The midwest is a treasure trove of high-quality properties where purchase prices are still widely accessible for the beginning investor on a tight budget. No matter if you are interested in commercial property, apartment buildings, commercial warehouses, or a simple single-family home, the midwest is likely a good place to begin your search.
According to the federal government, the Midwest is comprised of Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North & South Dakota, Ohio, and Wisconsin. As Britannica points out, the “Middle West” or Midwest is actually made up of two regions: the Northwest Territory and the Great Plains. This region is really important to the American economy because of the large concentration of manufacturing and other productive sectors.
The middle of the country is known for farming and the massive manufacturing industries as these two comprise the majority of the region’s economy. In fact, the midwest is one of the most important farming areas in the United States. The Midwest Region’s climate and natural resources are important to its economy as many areas have fertile, deep soil with valuable nutrients for the crops. In more recent times, healthcare and retail have grown. Together with manufacturing, these three industries employ more than 40% of the residents in the region.
We know the middle of the USA can get a bad rap…or rather no rap at all.
It lacks the sophistication of the east coast, the laid back luxury of the west coast, the warm embrace of southern hospitality, or the cool independence of Texas (yes, we know Texas stands on its own!). But, ironically, the lack of a distinct identity makes the American midwest just that, quintessentially American. It isn’t weighed down by trying to live up to marketing hype, it’s comfortable in its own skin to just be simple as vanilla ice cream.
Let’s be honest, when it comes to investing in traditional high capital, illiquid investments like real estate, being simple is a distinctly unique and attractive feature. What’s more, America’s heartland is the center of what makes America a convenient, attractive place to live. The midwest is home to many of the country’s largest employers, a manufacturing hub, and a burgeoning tech base.
Simplicity and consistency really are the name of the game when your goal is to build generational wealth. Few places deliver that with such robust fundamentals as the midwest. We are a fan of investing in many midwestern cities, but for the purposes of this article, we will focus on Ohio and Dayton in particular.
The “Buckeye State” is the crossroads of America.
It has excellent connections to most major markets within a 3-4 hour flight and is driving distance to many others. Furthermore, five interstate highways traverse the state, and freight is also significant with regional transit systems and rail services. Most of the train services are for commercial freight purposes but Amtrak operates passenger trains on their Cleveland, Toledo, and Cincinnati routes.
Overall, Ohio can be an attractive place for investing in real estate because, in addition to excellent transit arteries, the economy is also quite strong, the state’s GDP is ranked 7th in the nation.
A number of multinational conglomerates in manufacturing, health care, and energy call Ohio home, including:
- Cleveland Clinic
- Cardinal Health
- Owens Corning
- Proctor & Gamble
- Nationwide Financial Services, Inc.
- Progressive Group of Insurance Companies
- Goodyear Tire & Rubber Company
- Key Bank
- J.M. Smuckers
The Ohio state income tax laws are rated as corporate-friendly with the highest tax bracket kicking in at 7.5% for high-income earners with incomes of $200,000 or more. Similar laws favoring higher-income brackets only exist in select other states.
In addition to the economic benefits, Ohio brings a rich sports culture that is prevalent no matter the specific city. In Ohio, sports are a lifestyle. The state has a team representing them in practically every national league which is not only a source of pride for local residents, it also generates billions of dollars annually for tourism, and related sectors. The Ohio major leagues teams are:
- Cleveland Cavaliers for the National Basketball Association
- Cincinnati Reds for Major League Baseball
- Cincinnati Bengals and Cleveland Browns for the National Football League
- Columbus Blue Jackets for the National Hockey League
- Columbus Crew for Major League Soccer
Finally, the real estate investing opportunities in Ohio are robust as well. Not only does Ohio have landlord friendly tenant law, but the housing stock is also generally high quality for the value. There are a variety of major cities to choose from to invest in Ohio including Columbus, Cincinnati, Cleveland, and Toledo.
There are many different types of real estate to purchase in Ohio and single-family rentals are some of the best choices. The rental market in Ohio is largely composed of workers in manufacturing and other major industries as well as students attending high-quality colleges and universities throughout the state.
Income properties in Ohio are providing investors with a sustainable means to generate cash flow, build equity, and growth through appreciation.
No matter where you choose to invest, it’s important to avoid mistakes when investing in Ohio real estate – the largest of which is not having a team in place. At the very least, you should have a local realtor, contractors, real estate attorney, insurance agent, and property inspector in the market you choose to invest in. It will not serve you to try to take shortcuts or work with unprofessional vendors as you will end up paying more over time.