Ultimate Bond County Real Estate Investing Guide for 2024

The acronym BRRRR is a description of a long-term investment strategy — Buy, Rehab, Rent, Refinance, Repeat. This is a way to grow your investment portfolio not just purchase a single asset. A critical component of this strategy is to be able to get a “cash-out” mortgage refinance.

You add to the worth of the asset beyond the amount you spent acquiring and rehabbing the property. Then you take a cash-out mortgage refinance loan that is based on the larger value, and you extract the balance. This money is placed into a different investment asset, and so on. You add appreciating assets to the portfolio and rental income to your cash flow.

If your investment real estate collection is big enough, you might contract out its management and enjoy passive income. Find top Bond County property management companies by browsing our directory.

Factors to Consider

Population Growth

Population increase or decline shows you if you can depend on strong results from long-term investments. A growing population normally indicates busy relocation which equals new renters. Moving companies are attracted to growing regions offering secure jobs to people who move there. This equals stable renters, more lease income, and a greater number of potential buyers when you intend to liquidate your property.

Property Taxes

Real estate taxes, ongoing maintenance expenditures, and insurance specifically influence your bottom line. Rental property situated in unreasonable property tax areas will provide weaker profits. Communities with steep property tax rates aren’t considered a dependable situation for short- or long-term investment and should be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of what amount of rent can be demanded compared to the purchase price of the property. If median property values are steep and median rents are low — a high p/r — it will take more time for an investment to recoup your costs and achieve good returns. A large p/r informs you that you can collect modest rent in that area, a lower ratio tells you that you can demand more.

Median Gross Rents

Median gross rents are a clear indicator of the vitality of a lease market. Median rents must be growing to warrant your investment. If rents are being reduced, you can drop that area from discussion.

Median Population Age

Median population age in a good long-term investment market must show the usual worker’s age. If people are moving into the area, the median age will have no challenge remaining in the range of the labor force. If you find a high median age, your source of tenants is going down. That is an unacceptable long-term financial prospect.

Employment Base Diversity

A diverse employment base is something an intelligent long-term rental property investor will hunt for. When workers are employed by only several major companies, even a small problem in their business might cause you to lose a lot of renters and increase your risk significantly.

Unemployment Rate

You will not be able to enjoy a secure rental cash flow in a location with high unemployment. Unemployed people stop being clients of yours and of other businesses, which creates a ripple effect throughout the city. The still employed workers might find their own paychecks marked down. Existing tenants might fall behind on their rent in these circumstances.

Income Rates

Median household and per capita income will inform you if the tenants that you want are living in the city. Increasing wages also show you that rents can be increased throughout the life of the rental home.

Number of New Jobs Created

The reliable economy that you are searching for will be generating a large amount of jobs on a consistent basis. New jobs mean more renters. Your strategy of renting and acquiring more real estate requires an economy that will generate more jobs.

School Ratings

The rating of school districts has a powerful impact on housing values across the city. Well-graded schools are a prerequisite for business owners that are looking to relocate. Relocating employers relocate and draw prospective tenants. Housing values increase thanks to additional workers who are buying houses. Highly-rated schools are an important component for a vibrant real estate investment market.

Property Appreciation Rates

Strong real estate appreciation rates are a necessity for a successful long-term investment. You have to ensure that the chances of your investment raising in market worth in that area are good. Substandard or dropping property worth in a region under review is unacceptable.

A furnished residential unit where clients reside for shorter than 4 weeks is considered a short-term rental. The nightly rental prices are always higher in short-term rentals than in long-term ones. Because of the increased rotation of renters, short-term rentals necessitate more frequent care and cleaning.

Home sellers waiting to close on a new home, backpackers, and corporate travelers who are stopping over in the city for a few days prefer to rent a residence short term. House sharing websites such as AirBnB and VRBO have helped many residential property owners to engage in the short-term rental business. This makes short-term rentals a feasible way to try real estate investing.

Vacation rental landlords require working directly with the renters to a greater extent than the owners of longer term rented properties. Because of this, investors deal with issues regularly. Ponder covering yourself and your properties by joining any of property law attorneys in Bond County IL to your team of professionals.

Factors to Consider

Short-Term Rental Income

First, calculate the amount of rental revenue you need to meet your projected profits. A glance at an area’s recent average short-term rental prices will show you if that is an ideal market for you.

