Ohio is Where You Should Buy Your Next Investment Property
Ohio’s real estate market is on fire, and real estate investors who specialize in rental properties have taken notice.
During the first quarter of 2021, both real estate sales activity and average single-family home prices in Ohio have increased when compared to Q1 2020. Sales in the first quarter of 2021 reached 31,503, a 4.4% increase from 30,167 a year ago. The average price of $214,822 this year marks 13.5% from the 2020 average of $189,273.
Seth Task, president of Ohio REALTORS®, said in a recent news release that Ohio’s housing inventory is about half of what it was in 2020, which illustrates the strong the demand is for properties in Ohio.
People of all ages are flocking to Ohio in droves for the low cost of living, prestigious universities, a wide variety of attractions and activities, and one of the biggest economies in the country. Ohio is home to 25 Fortune 500 companies, 338 colleges and universities, and a large healthcare industry that employs much of Ohio’s population.
In 2020, Ohio was ranked #9 in America’s top states for business. The buckeye state has one of the highest-rated infrastructures and a low cost of doing business. As any experienced real estate investor knows, a growing job market and bustling economy are always good signs for a healthy housing market.
So, when it comes to Ohio, what is the best real estate investing? Ohio’s real estate market is booming and ripe for investors looking for rental property investments, but the most growth is happening in Cleveland, Cincinnati, and Columbus, where home values are expected to appreciate the most.
Cincinnati’s Rental Market
If you’re thinking about buying a house in Cincinnati, Ohio, good luck. The active housing inventory stood at just 1.4 months in January 2021 – a 37.5% drop from January 2020. It decreased even more in March – down 52% YOY.
For those looking to sell a home in Cincy, the real estate market is a dream come true. For 23 consecutive months, the median home sales price has steadily increased. The most recent home sales statistics from the Cincinnati Area Board of Realtors show the median sales price for a house in Cincinnati is $215,000.
Because of its thriving housing market, Cincinnati has been ranked nationally as:
- Second for cities with the fastest home sales in the country (Re/Max).
- Second hottest real estate market in Ohio – just surpassing nearby Dayton (Forbes)
- 28th in Metro Market Hotness (Realtor.com)
One of the driving factors behind Cincinnati’s popularity is its marketplace, affordability, and economic environment. There has been an influx of people moving to Cincinnati over the last decade. Cincinnati has also become a popular destination for new and relocating corporate headquarters, including 10 Fortune 500 companies and 17 Fortune 1000 companies. Despite its quick and continued growth, the cost of living and the cost of housing in Cincinnati is still well below the national average, making the city an affordable and attractive place to live.
Over the last few years, Cincinnati has attracted a large population of millennials, which continues to grow rapidly. About 25% of Cincinnati’s home buyers are from outside the state.
Another huge factor driving millennials toward homeownership in Cincinnati: it’s now cheaper to buy rather than rent. Jeff Tucker, Senior Economist with Zillow, said Cincinnati’s average monthly rent of $1,254 is $243 more than the expected monthly payment on a $200,000 home purchased with a 20% down payment. This contrasts with many other MSAs to which people may consider relocating.
Cleveland’s Rental Market
Downtown Cleveland, Ohio has undergone an estimated $19 billion renaissance during the past few years. Acres of green space were placed around Public Square, along with new apartment communities, commercial buildings, and other amenities. The city is home to numerous professional sports teams including the Cleveland Indians, the Cavaliers, and the Cleveland Browns. It also plays host to several popular cultural attractions including the Rock & Roll Hall of Fame and the Cleveland Museum of Art.
Since 2000, Cleveland’s population has grown, with millennials being the largest demographic moving to the city. Millennials and young professionals are attracted to the city for its affordability, relatively low cost of living, and a job market with ample employment opportunities offering high-paying positions in industries such as IT, healthcare, and manufacturing. Despite its hot job market, Cleveland wasn’t immune to the economic impacts of COVID-19. The healthcare industry, a backbone of Cleveland’s economy, was one of the hardest hit sectors.
