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If you are thinking of investing in Toledo or already have some properties in our city, then it’s important for you to stay up-to-date on what’s happening within the rental market.

Toledo’s story is unique from other markets. You don’t see huge jumps in rental rates and you need to be selective about the neighborhood you choose to buy in.

But that doesn’t mean Toledo isn’t a fantastic real estate market. For years, Toledo has been known for its inexpensive housing prices and strong cash flow.

In our Toledo rental market analysis, we will discuss historic rental trends in Toledo and where you should look to find the best opportunities.

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A Historic Look at the Toledo Housing Market

Understanding Toledo’s history is important because it gives investors a foundational understanding of why the real estate market is as it is today.

Toledo, much like its more famous neighbor, Detroit, has a history marked by industrialization and dramatically changing populations. Toledo was incorporated into Ohio in 1837 and quickly became a popular trading port with the opening of the Miami-Erie Canal in 1845. By the mid-1800s, Toledo was a thriving industrial center, which would set the stage for its nickname, “The Glass City.” Toledo’s manufacturing-driven economy would continue for decades, eventually drawing the attention of the automotive industry. Booming business investment required labor, resulting in an influx of interstate and immigrant residents.

While Toledo’s economy faced periods of struggle, particularly during the Great Depression, the city’s population continued to expand until 1970, peaking at just over 380,000 residents. However, being a part of the Rust Belt, Toledo lost most of its manufacturing industries over the following decades. By the end of the 20th century, Toledo had lost most of its Fortune 500 companies.

Over the past two decades, Toledo’s city and its residents have invested in revitalizing the downtown. Today, the economy is fueled by higher education, healthcare, the solar energy industry, and yes, still car manufacturing. However, the population declined to about 270,000 residents, meaning that the housing market has been oversaturated for years.

The Result of a Shrunken Population on Toledo’s Housing Market

Due to a sharp decline in population, Toledo had more housing than was required. As a result, housing prices stayed low and housing was affordable. Furthermore, tenants had a variety of options and landlords were left competing for occupants with low rental rates.

Eventually, homes started being left vacant and others foreclosed upon. There were simply more homes than there were households.

But as time passed, many of these properties fell into disrepair and eventually became condemned. With each passing year and minimal new construction, Toledo’s liveable housing supply shrunk. For investors today, that means that there’s plenty of opportunity to acquire rental properties in need of renovation at a considerable discount.

Toledo Real Estate Market Today

The 21st century has seen efforts to revitalize Toledo’s economy and its urban core. There has been a noticeable increase in investments in residential properties, rehabilitation of historic buildings, and development of new rental units. The rental market has benefited from these revitalizations, appealing to both young professionals and families looking for affordable living options in a growing city.

Today, Toledo’s rental market is characterized by its affordability and high cap rates, making it an attractive option for both tenants and investors. The city’s cost of living remains lower than the national average, and the rental market is resilient, often showing stability even during economic fluctuations.

Toledo Rental Market Analysis

If real estate investors are purely looking at Toledo’s history, they might wonder why they would ever want to buy a rental property in this market. Toledo lacks the glamor of other real estate markets, but it offers a unique blend of affordability and strong cash returns. Toledo housing market trends show us that the area offers stability in rental returns, giving investors confidence in how their assets will perform long term.

Rental Rates in Toledo

Toledo is known for its affordable homes both as rental and to buy. Like any city, the cost of living greatly depends on the neighborhood you are looking at. Currently, Toledo’s average rent is just $895. This figure includes units across all neighborhoods and of all sizes.

But when you’re investing in Toledo, you don’t want just any unit. We recommend investors buy what is called B-Class investment properties. B-Class rentals are homes in desirable areas that are reasonably updated. This class of property tends to have the strongest demand from quality tenants while still having an affordable price tag.

The Toledo neighborhood you invest in has a significant impact on your rental property’s rent. Pick areas where Toledo residents want to live. While our team has our preferred areas, one of the easiest ways of identifying a good neighborhood is based on its average rental rate.

According to Apartments.com, the neighborhoods with the highest rent prices (May 2024) in the Toledo real estate market are:

  • Bancroft Hills: $1,183
  • Scott Park: $1,183
  • Secor Gardens: $1,183
  • Westmoreland: $1,183
  • Onyx: $1,140
  • Downtown Toledo: $1,077
  • Toledo Warehouse District: $1,077
  • Vistula: $1,077
  • Roosevelt: $1,057
  • Ottawa: $1,051

However, we have found some neighborhoods like the Five Points area, Library Village, and Old West End Toledo to also be great locations for buyers to target.

Affordability

Toledo continues to be one of the most affordable markets in the United States, with rental prices significantly lower than the national average. This affordability attracts a diverse tenant base, including families, young professionals, and retirees. Lower rental costs also mean that tenants can often afford larger spaces in Toledo compared to more expensive markets, enhancing the quality of life and tenant satisfaction.

Not only is rent inexpensive, but home prices are also inexpensive. Currently, Toledo’s median home price is $116,000, but investors are able to get investment properties for far less.

High Cap Rates

Investors find Toledo attractive due to the high capitalization rates (cap rates) offered by properties here. The high cap rates are a direct result of the affordable property prices combined with stable rental incomes. This metric is particularly appealing for those looking to maximize returns on investment compared to markets where high property costs diminish yield percentages.

