Cleveland has emerged as a hot real estate investment market in recent years. With its affordable housing prices, strong rental demand, and high yields, Cleveland provides lucrative opportunities for real estate investors. In this article, we will explore the key factors that make Cleveland an attractive investment property market, outline the best areas to buy investment property in Cleveland, and provide tips for successfully investing in Cleveland real estate.
Cleveland’s affordability attracts property investors
Cleveland stands out for its affordably priced housing stock compared to other major metro areas. The median home price in Cleveland is around $150,000, significantly lower than the national median of $270,000. This allows investors to purchase investment property at a low cost basis while still collecting strong rental income. Additionally, the low home prices enable investors to find profitable deals and forced sales that can generate higher returns through value-add improvements.
Strong tenant demand supports cash flow
Despite its affordability, Cleveland has exhibited one of the lowest rental vacancy rates in the nation at around 5%. The market possesses high demand from tenants but limited inventory, leading to quick absorption of rental units. This dynamic produces excellent cash flow for investment property owners.
High rental yields compared to other markets
Thanks to affordable purchase prices and high rents, rental yields for investment property are very favorable in Cleveland. Gross rental yields typically range from 7% to 12% in Cleveland, compared to 3% to 5% in more expensive coastal markets. This gives Cleveland real estate investors significantly higher returns.
Good value-add and rehab opportunities exist
The age of Cleveland’s housing stock provides ample value-add and renovation opportunities for investors. Much of the inventory dates from the 1920s to 1950s. Upgrading dated kitchens, bathrooms, flooring and systems can unlock major value. Building renovations and conversions are also popular value-add plays.
Focus on western Cleveland suburbs
For buy and hold real estate investing, western Cleveland suburbs such as Lakewood, Rocky River and Westlake offer the best options. These areas draw high demand from tenants thanks to their proximity to downtown, good school districts and suburban amenities. Units in multi-family buildings and detached single-family rentals generate the strongest returns.
In summary, Cleveland provides a compelling real estate investment opportunity with its low purchase costs, lucrative cash flows and wealth of renovation potential. Savvy investors should focus on the high-demand western suburbs to capitalize on this lucrative market.