I am new to Cinci and thinking of buying a rental building (4 units, E. McMicken) in OTR .  Is the area stagnating, or not ?  Any thoughts are appreciated....

Start here:

 

http://www.3cdc.org/

 

Looks very nice !  Thanks.  Any other advice ?  I appreciate it. :-)

I am a bit concerned with crime and drugs......

E. McMicken is where there's a huge concentration of buildings owned by Over-the-Rhine Community Housing and other social service organizations.

 

In my opinion, this area is NOT going to receive the kind of dramatic gentrification and improvement that will happen in the Gateway Quarter and (eventually) Findley Market. There are just way too many social service organizations who have a vested interest in keeping low-income housing in that specific area.

 

Consequently, if you can make the numbers work for today and you are comfortable with the demographics of the street today - you will be fine. If you are expecting a Gateway Quarter type resurgence to justify your investment, I think you should look for areas in OTR that are further South or adjacent to Findley Market.

Isn't E. McMicken going through transformation/renavations/improvements as well ?

Not really. Most of the improvements for now are south of Liberty Street. I would not hold your breath for a dramatic improvement in the McMicken area for many years -- a decade at the earliest, even with a streetcar.

McMicken and E. Clifton are very tough right now (primarily around the corner of Lang). There are some great opportunities that will be coming up on Peete and E. Clifton, west of Frintz St. I disagree with the blanket statement that McMicken is 10 years out as I heard people say the same about Mulberry and even Main, north of Liberty and they were wrong.

also known as "hoe row"

 

"also known as 'hoe row'"

 

Or not. This area has a lot going for it. Rothenberg will be an anchor for this neighborhood for years to come, and redevelopment has already crept up to the head of main st north of Liberty. There is even a band of college kids that have taken over Hughes st a block from E. McMicken, and of course Prospect Hill is only a few more blocks away. The historic building stock on E. Clifton and some of those small back streets are pretty special. I don't see why this area won't can't look more like Mulberry does in a relatively short amount of time.

 

 

 

"also known as 'hoe row'"

 

Or not. This area has a lot going for it. Rothenberg will be an anchor for this neighborhood for years to come, and redevelopment has already crept up to the head of main st north of Liberty. There is even a band of college kids that have taken over Hughes st a block from E. McMicken, and of course Prospect Hill is only a few more blocks away. The historic building stock on E. Clifton and some of those small back streets are pretty special. I don't see why this area won't can't look more like Mulberry does in a relatively short amount of time.

 

Because of math. Stuff is creeping north via "beach heads" at Vine and Central, Main, and next Washington Park. This is intended. But it will only creep as fast as absorption rates, which are in the low 100's of units per year.

 

Where I live off W. McMicken there are about 0, thats right zero, habitable units. If there was an "absorption rate, which are in the low 100's of units per year" in my neighborhood it would already be a fundamentally different place than it was when I moved in almost a year ago. Right now it remains little more than a bunch of boarded up crack/whore houses. Grant Park and the proximinity of Findlay Market via E Elder st are some more strong assets of this neighborhood that haven't been mention. When I saw a relatively short amount of time I don't mean 6 months, this area has serious pontential.

^I'm not sure what you're trying to say. You just underscored exactly what I just posted.

"also known as 'hoe row'"

 

I don't see why this area won't can't look more like Mulberry does in a relatively short amount of time.

 

Because of math.

 

 

Did I misinterpret something here?

Because of math. Stuff is creeping north via "beach heads" at Vine and Central, Main, and next Washington Park. This is intended. But it will only creep as fast as absorption rates, which are in the low 100's of units per year.

 

It is creeping from every direction, North from the hillside of Mt. Auburn and has seen its way all the way down to E. Clifton at the corner of Frintz and E. Clifton where a condo that sold for 210,000 (and that is without a view). We are also seeing movement at the 5 points (Schwartz Point) and East, not just at Prospect Hill, but Vernon's Corner as well. If you really look at E. Clifton, the only trouble spot is centered around the Lang intersection. The rest is relatively empty as you continue west.

The real opportunity in these areas exist now, when everyone is saying there is no opportunity. The same was true with the rest of the 3CDC properties whereas developers are begging to get in now but would not have touched it only a few short years ago. Real Estate 101...go where people say you are crazy to go, and then convince others to do the same. That is true on Mulberry and the same is proving to be true on Main and I would say time will prove you correct on McMicken.

^Well duh, nobody wanted in on the 3CDC development zones before there was 3CDC, because it was before there was 3CDC! Before there was a critical mass of capital that no one investor was willing to commit.

 

And that is the point, a critical mass of capital investment. I understand that you see things from your Realtor perspective. But OTR as a whole is spotty, one street might go for $200 per square foot, and the next one over might go for $50. And this guy is definitely asking about a "spotty" part of the neighborhood. Thus, I think conservative advice would be best for him. If he were asking about buying a property near 14th and Vine, perhaps he could be more bullish.

