Investing in Cleveland real estate provides a number of financial benefits. You’ll have an asset that appreciates over time, and when you rent out the property you own, you have tenants who are contributing to your mortgage and other expenses that come with that investment. You’re also positioned to take advantage of many tax breaks unique to rental property owners.
While there are dozens of good reasons to invest, you have to be aware of the potential pitfalls and challenges as well. First time investors can easily make mistakes if they haven’t done their research or surrounded themselves with experts.
Here are a few tips that will help you successfully invest in Cleveland real estate for the first time.
Establish Investment Goals
Before you start investing in property, you need to know why you’re doing it. Establish some investment goals that are specific to your financial plans and projections. Ask yourself if you have the capital that’s required to begin investing, and how you’ll know you’re succeeding. A good investment plan will identify what you’re hoping to accomplish, and what kind of timeline you’re putting together to achieve your goals as an investor.
There are some decisions you have to make before you begin buying investment property. Will you rent out long term residential homes, or are you more interested in short term vacation rentals? Are you going to hold this property for five, 10, or 20 years? What is your exit plan?
Put Together an Investment Plan
Once you have a set of investment goals in place, you need a process for achieving them. People sometimes see an opportunity in real estate and are quick to invest without considering all the necessary risks and rewards. You need to think about your financial standing, the amount of time you have to invest in these properties, and what you know about the market.
Understand Investment Benefits and Drawbacks
Investing in real estate comes with benefits that few other investment options offer. You get a tangible investment compared to stocks and bonds. Your expenses can lower your tax liability. Your asset continues to appreciate. If you hold onto a property long enough, you may pay off the mortgage, and then you’re in the enviable position of earning complete cash flow every time you collect rent.
While the benefits are impressive, there are still some drawbacks associated with real estate. You always run the risk of vacancy, property damage, eviction, and terrible tenants. There are legal liabilities if you don’t know the fair housing laws or local requirements for security deposits and evictions. Sometimes, it’s hard to make decisions about holding or selling an asset because benchmarking your property’s performance is not as easy as when you’re evaluating investments in the stock market.
Work with a Cleveland Property Management Company
Decide if you’re going to be an investor or a landlord.
Landlords will have to respond to every need that comes up from their tenants and their properties. Landlords collect rent, take care of maintenance, and show the property when it’s vacant. They have to deal with tenant conflicts, disputes, and legal issues.
Investors, however, work with professional Cleveland property managers so they don’t have to deal with the day to day issues of leasing, managing, and maintaining their homes.
Trying to do everything yourself is a big risk when you’re investing for the first time. Surround yourself with experts who can help you. When it comes to property management, we think we’re your best resource. Contact us at IIP Management. We work with owners in Cleveland Heights, Lakewood, Lyndhurst, Parma, Solon, and South Euclid (Cuyahoga County).