The increasing barrier to entry results in fewer new STR's coming available for sale, but also fewer options for guests to rent. 

By doing this, not only are you increasing the value hopefully building you some equity (giving you some boost in your net worth) but also increase rental potential too. 

However, investing locally has become increasingly unfeasible and unrealistic due to the high costs.

But I can't see why Cleveland would increase in value based on negative population growth and, generally, being a bad place to live.   

The answer is clear: allowing full renovations without mandating sprinklers results in a far safer building than one that undergoes only superficial updates.Furthermore, requiring sprinklers in more buildings will likely increase costs even further.

Yearly increasing costs will, in time, eat up any profit they have per unit.

The key is to purchase in desirable locations where demand for rental housing is high, ensuring consistent occupancy and the potential for rental rate increases over time.2.

I also own a co hosting business but my rentals are in FL and TN. 

I recommend you do this annually to adjust for utility increases and other variables.

I define small business owners as people who employ w2 employees.