Ultimate Burlington Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term rental plan — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a plan for consistent expansion. A critical piece of this formula is to be able to obtain a “cash-out” mortgage refinance.

You enhance the worth of the asset above the amount you spent purchasing and renovating the property. Then you get a cash-out refinance loan that is calculated on the superior value, and you pocket the difference. This capital is placed into a different property, and so on. This plan allows you to steadily add to your portfolio and your investment income.

If an investor has a significant collection of real properties, it is wise to pay a property manager and designate a passive income stream. Locate one of the best investment property management companies in Burlington ME with a review of our complete list.

Factors to Consider

Population Growth

The rise or decline of an area’s population is a good gauge of the community’s long-term appeal for rental investors. An increasing population typically indicates vibrant relocation which translates to new tenants. The area is attractive to companies and workers to situate, work, and create families. This equals dependable renters, more rental revenue, and more potential buyers when you intend to sell the property.

Property Taxes

Property taxes, ongoing maintenance spendings, and insurance specifically affect your revenue. Unreasonable costs in these areas jeopardize your investment’s bottom line. If property taxes are unreasonable in a given location, you probably need to look in a different location.

Price to Rent Ratio

The price to rent ratio (p/r) is a signal of how much rent can be collected in comparison to the value of the property. An investor will not pay a steep sum for a house if they can only collect a small rent not allowing them to pay the investment off within a appropriate timeframe. The lower rent you can demand the higher the p/r, with a low p/r illustrating a more robust rent market.

Median Gross Rents

Median gross rents demonstrate whether an area’s lease market is robust. You want to find a community with consistent median rent increases. Shrinking rents are a red flag to long-term rental investors.

Median Population Age

Median population age should be close to the age of a typical worker if a city has a good stream of renters. You’ll discover this to be accurate in regions where workers are migrating. When working-age people aren’t coming into the region to succeed retiring workers, the median age will go up. That is a poor long-term financial prospect.

Employment Base Diversity

A varied employment base is what a wise long-term rental property investor will look for. If the community’s workers, who are your tenants, are employed by a diverse assortment of employers, you will not lose all of them at once (and your property’s value), if a dominant enterprise in town goes bankrupt.

Unemployment Rate

It is impossible to maintain a stable rental market when there is high unemployment. People who don’t have a job can’t buy goods or services. Those who still have workplaces can find their hours and incomes decreased. Existing tenants might become late with their rent in such cases.

Income Rates

Median household and per capita income will let you know if the renters that you want are living in the community. Existing income information will communicate to you if salary growth will enable you to raise rental rates to reach your investment return estimates.

Number of New Jobs Created

An expanding job market results in a consistent pool of renters. A larger amount of jobs equal a higher number of tenants. This ensures that you can keep a sufficient occupancy rate and acquire more real estate.

School Ratings

The reputation of school districts has a significant impact on housing prices throughout the community. Highly-endorsed schools are a requirement of companies that are considering relocating. Business relocation produces more tenants. Home market values rise thanks to additional workers who are buying homes. Reputable schools are a key component for a reliable property investment market.

Property Appreciation Rates

Good real estate appreciation rates are a must for a successful long-term investment. You need to be positive that your property assets will rise in market price until you decide to dispose of them. Inferior or decreasing property appreciation rates should remove a market from your list.

A furnished house or condo where tenants reside for shorter than a month is considered a short-term rental. Short-term rental landlords charge more rent each night than in long-term rental properties. With renters moving from one place to the next, short-term rental units have to be repaired and cleaned on a regular basis.

Average short-term renters are tourists, home sellers who are buying another house, and people on a business trip who want a more homey place than a hotel room. Any property owner can convert their home into a short-term rental with the know-how given by virtual home-sharing platforms like VRBO and AirBnB. Short-term rentals are thought of as a good way to begin investing in real estate.

Short-term rental unit owners require interacting personally with the tenants to a greater extent than the owners of longer term rented units. As a result, owners deal with difficulties repeatedly. You may need to cover your legal exposure by working with one of the top Burlington investor friendly real estate law firms.

Factors to Consider

Short-Term Rental Income

You have to find the level of rental revenue you’re looking for based on your investment strategy. A glance at a market’s recent average short-term rental rates will show you if that is a strong market for your endeavours.

