gray
    Syndication Expert and Investor · Indianapolis, IN · Member since 2016 · 591 posts · 808 votes
    5y

    It depends on the specific asset, sub-market, etc. I will say that in Indianapolis we were buying 2000's vintage 200+ unit properties for ~110k/unit two years ago, last year they were trading in the $130k/unit range, and I've seen current on market listings closer to $145k/unit. 

    That's more anecdotal, however. 

    1Reply
  • Brandon SturgillBusiness Member
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    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @Evan Polaski here is one of our zip codes that has experienced mild growth as an example...

    we're talking about 95% small MF properties here (no SFR)...most of our market looks like this...

    I think you will see this in many other comparable markets as well...just looking for the Nashville and Raleigh guys to chime in. I'm listing modest duplexes with only cosmetic renovations in this location for $300k-$350k year to date...up from $275k 4-months ago...next year I'll help the same clients exit at $450k...

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  • Brandon SturgillBusiness Member
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    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @Greg Dickerson just price...

    Deals we passed on 3-years ago at $45k/unit are trading at $125k/unit today...mostly cosmetic renovations...and no, rents have not kept pace...folks seem to be happy with 5CAP and a place in the market these days...

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  • Brandon SturgillBusiness Member
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    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
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    Good point @Nick B. and very true! 

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  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Evan Polaski:

    @Brandon Sturgill, like the others, I am a little skeptical on these numbers.  Cincinnati was up there as of late, and reportedly had the lowest days on market in the country for single family homes up until recently.  I am thinking to some flips we sold in 2016 and what that same house would achieve today, and it is still likely a 40% increase, but I would want to see how much of that growth you are referencing had rehab component tied to it.

    I come up with a different number than Todd: $1mm grew to $2.6mm, in 5 years, if compounding, to simple interest to $2.1mm.  

    I would imagine, without knowing the numbers, that the coastal major metros saw better than that, or close, even with the current pandemic pricing accounted for.  

    Trying to figure out that math. $1mm with a simple growth of 64% in year one grows to $1,640,000, then take the $1.64mm x 64% growth for year 2, then 3, then 4, then 5 = $11.86mm. I guess it's interpretation of numbers and how you're assuming the 64% growth 

    1Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    5y

    If your market can guarantee 21% for the next 5 years Ill make a deal with you. I will give you one million dollars and ask for a guaranteed 15% return. You can keep the difference. I will need collateral equal to $1m for the loan but since your returns are "guaranteed" you should have no problem with that right?

    22Reply
  • Jai Reddy
    Edmond, OK · Member since 2012 · 456 posts · 270 votes
    5y

    @Brandon Sturgill

    Why would you use clickbait to get people to chime in here?

    If I am mistaken about it being clickbait, tell myif you are guaranteeing it in writing.

    1Reply
  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    Guaranteeing what in writing @Jai Reddy

    This is just math...anyone can do it...it's division. If you are asking if my math is correct, yes it is. I was really hoping to see some other folks in similar markets doing some math on their market and letting me know what the figures look like. 

    Step 1- Download closed properties

    Step 2- Organize by years

    Step 3- Calculate the rate of growth from one year to the next

    Step 4- Find the average

    Happy to send the data over.

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  • Brandon SturgillBusiness Member
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    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @Account Closed My contact information is in my signature. I'll have my lawyer draft the agreement terms. 

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  • Jai Reddy
    Edmond, OK · Member since 2012 · 456 posts · 270 votes
    5y
    Originally posted by @Brandon Sturgill:

    Guaranteeing what in writing @Jai Reddy

    This is just math...anyone can do it...it's division. If you are asking if my math is correct, yes it is. I was really hoping to see some other folks in similar markets doing some math on their market and letting me know what the figures look like. 

    Step 1- Download closed properties

    Step 2- Organize by years

    Step 3- Calculate the rate of growth from one year to the next

    Step 4- Find the average

    Happy to send the data over.

    Its interesting you ask 'Guaranteeing what in writing'. What else, but the title of your post which reads 'Guaranteed 21% Annual Appreciation? Columbus, Oh?...where else?'

    All the above 'just math' you describe are valid, if you rephrased your post to say 'Guaranteed Historical 21% Annual Appreciation'

    4Reply
  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    Point taken @Jai Reddy

    I have already taken one other investor on the offer...he is asking for a 15% return...$1m commitment. But here is the truth...if you purchase in any of the dozen or so locations I'm talking about in Columbus...your property will appreciate at 21%...this year...next year...and the year after.

