Ultimate Bay County Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. When you intend to increase your investments, the BRRRR is a good method to follow. This strategy hinges on your ability to extract cash out when you refinance.

When you have finished renovating the house, the value has to be more than your total purchase and renovation costs. The rental is refinanced based on the ARV and the difference, or equity, comes to you in cash. You purchase your next rental with the cash-out capital and do it anew. You add growing investment assets to your balance sheet and rental revenue to your cash flow.

When your investment real estate portfolio is large enough, you might delegate its oversight and receive passive income. Discover good Bay County property management companies by looking through our list.

Factors to Consider

Population Growth

The growth or deterioration of a community’s population is an accurate benchmark of the area’s long-term appeal for rental investors. A booming population often demonstrates active relocation which means new tenants. The community is desirable to companies and employees to locate, work, and have families. An increasing population creates a reliable foundation of tenants who will survive rent raises, and a vibrant seller’s market if you want to liquidate any investment properties.

Property Taxes

Real estate taxes, ongoing maintenance spendings, and insurance specifically decrease your bottom line. Excessive expenses in these categories threaten your investment’s profitability. Excessive property taxes may show an unreliable market where costs can continue to grow and should be considered a red flag.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of what amount of rent can be charged compared to the value of the investment property. If median real estate prices are steep and median rents are small — a high p/r, it will take more time for an investment to recoup your costs and reach profitability. The lower rent you can charge the higher the price-to-rent ratio, with a low p/r indicating a more robust rent market.

Median Gross Rents

Median gross rents demonstrate whether a community’s rental market is robust. You need to find a site with regular median rent expansion. You will not be able to reach your investment goals in a market where median gross rents are dropping.

Median Population Age

Median population age should be close to the age of a normal worker if an area has a strong supply of tenants. If people are migrating into the community, the median age will not have a challenge staying at the level of the workforce. When working-age people aren’t entering the community to take over from retiring workers, the median age will increase. That is an unacceptable long-term financial scenario.

Employment Base Diversity

A diverse employment base is what an intelligent long-term rental property investor will look for. If there are only a couple significant employers, and either of them relocates or goes out of business, it can make you lose paying customers and your property market rates to drop.

Unemployment Rate

It’s difficult to achieve a secure rental market when there are many unemployed residents in it. Jobless individuals can’t be clients of yours and of related companies, which produces a ripple effect throughout the city. The remaining workers may see their own incomes reduced. Remaining tenants might delay their rent in such cases.

Income Rates

Median household and per capita income data is a valuable indicator to help you discover the regions where the renters you want are residing. Rising incomes also show you that rents can be raised over your ownership of the investment property.

Number of New Jobs Created

The robust economy that you are on the lookout for will be creating enough jobs on a consistent basis. The workers who are hired for the new jobs will have to have housing. This gives you confidence that you can retain a high occupancy level and purchase more properties.

School Ratings

Local schools will make a huge effect on the real estate market in their neighborhood. Highly-accredited schools are a necessity for businesses that are looking to relocate. Business relocation attracts more tenants. Homeowners who come to the area have a positive influence on property values. Reputable schools are a key factor for a reliable real estate investment market.

Property Appreciation Rates

The foundation of a long-term investment strategy is to keep the property. You have to see that the chances of your real estate increasing in market worth in that community are strong. Low or decreasing property worth in a community under examination is not acceptable.

A short-term rental is a furnished unit where a renter lives for shorter than a month. Long-term rentals, like apartments, impose lower rent per night than short-term rentals. Short-term rental units might demand more frequent care and cleaning.

House sellers standing by to close on a new home, excursionists, and people traveling for work who are stopping over in the location for a few days prefer renting apartments short term. Regular property owners can rent their houses or condominiums on a short-term basis through websites like AirBnB and VRBO. This makes short-term rentals a feasible technique to endeavor residential property investing.

Destination rental unit landlords necessitate working one-on-one with the renters to a larger degree than the owners of longer term rented properties. Because of this, landlords deal with issues repeatedly. You may need to protect your legal liability by hiring one of the best Bay County investor friendly real estate attorneys.

Factors to Consider

Short-Term Rental Income

You need to decide how much rental income needs to be earned to make your effort financially rewarding. Being aware of the usual rate of rent being charged in the market for short-term rentals will allow you to select a profitable area to invest.

