A guide to investing in Ohio multifamily real estate

Multifamily is the largest single category of private real estate investment in the United States, and Ohio is one of the places where the arithmetic still works: land and construction costs that let a new building pencil, and metros with the employment base to lease it. This is a plain description of how investing in Ohio multifamily development actually works — what the money buys, what determines the outcome, and what to ask before committing to any of it.

It is written by a developer. Metropolitan Holdings was founded in Columbus in 1998 and has developed more than $800M of multifamily assets since — a measure of development volume, not of investor return — and currently manages more than 2,000 apartment homes across the Columbus, Cincinnati, Dayton, and Akron markets.

Which Ohio, specifically

“Ohio” is not one market. The state contains several metros with genuinely different demand drivers, and a portfolio built across them is not the same as a portfolio concentrated in one. What separates one Ohio metro from another — the breadth of the employment base, what else is being built nearby, and how each jurisdiction treats density — is settled market by market.

Our own communities sit in Columbus and its suburbs, in Huber Heights and Milford near Dayton and Cincinnati, in Shaker Heights outside Cleveland, and in Green, Maumee, and Perrysburg in the north of the state. You can see the whole footprint on the communities map. That spread is deliberate: it is the difference between exposure to Ohio and exposure to one employer’s hiring plans.

Development is a different investment from buying a building

Most private real estate offerings buy an existing, occupied, income-producing property. Development does not. Capital goes in before there is a building, and the return depends on completing construction near budget, leasing the property up, and either selling it or refinancing it once it is stabilised — a sequence of stages that begins with entitlement and ends with an exit.

That changes the risk profile in specific ways rather than generally. There is no income in the early years, because there is no building. There is construction and cost-overrun risk that a stabilised acquisition does not carry. In exchange, the investor is buying at cost rather than at a market price someone else set, and the tax treatment in the first years is materially different — which is a large enough subject to have its own article.

Two ways capital participates

Broadly, private real estate offerings let you participate as a lender or as an owner, and the choice determines almost everything else about the investment — where you sit in the order things are paid, and what you give up for that position.

• Debt. You lend to the project and are paid interest. Your position sits ahead of the equity, your return is capped at the interest rate, and your outcome is largely insensitive to how well the project performs above the point where it can service the loan.
• Equity. You own a share of the project. You are paid after the lenders, your return is not capped, and you carry the downside if the project underperforms.

Neither is better. They price different risks. We run one of each, and the terms of both — offering size, minimum, preferred return, targeted hold period, liquidity — are published in full on the funds page, side by side so they can be compared line by line. Everything quoted there is a target drawn from the offering documents, not a guarantee, and the fund documents govern.

What actually determines the outcome

Marketing for private real estate tends to lead with a target return. The target is an output. These are the inputs it depends on:

• Construction cost and schedule. A project that finishes late finishes into a different interest rate and a different leasing season than the one it was underwritten against.
• Lease-up pace. How quickly the building fills, and at what rent, against what the model assumed.
• Interest rates at refinancing. Development is usually financed with short-term debt that has to be replaced once the property stabilises. The rate available at that moment is not knowable when the investment is made.
• Exit timing. Whether the asset is sold, and when. A hold that runs longer than projected changes the annualised return even if every dollar arrives as expected.
• Who develops and manages it. Whether the sponsor self-performs construction and management, or subcontracts both and inherits whatever that produces.

Real estate development involves substantial risk, including construction delay and cost overrun, lease-up risk, interest-rate and refinancing risk, illiquidity, leverage, and loss of principal. Interests in private offerings are not registered, are not freely transferable, and there is no public market for them.

Questions worth asking any Ohio sponsor

• Which specific metros, and what is the concentration in the largest one?
• Do you self-perform development, construction, and property management, or subcontract them?
• What is the debt structure, and when does it have to be refinanced?
• What happens if lease-up runs six months behind the model?
• How are losses and depreciation allocated to my class of interest, and does the operating agreement actually say so?
• What are the fees, and at what points are they taken?

Who can invest

Private real estate offerings of this kind are available to accredited investors only. Our offerings are made under Rule 506(c) of Regulation D, which permits us to describe them publicly — which is why this page exists — but requires us to verify accredited status rather than accept a self-certification. In practice that means documents, usually a letter from the CPA or advisor who already prepares your return.

Where to start

If you are comparing sponsors, the fund terms are the fastest way to see how we are structured, and the communities show what we have actually built. If this would be your first private offering, the step that decides the timing is verification — what a sponsor asks for, and when the money actually moves. If you would rather just talk to someone, our team will take the question directly.