Cincinnati Real Estate Market: Where to Invest

You should seriously consider buying a rental property in the Cincinnati real estate market. Here’s why.

5 Reasons to Invest in the Cincinnati Real Estate Market

When trying to evaluate any real estate market, it’s important to look at the current trends. Real estate markets are always changing so you need to keep up with certain indicators of a good time to invest. We’ve taken a good look at the Cincinnati real estate market trends and the overall consensus is: you should invest now. Take a look at why:

1) Very Strong Economic Activity

The third-largest city in the Ohio real estate market and one of the fastest developing metros in the country, Cincinnati has definitely got a strong economy to support its housing market. With 10 Fortune 500 companies and 17 Fortune 1000 companies, Cincinnati has a Gross Metro Product of $129 billion. Some of the top companies you’ll find headquartered in Cincinnati are Procter & Gamble, The Kroger, and General Electric.

Right now, the city’s unemployment rate is at 3.8 percent, and we’ve seen job growth of 1.2 percent. Amazon recently chose Cincinnati as the location for its new regional air services hub, investing $1.5 billion into this development. Expected to bring in about 2,000 new jobs, this move is just another example of Cincinnati’s economic strength.

2) The House Price Trends

According to Redfin, Cincinnati houses for sale typically get one offer and sell 2 percent below the property’s list price. With median home values going up 7.8 percent since last year, we’re seeing more competition over limited housing inventory in the Cincinnati real estate market, making it a seller’s market. Buying a house in Cincinnati is smart; we’re seeing healthy activity and with property values expected to go up another 2.3 percent in 2020, you should invest before the market heats up even more.

Even with this jump in property value, buyer demand is still high. Mainly because the Cincinnati housing market has got some of the most affordable real estate in the nation. The average home price of Cincinnati houses for sale is $150,000, which is 26 percent below the national average of $202,000.

3) Property Tax Rates in Cincinnati

While Hamilton County (where Cincinnati is located) does land a bit higher than the national average when it comes to property taxes, it’s still lower than a lot of other major US cities.

Cincinnati property owners have to pay about 1.53 percent of their home’s fair market value. So for example, Cincinnati investment properties valued at the city’s average of $150,000, will owe property taxes of $2,300 annually. Let’s compare that tax rate to what’s due in a couple of other major cities:

Detroit, MI: $5,900
Philadelphia, PA: $3,900
Fort Worth, TX: $3,800
Chicago, IL: $3,500

Cincinnati has a policy set in place which adjusts property tax rates to make sure a specific amount in total revenue is collected each year (the only major Ohio city which does so).

4) Strong Multifamily Investment Market

We’re seeing some of the most impressive numbers for the multifamily industry in the Cincinnati real estate market. According to Reis, Cincinnati had a record-breaking sales volume of $609.2 million in 2018. Cincinnati real estate investments in multifamily properties are definitely something you’ll want to get into. Dividing the 2018 average sales price per unit, we see that it comes in at 20 percent higher than the previous year ($75,360 per unit). This seems to be a continuing trend as the first three months of the year experienced a very impressive sales volume of $260.8 million.

The sales volume is not surprising when you see that multifamily properties are witnessing strong rental performance. Rent prices for apartments in the Cincinnati real estate market are, on average, $920 per unit. This is a rent growth rate of 3.8 percent since last year. The vacancy rate in apartments is also down from 4.4 percent to 4.1 percent.

5) Lenient Airbnb Regulations

With cities all across the country cracking down on the popular home-sharing platform, Airbnb, one’s got to wonder, “Is Airbnb legal in Cincinnati?” Yes, it is, but some new rules have gone into effect that short term rental operators need to be aware of.

More than a year of going back and forth regarding regulations on Airbnb Cincinnati properties and the City Council has finally approved an ordinance.

Since July 2019, the following has been enforced:

Short-term rental operators must pay a 7 percent excise tax (this will be going to fund the city’s affordable housing plans).
Hosts must register with the city before operating their properties as short-term rentals.
Short-term rental operators are required to self-certify that their properties meet the city building codes. The city will not be actively seeking out short term rental for compliance inspections; they will only respond to complaints.
Short term rental properties must carry insurance.
There is a limit on the number of dwelling units operating as a short-term rental in a multifamily building. If a multifamily home has 4 units or less, it is permissible for all of these units to operate as short-term rentals. Buildings with 5 or more units can operate 4 short-term rentals, plus one for every additional four units.
Short-term rental operators now have 15 days instead of 7 to correct a code violation.

These regulations are very host-friendly and Airbnb even applauded Cincinnati for providing such a fair regulatory environment for their hosts in the city. Such a case is rare to find in other major cities across the US housing market, so if you’re looking for a real estate market for your next short-term rental investment, Airbnb Cincinnati is the one.

Find a Profitable Airbnb Investment Property

So now you know why to invest in the Cincinnati real estate market; now it’s time to tell you where.

Where to Invest in Real Estate: Best Neighborhoods in Cincinnati

Knowing the real estate market’s current condition is not enough. Real estate investors need to evaluate how profitable this market is for their rental property strategy. What kind of return on investment will you be getting from a Cincinnati rental property? Mashvisor’s investment property calculator can tell you that. First, here’s our data for average citywide performance:

Median Property Price: $250,914
Monthly Traditional Rental Income: $1,296
Traditional Cash on Cash Return: 2.8%
Monthly Airbnb Rental Income: $2,713
Airbnb Cash on Cash Return: 9.4%
Airbnb Occupancy Rate: 55%

Both rental strategies (traditional and Airbnb) perform very strongly on average. But if you want optimal results, we recommend you start your search for Cincinnati investment properties in the following neighborhoods.

North Avondale

Median Property Price: $113,350
Monthly Traditional Rental Income: $3,079
Traditional Cash on Cash Return: 14.9%
Monthly Airbnb Rental Income: $2,621
Airbnb Cash on Cash Return: 21.4%
Airbnb Occupancy Rate: 55%

South Fairmount

Median Property Price: $79,933
Monthly Traditional Rental Income: $1,047
Traditional Cash on Cash Return: 5.9%
Monthly Airbnb Rental Income: $4,558
Airbnb Cash on Cash Return: 42.6%
Airbnb Occupancy Rate: 54%

College Hill

Median Property Price: $96,413
Monthly Traditional Rental Income: $1,023
Traditional Cash on Cash Return: 5.5%
Monthly Airbnb Rental Income: $1,814
Airbnb Cash on Cash Return: 12.3%
Airbnb Occupancy Rate: 50%

Westwood

Median Property Price: $102,102
Monthly Traditional Rental Income: $996
Traditional Cash on Cash Return: 4.4%
Monthly Airbnb Rental Income: $2,327
Airbnb Cash on Cash Return: 14.8%
Airbnb Occupancy Rate: 64%

Avondale

Median Property Price: $136,950
Monthly Traditional Rental Income: $1,153
Traditional Cash on Cash Return: 5.2%
Monthly Airbnb Rental Income: $2,889
Airbnb Cash on Cash Return: 11.4%
Airbnb Occupancy Rate: 55%

Do you have a free Mashvisor account? Use our Property Finder to find lucrative Cincinnati investment properties that match your criteria in a matter of minutes!

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Cincinnati Real Estate Market: Why and Where to Invest