right expectation on the return for cash flow properties in Columbus, Ohio

Cleveland, Ohio
Out of State Investing
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right expectation on the return for cash flow properties in Columbus, Ohio

Runbang Tang
Member since 2024 · 1 post · 6 votes

Hi Everyone,

As a first time out-of-state investor, I plan to do out-of-state investing in Columbus, Ohio. I found that normal duplexes or SFHs in C area do have cash flow, but the numbers didn't seem worth investing. For example, a duplex (in 1920s) ~ 240k, $2600 total rents with 20k rehab and 5% vacancy, 8% management and 12% maintenance, 1.37% property tax, $960 insurance, 25% downpayment and 7.25% interest rate. The overall cash on cash return is only 5.73% (with principal is 7.84%). It's way below the average return of qqq (12.5%). I want to know in this case if it is still worth investing in Columbus Ohio or if there is anything wrong in my calculation/expectation. I found that the return will be more than 12.5% when the interest rate <5%. Perhaps I should wait till the interests go down? Please share your thoughts and experience and what are the right investments to look at Columbus Ohio. Thanks a lot!

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Samuel DioufBusiness Member
Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
1y

Columbus is a market where you'll see a little cash-flow but the main reason investors buy in Columbus is for the appreciation that has been around 5% a year. If you factor in the appreciation, your cash-on-cash return will be a lot greater. 

If you don't want to bet on appreciation, Cleveland is another great market to look into where you'll see a much higher COC return. It still might not be 12.5% but it will definitely be higher than Columbus from a strictly cash-flow perspective.

If you wait for rates to drop, you'll be buying at a higher price point as everyone who's been waiting will start to jump back in the market. If you can, it would be better to buy now, then refi when rates drop. 

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  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    1y
    Quote from @Runbang Tang:

    Hi Everyone,

    As a first time out-of-state investor, I plan to do out-of-state investing in Columbus, Ohio. I found that normal duplexes or SFHs in C area do have cash flow, but the numbers didn't seem worth investing. For example, a duplex (in 1920s) ~ 240k, $2600 total rents with 20k rehab and 5% vacancy, 8% management and 12% maintenance, 1.37% property tax, $960 insurance, 25% downpayment and 7.25% interest rate. The overall cash on cash return is only 5.73% (with principal is 7.84%). It's way below the average return of qqq (12.5%). I want to know in this case if it is still worth investing in Columbus Ohio or if there is anything wrong in my calculation/expectation. I found that the return will be more than 12.5% when the interest rate <5%. Perhaps I should wait till the interests go down? Please share your thoughts and experience and what are the right investments to look at Columbus Ohio. Thanks a lot!


     Take into account the other benefits of investing in RE as well (appreciation, depreciation, debt paydown etc.) and you will be getting a lot higher than the 5.73% you are calculating. When rates go down the property values tend to go up in C class areas as they are heavily owned by investors who purchase off the numbers / area. 

    [email protected]614-502-5316Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
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  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y

    Columbus is a market where you'll see a little cash-flow but the main reason investors buy in Columbus is for the appreciation that has been around 5% a year. If you factor in the appreciation, your cash-on-cash return will be a lot greater. 

    If you don't want to bet on appreciation, Cleveland is another great market to look into where you'll see a much higher COC return. It still might not be 12.5% but it will definitely be higher than Columbus from a strictly cash-flow perspective.

    If you wait for rates to drop, you'll be buying at a higher price point as everyone who's been waiting will start to jump back in the market. If you can, it would be better to buy now, then refi when rates drop. 

    [email protected]614-662-1652
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  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y
    Quote from @Runbang Tang:

    Hi Everyone,

    As a first time out-of-state investor, I plan to do out-of-state investing in Columbus, Ohio. I found that normal duplexes or SFHs in C area do have cash flow, but the numbers didn't seem worth investing. For example, a duplex (in 1920s) ~ 240k, $2600 total rents with 20k rehab and 5% vacancy, 8% management and 12% maintenance, 1.37% property tax, $960 insurance, 25% downpayment and 7.25% interest rate. The overall cash on cash return is only 5.73% (with principal is 7.84%). It's way below the average return of qqq (12.5%). I want to know in this case if it is still worth investing in Columbus Ohio or if there is anything wrong in my calculation/expectation. I found that the return will be more than 12.5% when the interest rate <5%. Perhaps I should wait till the interests go down? Please share your thoughts and experience and what are the right investments to look at Columbus Ohio. Thanks a lot!

    Great question — and welcome to out-of-state investing!

    You're definitely running your numbers carefully, which is awesome. The return you mentioned (5.73% CoC) is fairly typical in many parts of Columbus, especially in C-class areas. The reality is, in today’s interest rate environment, hitting that 12%+ CoC return is tough unless you're getting deep discounts, adding value (BRRRR-style), or investing in higher-risk areas.


