Lakewood, Ohio

Lakewood, Ohio, situated just west of Cleveland along the shores of Lake Erie, has garnered attention in the short-term rental (STR) market. Known for its picturesque neighborhoods, historical architecture, and recreational opportunities, Lakewood attracts both business travelers and family vacationers. The city offers diverse accommodations, ranging from single-family homes to multi-family units and converted short-term rental properties.

As of late 2023, Lakewood's STR market remains a competitive yet attainable investment environment, characterized by notable demand from both leisure and business travelers. The current Average Daily Rate (ADR) is reported at $155.60, reflecting both local economic conditions and the relative pricing strategies of property owners in the area.

Several key performance indicators (KPIs) are essential for assessing the Lakewood STR market's viability:

• Average Daily Rate (ADR): $155.60
• Occupancy Rate: Approximately 65% (varies seasonally)
• Revenue Per Available Room (RevPAR): Estimated to be around $101.14, considering both occupancy rates and ADR.
• Average Length of Stay: Commonly 2 to 3 nights for leisure travelers, up to 5 nights for business stays.

These indicators showcase Lakewood as a strong market for STRs, with reasonable pricing and solid occupancy rates that signal a healthy demand for lodging.

Over the past ten years, Lakewood has experienced a steadily increasing trend in both the number of short-term rentals and the market's overall attractiveness to investors. A combination of factors has contributed to this growth:

1. Population Stability: Lakewood has maintained a stable population, which provides a consistent demand for STRs.
2. Urban Development: Recent development projects in the area, including improvements in amenities and public transportation, have made Lakewood more attractive to visitors.
3. Proximity to Cleveland: Being near a major urban center plays a significant role in capturing overflow visitors from Cleveland, particularly during events, festivals, and conferences.

From 2013 to 2023, the inventory of short-term rental properties has more than doubled, and average rates have shown a modest appreciation of around 2% annually. This gradual increase aligns well with regional economic growth, indicative of robust long-term potential for investors.

Investing in Lakewood's STR market can yield attractive returns, especially given the current ADR and occupancy rates. When assessing ROI, consider factors such as:

• Initial Investment Costs: These vary based on property type and condition, with median homes in Lakewood priced around $200,000 to $300,000.
• Operating Costs: Property management, maintenance, utilities, and cleaning fees can average around 30% of revenue.
• Projected Profitability: Assuming an occupancy rate of 65% at the current ADR, the annual revenue for a property could reach approximately $38,000 before deducting costs, leading to a potential net profit of approximately $26,000.

Consequently, many investors could expect an ROI of roughly 10-15%, depending on their operational efficiency and market conditions. Such returns make Lakewood a compelling opportunity for both new and seasoned investors.

Seasonality significantly impacts the STR landscape in Lakewood.

• Peak Season: Typically aligned with summer, from June to August, occupancy rates can rise as families vacation in the region. Local events, festivals, and outdoor activities further boost demand during this period.
• Shoulder Seasons: Spring (March to May) and fall (September to November) see moderate activity, with occupancy rates around 60%, driven by weekend travelers, college visitors, and business-related stays.
• Low Season: Winter months (December to February) usually present the lowest occupancy rates, often dropping to 50%, although holiday periods can see spikes in demand.

Investors should plan to capitalize on higher summer rates while preparing for potential revenue dips during the off-peak months by strategically pricing their rentals.

In Lakewood, various property types cater to different market segments:

1. Single-Family Homes: Ideal for families or groups, these properties often command higher occupancy during peak seasons. They’re typically priced higher for the extra space and amenities.
2. Multi-Family Units: These attract larger groups and can provide multiple revenue streams. Their performance hinges on effective management.
3. Apartments/Condos: Popular among business travelers, these units are usually smaller but appeal to guests seeking an affordable yet comfortable stay.
4. Specialty Rentals: Unique properties such as historic homes, waterfront cottages, or themed accommodations can charge premium rates and attract niche markets.

Investors should assess the area’s demographics and visitor trends to identify which property type aligns best with local demand.

Understanding guest preferences is crucial for optimizing rental performance. Research indicates that most visitors to Lakewood value:

• Proximity to Attractions: Guests prefer accommodations within walking distance or a short drive to parks, restaurants, and Cleveland attractions.
• Amenities: Free Wi-Fi, parking, and kitchens rank highly in demand. Unique touches like outdoor spaces, hot tubs, or pet-friendly options can differentiate offerings in a crowded market.
• Affordability: While guests seek quality, budget remains a significant consideration—particularly for families or larger groups.

Accommodating these preferences may enhance guest satisfaction, repeat bookings, and positive reviews, leading to better visibility in search rankings on STR platforms.

Lakewood's regulatory framework for STRs mirrors broader trends seen across many cities where the practice is being scrutinized. Key points include:

• Licensing: STR operators must obtain a license from the city. Ensuring compliance with safety regulations and zoning laws remains a prerequisite.
• Limits on Units: There may be restrictions on the number of days a property can be rented out short-term, particularly for non-owner-occupied homes, aimed at preserving community character.
• Tax Obligations: Hosts are required to collect a hotel tax on short-term rentals, which necessitates maintaining accurate records and adhering to tax regulations.

Potential investors should stay informed about regulatory developments, as they can significantly impact operational logistics and profitability.

Lakewood comprises various neighborhoods that can influence an STR's success:

• Birdtown: Known for cultural heritage and proximity to parks; often appeals to families and groups.
• Downtown Lakewood: This area sees a mix of visitors due to its lively dining scene, making it suitable for shorter stays.
• Lakefront: Properties here benefit from scenic views and recreational access, making them desirable for vacationers.

Choosing the right neighborhood is essential for attracting the target audience; thus, investors should examine local amenities and trends to identify prime locations for STR investments.

Looking ahead, several trends are shaping Lakewood’s STR market:

• Increase in Remote Work: As remote work continues, more professionals might look for longer-term rentals, creating a potential increase in demand for STRs that accommodate these groups.
• Sustainable Travel: Travelers are becoming increasingly conscious of their environmental impact, leading to a rise in demand for eco-friendly properties.
• Technology Integration: Smart home features and enhanced digital communication are becoming standard expectations among guests.

These trends suggest that Lakewood’s STR market is well-positioned for continued growth, particularly for those who can adapt to changing traveler preferences.

1. What is the average occupancy rate for short-term rentals in Lakewood?
The average occupancy rate for STRs in Lakewood is approximately 65%, but this number can fluctuate based on local events and seasonal changes.

2. How much can I expect to earn from a short-term rental in Lakewood?
With an ADR of $155.60 and an average occupancy rate, a property could generate around $38,000 annually before expenses, with net profits likely around $26,000 after operating costs.

3. What types of properties are most profitable for short-term rentals in Lakewood?
Single-family homes and unique specialty rentals generally perform well, but multi-family units can also provide significant revenue streams if managed effectively.

4. Are there regulations I need to be aware of before investing in an STR in Lakewood?
Yes, investors must comply with local licensing, zoning laws, and tax obligations to ensure compliance in operating short-term rentals.

5. How does seasonality affect rental income in Lakewood?
The STR market is cyclic, with peak performance in the summer, moderate activity during shoulder seasons, and decreased demand in winter, particularly outside holiday periods.

In summary, Lakewood, Ohio, offers a tangible opportunity for short-term rental investors, supported by an appealing mix of demographic factors, favorable regulatory conditions, and a growing number of travelers seeking local experiences. Carefully navigating the market dynamics will be crucial for maximizing returns and ensuring sustained success within this evolving landscape.