How realistic is it to BRRRR in Columbus, OH

Question

It would be great to hear from people with experience in the Columbus, OH market what it looks like to successfully BRRRR a rental property there.

How realistic do you think it is to find deals with the following criteria on the MLS?

- In decent neighborhood (C- to B-)

- All-in costs are 75% of ARV

- Cash-flow after a refinance where you pull out 75% of the ARV

I've been analyzing MLS deals and have found that the numbers work well in a few areas when the purchase price is around $85-100K but since I don't know the city I'm not sure if I'm analyzing in total war zone neighborhoods or not!

Is it realistic to find properties on the MLS in decent/up-and-coming neighborhoods that match the above criteria? If not, what other methods do you use to find deals?

Remington Lyman · Answer

@Alexis Schreier I think this is realistic if you find a distressed property on the MLS and put a lot of sweat equity into the deal. If you are an out-of-state investor and need to pay a GC to bring in his subs in then you need to pay a property manager 15% to oversee the project I think it is unrealistic. Columbus is not a cheap place to invest since it is so hot. Our job and population growth has been rapidly increasing for a while now. I think the way to be a successful out-of-state investor is to buy and hold for 5+ years and take advantage of the appreciation.

If you want to find cheap properties that are easier to make a short-term gain then I would recommend looking into markets like Cincinnati or Cleveland.

Daniel Judge · Answer

@Alexis Schreier I'm trying to do just this with a duplex I purchased in a very mixed Columbus neighborhood (South of Main, which is in the process of turning and would fit your criteria); purchased with the help of @Remington Lyman as my agent. The property was listed on the MLS.I'm looking at all-in costs around 65-70% ARV. I'm not convinced I'll be able to pull all my money out, though, because the rents in the neighborhood may not support that; realistically, I'm going to be satisfied if I am able to recoup 80-90%, get some positive, but likely modest cash flow, and have a nice, appreciating property in an up-and-coming neighborhood. This is my first attempt, though. Being on the front end of the renovation process, things could still go sideways on me.

I'd recommend looking at the designated opportunity zones in Columbus were you can get tax abatement, because it seems to offer major assistance in being able to get a cash flowing property in those areas.

Nate Margolin · Answer

@Alexis Schreier Did you find success using the BRRRR strategy in Columbus? Would love to hear your success stories! Or if you tried and it didn't work out, what problems caused it to fail?

Daniel Judge · Answer

Another point when considering the tax abatement situation. There is a lot of information on the city of Columbus' website, but one key point not mentioned is that the renovation costs must total 20% or more of the purchase price in order to qualify.

Daniel Judge · Answer

South of Main is in an opportunity zone called the Near East, which also includes the Olde Towne East and Franklin Park neighborhoods. Those latter two areas have seen steep price increases with a lot of fix and flips. In my albeit limited research, it's hard to find a property needing fairly extensive renovation in either of those neighborhoods for under 200K.

Tyler Weaver · Answer

I second the idea of BRRRR in Cincinnati. There are quite a few properties in Cincy that would meet your criteria.  There is also a meetup hosted by @Joe Fairless that I would highly encourage attending if you intend on investing in the area.  That way you can meet with other investors, get connections on contractors etc.

Zeke Liston · Answer

Hey Alexis, Columbus is a great market but it will be hard to find a decently priced properties on the MLS. I'm not saying they're not out there, they're just harder to find!

I am not sure what neighborhoods you're looking at with prices between $85K-$100K but some of the war zones in Columbus right now are Linden, Hilltop, and Whitehall. Although these areas will cashflow really well, I would generally suggest steering clear depending on your strategy.

Let me know if you have any other questions!

Joshua Myers · Answer

@Alexis Schreier if you're looking in Southern Orchards make sure that you work with someone you can trust. That area is changing really fast, but at the moment it's still street by street. I have a rental down there that I was able to refinance, but I wasn't able to get everything back. Even at that it only barely cash flows after everything.

If your time frame is 5+ years it's hard to go wrong down there, but it's not quick money.

Alexi Schreier · Answer

@Tyler Weaver, @Daniel Judge thank you both for the info.

Alexi Schreier · Answer

Thanks for your input and the recommendations. I am out of state so will be looking to work with a GC or manager for the rehab. I'm not necessarily looking for the cheapest properties, more so trying to understand the price points at which a brrrr could realistically work.

Sent you a PM if you'd like to further discuss.

How realistic is it to BRRRR in Columbus, OH

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