 

I don't think anyone would lose money at this point investing anywhere in the Basin. But I am not convinced yet that "all boats are rising with the tide" there. As you point out, stuff is also creeping down the hillside from the north. But that also proves my point. Some of that gentrification is 15 years old now, and those lower hillside streets are still quite unpredictable.

 

As a property owner and resident on East McMicken, here are my thoughts:

 

- JoeL is right in that there is a lot of units owned by OTRCH and other non-profits in this area.  However, the majority of them are regular residential projects and not permanent supportive housing or other disruptive housing types.

- This area is not going to be exactly like Gateway in that the majority of the buildings are residential and don't have as much commercial storefront.

- ucstudent is right in that there are some major projects completed or on the boards that will positively and significantly impact the area such as Vernon's Corner and the renovation of Rothenberg Elementary, and Mike is right that there is a lot of development coming from different directions.

- I personally know a number of people investing in this area for the long haul (on both single-family, multi-family, and mixed use projects).

- There is great potential with Grant Playground.

 

You need to understand what your plan is.  Are you looking for a quick return on your investment or a longer (+10 year) return?  Will these remain rentals or do you want to convert to condos?  Is this a personal investment where you will live or just a financial one?  All of these are valid, they just have different answers.

 

Just because it's not at the same level as the Gateway projects doesn't mean it's not a good investment.  Certainly your entry costs will be much lower purchasing a building here than on 14th and Vine.

 

Let me put it this way, are you in it just for the money or are you in it for the rebirth of the neighborhood?

 

Feel free to PM if you want to talk in more detail.

Hello Everybody !  Thank you for your posts.  It looks like I will take a leap and try...  Is it easy to rent out units on E. McMicken ?  I see a lot more positive things, as opposed to negative...  Againg, any comments are appreciated.  :-)

As you point out, stuff is also creeping down the hillside from the north. But that also proves my point. Some of that gentrification is 15 years old now, and those lower hillside streets are still quite unpredictable.

So when do you go in? When development is happening one street away?, two streets away?, or does it have to be next door and in mass? His risk sensitivity should be directly proportionate to the price and as one goes up the other will go down. He can wait or he could go to 14th and Vine (I would love that) and the price that he will pay will reflect that safer choice. So once again, what is the tipping point for him? I know what it was for me when I bought on Mulberry 7 plus years ago surrounded by a crime ridden section 8 apt to my south and two shells flanking my property and I got in at a price that could not be touched today with those issues now mitigated.

My point, and I guess it is a "duh", is that if you wait until there is that critical mass, you may be priced out. I understand it isn't rocket surgery but there is something to be said for taking a risk...it is the OTR way.

 

But it will only creep as fast as absorption rates, which are in the low 100's of units per year.

Perhaps, perhaps not. Anyone know what product type we are even talking about? Rental it sounds like but we are making an assumption this is even market rate. Assuming it is, what was the length of time it took Jim Moll to rent out Vernon's Corner or even Wade Dent at Main and Peete? If we followed basic absorption numbers, then should either of those projects should have even been done? Look at market rate vacancy percentages and that will give you a better gauge of the market vs absorption as you do not know how many are on the market vs being rented to begin with. Give Jim a call 623-2001 .

It looks like I will take a leap and try... Is it easy to rent out units on E. McMicken ?

 

What type of units are you planning on having?

2 BR, 1 BA;  4 units all together.

Are they market rate?  Have they been renovated recently?

The apartments are renovated - the building is vacant though.  What do you think they would go for ?  Shall I go through sec. 8 ?

If you want section 8 tenants! I'd rather have under market rents. 

Why is that ?

I would say because of the concentration of section 8 in that area is over abundant.  That stands both as an argument for your going section 8 as an income producing property owner and a reason to go market rate as someone who hopefully wants to positively affect the area.  Not all section 8 is bad, however when looking at E. McMicken you will tend to get a negative element (not just through your tenants directly but through the people who visit your tenants ((those who are not necessarily on the lease)).  If you are looking on the far east side of McMicken, towards Main, your chances of leasing to market rate tenants (assuming you produce a quality product) are very good.

We who live in the immediate area, myself included, would rather see market rate tenants move into the area to give greater diversity through areas like McMicken and E. Clifton.  The social services here always preach having an economically diverse community and as it stands now, McMicken needs more market rate and less Section 8 to achieve that diversity.

What do 2 BR, 1 BA go for at the market rate in the area - my renovations are decent, but not top of the line ?

That is a question for Jim Moll.  I am not in the rental business but  I am sure he could give you a ball park.  I put his number in one of the previous post.