Median Property Prices

When buying real estate for short-term rentals, you must calculate the budget you can spend. The median price of property will tell you if you can manage to participate in that area. You can tailor your real estate search by estimating median market worth in the city’s sub-markets.

Price Per Square Foot

Price per sq ft could be inaccurate when you are examining different properties. If you are examining similar kinds of real estate, like condominiums or stand-alone single-family residences, the price per square foot is more reliable. Price per sq ft can be a quick method to gauge different sub-markets or homes.

Short-Term Rental Occupancy Rate

A look at the community’s short-term rental occupancy levels will tell you if there is an opportunity in the site for additional short-term rentals. A high occupancy rate indicates that an extra source of short-term rentals is required. Weak occupancy rates communicate that there are more than enough short-term rental properties in that city.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to evaluate the value of an investment venture. You can calculate the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash investment. The percentage you get is your cash-on-cash return. When a venture is profitable enough to repay the capital spent promptly, you will have a high percentage. Mortgage-based investments will yield better cash-on-cash returns because you’re spending less of your own money.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are widely used by real estate investors to estimate the worth of rentals. High cap rates indicate that investment properties are available in that city for reasonable prices. When cap rates are low, you can expect to spend a higher amount for rental units in that city. Divide your projected Net Operating Income (NOI) by the property’s market worth or asking price. This shows you a ratio that is the year-over-year return, or cap rate.

Local Attractions

Big public events and entertainment attractions will attract tourists who need short-term rental houses. When a city has places that regularly hold must-see events, like sports arenas, universities or colleges, entertainment halls, and amusement parks, it can invite people from other areas on a constant basis. Natural attractions such as mountains, waterways, coastal areas, and state and national nature reserves will also draw prospective renters.

The fix and flip strategy entails buying a property that demands fixing up or rehabbing, putting more value by enhancing the property, and then selling it for a better market price. The essentials to a lucrative fix and flip are to pay less for the home than its full worth and to accurately compute the amount needed to make it sellable.

You also want to know the real estate market where the home is positioned. You always want to investigate how long it takes for listings to sell, which is shown by the Days on Market (DOM) information. Selling the home promptly will help keep your costs low and maximize your revenue.

To help motivated residence sellers find you, place your business in our catalogues of companies that buy houses for cash in Bond County IL and real estate investors in Bond County IL.

In addition, look for top real estate bird dogs in Bond County IL. These experts specialize in skillfully locating good investment ventures before they are listed on the market.

Factors to Consider

Median Home Price

The area’s median home price could help you locate a desirable neighborhood for flipping houses. If values are high, there might not be a steady supply of fixer-upper real estate available. This is an important element of a successful fix and flip.

When your research indicates a rapid decrease in home values, it might be a signal that you will find real property that fits the short sale criteria. Real estate investors who work with short sale facilitators in Bond County IL receive regular notifications concerning possible investment real estate. You will learn additional information regarding short sales in our guide ⁠— What to Expect when Buying a Short Sale Home?.

Property Appreciation Rate

Are home market values in the area going up, or on the way down? Steady upward movement in median values reveals a vibrant investment market. Housing purchase prices in the community need to be going up consistently, not quickly. Acquiring at the wrong moment in an unsteady environment can be catastrophic.

Average Renovation Costs

You’ll have to look into building expenses in any future investment area. Other costs, such as clearances, could inflate your budget, and time which may also develop into an added overhead. You need to be aware if you will need to employ other specialists, such as architects or engineers, so you can get ready for those spendings.

Population Growth

Population growth statistics provide a peek at housing need in the area. When the number of citizens isn’t going up, there isn’t going to be an adequate supply of purchasers for your real estate.

Median Population Age

The median population age is a factor that you might not have thought about. The median age in the market needs to equal the age of the regular worker. People in the regional workforce are the most dependable house purchasers. Older people are preparing to downsize, or move into age-restricted or retiree communities.

Unemployment Rate

You need to see a low unemployment level in your prospective location. An unemployment rate that is less than the country’s median is preferred. When it is also lower than the state average, that’s even more attractive. In order to buy your repaired property, your potential buyers have to be employed, and their customers too.

