Risks and Rewards of Investing in Real Estate - Article Banner

Why are you investing in Cleveland real estate?

It’s important you know the answer to this question, because buying property and then renting it out to tenants comes with a lot of risk. 

Luckily, there’s plenty of reward to offset that risk. Generally, investors buy real estate because they know there are huge opportunities for short-term income as well as long-term growth. 

This is true – as long as you’re willing to accept the risk that comes with investing in Cleveland real estate

Risks: Vacancy and Turnover

In the current market, we have a huge demand for well-maintained rental homes and a supply that can barely keep up. This means there’s a great pool of tenants for Cleveland landlords and owners. Rents are high, and investors won’t have trouble attracting good residents to their rental homes.

That’s a reward. 

But, rental markets fluctuate and there may be a time where things change. Rents could drop. Tenants could disappear. The type of property you own could completely fall out of favor with well-qualified renters. 

That’s a risk. You have to prepare yourself for vacancy costs and turnover loss. These things are expensive, and often difficult to budget for.

Reward: Increasing Home Values

The sales market is hard to follow lately. There have been unusual spikes and strengths, and we’re certainly dealing with a competitive market in Cleveland. Here, home values are high, and local real estate has been appreciating steadily over the last five years. 

That’s a huge reward for owners, and an indication of that is how eager many people are to sell their properties right now. 

Increasing home values and growing appreciation are investment rewards. But prepare for the risk that you won’t earn a lot of that appreciation right away. You’ll have to be willing to hold your investment property for the long term. Then, your investment property will be worth significantly more than it was when you bought it. And, you’ll have enjoyed years of tenants paying down your mortgage and covering your property expenses. 

Risk: Bad Tenants

Good tenants who pay rent on time and take care of your property can be a huge reward. 

The other side of that, of course, is a bad tenant. All tenants are risks – no matter how well you screen them. Someone can look great on paper and have good credit and income as well as a steady rental history. But, if they suddenly lose their job or find themselves in the middle of a nasty divorce – there’s no telling how they’ll deal with their obligations to you.

Reward: Cleveland Property Management

teamworkThe property management partner you choose should never increase your risk. It should always be a reward – that you have a qualified, experienced resource who can leverage their knowledge, their vendors, and their understanding of rental laws in order to keep you and your property in excellent condition. With the right property manager on your side, you have a much better chance at enjoying the rewards of owning rental property. There’s a lot less risk involved in the entire process.

We can talk more about what to expect when you invest in Cleveland real estate. Please don’t hesitate to contact us at IIP Management. We work with owners in the Greater Cleveland area.