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Roofstock Certified Agent, Harvey Yergin with Simple Solutions Real Estate in Columbus, Ohio answers important questions about investing in this market.

In this market overview, Michael and Harvey cover what investors need to know about the Columbus market from, local industry, the rent to price ratio, the competitive environment, the type of properties, and what investors should be looking out for on inspection reports. 

If you have more questions for Harvey about deals in Columbus, feel free to reach out. 

Simple Solutions Real Estate - harvey.yergin@gmail.com - 901-484-9751 

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Transcript

 

Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.

 

Michael:

Hey, everybody, welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and Today we have with us our roofstock certified agent out in Columbus, Ohio, Harvey, Yergin, and Harvey's gonna be talking to us today about the Columbus market as a whole and some things that we as investors need to be aware for if we're going to go invest in that market. So let's get into it.

 

Harvey, thank you so much for joining us today, man. Really appreciate you taking the time out of your busy schedule to chat with us about Columbus, Ohio.

 

Harvey:

Yeah, sure. No problem. Glad to be here.

 

Michael:

So tell everybody listening. Are you a Columbus native? You know, where did you come from? Like, where did you come from? Where did you go? And how long have you? And how long have you been in the Columbus market?

 

Harvey:

I have been in Columbus, back in Ohio for six or seven years now, with close to six years. I'm originally from Akron, Ohio, which is closer to Cleveland moved around the country a bunch sometime in Virginia, Tennessee, Oregon, Michigan, had a bunch of kids and decided we wanted to get closer to family. And we do a little bit of research on Ohio. No offense out there to other Ohio and but Columbus is it's got the most going on.

 

Michael:

Sound like fighting words to me.

 

Harvey:

Population growth is exponentially higher than the other two major markets in Ohio, Cincinnati and Cleveland. And there's just way more industry here. They're just they're just plain simple. There is more going off Columbus. So we landed here. We're close to family. My wife is from Pittsburgh. So we have a support system here now and Columbus is home.

 

Michael:

Love it. That's awesome. And how long? Have you been a realtor? And then how long have you been in the real estate game? Because I know you're chatting for the episode, you're an investor as well.

 

Harvey:

Yeah, I'm an investor, I spent most of my time in my investment company, and working on investments, been a real estate agent since 2018. So three years or so. And, like I said, primarily working in my own company with my partner. But then also just by nature of being an experienced investor in this market, also helping buyers and sellers buy and sell their real estate investments, as well.

 

Michael:

Awesome. And how many transactions have you done in the last 12? months? Like number of purchases? number of sales?

 

Harvey:

Oh, I don't know, a couple few dozen, most of which are representing our company and the purchase? Or sale?

 

Michael:

Awesome. And so did you get involved in the transactional side of things, because there was just a need for it because you were doing so much business, basically, for your for your investing business on the personal side of things.

 

Harvey:

I got involved as a real estate agent, primarily to I mean, I think there's a common story but get in, get your license so that you can save some expenses and costs

 

Michael:

on the Commission's Yeah,

 

Harvey:

Yeah, on the transaction on your own transactions. And then, you know, obviously, there's some some money to be made. If you're representing other people. You have you have a little bit of a niche in that you understand transactions, maybe more so than other real estate agents, because you buy and sell for yourself. And you're familiar with real estate investment transactions and deals because they're, you know, they're very much different than your retail sales, sales. And I like helping people as long as people want to be helped. I like like working deal but like wouldn't deals together.

 

Michael:

That's great. That's great. All right. Well, now I want to give you the platform to yell from the mountaintops how great of a market Columbus's. So talk to us about some of the economic drivers and talk to me like I know nothing about Columbus And truth be told, I don't know a whole lot. So that'll be eat that should be easy for you to do. But so what are the what are the big economic drivers in the market? Who are the big kind of companies that are that are in the space and do they have a tech scene.

 

Harvey:

There's no secret anymore. I mean, Columbus as a market for real estate investment, that that information is out there makes every top whatever list for real estate investing. And there's really there's two big factors there. Maybe three one is population growth, something like a million people in projected population growth between now and 2030, or 2040, or something like that. So a lot of people for short amount of time.

 

Industry here, mostly retail, I call it junk retail and fashion retail. So Big Lots is here, dollar generals here. But also, L brands, which is the biggest the biggest employer, in Columbus, they're here designer brands is here. So people like Abercrombie and Fitch, the SW baby, big fashion, retail. Businesses are here. And then if you've ever heard a Nationwide Insurance insider

 

Michael:

On your side!