Income Rates

The population’s income figures can tell you if the location’s economy is strong. Most homebuyers need to take a mortgage to buy a home. To qualify for a home loan, a home buyer shouldn’t spend for housing more than a specific percentage of their wage. The median income indicators will tell you if the region is appropriate for your investment plan. In particular, income increase is important if you prefer to expand your investment business. To stay even with inflation and rising construction and supply expenses, you need to be able to regularly adjust your purchase rates.

Number of New Jobs Created

The number of jobs created on a regular basis tells if wage and population increase are viable. An increasing job market indicates that a larger number of people are comfortable with buying a home there. Competent trained workers looking into purchasing a property and settling choose moving to areas where they won’t be jobless.

Hard Money Loan Rates

Fix-and-flip real estate investors normally use hard money loans instead of typical loans. This plan allows them make lucrative deals without delay. Find hard money lending companies in Bond County IL and compare their rates.

Investors who aren’t experienced concerning hard money lenders can learn what they need to learn with our detailed explanation for newbies — How Do Hard Money Loans Work?.

In real estate wholesaling, you locate a property that real estate investors may consider a profitable investment opportunity and enter into a purchase contract to purchase the property. But you don’t purchase it: after you have the property under contract, you allow a real estate investor to take your place for a fee. The real buyer then settles the purchase. The wholesaler does not sell the residential property itself — they only sell the purchase agreement.

Wholesaling hinges on the involvement of a title insurance company that’s comfortable with assigned real estate sale agreements and understands how to proceed with a double closing. Look for title companies that work with wholesalers in Bond County IL in HouseCashin’s list.

Our complete guide to wholesaling can be viewed here: Property Wholesaling Explained. When pursuing this investment plan, place your company in our directory of the best property wholesalers in Bond County IL. This will allow any desirable clients to see you and initiate a contact.

Factors to Consider

Median Home Prices

Median home values in the community will inform you if your required price point is viable in that city. As investors need investment properties that are available for lower than market value, you will want to take note of reduced median prices as an indirect tip on the possible availability of houses that you may purchase for lower than market price.

Rapid deterioration in real property values might result in a number of properties with no equity that appeal to short sale investors. Short sale wholesalers can receive perks using this strategy. But, be aware of the legal challenges. Obtain additional details on how to wholesale a short sale house in our extensive article. If you choose to give it a try, make certain you have one of short sale attorneys in Bond County IL and foreclosure lawyers in Bond County IL to confer with.

Property Appreciation Rate

Median home purchase price trends are also vital. Some investors, such as buy and hold and long-term rental landlords, specifically want to know that home prices in the area are growing steadily. Dropping market values illustrate an equivalently weak leasing and home-selling market and will scare away real estate investors.

Population Growth

Population growth data is something that your potential real estate investors will be familiar with. When the community is growing, new housing is needed. They realize that this will involve both leasing and owner-occupied residential housing. A location with a dropping population will not draw the investors you require to purchase your contracts.

Median Population Age

A good residential real estate market for real estate investors is active in all aspects, including tenants, who become homeowners, who transition into larger real estate. This takes a strong, consistent labor pool of citizens who feel confident to buy up in the housing market. A market with these attributes will have a median population age that is equivalent to the employed person’s age.

Income Rates

The median household and per capita income will be increasing in an active residential market that real estate investors prefer to work in. Income increment demonstrates a location that can absorb rental rate and home listing price increases. That will be crucial to the property investors you are trying to attract.

Unemployment Rate

Real estate investors will pay a lot of attention to the community’s unemployment rate. Tenants in high unemployment regions have a difficult time paying rent on schedule and a lot of them will stop making rent payments completely. This adversely affects long-term investors who want to lease their property. Tenants can’t transition up to ownership and current homeowners cannot sell their property and go up to a more expensive residence. This is a problem for short-term investors purchasing wholesalers’ contracts to rehab and flip a house.

Number of New Jobs Created

The frequency of jobs generated on a yearly basis is a vital part of the residential real estate structure. Job generation suggests added employees who need a place to live. No matter if your purchaser base is comprised of long-term or short-term investors, they will be drawn to a market with constant job opening creation.

Average Renovation Costs

An imperative variable for your client investors, especially fix and flippers, are rehabilitation costs in the city. When a short-term investor rehabs a house, they have to be prepared to resell it for more money than the entire cost of the acquisition and the upgrades. Below average remodeling expenses make a community more profitable for your priority buyers — flippers and rental property investors.

