Investing in Youngstown, OH

[Christopher Nerio]

Hi BP family, I am new to investing in RE and I have recently made a connection with an investor in Youngstown, Ohio. She said she owns 10 rentals and has been investing, strictly, in the 44507 and 44502 zip code area of Youngstown for 4 years. The prices of the SFHs is what really intrigues me. From what I've researched and what she told me, it is a low income area and has about a 13.5% vacancy rate. The lady makes her money through her rentals, managing rentals, and renovating the properties. So I buy the house, her company renovates it, then manages it. I live in Northern Va. She said that with about $45K ($5-10K for property, $5-10K for material, $15-25K for labor), which covers any major repair or replacement, I would have good cash flow. However, from what she told me, the rents are between $400-650/mo. According to my calculations it seems that my max investment that I would like would be $25k total to receive the monthly income I would like. The other concern I have is that she said that she doesn't do yearly lease agreements. Her tenants are all on a month-to-month cycle, which she said is normal in the area because with the area being low income, sometimes you get a bad tenant that you want to be able to evict them fast. However, she did say that because it's low-income many times the government pays their rent and that she tries to do a good screening of the tenants before hand (credit check and background check). Anyway, has anyone had success in Youngstown, OH? I hear it's kind of like Detroit? Should my max investment be less or more than $25k? What is the average rental rate there? Are the costs of labor and material accurate? Is it an area, that if the economy took a turn for the worst, that my rental would still be cash flowing? Any advice would be great. Thanks BP family.

[Stan Wu]

Researching Ohio and Youngstown is on my radar. Anything that is on the low price point in any city has the highest vacancy rate and tenant headaches.  One should always buy into a better situation or buy their problems away.  For your $50K fully rehabbed, go for a $100K established complex (2 or 3 units).  As this Covid pressists, I found that the some areas are isolated somewhat from a negative economy: the cost of living is low so less swings in the community.  Love the open lands and Mill Park.  Wow.