 

Harvey:

That’s right, so insurance is huge here. There's a lot of there's several big players, including nationwide. And then healthcare is also large, because nationwide is plays on both sides of that. So they they run a couple really big hospitals, facilities. And then if you've ever heard of the Ohio State University, their top five employer here as well. And not only do they have the university itself, but they have several research and medical facilities around the region. Technology is largely based in those those industries. There's a lot of funding in financial services I forget forgot to mention Chase is here. financial service technology, innovative insurance, technology and medical, medical technology. And then all of the technological research and development University is doing as well. I mean, there's a lot, there's a lot going on.

 

Michael:

Right on. So is it safe to say that that is a multifaceted economy? It's not solely reliant on a single sector?

 

Harvey:

Right. Yeah. I mean, I'm I went on to what I named, there may be three or four different sectors that are just in the top five employers in the area, there's Yeah, there's a there's a lot going on in terms of different industries, and diversity.

 

Michael:

That's fantastic. So that maybe you can give us kind of a walkthrough of if I'm looking at Google Maps, and I type in Columbus, I get a north, south east west over, you know, 30,000 foot view. Talk to us about some of the different markets, different sub markets within Columbus, that we should be aware of.

 

Harvey:

Yep. So if you look at a few of the map, you got it. 70, which goes around Columbus, generally, inside of that is Franklin County, it extends a little bit outside of that as well. So inside of Franklin County, obviously you have Columbus, but then you have really close in suburbs like Westerville Gahanna, Reynoldsburg, Grove City, Hillier power, how, in my view, there definitely is a couple other ones around. And those are the close in suburbs. And all of all of those cities and municipalities I just mentioned are super hot and saturated in terms of both retail and investment real estate. deals are just hard to come by they're as they are in a lot of MSA.

 

But if you extend out which the pattern now that we're seeing is that investors are starting to move out and it's because people are starting to move out as well. There's just cheaper houses. There's there's not as much of a demand right now anyway to commute to a job downtown. And even if you are commuting, it's likely that you're commuting less frequently. And maybe you're okay with a 45 minutes 60 minute drive now because you're saving 100- $200,000 on a house and you're getting more acreage and you're getting more space. You're, you're now okay with a 45 minute drive.

 

So places like Lancaster and Newark, Delaware, maybe Mount Vernon, which is to the north Lancaster's to the south east, Newark is due east, places like that, which are 45 minutes, average driving time to downtown Columbus, on fire. I mean, Newark. If you told me that Newark, Ohio, if you told me a year ago that Newark would be a place where you could buy a house, do a little bit of rehab, put it on the market and get multiple offers over asking, me and a lot of people will tell you recruit your that's exactly what exactly what's going on. And some of the best deals to be had are out in those peripheral markets.

 

Michael:

Now that's wild. And so give give everybody an idea of Like, if I'm a single family investor, I'm looking for a three to that'll have a good rent, what are some of the price points in those four markets, those four neighborhoods just mentioned, as well as their corresponding rents? And just, you know, ballpark average?

 

Harvey:

Yeah, I think it's pretty fair to say that you could find three to for between 130 and $150,000, then rent is going to be between $950-$1150 depending on your specific location and some features in the property. Awesome. Which, okay, 3/2 130 to 150. Good luck finding that and a lot of areas.

 

Michael:

I'm a California guy, and I can pretty well guarantee it doesn't just exist so much out here.

 

Harvey:

Yeah, not even in Columbus.

 

Michael:

So when you're looking to underwrite properties at Roofstock. And for those people that aren't familiar with you, you know, you're one of our rootstock certified agents out in Columbus, and so if not v certified agent out in Columbus. So when you're underwriting properties on Roofstock that go on the Select program, what is it that you're looking for,

 

Harvey:

You know, the big things are rehab, a lot of things that make them Margiela properties that make the market now in Columbus. And just as a disclaimer right now, on Roofstock, even though I'm mentioning these peripheral markets, we're the only the only properties that are available to Roofstock investors are the ones inside of Franklin County, really, because it's, it's because of the on the property management side, there's just there's not a lot of infrastructure for investor support yet on those markets. So we're limited to that, to that Franklin County, I 270 close in ring.