Median Property Prices

You also have to decide the amount you can afford to invest. To check if a region has opportunities for investment, check the median property prices. You can narrow your real estate search by examining median values in the location’s sub-markets.

Price Per Square Foot

Price per square foot may be misleading when you are looking at different units. A building with open foyers and vaulted ceilings can’t be compared with a traditional-style property with bigger floor space. It may be a quick method to compare several sub-markets or properties.

Short-Term Rental Occupancy Rate

A quick check on the city’s short-term rental occupancy levels will inform you whether there is a need in the region for more short-term rental properties. A region that requires additional rental housing will have a high occupancy rate. If landlords in the area are having issues renting their current units, you will have trouble filling yours.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return can inform you if the investment is a good use of your cash. You can compute the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by the cash you are putting in. The resulting percentage is your cash-on-cash return. High cash-on-cash return demonstrates that you will regain your cash faster and the purchase will be more profitable. Sponsored investment purchases can show stronger cash-on-cash returns as you will be using less of your own resources.

Average Short-Term Rental Capitalization (Cap) Rates

This metric shows the comparability of investment property value to its annual return. A rental unit that has a high cap rate as well as charging average market rents has a good value. When properties in an area have low cap rates, they generally will cost more. The cap rate is calculated by dividing the Net Operating Income (NOI) by the listing price or market value. This gives you a percentage that is the per-annum return, or cap rate.

Local Attractions

Short-term rental properties are preferred in regions where sightseers are attracted by activities and entertainment sites. If a community has sites that periodically hold interesting events, such as sports stadiums, universities or colleges, entertainment halls, and adventure parks, it can draw visitors from outside the area on a regular basis. Popular vacation spots are located in mountainous and beach areas, alongside lakes, and national or state nature reserves.

The fix and flip approach means acquiring a house that needs improvements or rebuilding, putting added value by upgrading the building, and then liquidating it for a better market value. To keep the business profitable, the flipper has to pay less than the market price for the property and determine what it will take to fix the home.

You also want to analyze the resale market where the house is positioned. The average number of Days On Market (DOM) for houses listed in the community is important. To profitably “flip” a property, you need to dispose of the renovated home before you are required to shell out cash to maintain it.

To help motivated property sellers locate you, enter your business in our directories of real estate cash buyers in Burlington ME and property investors in Burlington ME.

Additionally, hunt for the best property bird dogs in Burlington ME. These specialists specialize in quickly discovering promising investment opportunities before they come on the marketplace.

Factors to Consider

Median Home Price

The location’s median housing price should help you find a desirable city for flipping houses. You are on the lookout for median prices that are modest enough to hint on investment possibilities in the city. This is an essential element of a cost-effective rehab and resale project.

If your examination indicates a fast weakening in real property values, it could be a sign that you will find real estate that meets the short sale criteria. You’ll hear about potential investments when you team up with Burlington short sale facilitators. Uncover more about this kind of investment described by our guide How Do You Buy a Short Sale House?.

Property Appreciation Rate

The changes in property market worth in a location are critical. Stable growth in median values indicates a strong investment environment. Unpredictable market value changes aren’t desirable, even if it’s a substantial and sudden growth. When you’re purchasing and liquidating quickly, an erratic environment can sabotage your venture.

Average Renovation Costs

Look carefully at the possible repair costs so you will find out whether you can achieve your goals. Other spendings, such as authorizations, may inflate your budget, and time which may also develop into an added overhead. To draft a detailed financial strategy, you’ll want to know whether your plans will be required to involve an architect or engineer.

Population Growth

Population increase metrics allow you to take a peek at housing need in the market. When the number of citizens is not growing, there is not going to be an adequate supply of homebuyers for your properties.

Median Population Age

The median population age is a factor that you might not have included in your investment study. If the median age is the same as that of the average worker, it’s a good indication. People in the local workforce are the most reliable home purchasers. People who are about to exit the workforce or are retired have very specific residency requirements.

Unemployment Rate

You want to have a low unemployment rate in your prospective location. The unemployment rate in a prospective investment area should be less than the nation’s average. When it’s also less than the state average, it’s much more preferable. Jobless people cannot purchase your houses.

Income Rates

Median household and per capita income amounts show you if you will obtain adequate buyers in that city for your residential properties. Most families usually take a mortgage to purchase real estate. The borrower’s income will show the amount they can borrow and whether they can buy a house. The median income statistics show you if the area is eligible for your investment plan. Look for areas where wages are rising. To keep pace with inflation and increasing construction and material costs, you have to be able to periodically adjust your prices.