Median Property Prices

Thoroughly compute the amount that you can afford to spare for new investment assets. To find out whether a city has possibilities for investment, look at the median property prices. You can also employ median market worth in localized areas within the market to pick cities for investment.

Price Per Square Foot

Price per square foot can be impacted even by the design and layout of residential units. A home with open entryways and vaulted ceilings cannot be compared with a traditional-style property with bigger floor space. If you keep this in mind, the price per sq ft may provide you a basic estimation of real estate prices.

Short-Term Rental Occupancy Rate

The ratio of short-term rental units that are currently rented in a community is crucial knowledge for a future rental property owner. An area that demands new rental properties will have a high occupancy level. When the rental occupancy levels are low, there is not much demand in the market and you must search somewhere else.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return can tell you if the purchase is a practical use of your cash. Take your expected Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The return is shown as a percentage. When a project is profitable enough to pay back the investment budget promptly, you’ll have a high percentage. If you get financing for part of the investment amount and use less of your own funds, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are generally used by real property investors to evaluate the market value of rentals. High cap rates mean that income-producing assets are available in that region for fair prices. If cap rates are low, you can assume to pay more for rental units in that location. You can get the cap rate for potential investment property by dividing the Net Operating Income (NOI) by the Fair Market Value or listing price of the residential property. This presents you a percentage that is the year-over-year return, or cap rate.

Local Attractions

Big festivals and entertainment attractions will draw visitors who will look for short-term rental properties. When an area has places that regularly hold must-see events, such as sports coliseums, universities or colleges, entertainment venues, and adventure parks, it can draw people from other areas on a recurring basis. Must-see vacation spots are located in mountain and coastal points, along rivers, and national or state parks.

To fix and flip a residential property, you need to get it for lower than market value, handle any necessary repairs and upgrades, then liquidate the asset for higher market worth. To be successful, the investor must pay less than the market worth for the house and compute what it will take to fix it.

Analyze the housing market so that you understand the actual After Repair Value (ARV). You always have to check the amount of time it takes for homes to sell, which is shown by the Days on Market (DOM) indicator. Disposing of the home fast will help keep your costs low and maximize your returns.

Help compelled property owners in finding your firm by placing your services in our directory of Bay County cash property buyers and top Bay County property investment companies.

Additionally, look for the best real estate bird dogs in Bay County MI. These experts concentrate on skillfully uncovering profitable investment ventures before they hit the marketplace.

Factors to Consider

Median Home Price

The area’s median home price could help you determine a good community for flipping houses. Lower median home values are a sign that there must be a steady supply of real estate that can be acquired below market value. You want cheaper properties for a lucrative fix and flip.

When market data shows a rapid drop in property market values, this can point to the accessibility of potential short sale houses. You will be notified concerning these possibilities by partnering with short sale negotiation companies in Bay County MI. Discover more regarding this kind of investment by reading our guide How Do I Buy a Short Sale Property?.

Property Appreciation Rate

Dynamics relates to the route that median home market worth is taking. You have to have a city where home prices are constantly and continuously on an upward trend. Volatile value shifts are not good, even if it’s a remarkable and quick increase. Purchasing at a bad period in an unsteady environment can be disastrous.

Average Renovation Costs

You will have to estimate construction costs in any future investment community. The way that the municipality goes about approving your plans will have an effect on your venture as well. To create an on-target budget, you’ll need to understand if your construction plans will have to involve an architect or engineer.

Population Growth

Population information will show you whether there is solid need for housing that you can provide. When the number of citizens is not increasing, there is not going to be a good supply of purchasers for your houses.

Median Population Age

The median residents’ age is a factor that you may not have considered. When the median age is equal to that of the usual worker, it is a positive sign. A high number of such residents reflects a substantial pool of home purchasers. Aging people are getting ready to downsize, or relocate into age-restricted or assisted living neighborhoods.

Unemployment Rate

You need to have a low unemployment level in your considered location. The unemployment rate in a potential investment community needs to be lower than the national average. When it is also lower than the state average, it’s even more preferable. Non-working individuals can’t purchase your real estate.

