LIMA — You may see a 100-year old house in an old neighborhood in Lima.
Sayam Ibrahim sees an opportunity. That’s why he and his partners recently purchased 98 rental homes throughout the city, with plans to buy 44 more by July and perhaps reach 300 homes within a few years.
“Lima, Ohio, is a great town to invest in,” said Ibrahim, an investor living in Fort Lauderdale, Florida. “There’s enough going on there. There’s definitely a reason we want to be there.”
Most of the properties bought by Ibrahim’s groups, Lima Ohio Investment Group LLC and Viking Management Properties LLC, were previously owned by various LLCs operated locally as Lima Properties.
In Lima, 53.6% of homes are rentals, compared to the national average of 35.9%, according to the 2021 American Community Survey. One group from outside the city holding all of them could be a tipping point for the local market.
“These properties were owned locally, so the rent was going back into the community, not leaving the community,” said David McClough, an associate professor of economics at Ohio Northern University in Ada. “In a sense, housing is now an import in Lima.”
It could also be great news for the community, said Brandon Miller, an instructor at the University of Northwestern Ohio’s College of Business, with the new owners promising to make renovations.
“It’s great when people invest in Lima, period, whatever it is,” he said, “The more we can improve housing, the better. We have a housing problem in this region. Some people don’t want to move here because of it. Whenever we see an investment in housing the area, we should welcome it and work with these individuals.”
The group of investors includes Jonah Stevens, Anthony Pollack, Ibrahim and his brothers, Xavier and Columbus-based Amiel. They’re all in their early 30s and late 20s and fans of comic books. Their Columbus business is called Hero Home Solutions to reflect that. The Viking name comes from one partner’s fascination with mythology and Norse culture.
The Ibrahim brothers grew up in New York and New Jersey before heading to sunny Florida. The investors financed $2.53 million to purchase the properties, following a similar plan they’d executed in the Columbus and Dayton markets.
Most of the properties are older, two- or three-bedroom houses that were already being used as rentals. An analysis by The Lima News found the average property was valued at $36,146 by the Allen County Auditor’s Office, was built in 1919 and had 1,316 square feet inside. The total value of the 98 properties, according to auditor’s office records, was $3.54 million.
Ibrahim said the team’s goal is to spend about $10,000 to $15,000 on each property. Upgrades could include anything from updating kitchens and bathrooms to replacing siding or roofs. They’ve already updated seven of the properties, and they’re waiting for leases to expire on some others.
“The previous owners had some deferred maintenance on them,” Ibrahim said. “They were not putting money back into them. We want to make them nicer but still make them affordable.”
They’ll raise the rents to $600 to $650, which still would be less than the recommended 30% for housing costs for many people considered low income compared to Lima’s median income, $35,586, according to the U.S. Census Bureau.
After a few years, they intend to refinance the homes and invest in more, bringing the number up to perhaps 300. Eventually, the investors could own 500 houses, Ibrahim said.
It’s an effective strategy, said Allan Pohlman, an instructor at UNOH’s College of Business who has used the “buy, rehab, rent, refinance, repeat” approach himself in Delphos.
“It makes sense with this business model — if you do it properly,” Pohlman said. “Service is a big component of it. It’s a great concept, as long as you deliver on your promises.”
The challenge was finding a market with enough housing stock available, along with the workforce to help rehabilitate and maintain them, Ibrahim said. They’re using local contractors B&B General Contractors, led by Nicholas Bailey. The properties are managed by Yvette Blanco.
The investors started off by renovating and flipping properties in the Columbus market before realizing the advantages of the monthly rent coming in from rentals with investments in Columbus and Dayton. They looked at other Ohio markets, including Steubenville, before moving into Lima earlier this year.
Ibrahim said he learned about Lima’s suspicion of out-of-town investors when the team walked through one rental property that had tenants. The tenants expressed their concerns about someone from out of state being less likely to maintain the homes well. He noted his brother, Amiel, will be visiting Lima weekly as part of the business.
There are other possible concerns, said Jonathan Andreas, a professor of economics at Bluffton University.
“There are potential gains to the community, but you’re also naming the potential downside,” he said. “There’s the potential someone could have a lot more monopoly power. They could influence either politics or rents.”
He said much of the economy has shifted away from mom-and-pop businesses helping the local community, with larger businesses taking over everything from retail to farms. The rental market shouldn’t be a surprise, he said.
The up-front investment could make those concerns unrealistic, Itzhak Ben-David, who holds the Neil Klatksin Chair in Finance and Real Estate at the Fisher College of Business at The Ohio State University, said via email.
“Since real estate is a capital-intensive market, even the largest firms that own housing are tiny relative to any market,” he said. “So I don’t see many hazards realistically. The advantage is that these firms can be more efficient in managing rental homes, leading to greater efficiency and higher quality of service.”
End of an era
Miner Dickason has been the man behind Lima Properties for 35 years. The company started with 14 units back in 1987 and expanded since then. The company’s various limited liability companies were among the sellers to Lima Ohio Investment Group and Viking Management Properties.
“I was a lawyer, but I wasn’t a happy lawyer, so I became a landlord with a lot of help,” Dickason said. “It turned out I’m a better landlord than I was a lawyer.”
He said he’s been trying to sell properties for about three and a half years. The remaining ones in his company are under contract to be sold.
He said he took pride in providing affordable housing in Lima over the years. He hopes the new owners will do the same.
“I hope they improve Lima,” Dickason said. “That’s what we’ve tried to do, yet keep stuff affordable. A lot of people struggle here to pay the rent. I just wish them the best.”