    A few thoughts to consider:

    Don’t just compare it to QQQ. Real estate is a different asset class. It offers leverage, tax benefits, appreciation, and long-term equity building — not to mention cash flow that increases over time.

    C-class areas can work, but you’ll likely face higher tenant turnover and maintenance. You might want to explore B- to B-class neighborhoods in Columbus that offer slightly lower cash flow but better long-term stability and appreciation.

    If you want to hit higher returns, consider:

    Looking for off-market or distressed properties (there’s more upside with rehab)

    Exploring small multifamilies or mixed-use buildings where you can force appreciation

    Partnering with local wholesalers or agents who know the pockets that still cash flow well

    Waiting for rates to drop is understandable, but the competition will ramp up when that happens. If the deal makes sense now, and you’re in it for the long haul, it could still be a great move!

    [email protected]614-490-1163
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  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    1y
    Quote from @Runbang Tang:

    Hi Everyone,

    As a first time out-of-state investor, I plan to do out-of-state investing in Columbus, Ohio. I found that normal duplexes or SFHs in C area do have cash flow, but the numbers didn't seem worth investing. For example, a duplex (in 1920s) ~ 240k, $2600 total rents with 20k rehab and 5% vacancy, 8% management and 12% maintenance, 1.37% property tax, $960 insurance, 25% downpayment and 7.25% interest rate. The overall cash on cash return is only 5.73% (with principal is 7.84%). It's way below the average return of qqq (12.5%). I want to know in this case if it is still worth investing in Columbus Ohio or if there is anything wrong in my calculation/expectation. I found that the return will be more than 12.5% when the interest rate <5%. Perhaps I should wait till the interests go down? Please share your thoughts and experience and what are the right investments to look at Columbus Ohio. Thanks a lot!

    Hi Runbang! When it comes to real estate investments, you can't look purely at cash on cash return because real estate is so much more than that - it is cash flow, appreciation, principal paydown depreciation, and depreciation. When you add in all of those returns, your yearly return is closer to 20% a year. With that being said, appreciation in Franklin County ranges from 7-10% a year based on a report I read recently - it's one of the fastest growing cities with some of the highest appreciation potential in the US. 

    In Columbus Ohio, you can definitely find the 1% rule and tons of positive cash flow here after PITI but it won't be the BEST cash flowing market. But if you're okay with netting a few hundred dollars a door after PITI and reserves, you'll definitely find deals here!

    Additionally, it's one of the best appreciating markets in the US with tons of macroeconomics - population growth, job growth, and companies moving/developing here. So you're buying future appreciation over the next few years that will make the real estate 2-3x! Happy to connect and answer any questions you have!

    [email protected]614-300-7535
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  • Payton HaightBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2021 · 124 posts · 86 votes
    1y

    Hi Runbang, make sure you are accounting for CapEx. I assume you are lumping it in with your maintenance (depending on the condition and age of the property, that total number could definitely be higher). Outside of that, I don't believe you are doing anything wrong. As others have mentioned, there are many more factors to consider when evaluating the returns for a residential real estate investment. If you are only comparing the pure cash flow return for a long-term rental purchased at market value and today's interest rates vs. an index fund, I agree the numbers likely don't make sense. Once you start to factor in principal pay down, property appreciation, depreciation benefits, and rent growth over time, the deals start to look significantly better.

    Additionally, there are other options to increase your returns such as mid-term or short-term rentals. I have purchased several properties in A and B areas where the cash flow would have been very poor as a long-term rental, but I have been able to get 10%+ returns as a mid-term rentals. These properties are in desirable areas so they have also seen above average appreciation and rent growths. 

    I have experience long distance investing before I moved back to Columbus. Iwould be happy to connect with you and answer any questions!

    [email protected]380-324-0445
    1Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    1y
    Quote from @Runbang Tang:

    Hi Everyone,

    As a first time out-of-state investor, I plan to do out-of-state investing in Columbus, Ohio. I found that normal duplexes or SFHs in C area do have cash flow, but the numbers didn't seem worth investing. For example, a duplex (in 1920s) ~ 240k, $2600 total rents with 20k rehab and 5% vacancy, 8% management and 12% maintenance, 1.37% property tax, $960 insurance, 25% downpayment and 7.25% interest rate. The overall cash on cash return is only 5.73% (with principal is 7.84%). It's way below the average return of qqq (12.5%). I want to know in this case if it is still worth investing in Columbus Ohio or if there is anything wrong in my calculation/expectation. I found that the return will be more than 12.5% when the interest rate <5%. Perhaps I should wait till the interests go down? Please share your thoughts and experience and what are the right investments to look at Columbus Ohio. Thanks a lot!


     You need to factor in the average 5% appreciation and rent growth.

    [email protected]614-363-2787
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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    1y

    @Runbang Tang

    zero - zero cash flow anywhere in the first few years on an LTR.

    0Reply
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