Starting my investment journey in Dayton, OH ! Whats your BEST advice ?

Question

Hello Everyone,

I have started looking for multi family investment properties in Dayton Ohio area. Wanted to start this thread to learn from fellow OOS investor. Whats your best advice for someone who is just getting started ?

- Favorite areas

- Areas to avoid

- Any other advice.

Steven Foster Wilson · Answer

Hey Nitin! Check out Ohiorem.com and go to the neighborhood articles section, there is laid out all of the A, B, C, and D neighborhoods of Dayton Ohio. You Can also check out the educational videos that talk about what makes Dayton a good city to invest in, the Pro's and the Con's in comparison with its near by neighbors, Cincinnati and Columbus.

James Wise · Answer

If there ain't Hookers and Dope in the area, I ain't messin with it.

Eric Gerakos · Answer

“Fentanyl and Prostitutes.” That’s what I look for when choosing where to invest.

James Wise · Answer

Watch out for fentanyl. They love that stuff out there in Dayton.

Chantal Thomas · Answer

Hey there, I spent some time reading through your neighborhood insights. It was some pretty good information. Would love to connect as an out of state investor looking for MFH in the Dayton area.

Eric Fernwood · Answer

Hello @Nitin Gove,

I believe you may be putting the cart before the horse. You should choose an investment location based on your financial goals, not proximity to where you live.

I will assume the reason you will invest in real estate is financial freedom. However, financial freedom goes beyond simply replacing your current income; it requires maintaining your current lifestyle for life. To attain lifelong financial freedom, you need to invest in a city where:

• Rents must outpace inflation.
• Your rental income lasts a long time; you will not outlive your income.

If you invest in any city where rents do not outpace inflation, you can not achieve financial freedom. Here is the problem. Suppose you invest in a city where rents increase at 2%/Yr, inflation is 4%, and the initial rent is $1,000/Mo, what is the inflation-adjusted adjusted rent (or buying power) in 5, 7, and 10 years?

To calculate the future buying power, use the formula: FV = (1 + r)^n / (1 + R)^n where:

• r is the rate of increase
• R is the rate of decrease (inflation)
• n is the number of years into the future

Inflation-adjusted (buying power) rent at:

• 5 years: $1,000 x (1 + 2%)^5 / (1 + 4%)^5 ≈ $907
• 7 years: $1,000 x (1 + 2%)^7 / (1 + 4%)^7 ≈ $873
• 10 years: $1,000 x (1 + 2%)^10 / (1 + 4%)^10 ≈ $824

Because inflation is outpacing rent growth, your buying power continuously declines. The ugly truth is that no matter how many properties you own in locations where rents do not outpace inflation, you will sooner or later be forced to get a job.

What causes rents to increase?

In real estate, prices are determined by the imbalance between the number of buyers and sellers. When there are more buyers than sellers, prices rise until the number of buyers and sellers is roughly balanced. When there are more sellers than buyers, prices decline until the number of buyers and sellers is roughly balanced.

Rents follow prices. When prices are high, fewer people can afford to buy and are forced to rent, increasing demand for rental properties so rents rise. When prices are low, more people can buy, resulting in decreased demand for rental properties so rents fall.

What causes the imbalance between buyers and sellers? Population change.

For rents to outpace inflation. the rate of population growth must be significant and sustained. Also, for the location to be economically stable, a metro population >1M is necessary. Smaller cities tend to be dependent on a single company or market sector. The source for metro population size and population change: Wikipedia

Remote Investing

Does remote investing work? Yes, but only if you have an experienced local investment team. Here is the problem. Everything you learn from podcasts, books, seminars, and websites is general knowledge. You will purchase a specific property in a specific location, subject to specific local rules and regulations. The only source for the information, processes, experience, and resources is a local investment team.

We have an investor services business and have delivered over 490 investment properties. 96% of our clients are remote investors; they live in other states or countries. >90% of our clients buy more than one property from us and our largest source of new clients is referrals from existing clients. So, remote investing works, if you have a good local investment team.

And, working with an investment team typically does not cost more than other realtors. For example, of the 480+ properties we've delivered, we only charged our clients a fee on four or five occasions; these were exceptional circumstances. In all other cases, the listing agent covered our fees, not our clients.

In Summary

If you invest in any city where rents do not outpace inflation, inflation will continuously erode your buying power, and sooner or later you will be forced back on the treadmill.

Dave Smith · Answer

Hello, Im an investor in dayton and like previously stated. there are places in dayton you want to avoid. you also want a good team to support you here. feel free to DM me if you need more assistance

Matthew Masoud · Answer

There certainly are parts of Dayton you want to avoid. Try to stick to markets like Kettering, Oakwood, and Beavercreek. You'll pay a slight premium but more stable cash flow.

Ali Nichols · Answer

Congrats on getting started. Ohio is a nice place in today's market to get started.

Robert Ellis · Answer

I'm not too knowledgeable on dayton but I'd look at all markets in ohio and talk to teams in all of them. if no one replies for dayton it might be because it's a smaller market. I'd recommend looking at all the markets like Cleveland, Cincinnati, columbus that are larger first.

Starting my investment journey in Dayton, OH ! Whats your BEST advice ?

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