Income Rates

The residents’ income stats inform you if the local financial market is scalable. Most home purchasers have to obtain financing to buy a home. To obtain approval for a home loan, a home buyer shouldn’t be spending for housing a larger amount than a particular percentage of their salary. The median income indicators will show you if the city is appropriate for your investment project. Search for regions where wages are rising. Construction costs and home prices go up over time, and you need to be sure that your prospective customers’ wages will also improve.

Number of New Jobs Created

The number of employment positions created on a steady basis shows whether wage and population increase are feasible. A growing job market means that more people are confident in purchasing a house there. Competent trained professionals taking into consideration purchasing a house and deciding to settle prefer relocating to cities where they won’t be jobless.

Hard Money Loan Rates

Fix-and-flip property investors normally use hard money loans instead of traditional loans. Hard money loans enable these investors to move forward on pressing investment possibilities right away. Locate hard money loan companies in Bay County MI and analyze their mortgage rates.

Those who aren’t well-versed regarding hard money lenders can find out what they ought to learn with our guide for newbies — What Is Hard Money in Real Estate?.

Wholesaling is a real estate investment plan that requires finding homes that are appealing to real estate investors and putting them under a sale and purchase agreement. An investor then “buys” the sale and purchase agreement from you. The investor then settles the transaction. You’re selling the rights to the purchase contract, not the home itself.

Wholesaling hinges on the participation of a title insurance company that’s okay with assigned purchase contracts and understands how to deal with a double closing. Find title companies for real estate investors in Bay County MI in our directory.

To understand how wholesaling works, read our comprehensive guide Complete Guide to Real Estate Wholesaling as an Investment Strategy. When you select wholesaling, include your investment business on our list of the best wholesale real estate investors in Bay County MI. This way your desirable audience will learn about your location and reach out to you.

Factors to Consider

Median Home Prices

Median home values are instrumental to locating regions where houses are being sold in your investors’ purchase price range. A community that has a large source of the marked-down residential properties that your clients require will have a below-than-average median home purchase price.

A quick decline in the price of real estate might cause the swift appearance of houses with owners owing more than market worth that are desired by wholesalers. This investment plan regularly carries numerous different advantages. But, be cognizant of the legal liability. Obtain additional details on how to wholesale a short sale house in our comprehensive guide. When you choose to give it a go, make certain you employ one of short sale lawyers in Bay County MI and foreclosure attorneys in Bay County MI to consult with.

Property Appreciation Rate

Median home purchase price trends are also important. Many real estate investors, like buy and hold and long-term rental investors, specifically need to know that home values in the city are going up steadily. Both long- and short-term investors will stay away from a market where home market values are dropping.

Population Growth

Population growth statistics are something that your potential real estate investors will be familiar with. A growing population will require new residential units. This involves both leased and ‘for sale’ real estate. If a location is losing people, it does not need additional housing and real estate investors will not be active there.

Median Population Age

A vibrant housing market necessitates residents who start off leasing, then transitioning into homeownership, and then moving up in the housing market. This necessitates a vibrant, reliable labor force of residents who feel optimistic to shift up in the real estate market. A market with these features will show a median population age that corresponds with the employed person’s age.

Income Rates

The median household and per capita income should be on the upswing in a friendly residential market that investors want to work in. Increases in lease and sale prices must be sustained by growing salaries in the market. That will be critical to the property investors you are looking to draw.

Unemployment Rate

Investors whom you contact to purchase your contracts will consider unemployment levels to be a crucial bit of information. Renters in high unemployment places have a challenging time making timely rent payments and many will miss payments completely. Long-term investors who rely on stable lease payments will lose money in these cities. Real estate investors can’t rely on tenants moving up into their homes if unemployment rates are high. Short-term investors will not risk being cornered with a unit they can’t resell easily.

Number of New Jobs Created

The frequency of jobs produced on a yearly basis is a critical part of the residential real estate picture. New residents settle in a community that has more job openings and they need a place to reside. Whether your purchaser pool is made up of long-term or short-term investors, they will be attracted to a region with stable job opening production.

Average Renovation Costs

Rehabilitation spendings have a major influence on an investor’s returns. The purchase price, plus the costs of repairs, must reach a sum that is less than the After Repair Value (ARV) of the home to ensure profit. Seek lower average renovation costs.

Purchasing mortgage notes (loans) is successful when the note can be obtained for less than the face value. The debtor makes subsequent mortgage payments to the investor who is now their current mortgage lender.