 

And we're looking for is minimal rehab, things that hit the market at certain price points, you can just guarantee or just just assume I guess that if they're under a certain price point that they probably got some issues with them. And we know that Roofstock investors are not, especially because most of them are out of town, they're not really keen on having to manage any sort of big rehab project with people that they all know in town that they can't get to frequently, minimal rehab being $5,000 or less, on average. And then neighborhood quality because neighborhood quality translates to tenant quality. So we're looking at the the neighborhood rating score, and then gross yield. I mean, just how much how much ranking you get compared to the purchase price, which that number is shrinking with every day that passes I think, I think with time we'll start to see rent start to you know, it's lagging now. But we'll start to inch closer to the kind of growth that we've seen in in sales prices. But so those are the three things, just minimal rehab, making sure we're hitting a minimum neighborhood quality than the gross yield is something that will produce cash flow.

 

Michael:

Love it. And Harvey, can you talk to me a little bit about how to calculate property taxes. Cuz in a market like California, our state, we kind of have a statewide law that says the property taxes are gonna be based on the sale price. So if you bought a property 10 years ago, for 100 grand your property taxes are based on that purchase price, if I buy it from you now, and I pay 500, my property taxes are going to be probably at least 5x what you were paying. So how should investors be thinking about property taxes? And does a sale trigger any kind of reassessment? How does that work?

 

Harvey:

Yeah, the sale the sale doesn't necessarily trigger reassessment. But the local school boards and this is municipality specific. So if you're buying in Columbus, this is true. The school boards are very in, they have a really good process for going through finding recent transactions, making an appeal and getting that value updated. Which because they want their they want their funds they want. They're trying to capitalize on a market that is appreciating. And you know, they want their programs and their facilities to grow right alongside it. So you can't blame them. But that is it's happened to me. And it can be quite sizable. So look at the auditor site and figure out what the tax is based on now. And then figure out where where you think you're going to purchase it. And you get a reasonable idea of how much that tax bill is going to go up. Outside of Columbus, I don't really know but in Columbus, that's very common.

 

Michael:

Okay. So if I'm looking at a property that was at purchase, last purchase $100,000 and the taxes let's call it were 1200 bucks a year. If I'm going to then purchase the same property at two to $200,000. Is it a safe assumption then to double the property tax because the purchase price has doubled. So now I'm thinking I'll be at 2400?

 

Harvey:

You know, if you're underwriting it, I probably will do that. It's probably not that exact. I think they, there's some formula, I forget what it is, but they take a certain percentage off of that, and then they tax you on on that percentage. But yeah, that's, that's probably not a bad place to start for your calculations.

 

Michael:

Okay, perfect. It's funny, you mentioned the school board's I had the exact same thing happened to me numerous times down in Cincinnati, I'm pretty heavily invested down there. And, yeah, and it's funny, you know, because part of me feels really great about being able to help the local school systems get funded and grow, because everybody wants to be part of a good school system. So if you're coming into an area, you're then donating, for lack of a better term, more money to the school system, which will hopefully bring it up. But at the same time, I was like, Man, this sucks, like, it is just so expensive, oftentimes, to do business. So it's a catch 22.

 

Harvey:

It is, and it's a but in theory, it should come full circle that you think as the schools improve the neighborhood improves your your neighborhood and consequentially your house becomes more desirable. And then the like kind of feeds itself. But that assumes obviously the school board is handling your funds with some sort of proficiency.

 

Michael:

Yes.

 

Harvey:

Which, you know, I think in Columbus, they do a pretty good job. But I will also say, if you're taking out a loan on these, and your servicer is a little bit slow to I don't know, I don't know what their process is. But if they're slow to make sure that your escrow account is enough to keep up with that tax increase, what happened to me recently, I have a duplex in Columbus bought for, you know, an increased amount over the last last purchase price. My servicing company didn't know for two years, and then just this past year, we got Oh, you owe tax on the increased value for the last 24 months. We then double your PITI, your your mortgage payment

 

Michael:

To catch up!

 

Haryvey:

For the, catch up. Yeah, for past payments and future payments. Oh, my gosh, that would have been nice to have just incremental increases over, you know, a shorter amount of time. Wow. Yeah, that does happen.

 

Michael:

Well, that's a great tip for listening is look out for that stuff. I mean, if you're if you know what your tax bill should be, and you're mortgaging servicing company, your mortgage service company isn't taking enough from you and to make those payments. Speak up. Say something that's that's a really good teachable moment.

 

Harvey:

You're going to get notification from from the auditor or the treasurer

 

Michael:

For the county.

 

Harvey:

Yeah. When your tax is increasing. And then if you don't see increases in your payment on that property for a couple months, it's probably time to call on it. Start asking questions, because you don't want that surprise. 24 months.

