Understanding where you should invest and identifying the type of property you should buy can be tricky. Good decisions begin with sound investment goals. You need to know what you’re hoping to accomplish in the long term and the short term in order to make the right purchases when you’re looking for properties you can successfully rent out.
We have some advice on how to determine if a Cleveland rental property is a good investment.
Cleveland Rental Properties and Location
A potential rental property is not a good investment if it’s in a remote area, difficult to reach, or lost in a heavily commercial or industrial area.
Good investment properties are well-located in neighborhoods that tenants find attractive. Find out what the school district is like and take a look at how close the home is to commuter routes, hospitals, grocery stores, malls, restaurants, and opportunities for recreation and entertainment. A good rental property investment is located in a desirable area so you can easily attract tenants to the home.
Consider Rental Property Condition
A good investment can be rented almost right away. You don’t want to waste a lot of time doing major repairs and heavy renovations. Not only will this require an additional financial investment from you, it will also contribute to a longer vacancy. The goal of most investors is to get property cash flowing as quickly as possible. You need tenants in place and rent coming in. If you buy a home that needs structural repairs or major rehab work, you’re not going to collect any rent for several months.
Buying fixer uppers may be part of your investment strategy. If it is, you need a great team of vendors and contractors who are committed to helping you. If this isn’t a part of your investment strategy, steer clear of any investments that need a lot of work.
What Will You Earn and What Will You Spend?
Ultimately, it’s the money matters that really speak to whether a Cleveland rental property is a good investment. If you talk to a property manager, you’ll get an idea of what the property will rent for. Understanding local rental values before you invest is important.
Knowing your income is important and perhaps even more important is being able to estimate your expenses. What should you expect from this home in terms of vacancy time? How much will routine and preventative maintenance cost you on an annual, quarterly, or even monthly basis? Are there HOA fees or high property taxes?
Do the math before you invest so you understand what you’ll be earning and what you’ll be spending. This is an essential part of estimating the true value of a potential investment.
The way you purchase the investment will also have an impact. If you’re paying in cash, the way you evaluate the financial strength of an acquisition will be much different than if you’re applying for a mortgage or financing the purchase in some other way.
Every investor is unique, and so is every investment opportunity. If you’d like us to help you evaluate a potential rental property, we’d love to help. Please contact us at IIP Management. We work with owners in the Greater Cleveland area.