When a loan is being paid as agreed, it’s thought of as a performing loan. Performing loans earn you monthly passive income. Some note investors look for non-performing loans because if the mortgage investor can’t satisfactorily re-negotiate the loan, they can always acquire the collateral at foreclosure for a low amount.

Eventually, you could have multiple mortgage notes and necessitate additional time to oversee them by yourself. In this case, you can opt to employ one of mortgage servicers in Bay County MI that will essentially convert your investment into passive income.

If you determine to use this method, affix your venture to our list of promissory note buyers in Bay County MI. This will make you more visible to lenders offering lucrative possibilities to note investors like yourself.

Factors to consider

Foreclosure Rates

Investors hunting for current loans to acquire will want to see low foreclosure rates in the area. Non-performing mortgage note investors can carefully take advantage of locations that have high foreclosure rates as well. If high foreclosure rates are causing a weak real estate environment, it may be difficult to get rid of the collateral property after you seize it through foreclosure.

Foreclosure Laws

Investors should understand the state’s laws concerning foreclosure prior to investing in mortgage notes. Some states utilize mortgage documents and some utilize Deeds of Trust. A mortgage requires that you go to court for approval to start foreclosure. A Deed of Trust authorizes the lender to file a public notice and proceed to foreclosure.

Mortgage Interest Rates

Acquired mortgage loan notes come with a negotiated interest rate. That interest rate will unquestionably impact your investment returns. No matter the type of mortgage note investor you are, the note’s interest rate will be important to your estimates.

Traditional lenders charge different interest rates in various parts of the United States. The stronger risk accepted by private lenders is accounted for in higher mortgage loan interest rates for their mortgage loans compared to conventional loans.

Experienced mortgage note buyers continuously check the interest rates in their area set by private and traditional mortgage firms.

Demographics

An effective mortgage note investment plan includes a study of the community by utilizing demographic data. The location’s population increase, employment rate, job market increase, wage levels, and even its median age contain pertinent information for note buyers.
Investors who invest in performing mortgage notes select communities where a large number of younger individuals maintain good-paying jobs.

Mortgage note investors who look for non-performing mortgage notes can also make use of strong markets. If non-performing mortgage note investors need to foreclose, they will need a strong real estate market when they liquidate the repossessed property.

Property Values

The more equity that a borrower has in their property, the better it is for their mortgage note owner. If the investor has to foreclose on a mortgage loan with lacking equity, the foreclosure auction might not even repay the amount owed. As loan payments reduce the amount owed, and the market value of the property increases, the homeowner’s equity goes up too.

Property Taxes

Payments for property taxes are normally given to the mortgage lender simultaneously with the mortgage loan payment. So the mortgage lender makes certain that the real estate taxes are taken care of when payable. The lender will need to compensate if the mortgage payments halt or they risk tax liens on the property. If a tax lien is filed, the lien takes first position over the lender’s loan.

Since tax escrows are combined with the mortgage payment, increasing taxes indicate higher house payments. Homeowners who are having difficulty making their mortgage payments might fall farther behind and eventually default.

Real Estate Market Strength

A region with increasing property values has strong opportunities for any note buyer. It’s good to know that if you need to foreclose on a collateral, you won’t have difficulty receiving a good price for it.

A growing real estate market may also be a good place for originating mortgage notes. This is a profitable stream of income for successful investors.

A REIT, or Real Estate Investment Trust, means a business that makes investments in income-producing assets. This was first invented as a way to empower the typical investor to invest in real estate. Many people at present are able to invest in a REIT.

Participants in REITs are completely passive investors. REITs manage investors’ risk with a diversified selection of assets. Shares in a REIT may be unloaded whenever it’s desirable for you. But REIT investors do not have the ability to select specific investment properties or markets. You are confined to the REIT’s collection of properties for investment.

Mutual funds that hold shares of real estate companies are called real estate investment funds. Any actual property is held by the real estate companies rather than the fund. This is another way for passive investors to diversify their portfolio with real estate avoiding the high entry-level cost or exposure. Funds aren’t obligated to distribute dividends unlike a REIT. The value of a fund to someone is the projected increase of the price of its shares.

You may choose a fund that specializes in a predetermined kind of real estate you’re familiar with, but you do not get to pick the location of every real estate investment. You have to depend on the fund’s managers to select which markets and properties are picked for investment.