Congratulations on investing in a Cleveland rental property. This has been a crazy and competitive market, and if you find yourself with a valuable asset, you’re in a great position. While the sales market is beginning to cool slightly thanks to rising interest rates and a decreasing pool of buyers, the rental market continues to be resilient. A lot of well-qualified renters are looking for properties, and rental values continue to stay strong.
Now that you own a Cleveland investment property, what’s next? What do you have to do before you can begin placing tenants and collecting those rents every month?
There are a few important logistics that need your attention.
Evaluate Your Maintenance Needs
It’s rare to buy an investment property that’s in perfect condition and ready for the rental market. There are likely some minor maintenance issues that will need your attention.
Some of these things will seem minor. When you buy a home that you plan to live in yourself, a wobbly doorknob or a closet door that sticks hardly seem worth your immediate attention.
But, when you’re buying a home to rent out to tenants, you need to make sure that everything is working perfectly. You don’t want to spend the first few weeks of a tenancy responding to multiple maintenance requests because things aren’t the way your tenants expect them to be.
Conduct a detailed inspection once you close on your investment property. Walk through every room and make a list of what needs to be repaired or replaced. Maybe it’s fresh paint that’s needed or new carpet. Perhaps the windows need to be replaced or an appliance is malfunctioning.
You likely had a complete professional inspection before you bought the property. Take care of any issues that the inspector found that the seller did not address before closing. Whether they’re major or minor, you need to make those repairs before you list the property on the market.
Consider Upgrades and Renovations
Here’s something you need to know about property condition: it matters about as much as property location. Tenants care about living in a home that’s attractive and modern. So once you’ve invested in a Cleveland rental property and you’re preparing for everything that comes next, think about where you can make some minor updates and improvements. There are a number of reasons to do this:
- If your property is already in relatively good condition, these minor renovations will be cost-effective and require a minimal investment from you.
- Updates and upgrades will increase your rental value and your property value.
- You’ll have an easier time attracting tenants.
- You’ll worry less about maintenance going forward.
Some of the best types of upgrades that we always recommend include:
- Flooring. Get rid of old carpet. Maybe get rid of carpet altogether and consider installing hard surface floors. They don’t have to be expensive hardwoods. Tenants will love them because they’re easier to clean and maintain. There are fewer allergens, odors, and dirt to worry about living in the carpet fibers. You’ll have an easier time during turnovers. And, they look better. You can earn more rent with hard floors versus carpet.
- Lighting. Bright lights are especially essential in kitchens and bathrooms. Inspect your outdoor lights too, because those are important for tenant safety and security.
- Fixtures. Those knobs on the cupboards, the drawer pulls, and even the faucets can get an easy upgrade that isn’t too expensive. They’ll look shiny, modern, and attractive.
- Landscaping. Pay attention to your curb appeal. The first impression you create will impact how quickly you attract tenants and how much they’re willing to pay to live in your property.
Register Your Rental Property
If you’re renting out a home in the City of Cleveland, the Rental Registration Ordinance requires you to register with the Department of Building & Housing. You’ll have to register annually and pay a fee, which is currently set at $70 per property.
This law is in place to ensure that property owners maintain safe and habitable rental homes that do not become a nuisance in the neighborhood.
Interior and exterior inspections are required when you apply for your registration. Exterior inspections are done throughout the year and you’ll be notified by mail of when you can expect an interior inspection if that becomes necessary.
During the inspection, a City Code official will identify problems and concerns and if there are deficiencies, you’ll be required to bring the property into compliance and schedule a re-inspection. Once the property is in compliance, the Rental Registration Certificate will be issued or renewed.
Think about Pricing Your Cleveland Rental Property
Next is pricing.
This is where a lot of new investors stumble a bit, especially if they don’t know the market or they can’t access reliable data that tells them where their rental range is likely to be.
Here are your most important considerations when you’re pricing your Cleveland property:
- It’s all about the Cleveland rental market
Before you price your rental property, you need to understand the strength of the Cleveland rental market. This is going to have the largest impact on your rental value. Take a look at competing properties that are also on the market. Compare your home to those. Gather information on what the homes most similar to yours are renting for, and how long it’s taking them to rent. Analyze the information you find as you’re deciding where your own rental home fits in.
When there are a lot of homes similar to yours available for rent, you’ll have to be more competitive with your price. When the market is tight, however, and rental homes are hard to find, you can raise your price a little bit.
- Seasonal pricing
Time of year can also impact how much you can earn, especially in a market like Cleveland, where very few tenants want to move when it’s snowy and icy outside. If your property is vacant in the late spring and early summer, you can really push the rental amount towards the higher end of the standard range, because there are more tenants willing to move and looking for new homes during those months. Around the holidays and during the winter, it may be necessary to make your price more competitive. That’s because the demand just isn’t as high.
- Location always impacts price
Location is just as important in the rental market as it is in the sales market. Tenants are going to pay more for a home that’s close to restaurants, shopping, and schools. When evaluating how much you can charge for your rental property, always consider location. If you’re in a great school district and a desirable neighborhood, you can probably charge a little more than you could if your property is in a remote location and not close to any commuter routes, shopping centers, or conveniences.
- Property condition
You can’t do anything about the market or the competition, but you can decide whether you’re going to offer a modern, well-maintained rental home or a deteriorating property that will rent for less. We discussed this earlier; if you’re willing to offer upgrades and improvements, you’re likely to earn more on your property.
You can look at online rental sites for an idea of what homes like yours are renting for. A better idea is to talk with a property manager in Cleveland who can give you data that’s more precise and evaluate your home to establish the right price. You don’t want to price your home too low; you’ll only lose money right out of the gate, and you’ll struggle to raise the rent to market rates. You also don’t want to price your home too higher; that’s only likely to lead to longer vacancy periods.
Choose a Cleveland Property Manager
As you begin to make the preparations that are necessary to lease, manage, and maintain your home, you’ll want to look for excellent property management. If you don’t already have a management partner you’re working with, now is the time to start looking. Your best bet is to choose an experienced management company with a great reputation. There are so many benefits to good property management as a new investor:
- You can leverage a great network of vendors and contractors without screening and hiring them yourself.
- You’ll have the expertise and knowledge you need when it comes to pricing, marketing, tenant screening, and preventative repairs.
- You’re protected from the risk and liability that comes with renting out property.
- You’ll have less work to manage yourself and more time to do what you love.
- You’re likely to earn more and spend less on your investment.
Good property management is a huge value to new and experienced investors in Cleveland. When you’re ready to find a property management partner, we hope you’ll consider our team. For more information, please contact us IIP Management. We work with owners in Cleveland Heights, Lakewood, Lyndhurst, Parma, Solon, and South Euclid (Cuyahoga County).