Investing in CIncinnati

[Rudy Manna]

Hi,

I am from Seattle and own couple of rentals here. As you might know the property market is booming and hence and cash flow on rental properties is terrible (4%-5% gross cap rates). 

I am looking into elsewhere in the country for returns and diversification. I went to university of Cincinnati, so I am somewhat familiar with the neighborhood. Checked some properties in MLS and 4 br/ 2 unit multifamily units going in the range of 100-150k. The current rental rates for a unit are $800-900. Overall looks its reasonably easy to get 15%-20% cap rate and a strong cash flow.

I know that I need to avoid a few areas with high crime rate such as vine, Over the Rhine,  etc, but are there other trade-offs for real estate investing in Cincinnati. Look forward to hear from experienced investors in the area.

[Joe Fairless]

@Rudy Manna finding a good property mgmt company will be very important since you're out of state. Wish I had a good rec for you but I'm sure some other Cincy investors can chime in on who they use. 

[Ryan Ball]

Saying it is easy to get 15-20% cap rates is a bit aggressive.  We live in Chicago but have been investing in Cincinnati since 2007.  Any property which is that high on a pro-forma basis is likely in a pretty rugged area and something that would need very hands on property management to realize anything approaching that return.  As @Joe Fairless said, property management is key.  I would also add a realtor who deals in investment properties is another important factor, especially when investing outside your area.   

[Chris Washington]

@Rudy Manna I just moved to Cincinnati from Los Angeles about 6 months ago (so I'm definitely not an expert in the area), and have been aggressively researching the city since before I moved here. From what I've seen, I do believe Cincinnati is a viable area to invest. There has been some recent, positive economic investment in the greater Cincinnati area, as well as a fair amount of companies expanding their operations/facilities and bringing more jobs. Unemployment rates in Cincinnati still fall below national and OH average. 

I definitely would not say 15-20% cap is "easy", but rents in general look very solid when compares to sales price so you likely will find cap rates north of what you could get in Seattle. Specific location of any property here is key as quality of neighborhoods/tenants change quite dramatically as you move through the greater Cincy area, so I would recommend to do your homework on the specific area you are interested in investing in to ensure you won't be surprised by what you find. 

Best of luck!

[Rudy Manna]

tHanks all. I am looking to buy around university of Cincinnati, in Probasco, Stratford, Marshall street to name a few. Relatively safe and at the same time houses are not quite expensive. I will have to deal with student renters though..

However Cincy does look like strong cash flow. Quite a Few duplexes listed in the 150k range and SFR in 70k range. Vacancies should be low around university too.

[John Cohen]

@Rudy Manna Cincinnati is a great market, I just closed on a 27 unit and looking forward to the next property that comes my way.

[Rudy Manna]

@John Cohen - which location in Cincy you are investing?

[John Cohen]

@Rudy Manna  My building is in Incline District