All Forum Posts by: Zach F.

Hey @Yang Zeng, good questions!  You are correct that Ohio can be a great market in the country to find lower-priced rental properties compared to the rest of the country.  The Midwest in general, can be typically like this.

At our property management company in Cincinnati we have a significant amount of out of state investors (many in Cali) and they love our market because like you said, there are opportunities for lower priced homes compared to where you live.

The biggest thing in my opinion is to find the right Realtor to help you navigate the different neihborhoods in Cinci as I believe it'll be very difficult for any out of state investor to TRULY know what they are getting into without a very good Realtor.

Reach out directly to me if you want to chat more!  I would be happy to go over your questions in more details and also provide you with more information on property management.

Thanks!

Hi @John B. !

I highly suggest you reach out to our Business Development Manager, Patrick Rohan (cell phone 513-790-3939) to learn more about our company, True Home Ohio Property Management.

We are a full-service property management company that specializes in ONLY property management.  We do not have any Realtors or agents working under our brokerage who help people buy/sell property.  We have all our time, energy, and focus on strictly property management.  I personally think this is a big box you'll want to check off when shopping for the best property management company in Cincinnati, Ohio.

Give Patrick a call and/or fill out the form on our website!

@William Orrock, I would suggest first to elaborate more on what your goals are for investing.  If you try to dig deeper on exactly what you are trying to do with real estate, you will be able to get lots more great insight.  Where do you live?  Do you not have enough time to try and manage on your own?  Why are you wanting to buy a rental?

Hey @Michael Dengler! I think the best thing to do in this situation is dial in exactly what your goals are for the investment.  I will be able to provide much more detailed insight if you are able to elaborate on things such as what your goals are for this property, when you expect to purchase the next one, are you planning on flipping or holding?, are you going to live in this building, etc.  

Hi @Neil Yang, we run a very successful property management company in Cincinnati and would be happy to chat about how we might be a good fit for you.  Property managers in Cinci are going to vary pretty heavily depending on what neighborhood and street your rentals are in.  There are some streets in the city that are very difficult to manage and some PM's will bite off more than they can chew.  This is where due diligence is very important when selecting a PM.

As I'm sure you are aware, your property manager is going to make-or-break your rental property investment.  Aside from the initial analysis you make prior to placing an offer, picking the right PM is the #1 most important decision you will make that is going to either positively or negatively impact your cash flow.

@Andrew Caldieraro, if I were you, I'd be looking for a small mom-and-pop broker who doesn't have a huge team or do a ridiculous number of sales per year.  If you just google, or jump on your states real estate website, I'd find a list of brokers with phone numbers.  Then just start calling all of them and telling your story with what your goal is.  You'll probably learn a lot doing this, getting perspective from different folks and ideally connect with a good fit.

Once you connect with someone, then setup lunch or coffee and go into more detail/create rapport.

Hey @Account Closed, I would HIGHLY suggest the FHA route.

These loans get a bad reputation for a number of reasons. One theory I have is that Realtors and lenders do not like FHA loans as there is a higher likelihood of the deal falling through vs conventional. There are more inspections required for FHA and more strict requirements.

If I could get 100 FHA loans, I totally would. Yes, PMI for life, but do a comparison of rates between FHA & conventional. The rate difference almost cancels out the fact that you have to pay PMI for life. Also, who cares about PMI for life when you can:

Acquire a $200,000+ asset for literally $4,000 (cash to close) that you can get paid to live in, and then cash flow over $2,000/month once you move out of it.

That is exactly what I did with one of my 4-unit buildings I purchased in Cincinnati.  It's now worth over $200,000, but at the time I paid much less.  It was one of the best investments I have ever made in my life.  While all my friends were paying over $1,000/month to live in a nice apartment, I was not only saving that money, but actually making money off the other 3 units in the building while living there.  

I think you have the wrong mindset about the PMI and are getting too hung up on it.

In your situation, I honestly wouldn't be looking at any other options other than FHA.

Good luck and GO BOBCATS!

Older homes aren't always bad, they are usually built like tanks in my experience.  Things were built to LAST 'back in the day'.  Appliances now-a-days are designed by engineers with a lifetime parameter.  Meaning, the engineers design the appliances to fail in, say, 5 years so that you go buy a new one.  I don't think that is necessarily how things were designed a long time ago.  I have two furnaces in a duplex that were designed so well, I was told that they went out of business because people would buy them once and never have to replace them.

The main thing I would be looking out for, as noted above, is the plumbing.  Old cast iron waste stacks are likely failing and needs replaced with PVC.  Definitely keep your eye out for that and just plan accordingly.

Unless you are working with a 5+ unit building as a value add deal (decrease expenses, increase CAP, therefore increase value of building), I would be willing to bet that 9 out of 10 times, sub-metering the water on a 4 unit or less in Cincinnati is a bad idea. In theory, yes, this sounds great. But in the real world, not so great.

Out of the 150+ units we manage in Cinci, not a single 4 family has the water sub-metered.  This is a fairly small sample size compared to the entire city of course, but I would be extremely surprised if I came across a 4 unit that has the water sub-metered.  

Therefore, all of your competing 4 units or less in the area are going to be advertising a rental rate that the property manager/landlord/market set based on the fact that the owner is paying for water.  You're going to have to drop your rent to offset this.  

Another reason is that there really isn't such a thing as CAP rate for 4 unit or less properties. Sure you can calculate this and utilize it in your search for rentals, but the bank isn't going to care whatsoever about your 4 unit CAP rate. On commercial buildings (5+ units), then this is a completely different story.

I tried very hard to figure out how to eliminate the water expense in my rentals and the ones we manage for our investor clients.  An average 4-fam water bill is going to run you around $1200-$1500/year and unfortunately this is just something I have to incorporate into all my 4-fam pre-purchase analysis.  

Your best bet is going to be installing high efficiency devices.  Check out the math below.

Here is a long drawn out example I sent to one of our clients who we recognized had 7 GPF toilets:

• On average, based on my research, I've found that a toilet gets flushed ~5 times per day. By doing this math, that is around 1,825 times per year. At 7 gallons per flush, with 8 units, that is about 102,200 gallons of water being used in your building just for the toilets!
• If we move to a high efficiency toilet in every unit, at 1.2 GPF, 8 units, that is 17,520 gallons per year.
• That is a water savings of 102,200 gallons - 17,520 gallons = 84,680 gallons per year.
• Looking at my personal water bills, it looks like 10 CCF is equal to 7,480 gallons, which is roughly how many gallons used in a duplex I own. That bill was $114 for the month.
• This shows we pay about $0.65/gallon of water used.
• If we actually were to save 84,680 gallons of water by replacing the toilets, that would save you ~$1,303 for the year. This is assuming each toilet has a 7 GPF rating. 
• Just for the toilets!

@David Flores, what is the main desire to partner? With an FHA loan, you are not going to be bringing hardly any capital to closing (compared to a conventional 4-fam purchase with 25% down).

You can typically only get one FHA loan, wouldn't it make more sense for you each to get your own loan and own property?