Number of New Jobs Created

Understanding how many jobs are created per year in the community can add to your assurance in a city’s investing environment. Houses are more easily liquidated in a community with a robust job market. New jobs also entice people migrating to the city from elsewhere, which also revitalizes the real estate market.

Hard Money Loan Rates

Fix-and-flip property investors normally borrow hard money loans in place of traditional loans. This strategy enables investors complete lucrative ventures without delay. Locate the best private money lenders in Burlington ME so you can compare their fees.

Someone who needs to learn about hard money financing products can discover what they are and how to use them by reviewing our guide titled How Hard Money Lending Works.

Wholesaling is a real estate investment approach that requires finding properties that are appealing to investors and signing a sale and purchase agreement. A real estate investor then “buys” the contract from you. The real buyer then settles the acquisition. The wholesaler does not sell the residential property — they sell the contract to purchase one.

The wholesaling form of investing includes the engagement of a title company that comprehends wholesale deals and is savvy about and active in double close deals. Locate Burlington investor friendly title companies by utilizing our directory.

Our extensive guide to wholesaling can be viewed here: Ultimate Guide to Wholesaling Real Estate. As you choose wholesaling, add your investment company on our list of the best wholesale real estate investors in Burlington ME. This will help your potential investor purchasers find and contact you.

Factors to Consider

Median Home Prices

Median home prices are key to finding places where homes are being sold in your investors’ price range. As real estate investors need investment properties that are on sale for less than market price, you will need to see lower median prices as an implicit tip on the potential supply of residential real estate that you could acquire for lower than market value.

Accelerated worsening in real property market worth could lead to a lot of houses with no equity that appeal to short sale property buyers. This investment strategy often delivers multiple different benefits. Nevertheless, there might be challenges as well. Find out more concerning wholesaling short sales with our comprehensive explanation. Once you’re ready to start wholesaling, hunt through Burlington top short sale attorneys as well as Burlington top-rated property foreclosure attorneys directories to discover the appropriate counselor.

Property Appreciation Rate

Property appreciation rate completes the median price statistics. Investors who plan to maintain real estate investment properties will want to find that housing prices are consistently going up. Both long- and short-term investors will avoid a market where residential market values are depreciating.

Population Growth

Population growth information is essential for your proposed contract purchasers. If they see that the population is multiplying, they will presume that new housing is a necessity. There are a lot of individuals who lease and additional customers who purchase real estate. When a community is not multiplying, it does not require more housing and investors will look in other locations.

Median Population Age

A dynamic housing market prefers people who start off renting, then transitioning into homebuyers, and then moving up in the residential market. A region with a huge workforce has a strong pool of renters and purchasers. An area with these attributes will display a median population age that is the same as the employed citizens’ age.

Income Rates

The median household and per capita income will be on the upswing in an active housing market that investors prefer to operate in. Income increment demonstrates an area that can manage rent and real estate purchase price surge. Investors need this in order to meet their expected returns.

Unemployment Rate

Investors will pay a lot of attention to the community’s unemployment rate. High unemployment rate prompts many renters to pay rent late or miss payments altogether. Long-term investors who depend on reliable lease payments will do poorly in these areas. Renters cannot level up to homeownership and existing homeowners can’t sell their property and move up to a larger residence. This makes it tough to reach fix and flip real estate investors to acquire your contracts.

Number of New Jobs Created

Understanding how often fresh job openings are generated in the market can help you see if the house is located in a dynamic housing market. New jobs produced result in an abundance of employees who require spaces to lease and buy. Long-term real estate investors, like landlords, and short-term investors like flippers, are gravitating to areas with impressive job production rates.

Average Renovation Costs

An influential consideration for your client real estate investors, specifically house flippers, are rehabilitation costs in the community. Short-term investors, like fix and flippers, don’t make a profit if the purchase price and the repair expenses total to more money than the After Repair Value (ARV) of the house. Seek lower average renovation costs.

Acquiring mortgage notes (loans) is successful when the mortgage loan can be purchased for a lower amount than the remaining balance. When this happens, the note investor takes the place of the debtor’s lender.

