Ultimate Columbus Real Estate Investing Guide for 2024

BRRRR means “Buy, Rehab, Rent, Refinance, Repeat”. BRRRR is a strategy for repeated expansion. A key piece of this plan is to be able to do a “cash-out” mortgage refinance.

When you have finished refurbishing the property, its value must be higher than your complete purchase and renovation spendings. Then you receive a cash-out mortgage refinance loan that is calculated on the larger value, and you take out the balance. You utilize that capital to get an additional home and the operation starts again. This assists you to reliably grow your portfolio and your investment income.

When an investor owns a substantial portfolio of real properties, it is wise to pay a property manager and designate a passive income stream. Find one of the best investment property management companies in Columbus OH with a review of our exhaustive list.

Factors to Consider

Population Growth

The increase or deterioration of a market’s population is a good benchmark of the region’s long-term desirability for lease property investors. If the population growth in a city is robust, then new renters are obviously coming into the market. Businesses think of it as promising community to move their company, and for workers to situate their households. A growing population constructs a reliable base of renters who will keep up with rent raises, and a vibrant property seller’s market if you need to sell any investment properties.

Property Taxes

Real estate taxes, ongoing upkeep costs, and insurance specifically hurt your returns. Investment property located in unreasonable property tax areas will bring smaller profits. Communities with high property taxes are not a reliable setting for short- and long-term investment and need to be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is a signal of how high of a rent can be collected in comparison to the purchase price of the asset. If median home prices are steep and median rents are low — a high p/r — it will take more time for an investment to recoup your costs and attain profitability. The lower rent you can charge the higher the p/r, with a low p/r illustrating a more profitable rent market.

Median Gross Rents

Median gross rents are an important illustration of the strength of a rental market. You want to discover a market with regular median rent expansion. If rental rates are going down, you can eliminate that city from consideration.

Median Population Age

Median population age will be similar to the age of a usual worker if a community has a good supply of renters. This could also show that people are relocating into the region. If you see a high median age, your supply of renters is reducing. An active investing environment can’t be bolstered by retired people.

Employment Base Diversity

A higher number of enterprises in the community will improve your prospects for success. When people are concentrated in a few significant businesses, even a little problem in their operations might cost you a great deal of renters and increase your exposure significantly.

Unemployment Rate

You won’t be able to benefit from a steady rental cash flow in a location with high unemployment. Unemployed residents cease being customers of yours and of related businesses, which causes a ripple effect throughout the city. This can cause a high amount of dismissals or reduced work hours in the community. Even renters who have jobs will find it tough to stay current with their rent.

Income Rates

Median household and per capita income will show you if the tenants that you are looking for are residing in the area. Existing salary records will show you if salary increases will permit you to hike rents to hit your investment return calculations.

Number of New Jobs Created

An expanding job market produces a regular pool of tenants. The workers who fill the new jobs will require a residence. This enables you to buy more lease real estate and fill existing empty units.

School Ratings

School rankings in the community will have a big effect on the local housing market. When an employer looks at a community for potential relocation, they remember that good education is a must for their workforce. Business relocation creates more tenants. New arrivals who purchase a house keep property prices high. You will not discover a vibrantly growing housing market without good schools.

Property Appreciation Rates

The basis of a long-term investment strategy is to keep the investment property. You have to see that the odds of your real estate increasing in market worth in that area are promising. Weak or dropping property value in a region under examination is inadmissible.

A furnished residential unit where clients live for less than a month is referred to as a short-term rental. Short-term rental landlords charge a steeper rate per night than in long-term rental properties. These units may necessitate more periodic maintenance and sanitation.

Normal short-term renters are excursionists, home sellers who are waiting to close on their replacement home, and people traveling for business who need more than hotel accommodation. Regular real estate owners can rent their houses or condominiums on a short-term basis via websites like AirBnB and VRBO. A simple method to enter real estate investing is to rent a property you currently possess for short terms.

Destination rental unit landlords require interacting personally with the renters to a larger degree than the owners of yearly rented properties. This results in the landlord having to regularly deal with protests. Consider covering yourself and your assets by joining one of real estate lawyers in Columbus OH to your team of professionals.

Factors to Consider

Short-Term Rental Income

You should figure out how much rental income needs to be produced to make your investment lucrative. Being aware of the standard rate of rental fees in the community for short-term rentals will help you pick a desirable location to invest.

