To invest successfully in rental real estate, you need to know what a high performing property looks like.
Every market is different, so if you’re not investing from within the Cleveland metro area, you might have some different ideas about what you need for a successful and profitable investment.
We are taking a look at the key features of a well performing rental property in Kamm’s Corners and the surrounding areas. Whether you’re investing for the first time or identifying opportunities from outside the area, we can help you find the right rental property for your portfolio.
Here’s what the right investment home requires.
Desirable Location from a Tenant Perspective
Location always matters when we’re talking about real estate.
When we’re talking about rental real estate, you need to think like a tenant. A rental property will be profitable if it’s near good schools, easy commuter routes, and conveniences like shopping, restaurants, and entertainment. Tenants will want to be close to recreation. They’ll need to know they’re in a safe neighborhood.
Pay attention to neighborhoods when you’re shopping around for an investment property. The location will impact your rental value, the types of tenants you’re able to attract, and your vacancy rate. Homes that are more remote will likely bring in less income and take longer to rent out.
High Performing Rental Homes are Well-Maintained
Avoid the trap of the fixer-upper.
A home that’s aging, deteriorating, or in need of a lot of renovation work might seem attractive to an investor. The price tag is probably a bit lower, and it can be fun to put your personal touches on a property before you rent it out.
If you want to start earning income as soon as possible, however, you don’t have that kind of time.
Renovations and rehab work will always take longer than you expect. Not only do you have to invest money in the upgrades you want to make, you’re also delaying your cash flow. You can’t earn any money on a rental home that isn’t occupied. The longer it takes you to bring your property to the rental market, the less you’re able to earn on that property.
Look for a well-maintained rental home that may need basic cosmetic repairs and updates. Have a complete inspection made before you close on the property, and spend some time budgeting for what repairs will cost you going forward, once you own the home and have tenants living in it.
Sound maintenance policies will be important once you’re renting out the property. Be responsive to any routine repairs needs, and implement a preventative maintenance strategy that will keep your investment in good condition. Your rental property has no chance of performing if it’s plagued by deferred and unreported maintenance issues.
Keeping Kamm’s Corner Rental Homes Updated
Maintenance is important, but you need to go a step further than simply maintaining your property if you want to have a successful investment experience with a rental home that performs well.
Make routine updates and improvements that will keep the property modern, attractive, and welcoming. This does not always mean granite counters and marble floors. Your improvements can and should be cost-effective. Your goal is to ensure your property remains easy to rent out. Attracting and retaining high quality tenants is a key part of making sure your property performs well. Tenants are more likely to rent homes that have been recently updated. They don’t want appliances that are 20 years old or carpets that are stained and fraying.
Estimate Your Earnings
How much will you earn on a potential investment property? This is an important way to evaluate whether it’s an investment that will perform well.
To know whether you’re likely to make the kind of money you’re expecting, you need to decide what you’re hoping to achieve. Some investors are only interested in cash flow, and nothing else matters except what they’re earning in profit every month. Other investors understand that cash flow isn’t the only way to earn money on an investment, and they’re more concerned with appreciation and rising property values.
Again – success will go back to your investment goals. Cash on cash return might be your only indicator of success. Or, knowing you’ll pass a valuable asset down to a future generation might be what you’re more interested in. Perhaps you’re looking for properties that will give you the nest egg you need for retirement. Depending on your goals and expectations, you’ll be looking at different properties.
Buying in our market, most investors are likely looking for both cash flow and appreciation.
To choose the right rental investment, you’re going to need some kind of an idea about how much money you’ll earn in rent and how much the property is likely to appreciate in value over time. As you approach your potential investment, think about these things:
- How will you finance the acquisition?
- What will you likely earn in rent every month?
- Are there other revenue streams you might explore with this property?
- What kind of expenses will you need to factor into your budget?
High performing rental homes, obviously, make money. While there are certainly a lot of variables at the start of your investment process, you’ll need to have some idea of what you’ll earn and spend before you pursue a potential property.
Look for an investment that will bring in high rents and good tenants. Then, think about how much your property will be worth when you are finally ready to sell in 10 or 20 years. That appreciation potential will tell you whether you’re making a strong investment.
Would you like some help identifying investment properties that are likely to perform well? This happens to be our area of expertise.
If you have any questions about how to find or manage a rental property in Kamm’s Corners or the surrounding areas, we invite you to contact us at Avalon Group Realty. We can help you lease, manage, and maintain your investment property in the Cleveland metro area, including Kamm’s Corner, West Park, Fairview Park, Lakewood, Parma, Parma Heights, Bedford, and Bedford Heights.