2-4 Unit Properties in Cincinnati (& possibly Dayton)

9 Replies

I have my eye on Cincinnati due to the affordable pricing (to purchase my first investment property - buy & hold). Looking for 2-4 units to keep it Residential not Commercial.  I see that the buildings are pretty old, and I imagine this is or could be a maintenance nightmare. The Cash Flows that I have seen on the MLS look excellent (on paper), but what are the realities?  I guess that ties with my main questions - why are properties so cheap? What's the catch?  High maintenance?  Tenants who can't pay rent regularly? Low demand for these units?  If so, that looks like a recipe for disaster - spending money on maintenance while have no paying tenants.  Am I too cynical or is this an obvious red flag? What's the true ROI like out there?

Properties are cheap because the cost of living is lower here.  Prices have not run up due to demand like they have in bigger cities like NY, LA, Miami, etc. etc.  Yes buildings can be old but so long as they are well maintained it should not be an issue.   With the right property manager the properties should cash flow without issue unless you are buying in a D area of Cincinnati.

@Paul Sian.  I get the vibe that it is a vastly different demographic (in terms of job stability & crime) than what I am used to out here in Reno, NV.  Here we don't have too many 'high crime areas' or large populations of unemployed individuals. We also don't have decent rental properties under $500K.  Neither do we have very many old buildings (the West is so much newer, as you probably know).  On the surface it looks like an ideal market for a first-timer like me (although I have never owned rental properties, I used to be a PM here), I get this fishy feeling that something is off.

Mica, if you don't feel comfortable with what you see then look elsewhere until you find a place that works for you. There are many many markets for REI. If you don't like the Midwest then look for somewhere that suits you better.

@Kent Hall.  Yes, yes I know.  The point is there must be a reason it looks good on paper -- I wonder what the reality is.

@Mica Moore it is not the fastest growing market, but it is a growing market. It is very stable with a good business community. As with any larger city, there are good and bad areas. It is a much more diversified economy than I would imagine Reno is and a larger market than Reno so you will have more areas of town to learn about to make an informed decision. 

It is a very good market. The downside is that it does not get institutional cash from the very largest players, but there still is a lot of private money from both in town and outside of town who invest very successfully in the area. With anything, do your homework. Buy in the right neighborhoods at the right prices. 

@Mica Moore

You definitley have to be more aware and cognizant of the areas/blocks around Cincinnati and Dayton as they jump from a decent area with quality tenants to Section 8 very quickly.  From my experience, living in Florida and California for the last decade, the "nicer" areas around the cities in the northeast tend to be smaller and less defined with the "problem areas" scattered about.  In Cincinnati, if you're in an area like OTR, one block has expensive newly remodeled condo's while the next street you don't want to walk through at night as it hasn't been "fixed up" yet.  My MF property is in the Norwood area, a litle farther north and close to Xavier, but it still has some very questionable areas from block to block.  I really had to make a couple trips to get a feel and now I still really rely on my PM for neighborhood recomendations.   Also, when you don't live in these city you have to remember you're not looking at places as if you'd live there.  It's been years since I lived in Ohio, when I visit I tend to look at neighborhoods and get the feeling of "I'd never live here" while the local people I know say the same neighborhoods area great.  A lot of these cities have large rental populations as living isn't that expensive so rents tend to be decently cheap.  The cash flow and ability to go big are really nice in these cities for sure.    

@Mica Moore you ask some really good questions and are understandable from someone who is not from here.  As many mentioned above it is because of cost of living and inflation.  I'm a local investor in Dayton but not originally from here.  I moved here 14 years ago and stay only bc of the RE.  Our economy here is VERY strong with no signs of slowing down.  The houses are older but as a buy and hold investor myself I can assure you that with proper budgets you can't make more money anywhere else in the country (I've looked).  It is easy to get double digit returns even after accounting for repairs.  If you want to chat in private I'd be happy to give you a deeper look into things.

Thanks all... I'm going to keep investigating. 

@Mica Moore  My thought: 

You’re clearly apprehensive with the challenges in out of state investing.... and I’d be to if my first investment was 2k miles away in a city I’ve never been .. most people from Cali, ny, etc come to cincy and buy 30k-75k **** properties because as you said.... the numbers look good on paper.... most fail miserably.

If you’re  a first time investor looking to the Midwest... my suggestion would be spend 100-150k and be in a B neighborhood. I’ve actually wholesaled a few properties to some friends that live in South Tahoe.... they’ve done really well... especially as a newbie.... this type of investment will be much easier on you’re blood pressure.... but then again... if you can spend 100k- 150k id just look to Sac, Boise, or other places closer to you.

If you do decide to invest here.... you’ll probably want to visit out here a few times.... go to a few meetups.... and then, if you’re comfortable with the idea, pull the trigger. 

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