 

Michael:

Yeah, that's that's not a fun present.

 

Harvey:

No, no, not at all.

 

Michael:

Harvey, talk to us about some common issues that might show up on an inspection report in Columbus, that folks should just be aware of, as an example, I bought property in Alaska, and they have diesel fired boiler and heat the house that's just common place me being California. I was like, Whoa, major, major hazard and I was like, calm down. This is standard par for the course. So what are some things that you that that you see that buyers should be aware of?

 

Harvey:

Wet basements blowing basement walls, that those are scary things, especially for people who aren't familiar with basements. And we are familiar with basements that were made to be wet. houses. There's there's a lot of old inventory in Columbus. And a lot of that old inventory from what I understand, was built to take on water that doesn't excuse poor water controls from your downspouts and your gutters and your grading. But they can cause bowing and it can cause signs of water intrusion.

 

Remedying bowing basement walls is a very common practice going in and having to waterproof a basement that's not already waterproof is a very common practice. The selection of contractors that do that is very high. I mean, there's a lot of contractors out there that do that kind of work, both remedying the the bowing and the waterproofing. So don't let don't let that scare you. If anything, it's a it's a negotiation tactic with whoever you're purchasing from, but that will inventory there's still knob and tube electric work in houses, which can be scary for people. But again, there's those contractors that can handle that sort of thing. I've had to do it several times. It's just not that big a deal.

 

Being on well water or having a septic tank instead of public water and public sewer. It's just not that's not that scary one buyers, especially if they're native. They understand renters as long as things are inspected and safe and functional. They understand as well, but in certain areas... I mean in Columbus, it's very rare in fact that I think they've fallen gotten rid of all septic tanks? Anybody who's not on public sewer or public water, but just outside of the city. That's that's pretty common and it should not be a deal breaker. As long as they're functional. They're safe. And they've been inspected.

 

Michael:

Great. those are those are three really good ones. Because as you were saying them I'm so over here like, ah, like, that sounds awful. So this is a good learning lesson for me too. I've never heard that that some of these older properties were built to take on water. That is a totally foreign concept to me.

 

Harvey:

Yeah, yeah. When I heard it, too. I was thinking Who the hell would build a house? That's supposed to where the basements supposed to get wet? But yeah, it's just, it just was the way they built.

 

Michael:

Okay. And they don't make them like they used to, that's for sure.

 

Harvey:

No, they don't build basements to take on water anymore.

 

Michael:

Do you have any interesting stats, or kind of notable highlights that you want to share with with potential buyers or folks interested in the Columbus market?

 

Harvey:

I would say the inventory levels here in Columbus right now are pretty interesting. There wasn't long ago, there was 1300 houses on the market. And I just looked today, and I think there's 28-2900 houses on the market. Some of that is seasonal, I mean, things just tend to loosen up around this time of the year anyway. But that's a pretty sizable gain. And we're starting to feel it a little bit. It's not as crazy inventory is starting to sit on the market a little bit longer than it was this summer and spring. And prices are as crazy then maybe isn't as many offers. So it is getting a little bit easier to purchase. We run a real estate investment company we go direct to seller, the more difficult it becomes for anybody to purchase, the more difficult it becomes for us to purchase. But we're seeing a little bit more ease. On the purchase side.

 

I would just encourage investors Roofstock investors who are interested in the Columbus market to just continue to be patient. I've been a real Roofstock agent since early spring of 2021. Guess how many transactions we've completed for Roofstock purchasers? Zero sec. Yep. And it's, it's just tough. I mean, finding a rehab property that is on the MLS and marketed already, that isn't one going in 24 hours or two, doesn't have the rent to support the purchase price. To date, it's just been a very, it's just, it's just rare to find. But like I mentioned, things are loosening up, continue to be patient. And I think I think you'll there will be deals to find.

 

And I would also encourage through the winter. So let's say late September through March, keep paying attention because that is the time to buy because historically the market is more buyer friendly. Less seller friendly.

 

Michael:

Harvey are you trying to cut into my turkey time you telling me I gotta go look at real estate deals. I'm trying to eat stuffing.

 

Harvey:

I mean, if you want to, if you want to buy deals and build long term wealth, yeah, I guess

 

Michael:

That was it's such a good point. I bought so many deals in that exact timeframe for just that reason. I mean, I I joke it I kind of saying tongue in cheek, but I think for folks that kind of take time off. That's the wrong time to take off. I say if you're gonna sit out, you know, anytime do it when the markets crazy hot. And so when when there aren't folks out there trying to buy deals when everybody else is taking a break. That's when you should be pushing the pedal to the metal.

