Cleveland, Columbus or Indianapolis for first time investment?

Question

Hello everyone!

I'm new to real estate investing and am looking to make my first ever purchase this year.  I am currently contemplating rental properties (SFH, multifamilies) with good cashflow in the Ohio (Columbus and Cleveland), and the Indianapolis area.   Currently I am able to put down 30-40k as a down payment to a loan and I am also putting aside 2k/month in savings for future real estate investments. Was wondering which of these 3 cities you guys like and why?  They all seem pretty promising in the long run but I am open to other areas as well.

James Maradits · Answer

Hi Ryan!  Welcome to BP.

I think you will have success in any of these markets as long as you do you due diligence and work to put together a solid team.  As with most of the country currently, we're experiencing a seller's market (low inventory) and rapid appreciation in all of these popular midwest cities which is making it slightly harder to find deals--but still possible.

The city of Cleveland is smaller than Columbus or Indianapolis, but all of these MSAs are relatively close in size.  The property taxes in Indiana are typically lower than they are in Ohio which is nice, but the home prices in much of the Cleveland market are a bit lower so this may prove to be an easier entry point for you.  I'm sure the Columbus experts will chime in shortly to provide their opinions.

Best of luck to you, and feel free to send me a message with any questions I may be able to help with.

Justin Polston · Answer

@Ryan Cruz shoot for the suburbs of those areas to find less competition and more deals. Like indianapolis where I am from, you'd want to try for any of the donut counties, and cities like Shelbyville, Rushville, Greenfield, Franklin, Greenwood, etc.

Just pick any metro hub really and go 30 min out drive time and you'll find decent homes, less crime, less "street by street" scenarios, you get the drift!

Brandon Sturgill · Answer

@Ryan Cruz I have clients in all 3 markets...but they are very different markets. Out of the 3, Columbus is superior in any and every financial and economic metric you can put on the table...here are a couple things to think about

A few things you may have not known about Ohio’s Capital City:

2nd Largest City in the Midwest behind Chicago (And Larger than Atlanta, San Francisco, Indianapolis, Charlotte, Nashville, Fort Worth, Denver, Seattle...and many others)

Port Cities are a Thing of the Past- Columbus is the "Center of the Country"

Cost of Living is Quite Low with High Quality of Life When Compared to Other Large Cities

1st Amongst the 10 Largest Midwest Cities in US for Population Growth, Job Growth, and GDP Growth.

Realtor.com "Hottest Real Estate Market" in the US April 2019/ December 2020-February 2021

AAA Bond ratings across the board

#2 Metro Market in US for Mobile Network Performance

Average age 31yrs. & Top "Hipster" Destination in the US

88 Jobs Paying Higher Wages than New York City

Home to 2nd (soon 1st) Largest University in the US ($7B in Capital Projects & 60,000+ students)

Hotbed of Startups and Venture Capital- "Exodus from Silicon Valley"

1st "SMART" City in the US ($50m DOT Grant)

Intentionally Underbuilding to Hedge Risk...30,000+ units short of demand

11-County Region with Huge Room for Growth & Expansion (3million+) over the next 20-years

And if that wasn’t enough,

50% of the Columbus Population Rents

All-time Record Low Homeownership for the Millennial Generation (largest population in America- bigger than Baby Boomer population)

The Average Market Rent in Columbus has Climbed to $2,000/mo. (existing "affordable" inventory becomes very attractive)

"1%" Rent-to-Purchase Price Ratios and 7-10% Cash-on-Cash is Normal.

An Abundance of C/C- Locations in Extreme Transition with Verifiable Upward Trends

Dozens of Neighborhoods with 70% Price Appreciation Over the Last 5-Years

20,000+ Multifamily Structures in Franklin County; Less than 10% Transact Annually

Market Rents are Impossibly Low Across Existing Small MF Inventory

Remington Lyman · Answer

I prefer to invest in Columbus just because I am local. Fortunately, it is the city with the best underlying demographics.

Timothy Lewis · Answer

I keep hearing great things about Columbus...

Mike D'Arrigo · Answer

@Ryan Cruz Indianapolis and Columbus have growing populations. Cleveland has the 5th fastest shrinking population in the nation and has been shrinking since 1950.

Michael Ohara · Answer

You can do well in any of those cities. I focus on Cleveland. It's all about finding the deal.

Gloria N Gear · Answer

Here is a plug for Indianapolis.  I think the #1 answer is Diversity -- in both economic and types of rentals/flips you can do.

We have a very stable and diverse economy - medical, tech, aerospace, the airport is national hub for FedEx, so you also have plenty of distribution and manufacturing which is your blue collar tenants.

Big convention and sports town if you want to get into short term rentals.  For investment properties, you can chose from $30K - $300K.

Plenty of different types of HOLD areas that cash flow well at levels from $750-$1800 rents.  I have heard stats that Indy is 50/50 tenats to homeowners.

Great areas for FLIPS  a $90K house can be turned into a $350K house in certain neighborhoods.

Plenty of up and coming neighborhoods that work for BRRR strategy as well.

Let me know if you would like to connect.

Marc Rice · Answer

@Ryan Cruz

I personally like and invest in Columbus the most due to its increasing population and job growth. There are a lot of good cash flow markets in the Midwest, but not many offer the strong appreciation of Columbus to really build long term wealth.

Cleveland, Columbus or Indianapolis for first time investment?

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