Median Property Prices

Meticulously evaluate the budget that you are able to pay for new investment assets. Search for locations where the budget you count on correlates with the existing median property worth. You can adjust your market search by studying the median market worth in particular neighborhoods.

Price Per Square Foot

Price per sq ft can be affected even by the style and floor plan of residential units. A building with open foyers and high ceilings cannot be contrasted with a traditional-style residential unit with bigger floor space. If you take this into account, the price per sq ft may give you a broad view of real estate prices.

Short-Term Rental Occupancy Rate

The demand for more rental units in a location can be verified by evaluating the short-term rental occupancy rate. A region that requires new rental housing will have a high occupancy rate. If property owners in the community are having problems filling their existing properties, you will have trouble renting yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to evaluate the value of an investment plan. Divide the Net Operating Income (NOI) by the amount of cash invested. The resulting percentage is your cash-on-cash return. If an investment is lucrative enough to repay the capital spent promptly, you’ll have a high percentage. If you get financing for a fraction of the investment budget and use less of your own cash, you will realize a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This metric shows the comparability of rental property value to its per-annum return. A rental unit that has a high cap rate and charges market rents has a high market value. If investment properties in a city have low cap rates, they usually will cost more. You can get the cap rate for possible investment real estate by dividing the Net Operating Income (NOI) by the Fair Market Value or listing price of the investment property. The percentage you get is the investment property’s cap rate.

Local Attractions

Short-term tenants are often travellers who come to a region to attend a recurring important event or visit tourist destinations. When a city has sites that regularly produce sought-after events, such as sports stadiums, universities or colleges, entertainment halls, and adventure parks, it can attract people from outside the area on a recurring basis. Outdoor scenic spots like mountainous areas, waterways, coastal areas, and state and national parks will also attract potential tenants.

The fix and flip approach involves purchasing a home that requires repairs or renovation, creating more value by upgrading the building, and then selling it for its full market price. To get profit, the investor has to pay below market worth for the property and know what it will cost to renovate the home.

You also want to evaluate the resale market where the house is situated. Look for a market with a low average Days On Market (DOM) indicator. Liquidating the house fast will keep your expenses low and maximize your revenue.

To help distressed property sellers find you, place your company in our lists of companies that buy houses for cash in Columbus OH and real estate investing companies in Columbus OH.

In addition, hunt for top bird dogs for real estate investors in Columbus OH. These specialists specialize in rapidly locating good investment prospects before they come on the marketplace.

Factors to Consider

Median Home Price

Median real estate price data is a valuable benchmark for estimating a future investment market. Lower median home prices are a hint that there should be an inventory of houses that can be purchased for lower than market value. This is an important element of a profit-making fix and flip.

When you detect a sharp decrease in real estate market values, this might signal that there are potentially houses in the market that qualify for a short sale. You will receive notifications concerning these possibilities by working with short sale processors in Columbus OH. You will learn additional information regarding short sales in our guide ⁠— How to Buy a Pre-Foreclosure Short Sale Home?.

Property Appreciation Rate

Are home market values in the area on the way up, or going down? You are looking for a reliable appreciation of local property market rates. Accelerated property value increases could indicate a market value bubble that is not sustainable. Purchasing at an inopportune time in an unreliable market can be devastating.

Average Renovation Costs

You will have to look into construction expenses in any future investment community. The time it requires for acquiring permits and the municipality’s rules for a permit application will also influence your plans. To draft an accurate financial strategy, you’ll need to know if your plans will have to involve an architect or engineer.

Population Growth

Population increase is a good indication of the strength or weakness of the city’s housing market. If there are purchasers for your restored real estate, it will demonstrate a strong population growth.

Median Population Age

The median residents’ age is a factor that you might not have thought about. If the median age is the same as that of the usual worker, it is a good indication. Employed citizens can be the individuals who are active homebuyers. Aging individuals are preparing to downsize, or move into age-restricted or assisted living neighborhoods.

Unemployment Rate

When you stumble upon a city showing a low unemployment rate, it’s a solid indication of good investment prospects. It must definitely be lower than the country’s average. A very reliable investment market will have an unemployment rate lower than the state’s average. Jobless individuals can’t purchase your real estate.