 

Harvey:

Yeah, sure. And it takes some discipline to because I came from, like corporate america and a regular job. And that time of year is where everyone kind of slows down takes vacation doesn't take work. So serious holiday parties party is in the office. But yeah, I mean, to just say, Okay, this is our plan for fourth quarter and in the first quarter of 2022. And stick to it and be disciplined about it. I mean, that can be you can make a break an entire year off of the deal you purchase in December.

 

Michael:

Easily, easily. No, I love that man. And I'm curious. I mean, you bring up a really great point that there haven't been any deals done in Columbus. So I would challenge everybody listening to go and be the first person to get a deal done when you know, win that race but also what should folks be aware of? What would you coach recommend people on that they need to do in order to win deals in this market? And we're recording this late August of 2021. So take this with a grain of salt depending on when you're listening to it but right now what do you see in folks? What do they need to do?

 

Harvey:

Be reasonably aggressive on your purchase price, not not aggressive? Just be reasonable on your purchase price. Just assume that the deal you're that you're offering was being offered on by other people now, certainly. You can submit offers below asking, and certainly you should submit offers at a price that makes sense. In fact, I would just encourage you to, to make offers. Because it's, it's, it's just like fishing, right? We just, it's a numbers game at this point.

 

Don't be over lease, freaked out by a an inspection. Recently, I had a deal blow up when the inspection came back, we had a 10 day remedy period in the contract, which just means that we get the inspection, we read it over, we decide to things that we don't like and then we ask you to either fix them or give us money. Because of that. Use the remedy period, if you ask for things, all they can say is no. Or maybe they say yes. And all of a sudden, now you have a deal. That was less cash in or a deal that is fixed up and better than it was when it was on the market to use that period to your advantage. Don't run off, just because there's some scary things in in the inspection.

 

Michael:

Now those are those are great tips. And how are you seeing all cash offers playing in the Columbus market right now?

 

Harvey:

They're frequent. And they come from institutional buyers quite a bit. There's hedge, hedge funds and institutions that we're all competing with. And they throw down big chunks of cash. And they they often buy multiple houses at the same time.

 

However, I've seen sellers opting to be more patient for more money than jump out a cash offer just because they can close in 10 days. So cash doesn't always win. It looks like maybe they're winning less frequently. I don't know that for sure. But it seems that way that sellers are being more patient thinking okay, I can get I can wait 30 days, 25 days and get 20,000 more dollars out of this. Well,

 

Michael:

Seems like a pretty good ROI.

 

Harvey:

Yeah. Yeah, not bad. I mean, then lender is good lenders are closing in 21 days. So if you come in and you're pre approved, and your lender is legit, and they're gonna move on things quick. I mean, three weeks, the seller can make, you know, several 1000 more dollars, which can compete with really as a cash offer, at or above asking that close in 10 days.

 

Michael:

Well, that's really good to know. That's really good to know, Harvey, this has been awesome, man. Is there other any other thoughts, tips, tricks, insights that folks should be aware of about the Columbus market?

 

Harvey:

Be patient. And like I said earlier, I'd make make offers and pay attention. Paying attention, especially through the winter months.

 

Michael:

Perfect. We'll have our our heat vision goggles on it's I know it gets pretty cold out there.

 

Harvey:

Yeah it can.

 

Michael:

Awesome. Well, Harvey what's the best way for folks to get in touch with you if they have questions about the Columbus market about property management?

 

Harvey:

Yeah, feel free to email me harvey.yergin@gmail.com. You can also text or call me although I'm usually faster respond to texts at 901-484-9751. I'm also on Facebook, our investment company Simple Solutions Real Estate is also on Facebook. I'm all over the place. Reach out and love to connect.

 

Michael:

Right on. Well, thanks again. Harvey. This was really great. Appreciate you coming on.

 

Harvey:

Yeah. Thank you, Michael.

 

Michael:

Take care. Talk to you soon.

 

All right. All right, everybody. That was our episode. A big big big thank you to Harvey. I know I learned a ton about the Columbus market very much looking forward to continuing to learn about the market and seeing where it goes from here. Sounds like some really big things coming down the pike. If you enjoyed the episode, feel free to leave us a rating or review. And as always, we'd love to hear comments or a future topic ideas so let us know in the comment section. We look forward to seeing the next one. Happy investing