The Columbus real estate market has always been a top location for investors for many reasons. The market is pretty affordable compared to the national median (the median property price is $261,659 according to Mashvisor). Columbus has a diverse economy that is supporting the housing market and attracting a new population. And the most important reason to invest in Columbus, OH is profitability. Of course, you always want to invest in locations where you will assure profits, and Columbus has a long record of being lucrative for both traditional and Airbnb investments!
But, which is the better option in 2020?
To help you decide whether to buy traditional, long-term rentals or Airbnb, short-term rentals in the Columbus, Ohio real estate market, we researched how both investments are doing this year. While you might already have a preference, it’s always smart to base your decisions on real estate trends and data. Keep reading our Columbus real estate market analysis for each rental strategy and find your answer.
The Traditional Rental Market in Columbus
#1 Growing Renter Population
The first trend to look at when deciding if you should buy a Columbus investment property to rent out as a traditional long-term rental is, naturally, the demand for this type of rental. As the capital city of Ohio, Columbus is home to a large renter population that keeps growing at a constant. Data from the US Census Bureau show that the homeownership rate of Columbus is only 45%. This tells us that more than half of the city’s population (55%) are renters. While people are moving out of some large cities to the suburbs, the Columbus real estate market continues to draw a new renter population.
Also, the Columbus region has one of the highest concentrations of higher education in the nation, with over 50 college and university campuses, a total enrollment of 136,000 students and over 20,000 graduates annually. This huge student market adds to the renter population and demand for rental properties. As a result, Columbus is one of the best places to invest in real estate and rent out to students. According to Mashvisor’s real estate data, you can earn a monthly rental income of $1,166 from a Columbus rental property rented out traditionally. Of course, this is just the city average and you can find rental properties for sale with higher potentials for profit.
Related: College Towns: The Best Places to Buy a Rental Property
#2 Strong Job Market & Economy
As mentioned, one of the top factors attracting investors to Columbus, OH is its strong and diverse economy. Top industries that support the city’s economic and job growth include professional and business services, education and health, leisure and hospitality, government, and technology. In addition, five Fortune 500 companies are headquartered in Columbus. As you can imagine, this diverse economy has helped Columbus’ job market to grow by 1.4% while still maintaining the cost of living that is below the national average.
Columbus is also well-known as one of the best cities for young professionals and startups. Forbes ranks it on the top 10 rising cities for startups while Business Facilities ranks it as the 6th city for corporate HQ leaders. Tech also plays a major role in the city’s economy with both Fortune and Smart Asset calling Columbus the #1 city for tech jobs. All of this explains why the job market in Columbus is strong and steady, with about 2,600 new jobs added over the last 12 months. With this economic success expected to continue in 2020 and beyond, the traditional Columbus real estate market will further strengthen.
#3 Columbus is Landlord Friendly
The final factor benefiting Columbus real estate investors who are renting out traditionally is the fact that landlord-tenant laws are in their favor. Ohio is rather landlord-friendly – much friendlier than neighboring Midwestern states like Pennsylvania. For starters, there are no laws requiring a renal license to be a landlord. In addition, there are no laws regarding pets, payment grace periods, or re-keying. Rental agreements are recommended but aren’t required for leases shorter than 12 months. Moreover, there is no limit on late fees, though they must be “reasonable.”
Best Neighborhoods in Columbus for Traditional Investments
#1 Southeast
- Median Property Price: $139,900
- Price per Square Foot: $106
- Price to Rent Ratio: 9
- Traditional Rental Income: $1,372
- Traditional Cash on Cash Return: 4%
#2 Eastgate
- Median Property Price: $194,900
- Price per Square Foot: $127
- Price to Rent Ratio: 17
- Traditional Rental Income: $1,340
- Traditional Cash on Cash Return: 3%
#3 Southwest
- Median Property Price: $106,000
- Price per Square Foot: $99
- Price to Rent Ratio: 9
- Traditional Rental Income: $983
- Traditional Cash on Cash Return: 1%
#4 Edgewood
- Median Property Price: $165,000
- Price per Square Foot: $107
- Price to Rent Ratio: 13
- Traditional Rental Income: $1,090
- Traditional Cash on Cash Return: 4%
#5 Shady Lane
- Median Property Price: $155,683
- Price per Square Foot: $117
- Price to Rent Ratio: 12
- Traditional Rental Income: $1,050
- Traditional Cash on Cash Return: 2%
The Airbnb Rental Market Columbus
#1 Impressive Tourism Statistics
When it comes to where to invest in Airbnb, it’s important for investors to choose locations where there’s a strong demand for short-term rentals. You can tell how the demand for Airbnb rentals is by looking up tourism statistics. And in Columbus, such statistics are pretty impressive. Tourism is actually a big part of Greater Columbus’ economy, adding 1,000 tourism-related jobs last year. Over 39.3 million people visit the Greater Columbus area annually, enjoying so much to see and do from art, culture, outdoor adventures, museums, and more.
