As a real estate investor, growing a portfolio of single-family homes (SFHs) or smaller multi-family homes (MFHs) in a new market is a challenge. If you have not been to that area and spent a few days driving around, building intentional relationships, and touring a few properties, the task becomes that much harder.
In every new state and city, there are nuances to everything from neighborhoods to school districts to construction styles. All of these subtleties must be accounted for when you are making a purchase that needs to be a sustainable, long-term investment. You are not just buying an asset. You are creating a long-term product for the market and a place to call home for your future residents.
So how do you know these things, or how do you find them out?
If you are investing in the Toledo market, start with Josh’s Guide, available for free at www.pmtoledo.com. It is written specifically to help out-of-state and first-time investors avoid common mistakes and understand what actually matters when investing here. Realtors can use it too!
Reach out to J Bowen & Company or to other Realtor partners who regularly work with investors. Agents who are investors themselves should be at the top of your list. Make sure your Realtor understands your goals and that you are having honest, open conversations. Investing can be exciting and fast-moving, but you need a Realtor who communicates in reality and is not afraid to say, “No, this is not a good purchase. This does not align with your long-term goal.”
Two Critical Factors to Entering a Market Successfully
1. Funding and Terms
Cash, 1031 Exchange, Self-Directed IRA, Private Money, Traditional Financing, Non-Traditional Financing like DSCR loans: every one of these comes with its own rules, and we play by those rules when crafting offers.
Cash is always king because it removes some of the contingencies that make sellers nervous. The goal is to make it easy for the seller to say “yes”. The more risk you are willing to take on, the higher your chance of getting that yes.
If you enter the market needing every property to pass a lengthy inspection, appraisal process or third party approval, you will pay at or near retail and still lose more offers than you win. The ability to move fast and close with confidence gives you a serious edge. Being a well-capitalized investor is not optional. It is key to both short-term wins and long-term growth. If your funding is weak or your terms are inflexible, you are going to struggle in this market. That doesn’t mean you can’t grow a portfolio, it just means that it will take longer and that time is the real cost.
2. Realistic Rental Expectations
Rent rate, rental terms, property features that are important in this market, and the socioeconomic factors that affect tenant demand, all of that matters.
I have had more than the usual number of calls this year from new investors who want to buy only for the Section 8 guaranteed payment, now called the Housing Choice Voucher Program.
They join Section 8 investor groups that talk endlessly about spreadsheets and maximum allowable guaranteed rents. They call me wanting to buy the cheapest houses in the least desirable areas, do the bare minimum to pass inspection, and still collect
top-of-the-market rent.
First of all, these conversations genuinely hurt my brain. I have operated in this market for over 12 years, but somehow, I am always wrong and the spreadsheet is right. Second, please refer to Josh’s Guide and the three rules of real estate investing before you lose your money on a bad purchase.
And third, this is the most important part:
**a tenant has to choose your house.**
If you buy a dump in an undesirable area, and your plan is to fill it quickly with a highly qualified, long-term resident at premium rent, you are setting yourself up to fail. That is not how any of this works. Just don’t do it.
Reframe your focus to improving the home, adding pride back into the neighborhood and providing an amazing living experience for your resident. If you add that to your long term goal checklist, you’ll have a better chance of success and building long term wealth.
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Let’s Build Smarter
Now that we have put that behind us, here is the good news. Smart investing in Toledo is absolutely possible with the right mindset, strategy, and local partnership. Whether you are just starting or expanding your portfolio, the resources and relationships you build now will shape your results for years to come.
Start with the right guide, surround yourself with honest professionals (Realtors, Property Managers, local Insurance, Financial Partners, Legal), and approach each purchase with clarity and care.
Visit www.pmtoledo.com to download Josh’s Guide and reach out to schedule a strategy session. Let us grow your investment portfolio with purpose.
Because smart growth starts with smart choices!