Income Rates

Median household and per capita income amounts tell you whether you will obtain enough purchasers in that region for your residential properties. When property hunters acquire a home, they typically need to take a mortgage for the home purchase. To qualify for a home loan, a borrower shouldn’t be using for a house payment greater than a particular percentage of their wage. You can figure out from the city’s median income whether many individuals in the city can afford to buy your properties. In particular, income increase is critical if you want to grow your investment business. Construction spendings and home prices increase from time to time, and you need to be sure that your target clients’ income will also improve.

Number of New Jobs Created

The number of employment positions created on a steady basis tells whether wage and population increase are sustainable. An expanding job market communicates that more prospective home buyers are amenable to investing in a house there. Qualified skilled workers looking into buying a home and settling opt for relocating to communities where they will not be out of work.

Hard Money Loan Rates

Investors who purchase, repair, and liquidate investment real estate like to enlist hard money instead of typical real estate funding. Hard money funds enable these purchasers to pull the trigger on pressing investment opportunities immediately. Research Columbus hard money loan companies and study lenders’ costs.

Those who are not experienced concerning hard money lenders can uncover what they need to learn with our article for newbie investors — How Does a Hard Money Loan Work?.

In real estate wholesaling, you locate a home that investors may consider a lucrative deal and enter into a purchase contract to purchase it. However you do not close on the home: after you have the property under contract, you allow someone else to take your place for a price. The property is sold to the investor, not the real estate wholesaler. The wholesaler does not sell the property under contract itself — they simply sell the purchase agreement.

This business involves using a title company that’s experienced in the wholesale contract assignment operation and is capable and willing to coordinate double close purchases. Locate Columbus title companies that work with wholesalers by utilizing our directory.

Read more about how wholesaling works from our definitive guide — Real Estate Wholesaling Explained for Beginners. When you select wholesaling, add your investment project on our list of the best wholesale real estate investors in Columbus OH. This way your desirable customers will see your location and contact you.

Factors to Consider

Median Home Prices

Median home values in the region will show you if your required price point is possible in that market. A region that has a large source of the marked-down residential properties that your clients want will display a below-than-average median home purchase price.

A sudden decrease in real estate values might be followed by a large selection of ‘underwater’ houses that short sale investors look for. Short sale wholesalers can receive perks from this strategy. Nevertheless, there may be liabilities as well. Find out about this from our extensive explanation How Can You Wholesale a Short Sale Property?. Once you choose to give it a try, make certain you employ one of short sale lawyers in Columbus OH and foreclosure attorneys in Columbus OH to confer with.

Property Appreciation Rate

Property appreciation rate boosts the median price data. Investors who want to sell their properties later on, like long-term rental landlords, require a place where residential property market values are going up. A dropping median home value will illustrate a weak leasing and housing market and will disappoint all types of investors.

Population Growth

Population growth stats are a contributing factor that your future real estate investors will be familiar with. An increasing population will need new housing. There are a lot of people who lease and plenty of clients who buy real estate. A place with a shrinking community does not draw the investors you need to buy your purchase contracts.

Median Population Age

Real estate investors have to work in a steady property market where there is a considerable supply of tenants, newbie homebuyers, and upwardly mobile residents switching to larger houses. A region that has a huge employment market has a consistent supply of renters and purchasers. A city with these features will show a median population age that mirrors the working adult’s age.

Income Rates

The median household and per capita income demonstrate consistent increases historically in places that are good for real estate investment. Increases in lease and purchase prices must be sustained by rising income in the area. Real estate investors need this if they are to meet their expected profitability.

Unemployment Rate

The region’s unemployment stats are an important factor for any prospective contracted house purchaser. Late lease payments and default rates are prevalent in areas with high unemployment. This adversely affects long-term investors who plan to lease their property. Tenants can’t level up to ownership and existing owners cannot put up for sale their property and move up to a bigger home. This makes it difficult to reach fix and flip investors to buy your contracts.

Number of New Jobs Created

Knowing how frequently fresh jobs are produced in the region can help you see if the property is situated in a dynamic housing market. Job creation means additional employees who need housing. Whether your buyer supply is comprised of long-term or short-term investors, they will be drawn to a region with consistent job opening generation.

Average Renovation Costs

Updating spendings have a strong influence on a flipper’s returns. The purchase price, plus the costs of renovation, should reach a sum that is lower than the After Repair Value (ARV) of the house to create profitability. Look for lower average renovation costs.