Market Resilience

Toledo’s rental market has demonstrated resilience through economic cycles. This stability is attributed to the city’s diverse economy, which includes sectors like healthcare, education, and manufacturing. The presence of major institutions and businesses, including the University of Toledo and several large hospitals, provides a steady employment base that supports the rental market.

Growth in Demand

Recent years have seen a steady increase in demand for rental properties in Toledo, driven by economic recovery and population stabilization. The city’s efforts in revitalization and community development have made certain neighborhoods particularly attractive for living and investing. The downtown area, for example, has seen growth in both commercial and residential developments, which in turn boosts demand for nearby rental units.

Investment in Infrastructure and Development

The city’s investment in infrastructure and public services has made living in Toledo more attractive. Improved public transportation, parks, and school systems contribute to a higher standard of living, which can attract more long-term residents and reduce turnover in rental properties.

Toledo Real Estate Market Insights and Housing Market Data

Real estate investors love to scour the internet to get data on an area they are interested in investing. One thing that’s important to note about the Toledo metropolitan area is that the data available online (like the Zillow home value index) is unreliable. The average price of home values or for rent can greatly vary from what you read online. These databases are supplied by online listings, and many of Toledo’s rental properties are leased without going through sites like Apartments.com or Zillow.

If you want to buy a Toledo investment property, it’s crucial to become familiar with the micro-markets. Instead of relying on online data, talk to local real estate agents and property management companies like Oz Realty. Our local knowledge is invaluable compared to large online databases.

Toledo Housing Market Opportunities

Toledo, once known primarily for its high cash flow from rental properties, is now gaining attention for its appreciating property values as well. Recent data from Redfin indicates that the average house price in Toledo has surged by 11.8% compared to last year. Realtor.com’s data is even more impressive, showing that prices have increased 18.1%. This increase in property value positions Toledo not just as a stronghold for rental income but also as a promising arena for capital gains.

Toledo is a hot market, and investors around the country are taking notice. Investing in Toledo rentals today offers a dual benefit: the potential for substantial equity growth and the continuation of strong cash returns. Further price growth is expected when interest rates begin dropping, so it’s not too late to ride the growth cycle.

Challenges in the Toledo Rental Market

While Toledo offers numerous opportunities for investors, it’s not without its challenges. Understanding these can help investors better navigate the market and maximize their returns.

One of the biggest challenges in Toledo is the significant variability between neighborhoods. As mentioned earlier, picking the right area to invest in is crucial. Some neighborhoods, especially those that have seen more revitalization efforts, tend to have higher rental rates and better tenant quality. Others, however, may still struggle with high vacancy rates, lower rents, and property maintenance issues.

Furthermore, many of the available properties in Toledo are older and may require substantial renovation. While this can be an opportunity to add value, it also means higher upfront costs and potential delays in getting the property rental-ready. Investors need to budget for these expenses and ensure they have a reliable network of contractors and property managers to handle renovations and ongoing maintenance.

Finding the Best Investment Opportunities

Despite these challenges, there are strategic ways to identify and capitalize on the best investment opportunities in Toledo.

Leverage Local Expertise

As mentioned earlier, local real estate agents and property management companies can provide invaluable insights into the Toledo market. They have a deep understanding of neighborhood dynamics, rental trends, and potential pitfalls. Partnering with local experts can help investors make more informed decisions and find properties with the best potential returns.

Focus on Revitalizing Areas

Investing in areas undergoing revitalization can offer significant upside potential. Neighborhoods like Downtown Toledo and the Toledo Warehouse District have seen substantial investment and development, attracting a mix of new residents and businesses. Properties in these areas are likely to appreciate in value and offer strong rental demand.

Look for Value-Add Opportunities

If approached correctly, properties in need of renovation can be excellent investment opportunities. Look for properties that require cosmetic upgrades rather than structural repairs, as these are typically less expensive and quicker to complete. Improving the property’s condition can justify higher rents and attract better-quality tenants.

Save Time, Stress, and Money with a Turnkey Rental Property

Investing in Toledo’s rental market can be incredibly rewarding, but managing renovations, finding tenants, and handling day-to-day operations can be overwhelming. Turnkey rental properties offer a hassle-free solution to building your portfolio. These properties are fully renovated and already occupied, allowing you to start earning rental income immediately.

Ohio Cashflow specializes in turnkey property investment in Toledo. They provide high-quality, fully renovated properties with reliable tenants in place. Plus, they handle all property management, ensuring a seamless and profitable investment experience.

Skip the stress and dive straight into earning with Ohio Cashflow. Explore their turnkey properties today at Ohio Cashflow and start your journey toward a hassle-free investment in Toledo real estate. Let Ohio Cashflow save you time, reduce stress, and boost your returns!

About the Author

Kelsey Heath

Kelsey Heath is a real estate content specialist with an extensive background in residential, industrial, and commercial property. She has been involved in the industry for a decade as a professional and personal investor, gaining a deep understanding of the market and trends. With a passion for written communication, Kelsey loves helping people understand the sometimes-complicated concepts behind real estate and is now a sought-out guest and ghostwriter.

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