Note investing professionals obtain debt from mortgage lenders if the investor can buy the loan below face value. When this happens, the note investor becomes the debtor’s lender.

When a loan is being repaid on time, it is thought of as a performing loan. Performing loans give stable income for you. Note investors also obtain non-performing mortgages that the investors either modify to help the debtor or foreclose on to purchase the collateral less than actual worth.

At some time, you might accrue a mortgage note collection and notice you are lacking time to service your loans by yourself. In this case, you can opt to employ one of mortgage loan servicing companies in Bond County IL that will basically turn your investment into passive income.

When you find that this model is a good fit for you, include your firm in our list of Bond County top mortgage note buying companies. When you’ve done this, you will be noticed by the lenders who announce lucrative investment notes for acquisition by investors like yourself.

Factors to consider

Foreclosure Rates

Performing note buyers research communities showing low foreclosure rates. If the foreclosures are frequent, the location may nonetheless be good for non-performing note investors. If high foreclosure rates have caused an underperforming real estate environment, it may be challenging to resell the collateral property if you foreclose on it.

Foreclosure Laws

It’s important for mortgage note investors to study the foreclosure laws in their state. They will know if their law uses mortgage documents or Deeds of Trust. You may need to receive the court’s permission to foreclose on a property. Investors do not have to have the judge’s agreement with a Deed of Trust.

Mortgage Interest Rates

The interest rate is determined in the mortgage notes that are acquired by investors. This is a major factor in the returns that lenders reach. Interest rates affect the strategy of both types of note investors.

The mortgage loan rates quoted by traditional mortgage lenders aren’t the same everywhere. Mortgage loans offered by private lenders are priced differently and may be more expensive than traditional mortgage loans.

Experienced investors continuously check the rates in their community set by private and traditional lenders.

Demographics

A city’s demographics details assist mortgage note buyers to focus their efforts and properly use their assets. It’s essential to find out if a sufficient number of residents in the neighborhood will continue to have good paying jobs and incomes in the future.
Investors who prefer performing notes look for areas where a lot of younger people maintain good-paying jobs.

Non-performing mortgage note buyers are interested in similar factors for other reasons. If foreclosure is called for, the foreclosed property is more easily sold in a growing market.

Property Values

The greater the equity that a homeowner has in their home, the better it is for the mortgage lender. If the property value isn’t higher than the loan balance, and the mortgage lender wants to foreclose, the house might not realize enough to repay the lender. As loan payments lessen the balance owed, and the market value of the property goes up, the homeowner’s equity goes up too.

Property Taxes

Typically, lenders collect the house tax payments from the homeowner each month. That way, the mortgage lender makes certain that the property taxes are submitted when payable. The mortgage lender will need to make up the difference if the house payments halt or they risk tax liens on the property. If property taxes are delinquent, the government’s lien leapfrogs any other liens to the front of the line and is satisfied first.

If a region has a record of rising tax rates, the total house payments in that municipality are constantly increasing. Overdue homeowners may not be able to keep up with growing payments and could stop making payments altogether.

Real Estate Market Strength

A community with growing property values has strong opportunities for any note investor. Since foreclosure is a necessary component of mortgage note investment planning, growing real estate values are crucial to locating a desirable investment market.

A growing real estate market can also be a profitable place for initiating mortgage notes. For veteran investors, this is a useful segment of their investment strategy.

Many real estate investment firms are formed as trusts called Real Estate Investment Trusts or REITs. This was originally invented as a method to allow the ordinary person to invest in real property. Many people currently are able to invest in a REIT.

REIT investing is classified as passive investing. The liability that the investors are accepting is distributed within a collection of investment properties. Shares may be liquidated when it’s agreeable for the investor. But REIT investors do not have the capability to choose individual assets or locations. You are restricted to the REIT’s portfolio of real estate properties for investment.

Real estate investment funds are basically mutual funds specializing in real estate companies, including REITs. Any actual property is owned by the real estate companies rather than the fund. These funds make it feasible for more people to invest in real estate. Funds are not required to distribute dividends like a REIT. As with any stock, investment funds’ values grow and decrease with their share market value.

You may select a fund that focuses on a selected category of real estate you are expert in, but you do not get to pick the market of every real estate investment. Your choice as an investor is to select a fund that you rely on to manage your real estate investments.