Because of Cleveland’s financial reliance on the healthcare industry, there were reasons for economic concern when job losses climbed in April 2020. Since then, however, jobs in healthcare have increased and gradually continue to do so, luring in new residents once again. Forbes included Cleveland as one of the top real estate markets to watch in 2021. Single-family homes in Cleveland are especially appealing to remote real estate investors and to those who now work from home. Much like the rest of the United States, Cleveland’s housing demand is high, and its real estate inventory is low.
Cleveland Real Estate Market Statistics:
- Home values in Cleveland have increased 18.8% YOY and nearly 76% over the past five years. Values are forecasted to grow another 13.1% in the next 12 months.
- Median list price of a single-family home in Cleveland is $99,900.
- Median days on market is 55.
- Median sale price for a single-family home in Cleveland is $115,000.
Cleveland’s housing market is perfect for rental property investors. Rising home prices are creating a strong demand for single-family rental properties. More than half of Cleveland’s real estate properties are occupied by renters, making the city of the top places to buy rental property in 2021 for cash flow and appreciation. Although successful real estate investors know how to make money in any market cycle, Cleveland is one of the most recession-proof markets in the U.S., according to Crain’s Cleveland Business, which is one reason people are investing in Cleveland rental property.
Columbus’s Rental Market
Columbus is a great place to live and rent. The cost of living in Columbus, Ohio is 10% lower than the national average, and the housing market is exceptionally affordable compared to the national average of listing prices for homes. Furthermore, Columbus’s economy is hugely diverse, offering career positions with major industries such as technology, finance, and education.
Columbus Real Estate Market Stats:
- Home values in Columbus increased 11.6% YOY and are forecast to grow another 10.7% in the next 12 months.
- Median listing price of a single-family home in Columbus is $215,000.
- Median Days on market is 50.
- Median sales price for a single-family home in Columbus is $232,500, up 16.3% YOY.
WalletHub ranked Columbus as one of the best cities for renters. The city’s rental market has high rankings for activity in the marketplace, rental property affordability, and overall quality of life. In fact, the demand for rental property in Columbus is so strong that nearly half of the residents who reside in Columbus’s metro area are renters.
Columbus has seen its own urban exodus over the past year. According to Columbus Business First, median home prices in Columbus have increased 17% year-over-year. A limited housing supply combined with the multitude of jobs, services, quality schools, and a healthy economy is creating a “seller’s market frenzy.” The city is also a real estate investor’s playground. Home prices are continuing to skyrocket because in-state buyers and remote real estate investors are buying property all over the city. Because of the surge, Columbus has less than one month’s supply of real estate inventory. The short supply is helping to keep prices climbing and demand for rental properties in Columbus strong.
Investing in Property in Ohio
Ohio has several attractive qualities to offer real estate investors who are researching where to buy an investment property. Ohio’s affordable cost of living and reasonable real estate prices are perhaps the two most attractive. Home price growth in Ohio has increased nearly 9% YOY, with a projected increase of 10% over the next year. Home values are rising nationwide as home equity reached record highs in 2020 and are projected to continue climbing as demand drives up home prices.
Ohio’s median home price is $100,000 lower than the national average. Low real estate property prices combined with record-low mortgage rates make owning a home in Ohio incredibly affordable for investors of any experience level.
While inventory might be harder to find, investors with strong real estate investment strategies can still profit. It’s more important than ever to have a lender capable of helping you:
- Secure a loan with the best price and maximum leverage for your next rental investment
- Close properties quickly and certainly
- Run your construction or rehab projects smoothly
We are experts in financing rental properties and portfolios. Our team of experienced professionals will help guide you through our rental loan programs regardless of your experience level and help you purchase, refinance, or cash-out individual rental properties, as well as entire portfolios.
If you’re interested in obtaining a loan for a rental property in Ohio, call us today. Get started today and scale your rental property portfolio with Lima One.