Investing In Cincinnati, OH - Avondale Area?

Question

Hi BP community - I have been reading a lot of the forum posts and articles and set up keyword searches to start taking advantage of all the knowledge this community has to offer! My husband and I are looking to start investing in Cincinnati as out of state investors (as we live in Manhattan).  We have been working with an agent who has given us details on some of the areas that she thinks we can get a strong tenant pool in nicer neighborhoods.  As we started looking at those areas, they seem to be pretty expensive already (i.e. hard to find things less than 200k).

We have seen some properties in the Avondale area - what are people's thoughts on that area? Would we be able to get decent renters here/is this area becoming nicer where people would start moving to in the next 5 years?  We don't mind if it isn't in the "best area" of the city yet, but we also don't want to get in a situation where we can't get long term leases signed, have to evict, etc.  Any insight would be greatly appreciated!!

John Casmon · Answer

Agree wholeheartedly. As an out of market investor, you have to factor in hidden costs that won't show up in a pro forma. Avondale looks good on paper, but I would advise speaking to an out of market investor who actually owns property in the area and has owned for at least 2 years. Talk to the PMs and get their take......really like the Montgomery corridor for value and potential appreciation.

Slocomb Reed · Answer

@John Casmon isn't it crazy that places like Avondale and Evanston (improving though!) are priced like Norwood and Kennedy Heights?

Personally I'm betting on continued development all up and down Montgomery Rd from Evanston to Kenwood and I think if an investor decides to buy on slim margins in this market, that's one of the better places to do it.

John Casmon · Answer

@Erika Graham I'm sure you got some great advice from @Slocomb Reed what I'll add is there are similar priced neighborhoods (maybe a little more) that I like better currently and are still in the path of progress. Consider looking into Norwood, North Avondale, Kennedy Heights and Pleasant Ridge.

Linda Hull · Answer

Fairmount/South Fairmount/North Fairmount.

Will you be here on Thursday evening? Cincinnati REIA has it's meeting from 6-9pm. If you will be around, come as my guest! You will meet lots of local real estate investors, contractors, etc.

cincinnatireia.com

Kyle Bale · Answer

Hey Erika, welcome! I definitely understand your sentiment on not wanting to invest in already-developed areas so as to avoid overpaying for a given rental property as a young investor with limited capital.

As far as Avondale goes, like Paul said, Cincinnati can really vary street-to-street which is not a great answer for an out-of-town investor like yourself. What I can say, though, is that there are definitely parts of Avondale I would not feel comfortable walking around at night. However, that area is great for student rentals as University of Cincinnati Med Campus (and main campus to a lesser extent) are very close. Though student rentals have their pros and cons, eviction is hardly one of them as no student wants to be left homeless during the school year, even less so if you make parents co-sign the lease agreements.

Outside of student rentals, there are also plenty of medical Interns, Residents, and Attendings working at UC Health/Cincinnati Children's that that are looking for safe housing around work in the Corryville/Avondale area. These areas represent a great opportunity on both fronts if you're willing to get to know the streets that are safe to buy into.

If you're interested in learning more about student rentals in that area, @Jake Walroth is a great resource and has partnered with out-of-town investors in the past.

Paul Sian · Answer

Cincinnati can vary quite a bit street to street.  There are some decent parts of Avondale where you can get good tenants and some parts where you better have a great PM in place to manage tenants for you otherwise things can get away from you quickly.  What are your investing goals?  What types of areas (grades A-D)?  What type of ROI?  With as many rentals units here in Cincinnati as there are I don't think you will have problems finding tenants assuming the rent is market rate.

Rodney Rowland Yarger · Answer

I have done investing in Avondale that has turned out well. (Even after a humorous episode with a squatter.)  Neighbors helped me throughout my ownership of it and even helped me find my buyer!

It is a neighborhood in transition.  One of the positives to it is the proximity to St. Xavier University.

Know your exit before you buy, and buy right.  Make improvements to fit the market for the property not improvements that you would make if you would live there to keep from over-spending.

Erika Graham · Answer

@John Casmon  @Slocomb Reed  Thanks a lot for your input. Definitely helped seeing some of these neighborhoods and really appreciate the advice!

Slocomb Reed · Answer

@Erika Graham it was great meeting you yesterday!

In low-income neighborhoods, two things you can do to make sure you're getting better tenants:

1) Hire a property manager that understands low-income rentals and (most importantly) is very good at working with the Cincinnati Metro Housing Authority ("Section 8").

2) Nothing matters as much as #1, but I'd also focus on multi-bedroom units. Cincinnati has very low supply of 3+ bedroom apartments, especially in lower-income neighborhoods, and they're constantly in high demand. And there's a much higher demand for 2-beds than 1-beds in the vast majority of cases.

Erika Graham · Answer

@Aaron Rohn  Thanks for your note. I actually read it just as we were landing Cincy for a weekend of touring different neighborhoods and seeing some places and drove through these neighborhoods you suggest as well.  I definitely understand more what everyone is saying about the mix and quick changeover from street to street.  It helped to be there and get a better sense for this.

Investing In Cincinnati, OH - Avondale Area?

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