Youngstown had historically been a town centered around steel production and manufacturing which supported the auto and other industries. Economic hardship since the 1970s has left Youngstown with fewer jobs and fewer people than the city had expected to support. For this reason housing supply is not as limited as in many other parts of the country and therefore we see lower than average prices in Youngstown. This vacuum of economic activity has spurred business and government intervention and, in turn, opportunity for investors.

Economic Forces at Work in Youngstown

In 2017, the federal government created opportunity zones to "spur economic growth and job creation in low-income communities while providing tax benefits to investors". Youngstown has several opportunity zones for investors to take advantage of. Typically businesses invest in a zone and banks create financial instruments around the investments into which investors can buy. Put another way, investments are made, investment funds are created around them, and all involved can benefit from tax breaks. Investing directly in real estate is another way to take advantage of the incentives. An investor would need to create a Qualified Opportunity Fund to begin the process.

We mentioned the low prices in Youngstown, but another key metric, vacancy rate, is also quite low at 3.2%. Low vacancy reduces risk and is one of the most important numbers investors look at. Another positive number is the rent to home value ratio. The amount of annual rent you can expect from the median rental is enough to cover 18.53% of the purchase price of the property. So in 5.5 years enough rent could conceivably be collected to recoup the entire cost of the home. This is of course with the caveat that there are other expenses and risks outside of rent and purchase price. The 77% home value appreciation rate in Youngstown is another reason it makes sense for investors.

The Properties

Once again, we notice the low prices. Given the low median price in Youngstown, it's not surprising to see real estate properties priced below the median being sold as-is or being described as needing work. There is no shortage of opportunities for someone looking to rehab a property in Youngstown. One such property is #8 on our list in the desirable Brownlee neighborhood. The house is attractive on the outside and the interior work looks like it could be fairly cosmetic.

This reasonably priced multi-family property could serve as a rental for students. It also has a desirable location which, generally speaking, helps a property hold its value.