Youngstown / Boardman, OH

[John Minnix]

BP Community,

I read a few articles about Youngstown, OH being one of the better bets for real estate investing in 2022. I did a bit of research and see that neighboring Boardman has good schools. What are your thoughts on this marker for a single family income play?  Any advice, recommendations or introductions are greatly appreciated. 

[Lori Williams]

You will be directed to the suburbs, because there are not a lot of people with a high opinion of Youngstown proper.

Let's look at the problems with the city... Devastated by the collapse of the steel industry in the 70s, 80s and 90s. Lost half of its population. Anyone with any money moved out of the city as areas began to decline (a few neighborhoods remained where older residents with money held their ground bc they loved their homes).

Out of state (and local) slumlords started looking at Ytown as a place to buy disposable properties - buy them cheap, rent to the first crackhead with 500.00 in their pocket, and every few months rinse and repeat bc they got the properties for 15-25k and didn't have to put any real money into them to rent them. So this took entire neighborhoods even further down, and no one with a lick of self respect or a job would want to live in these neighborhoods with crackhead neighbors. So those ppl moved to the burbs (Canfield, Poland, Boardman, etc)

To someone from California (my husband is from LA and my stepson still lives there), especially when you're better off and paying 1.2M for a tiny triplex, tends to not respect a triplex they can pick up for $50k - just by way of the price, it will never be worth anything.

My stepson bought that 1.2M triplex in LA in 2019 and did no rehab (he's frugal ;) ). His tenants are section 8. He has about 250k in cash invested in it and nets around 1000.00 per month profit after paying for everything.

I bought 2 duplexes in Ytown for 96k total, and put about 140k into the rehab, and do NOT rent section 8. Our cash investment is about $50k after refinancing, and our net is around 2500.00/mo. 

So which is the better market? It depends on what you're looking for.

My stepson is looking for a big payout on sale, and his property will probably double in value over the next 3 - 5 years, maybe sooner (meanwhile, his ROI on cash flow is awful). He also bought it at speculative pricing bc of the new stadium, so he paid well over market value at the time.

These two duplexes have about 37.00/sq ft into them, and should double in value within the next 3-5 years, to 74.00/sq ft. Rents will also increase about 25% during that time period.

If my stepson had purchased 5 sets of 2 duplexes using our process, he'd have spent the same amount out of pocket as he did on his triplex (10 properties for the same cash outlay as 1 property), and would be netting around 12,500.00/month (instead of the 1k he's currently netting)

At the end of 5 years, if those 10 duplexes only get to 70.00/sq ft, he would profit 990k, so probably not that much less in market value for the cash out of pocket (chances are very good that in 5 years, these particular duplexes will be worth at least 80.00/sq ft, and if so, that would be another 300k with that extra 10.00/sq ft on those 10 properties and be equal to what his property doubling in value would be). 

But those monthly net rents would have made him another 750k, so he'd probably be further ahead overall in the Youngstown market than the LA market. 

Plus, getting much of your "profit" from monthly rents rather than a back end sale means you keep more of your money, because that back end sale has realtor fees and closing costs tied to it, and can also mean capital gains, where as monthly rent profits don't have those added expenses and possible taxes.

I know this is a lot of words. So to summarize, Youngstown is actually an excellent market if you know where to invest in the city (and gradually, those areas will increase in number), with a ton of room for growth and the ability to get excellent rents. It all depends on your business model and whether you want to be a slumlord and make no real investment, or you're willing to make that real investment.

I get more rent for a 2 bedroom duplex unit in Youngstown proper than I can get in the much higher property value town I live in 30 minutes down the road. 

There are several reasons I do all my investing in the city of Youngstown and not the suburbs.