Ohio has emerged as an attractive destination for real estate investors in recent years, owing to its affordable housing, business-friendly policies, and diverse local economies across the state. With higher rental yields, lower property prices, and a pro-growth environment, Ohio provides a balanced mix of capital appreciation and regular income for real estate investments. The state’s major urban centers like Cincinnati, Columbus, and Cleveland offer distinct investment opportunities in residential, commercial, and industrial real estate segments. However, navigating the local markets require a nuanced understanding of demand-supply dynamics and investment risks involved.
Strong rental demand and rising rents make Ohio’s residential real estate lucrative
The residential rental property market in Ohio provides stable and attractive returns for real estate investors. Major metros have witnessed a surge in rental housing demand due to population growth and increasing preference for rental housing. Census data shows Ohio added over 73,000 renter households from 2010 to 2020. Rents have also increased consistently over the years, especially in cities like Columbus which saw a whopping 34% jump in average rents from 2011 to 2021. The improving economy and job market further support demand for rental housing. All these factors enable residential landlords to enjoy higher rental yields in the range of 10-15% in Ohio’s key markets – much higher than the national average.
Affordable property prices allow investors to achieve higher cash flow
Real estate prices in Ohio are quite affordable compared to other states, ranging between $140 – $170 per square foot on average for residential homes. Investors can purchase good rental properties at relatively low price points, which results in better capitalization rates and cash flows. The price difference with other states also provides room for strong appreciation in property values. Ohio’s median home price is just around $169,000 as of 2022, nearly $100,000 lower than the national median price. Overall, the affordable purchase prices help investors maximize rental yield from their capital invested.
Pro-business environment and tax incentives favor commercial real estate
Ohio offers a very conducive environment for businesses with corporate tax rates lower than most states, streamlined regulations, and initiatives like ‘Ohio Loans’ to support local firms. This business-friendly ecosystem has stimulated employment and commercial real estate activity. Demand for industrial spaces has been robust, especially from distribution and warehousing companies like Amazon. To attract businesses, many Ohio counties and townships also provide tax abatements on new commercial developments. Investors can capitalize on these factors to earn stable income from retail, office, and industrial commercial spaces.
Good economic diversity provides stability across market cycles
A diverse mix of industries provides Ohio’s real estate markets stability through economic cycles, mitigating geographic or sector-specific risks. The state has a balanced presence of financial services, healthcare, manufacturing, agriculture, and technology companies. This varied tenant profile across industries results in steady demand for different types of commercial real estate. Ohio’s gross domestic product has also outperformed the national economy in recent years, indicating the state’s resilience. Investors can be assured of consistent rental incomes and lower vacancy risks over the long term.
Strong property fundamentals despite slower price growth than US average
Ohio may not provide massive capital gains like some faster-growing states, but it offers stable property fundamentals. Home prices and rents have appreciated consistently over the years, though at a slower pace than the national average. Demand from institutional investors has also picked up, especially in Cincinnati and Columbus markets. With its diversified economy and affordable real estate, Ohio can provide respectable total returns for long-term real estate investors through a combination of rental income and moderate property value gains.
Ohio provides a supportive environment for real estate investing, with healthy demand, affordable housing, and business-friendly policies driving returns. The state offers relatively higher rental yields and ample opportunities for market-beating total returns in the long run.