According to nationwide data from Mashvisor, the Toledo real estate market is one of the best places to buy rental property in the U.S. in 2021. Compared to other cities, it has one of the highest cash on cash return rates for both traditional and Airbnb rental properties.
So, if you’ve been looking for where to invest in 2021 with great returns or just learning how to invest in real estate, you may want to consider Toledo, Ohio. But don’t just take our word for it.
Here’s everything you need to know about investing in the Toledo area and why this can be the best place to invest money in real estate this year.
Why You Should Invest in the Toledo Housing Market in 2021
Toledo real estate has been one of the most overlooked markets in the country, but many investors are now starting to see why it is one of the best places to buy rental property nationwide. While mortgage rates were hitting a new low during the Coronavirus pandemic, Toledo remained a hot spot for real estate investment. Toledo real estate agents in the area were at their busiest despite increasing fears that there would be a housing market crash.
Now, as the country recovers from COVID-19 and economies are finally heading towards pre-Coronavirus levels, Toledo has maintained its upward trend making properties there some of the best investments right now. Based on real estate market analysis by Mashvisor, which relies on data from dozens of credible market sources and machine-learning algorithms, these are the numbers from May 2021 for Toledo income properties, including traditional and Airbnb data:
- Median Property Price: $108,000
- Average Price per Square Foot: $86
- Traditional Rental Income: $876
- Traditional Cash on Cash Return: 5.83%
- Traditional Price to Rent Ratio: 10
- Airbnb Rental Income: $1,816
- Airbnb Cash on Cash Return: 8.08%
- Airbnb Occupancy Rate: 64%
So, what factors make Toledo one of the best places to buy rental property in the U.S?
Properties in Toledo are relatively affordable
While home prices in the U.S. housing market 2021 are generally high, the median value still soared to $370,000 recently despite the Coronavirus pandemic. With numbers like this, it is easy for potential real estate investors to miss out on buying real estate if they don’t have large funds.
The Toledo real estate market is one of the best places to buy rental property if you are looking for affordable housing such as single-family homes. As shown above, the median property price and average price per square foot in the city are $108,000 and $86, respectively, which is way lower than the values you find in most cities in the U.S. This way, you can afford a smaller 20% down payment required to buy a house as a real estate investor and get a mortgage for the remaining amount.
On a side note, you don’t have to get caught up in real estate markets where the prices of property are very high if you don’t have a lot of capital. You can use tools like Mashvisor to discover the cheapest place to buy a house. Our real estate software platform helps you sort properties based on location and price ranges, and there are hundreds of U.S. housing markets to choose from. So, whatever stage of real estate investing you are in, you can always find the best real estate investments around.
It’s a buyer’s market
There are more homes in supply than demand for them in the Toledo real estate market. For a real estate investor, this is good news and the best time to buy a new home. You can get rental properties for a good price while avoiding any bidding wars. However, if you’re not already familiar with the Toledo real estate market, you may want to take your time and check as many rental properties as you can before opening your purse.
This also helps you to find the best deal since you are able to negotiate a price, unlike when it is a seller’s market, where the competition is stiff. For instance, let’s assume you’ve found a single-family home for $200,000 in one of the best places to buy rental property in Toledo. Later you discover 5 more similar properties for $50,000 less in the same neighborhood. In a buyer’s market you can negotiate a fairer price based on what you can consider the average market price.
More people rent than own houses in Toledo
Although it is less expensive to buy homes in Toledo as demonstrated by the low price to rent ratio, it is a strong rental market. According to NeighborhoodScout, over half of the Toledo population (50.9%) rents homes rather than owning. This is good news for real estate investors in Toledo as it increases their chances of getting tenants and avoiding vacancy.
If you’re wondering why more people choose to rent homes when buying Toledo investment properties is affordable, there’s an explanation. According to MarketWatch, Toledo is one of 25 cities in the U.S. where a social security check is able to cover housing costs. This explains why more Toledo residents would ideally want to rent houses, which in turns makes it one of the best places to invest money, for investors.