Purchasing mortgage notes (loans) works when the note can be purchased for less than the face value. The borrower makes remaining payments to the mortgage note investor who is now their current mortgage lender.

Loans that are being paid on time are called performing loans. They give you long-term passive income. Note investors also purchase non-performing loans that the investors either re-negotiate to assist the client or foreclose on to purchase the property less than market worth.

At some point, you may accrue a mortgage note portfolio and notice you are lacking time to manage your loans on your own. If this happens, you might pick from the best loan portfolio servicing companies in Columbus OH which will make you a passive investor.

If you determine to use this strategy, affix your venture to our list of mortgage note buyers in Columbus OH. Showing up on our list puts you in front of lenders who make desirable investment opportunities available to note buyers such as you.

Factors to Consider

Foreclosure Rates

Note investors searching for current mortgage loans to buy will hope to see low foreclosure rates in the market. High rates may signal opportunities for non-performing loan note investors, however they need to be careful. The locale needs to be robust enough so that mortgage note investors can complete foreclosure and resell properties if required.

Foreclosure Laws

Note investors need to understand the state’s laws concerning foreclosure before pursuing this strategy. Many states use mortgage documents and some require Deeds of Trust. A mortgage dictates that you go to court for authority to foreclose. A Deed of Trust allows the lender to file a public notice and proceed to foreclosure.

Mortgage Interest Rates

Note investors acquire the interest rate of the mortgage loan notes that they acquire. That interest rate will undoubtedly impact your profitability. Mortgage interest rates are significant to both performing and non-performing mortgage note buyers.

Traditional lenders charge different mortgage interest rates in various regions of the country. Loans supplied by private lenders are priced differently and can be more expensive than traditional mortgage loans.

Note investors should always be aware of the prevailing local interest rates, private and traditional, in potential mortgage note investment markets.

Demographics

When mortgage note buyers are determining where to invest, they will consider the demographic indicators from reviewed markets. Investors can discover a great deal by reviewing the size of the population, how many citizens have jobs, the amount they earn, and how old the residents are.
A young growing market with a diverse employment base can generate a stable income flow for long-term mortgage note investors looking for performing notes.

Mortgage note investors who look for non-performing mortgage notes can also make use of stable markets. If non-performing mortgage note investors have to foreclose, they’ll have to have a stable real estate market in order to unload the collateral property.

Property Values

The more equity that a borrower has in their property, the more advantageous it is for their mortgage note owner. When you have to foreclose on a loan with little equity, the sale might not even pay back the balance owed. Appreciating property values help raise the equity in the collateral as the borrower reduces the balance.

Property Taxes

Escrows for property taxes are typically sent to the lender simultaneously with the mortgage loan payment. This way, the lender makes sure that the real estate taxes are submitted when due. If mortgage loan payments are not being made, the lender will have to choose between paying the property taxes themselves, or they become past due. Tax liens take priority over any other liens.

Because tax escrows are combined with the mortgage loan payment, rising taxes mean larger mortgage payments. Overdue customers may not have the ability to keep paying increasing loan payments and might interrupt making payments altogether.

Real Estate Market Strength

A place with appreciating property values has excellent opportunities for any note investor. As foreclosure is a crucial component of mortgage note investment planning, growing property values are critical to finding a good investment market.

A growing real estate market can also be a lucrative area for initiating mortgage notes. For experienced investors, this is a beneficial portion of their business plan.

Many real estate investment companies are conceived as trusts termed Real Estate Investment Trusts or REITs. REITs are developed to permit everyday people to invest in properties. Shares in REITs are not too costly for the majority of investors.

Shareholders’ participation in a REIT falls under passive investing. Investment exposure is spread across a package of real estate. Investors are able to unload their REIT shares anytime they choose. However, REIT investors don’t have the ability to pick specific investment properties or locations. The properties that the REIT chooses to buy are the properties you invest in.

A Real Estate Investment Fund is a mutual fund that owns stocks of real estate companies. Any actual real estate property is possessed by the real estate businesses rather than the fund. These funds make it feasible for additional people to invest in real estate. Whereas REITs are required to disburse dividends to its members, funds don’t. The value of a fund to an investor is the projected appreciation of the price of the fund’s shares.

You may pick a fund that focuses on specific categories of the real estate business but not particular markets for each real estate property investment. Your decision as an investor is to select a fund that you believe in to manage your real estate investments.