Looking for advice on areas of Columbus, Ohio

[Michael Wentzel]

Hello people,

I live in Colorado Springs, CO and I'm currently purchasing, rehabbing and refinancing properties in Pueblo, CO. I've been looking for a second larger market to enter. Being from Ohio, I've considered Cleveland, Toledo and Columbus. I think I've settled on Columbus and have started to look at properties there. There are certainly a lot of cheap properties in the city, but that doesn't necessarily mean they are going to make money. So here's a few questions...

I would like to purchase properties in the $20,000 to $30,000 range. Is anybody doing this? Have you found a good or bad areas for this price point?

Is anybody buying, rehabbing and refinancing? The neighborhoods I've looked at are so riddled with foreclosures I feel like it will be tough to get a decent appraisal after the rehab.

I would like to chat or email with a few investors, Realtors and property managers to learn more. So contact me if you have some insight on Real Estate in Columbus, Ohio.

Mike

[Peter Lohmann]

My question is if there are neighborhoods in Columbus where these sort of deals might exist.

There are plenty of neighborhoods where deals just like that do exist. However, your plan has a few flaws:

1) Refinancing the property at 60k doesn't really help you much. For one thing, it reduces your monthly cash flow. For another, you're at risk of going underwater should you ever need to sell. Retail buyers are very scarce.

2) Assuming you plan to buy and hold, properties available to purchase for 30k will require a lot more than 15k in rehab to be solid performers in the long run (more like 50k). That is to say, homes in that price range in Columbus are OLD. They were not built in the 60's, not the 70's - these homes were built 80 to 110 years ago. The maintenance and capex demands are unreal. Without significant up-front investment, you will be nickel-and-dimed to death. Things like sewer and water service lines, main stacks - lots of old stuff that breaks and destroys your numbers for the entire YEAR.

We manage hundreds of these homes and, and our clients are barely breaking even in many cases, due to higher tenant turnover in those neighborhoods, the age of the properties, and the low rents. There's only so much a good property manager can do.

My recommendation is to buy one $100,000 home instead of 3-4 lower-priced homes. Your long-term performance will be higher.