Mashvisor’s real estate data analysis places the city-level average cash on cash return for long-term rental properties at 5.83%. For landlords, it’s important to note that this is one of the highest levels across the whole country.
Toledo is an emerging market
In a recent report by the Wall Street Journal, Toledo was listed as one of the top 25 emerging markets in the United States. It is one of the four cities in Ohio to make the list including Springfield, Akron, and Columbus. This is a general indication of the Ohio housing market 2021 as a great location for real estate investment.
It is also proof that Toledo is an ideal investment destination not just for its profitability. As a top emerging market, several factors were considered. This includes factors like wages, small business activity, unemployment rate, and other quality of life metrics.
The data also shows that half of the people looking for Toledo rental properties are from outside the city including Ohio and out-of-state locations like Atlanta, Chicago, and New York. People are moving from other locations to Toledo for its affordability and strong economy, especially as the Coronavirus pandemic has introduced a larger adoption of remote work. This makes it easy for inter-state migrations for many U.S. residents.
As a real estate investor, a growing economy (both city-wide and state level) is a major factor that should influence your decision in investing in the Toledo real estate market, one of the best places to invest in real estate this year.
Tourism in Northwest Ohio is a multibillion-dollar industry
Visitors to Toledo spend about $900 million every year. And the tourism industry brings in a whopping $2 billion in income into Lucas County, where Toledo is located. People come in for both business trips and tourism attractions like Walleye and Mud Hen games, the Toledo Museum of Art and Glass Pavilion, and the Toledo Zoo.
According to Richard Nachazel, president of Destination Toledo Inc., revenue from daily trips in Ohio stands at an average of $114 and can increase to $250 and $350 if the visit extends overnight.
This makes investment in Ohio Airbnb rental properties a worthy proposition, especially if you’re more inclined towards short-rentals. And now that the COVID-19 vaccine is being rolled out across the country, tourism activity in the U.S. is expected to increase. So, in perspective, now is the best time to invest in Airbnb properties, including in the Toledo real estate market.
With this strong demand from short-term visitors, it comes as no surprise that Toledo enjoys one of the absolute highest return on investment for vacation home rentals across the U.S. market, according to Mashvisor’s Airbnb data. A city-wide Airbnb cash on cash return of 8.08% is not something that investors usually see. The Toledo Airbnb occupancy rate of 64% is also above the national average.
Is Airbnb Legal in Toledo, OH?
Short-term rental regulations are important factors to consider when buying rental properties for sale, including Airbnb Toledo. That’s because generally speaking, investing in rental properties can be tricky and you don’t want to be on the wrong side of the law. And while Toledo is one of the best cities to invest in real estate in 2021 and operating a short-term rental property is legal, there’s been a recent development that every potential investor should be aware of.
Airbnb hosts in Toledo could soon need permits to operate a short-term rental. The Toledo City Council is considering short-term rental permits as part of a set of measures to address public safety. In essence, these properties would have to be registered with the city to be considered legal businesses.
This is not surprising though as similar regulations are being put in place in other cities in the Ohio real estate market including Columbus and across the country in general. For Toledo though, a short-term rental application fee is expected to cost $50 and to be renewable every year.
While the short-term rental law is not in place yet, it is important to have this in mind when investing in the Toledo real estate market.
Ready to Invest in Toledo, One of The Best Places to Buy Rental Property?
All the factors listed above show why the Toledo housing market is one of the best places to buy rental property in 2021, but the most important fact is that it offers a high return on investment for both traditional and Airbnb rental properties. This means that you can easily switch between rental strategies – if needed – and still maintain a profitable real estate business. Meanwhile, you’re probably thinking, “So, where exactly do I find rental properties for sale?” The simple answer is Mashvisor, a real estate analytics tool for both beginner and experienced real estate investors. For instance, in the case of the Toledo housing market, Mashvisor helps you analyze properties across all neighborhoods in the city.
This way, you are more likely to make a profitable investment decision and take advantage of all the positive factors about the Toledo housing market we’ve discussed in the article. Sign up for Mashvisor now to turn 3 months of real estate research and analysis into 15 minutes.