    2021- 10 SFR's purchased in Franklinton for $100,000 each w/$15,000 Renovation each

    2022- 10 SFR's sold in Franklinton for $220,000 each

    These aren't flips...these are basic cosmetic renovations doubling the value of the property  

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Brandon Sturgill:

    Point taken @Jai Reddy

    I have already taken one other investor on the offer...he is asking for a 15% return...$1m commitment. But here is the truth...if you purchase in any of the dozen or so locations I'm talking about in Columbus...your property will appreciate at 21%...this year...next year...and the year after.

    2021- 10 SFR's purchased in Franklinton for $100,000 each w/$15,000 Renovation each

    2022- 10 SFR's sold in Franklinton for $220,000 each

    These aren't flips...these are basic cosmetic renovations doubling the value of the property  

     Columbus, Ohio to the moon

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  • Mike B.
    Rental Property Investor · Madison, WI · Member since 2020 · 91 posts · 71 votes
    5y

    @Brandon Sturgill

    That level of appreciation is fantastic. If buying those same properties today, what are some of the other typical return metrics that you're seeing, such as CoC?

    1Reply
  • Jai Reddy
    Edmond, OK · Member since 2012 · 456 posts · 270 votes
    5y

    @Brandon Sturgill

    Then, it seems your data has given you the confidence to guarantee the return. When you mentioned your lawyer drafting up an agreement for a 15% return, I thought it was in jest.

    Wishing you the best then.

    2Reply
  • Saleh RiaziPro Member
    Investor · San Jose · Member since 2018 · 47 posts · 65 votes
    5y

    @Brandon Sturgill

    @Brandon Sturgill

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Brandon Sturgill:

    @Account Closed My contact information is in my signature. I'll have my lawyer draft the agreement terms. 

    not to get technical but to Guarantee a return you will need to do a REG A offering.. and those cost about 50 to 100k to prep .. 

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  • Account Closed
    Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    5y

    I swear to god most of this Columbus growth is just our fleet of boiler-room realtors with their biggerpockets keyword nets capturing all the wandering California money.  Y'all killing me. What am I supposed to do, start buying in Newark or Circleville? Yuck

    I do kick myself every time I drive by a few of the small local multifamilies I got outbid on by what seems like nickles 3 or 4 years ago.  I didn't know what an escalation clause was then.

    10Reply
  • Account Closed
    Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    5y

    Also I was joking around in the previous post, but can you clarify about the Guaranteed 21% appreciation?    

    2Reply
  • Brian Garlington
    Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    Brandon, are you a Broker, or an agent? You are using both titles in your thread. I wasn't sure so I did a Google search of Hypothetical Insight in Columbus, Ohio and the first thing that popped up shows an address on Carpenter Street that (according to Google) is permanently closed. We all know that Google is not known for being super accurate, but you may want to look into why that's the first thing that pops up.

    As for Columbus....I have a lot of love for the area and have lots of family there.

    4Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    5y

    First of all, “Guarantee” plus “return” in the same sentence= run the other direction. Secondly 5 years of strong appreciation isn’t a long enough time period to tell us much. When the entire national market has been breast-fed government steroid milk for going on 12 years now, it’s no surprise that even the last places to recover from the 2008-2010 crash have finally now fully recovered and are appreciating. Just looked up Columbus OH historical appreciation and got 3.6%, which is a little better than historical inflation. Looks like the market there declined 10% 2007-2011 then started rebounding hard starting in 2016, fully recovered by 2018 and has been gangbusters since then, so seems more like a boom and bust market than one with strong long-term fundamentals to me, and since it’s been booming for a while now... I mean how much higher can prices and rents go? Affordability must be a concern in market performance moving forward. Have wages gone up at the same pace as rents? At this point in the market cycle, I think it’s wiser to look at historical appreciation, and which markets are historically the most resilient in a downturn. Surprise, surprise! I like my own market for this reason, because prices have not gone down once in a single year here in over 40 years, including the global financial crisis 2008-2010. We have averaged 6% extremely consistently and only dipped to 2-3% appreciation in 2008-2010 while other parts of the county dropped by up to 50%. No disrespect to Columbus whatsoever and I wish everyone investing there much success, but 5 years of strong appreciation in a fed-fueled bull market, (that some would call an inflating bubble), when almost everywhere else has also had strong price growth regardless of varying underlying market fundamentals at the same time, isn’t a metric that has me getting out my checkbook.

    7Reply
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