Seeing that leisure and hospitality are among its top industries, it’s no wonder why you’d want to buy Airbnb investments in the Columbus real estate market. As a matter of fact, Columbus was named the hottest Airbnb city in the Midwest in 2018. As a result of these positive tourism trends, it’s no surprise that there’s a good demand for Columbus short-term rentals. This is reflected by Airbnb occupancy rate data which is 55.2% according to Mashvisor’s Airbnb data.
Related: What Kind of Airbnb Occupancy Rate Can You Expect?
#2 Non-Owner Occupied Rentals are Legal
It’s crucial for investors to know the Airbnb laws and regulations concerning non-owner occupied rentals in the city where they’re thinking of buying Airbnb property. This is because many major cities like Los Angeles and Las Vegas have completely banned non-owner occupied Airbnb rentals. As a result, it’s impossible for most real estate investors to take advantage of this profitable rental strategy in those cities. When it comes to Airbnb Columbus, the good news is that the city allows non-owner occupied rentals. Still, there are some Airbnb regulations that you must comply with. The most important Airbnb Columbus laws include that short-term rental hosts must:
- Apply for a permit in order to operate.
- Display their permit numbers in any advertising
- Provide contact information for rental properties
- Keep four years’ worth of records that show guest names, room rates, and the dates and durations of stays
- Carry a liability insurance policy of at least $300,000
- Collect the city’s 5.1% hotel/motel tax from guests and pass the tax revenue on to the city
#3 Airbnb Investments are Profitable
In spite of the previous regulations, Airbnb Columbus rental properties can still generate a good return on investment. According to Mashvisor’s Airbnb data (taken from actual Airbnb listings and verified by hosts), hosts in the Columbus real estate market 2020 earn $119 average Airbnb daily rate and $1,946 monthly Airbnb rental income.
Related: Is Owning an Airbnb Profitable in 2020?
Best Neighborhoods in Columbus for Airbnb Investments
#1 Westside
- Median Property Price: $174,500
- Price per Square Foot: $120
- Airbnb Occupancy Rate: 4%
- Average Airbnb Daily Rate: $114
- Airbnb Rental Income: $2,935
- Airbnb Cash on Cash Return: 7%
#2 Leawood
- Median Property Price: $123,425
- Price per Square Foot: $120
- Airbnb Occupancy Rate: 5%
- Average Airbnb Daily Rate: $105
- Airbnb Rental Income: $2,142
- Airbnb Cash on Cash Return: 6%
#3 Hilltop
- Median Property Price: $116,967
- Price per Square Foot: $72
- Airbnb Occupancy Rate: 3%
- Average Airbnb Daily Rate: $111
- Airbnb Rental Income: $2,217
- Airbnb Cash on Cash Return: 3%
#4 Pine Hills
- Median Property Price: $134,500
- Price per Square Foot: $121
- Airbnb Occupancy Rate: 5%
- Average Airbnb Daily Rate: $107
- Airbnb Rental Income: $2,385
- Airbnb Cash on Cash Return: 2%
#5 Linwood
- Median Property Price: $127,889
- Price per Square Foot: $122
- Airbnb Occupancy Rate: 8%
- Average Airbnb Daily Rate: $94
- Airbnb Rental Income: $2,194
- Airbnb Cash on Cash Return: 7%
To start looking for and analyzing the best Columbus rental properties in your neighborhood of choice, click here.
So, Which Is The Better Rental Strategy?
So if you plan to invest in the Columbus, OH real estate market, which rental strategy should you go for? Renting out on Airbnb vs renting out traditionally? According to market trends, it seems that either would be a good investment. Moreover, Mashvisor’s data show that both can provide high enough rental income to generate positive cash flow. However, if we were to look just at the numbers, buying an Airbnb rental in Columbus would make a higher return on investment in terms of cash on cash return. If you’re willing to take on the Airbnb regulations, this could be the rental strategy for you in 2020.
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