When a loan is being repaid on time, it is considered a performing note. Performing notes earn consistent income for you. Some investors want non-performing notes because when they cannot satisfactorily restructure the mortgage, they can always obtain the collateral at foreclosure for a low amount.

At some time, you could build a mortgage note portfolio and notice you are needing time to service it on your own. When this happens, you could pick from the best loan servicing companies in Burlington ME which will designate you as a passive investor.

Should you decide to adopt this investment model, you ought to place your business in our directory of the best real estate note buyers in Burlington ME. Being on our list places you in front of lenders who make profitable investment opportunities available to note investors such as yourself.

Factors to Consider

Foreclosure Rates

Note investors looking for stable-performing mortgage loans to purchase will prefer to see low foreclosure rates in the market. If the foreclosures are frequent, the place could nonetheless be desirable for non-performing note investors. However, foreclosure rates that are high often signal an anemic real estate market where selling a foreclosed home could be a no easy task.

Foreclosure Laws

Mortgage note investors are expected to understand the state’s regulations regarding foreclosure before pursuing this strategy. Some states use mortgage documents and some use Deeds of Trust. A mortgage requires that you go to court for authority to foreclose. A Deed of Trust permits the lender to file a public notice and continue to foreclosure.

Mortgage Interest Rates

Purchased mortgage loan notes come with a negotiated interest rate. This is a major factor in the investment returns that lenders earn. Regardless of the type of investor you are, the mortgage loan note’s interest rate will be significant to your predictions.

Traditional lenders price different mortgage loan interest rates in various locations of the country. Private loan rates can be a little higher than conventional mortgage rates because of the higher risk taken by private lenders.

Note investors ought to always know the prevailing market interest rates, private and conventional, in possible mortgage note investment markets.

Demographics

A region’s demographics data assist note investors to focus their efforts and appropriately distribute their assets. It’s important to determine whether a suitable number of residents in the community will continue to have reliable employment and wages in the future.
A young expanding community with a strong employment base can contribute a reliable revenue stream for long-term mortgage note investors looking for performing mortgage notes.

Investors who look for non-performing mortgage notes can also make use of growing markets. A strong local economy is prescribed if they are to find buyers for properties on which they have foreclosed.

Property Values

The more equity that a borrower has in their home, the more advantageous it is for their mortgage note owner. If the property value is not significantly higher than the mortgage loan amount, and the lender has to start foreclosure, the home might not realize enough to payoff the loan. As mortgage loan payments decrease the amount owed, and the market value of the property goes up, the borrower’s equity goes up too.

Property Taxes

Payments for house taxes are usually given to the lender along with the loan payment. When the property taxes are payable, there should be enough payments being held to handle them. The mortgage lender will need to make up the difference if the mortgage payments halt or they risk tax liens on the property. Tax liens leapfrog over any other liens.

Because tax escrows are included with the mortgage payment, growing taxes mean larger mortgage loan payments. Borrowers who are having a hard time making their loan payments may fall farther behind and sooner or later default.

Real Estate Market Strength

Both performing and non-performing mortgage note investors can be profitable in a strong real estate market. It is critical to understand that if you have to foreclose on a collateral, you won’t have difficulty getting an acceptable price for the collateral property.

Note investors additionally have an opportunity to create mortgage loans directly to homebuyers in sound real estate communities. This is a profitable source of income for experienced investors.

A REIT, or Real Estate Investment Trust, means a business that invests in income-producing assets. This was initially invented as a way to permit the everyday investor to invest in real estate. Shares in REITs are affordable to the majority of people.

Investing in a REIT is termed passive investing. REITs oversee investors’ liability with a diversified selection of assets. Investors can unload their REIT shares whenever they wish. But REIT investors don’t have the ability to choose individual assets or markets. The properties that the REIT picks to purchase are the assets you invest in.

Mutual funds holding shares of real estate businesses are known as real estate investment funds. Any actual real estate is held by the real estate companies rather than the fund. Investment funds are considered an inexpensive way to include real estate properties in your allotment of assets without needless risks. Fund participants might not receive typical disbursements the way that REIT shareholders do. The worth of a fund to an investor is the projected appreciation of the value of the shares.

You can pick a fund that focuses on a targeted type of real estate you are aware of, but you don’t get to choose the market of every real estate investment. Your selection as an investor is to select a fund that you rely on to oversee your real estate investments.