Ultimate Clay County Real Estate Investing Guide for 2024

The acronym BRRRR is a description of a long-term investment strategy — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a plan for continuous expansion. It is critical that you be able to obtain a “cash-out” refinance loan for the plan to be successful.

The After Repair Value (ARV) of the home needs to equal more than the total purchase and improvement expenses. Next, you extract the value you generated out of the property in a “cash-out” refinance. This cash is placed into a different investment asset, and so on. You purchase additional assets and repeatedly expand your lease income.

When your investment property portfolio is substantial enough, you might contract out its management and enjoy passive income. Discover one of the best property management firms in Clay County KS with the help of our exhaustive list.

Factors to Consider

Population Growth

Population increase or decrease shows you if you can count on reliable results from long-term real estate investments. If the population growth in a market is robust, then additional renters are assuredly moving into the region. Employers view this market as an attractive area to situate their company, and for employees to situate their families. An increasing population builds a stable foundation of renters who will keep up with rent increases, and a vibrant seller’s market if you need to sell your investment assets.

Property Taxes

Real estate taxes, just like insurance and maintenance expenses, may differ from market to place and should be looked at cautiously when estimating potential returns. Excessive property tax rates will hurt a real estate investor’s returns. Unreasonable real estate tax rates may show a fluctuating community where expenditures can continue to grow and should be treated as a red flag.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of how high of a rent can be charged compared to the acquisition price of the asset. If median property values 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. You need to see a lower p/r to be assured that you can establish your rents high enough to reach acceptable returns.

Median Gross Rents

Median gross rents are an important sign of the strength of a rental market. You are trying to discover a site with stable median rent increases. If rents are shrinking, you can scratch that market from deliberation.

Median Population Age

The median population age that you are looking for in a reliable investment market will be approximate to the age of working people. If people are migrating into the community, the median age will not have a problem staying in the range of the employment base. If you see a high median age, your supply of tenants is shrinking. This is not promising for the forthcoming economy of that area.

Employment Base Diversity

A varied employment base is what a smart long-term rental property investor will look for. If working individuals are concentrated in only several significant enterprises, even a minor issue in their operations could cost you a great deal of tenants and expand your liability enormously.

Unemployment Rate

It is difficult to achieve a reliable rental market when there are many unemployed residents in it. Historically successful companies lose customers when other employers retrench employees. The remaining people could discover their own salaries reduced. Even renters who have jobs may find it tough to pay rent on time.

Income Rates

Median household and per capita income rates let you know if a high amount of qualified renters dwell in that location. Increasing salaries also tell you that rental rates can be increased over the life of the rental home.

Number of New Jobs Created

The more jobs are continually being produced in a location, the more stable your tenant inflow will be. The workers who are employed for the new jobs will require housing. This enables you to purchase additional lease assets and replenish current unoccupied properties.

School Ratings

School reputation in the area will have a large influence on the local property market. Employers that are thinking about relocating require superior schools for their workers. Moving companies bring and draw prospective renters. Homebuyers who relocate to the community have a good effect on home prices. You will not find a dynamically soaring housing market without reputable schools.

Property Appreciation Rates

The essence of a long-term investment strategy is to keep the property. You need to be positive that your real estate assets will appreciate in market price until you need to liquidate them. Low or dropping property appreciation rates should eliminate a market from the selection.

A short-term rental is a furnished unit where a tenant resides for less than one month. Short-term rental landlords charge a steeper rate a night than in long-term rental business. Because of the high turnover rate, short-term rentals entail more regular repairs and sanitation.

Short-term rentals are popular with individuals traveling for business who are in town for a couple of nights, those who are moving and want transient housing, and excursionists. Regular real estate owners can rent their homes on a short-term basis using sites like AirBnB and VRBO. Short-term rentals are viewed to be a smart technique to embark upon investing in real estate.

Short-term rental landlords necessitate working directly with the occupants to a greater extent than the owners of yearly rented units. That results in the owner having to regularly handle protests. Give some thought to managing your liability with the aid of any of the top real estate attorneys in Clay County KS.

Factors to Consider

Short-Term Rental Income

First, determine how much rental income you must have to meet your projected profits. A region’s short-term rental income levels will quickly reveal to you if you can anticipate to reach your estimated rental income levels.

Median Property Prices

When buying investment housing for short-term rentals, you must know how much you can pay. Look for areas where the purchase price you have to have corresponds with the present median property values. You can calibrate your location search by analyzing the median values in particular neighborhoods.

Price Per Square Foot

Price per sq ft may be inaccurate when you are examining different properties. If you are looking at the same kinds of real estate, like condominiums or separate single-family homes, the price per square foot is more consistent. If you take note of this, the price per sq ft may provide you a basic estimation of local prices.

Short-Term Rental Occupancy Rate

The number of short-term rental properties that are presently tenanted in a location is vital knowledge for a future rental property owner. If almost all of the rental properties have tenants, that community demands additional rental space. If the rental occupancy indicators are low, there isn’t much need in the market and you should search elsewhere.

Short-Term Rental Cash-on-Cash Return

To know if you should invest your funds in a particular investment asset or market, evaluate the cash-on-cash return. Take your estimated Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The return is a percentage. The higher the percentage, the sooner your invested cash will be recouped and you will begin realizing profits. When you get financing for a portion of the investment and put in less of your own funds, you will realize a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) levels are largely used by real property investors to estimate the value of rentals. A rental unit that has a high cap rate as well as charges market rents has a good market value. When cap rates are low, you can prepare to pay more cash for rental units in that area. Divide your projected Net Operating Income (NOI) by the property’s value or asking price. The result is the per-annum return in a percentage.

Local Attractions

Short-term rental units are preferred in cities where sightseers are attracted by activities and entertainment sites. If an area has places that annually produce must-see events, such as sports stadiums, universities or colleges, entertainment halls, and theme parks, it can invite people from out of town on a recurring basis. Outdoor scenic attractions such as mountains, rivers, beaches, and state and national nature reserves will also draw future tenants.

To fix and flip a residential property, you should buy it for less than market value, complete any necessary repairs and improvements, then liquidate it for higher market value. To keep the business profitable, the flipper needs to pay lower than the market worth for the property and compute how much it will cost to repair the home.

Investigate the prices so that you are aware of the accurate After Repair Value (ARV). Locate a region with a low average Days On Market (DOM) indicator. To profitably “flip” real estate, you must liquidate the repaired home before you are required to put out funds maintaining it.

In order that home sellers who need to sell their property can easily locate you, showcase your availability by using our directory of companies that buy houses for cash in Clay County KS along with top real estate investors in Clay County KS.

In addition, work with Clay County real estate bird dogs. Specialists found on our website will assist you by rapidly discovering possibly lucrative projects prior to them being sold.

Factors to Consider

Median Home Price

When you search for a good area for home flipping, look at the median housing price in the city. You are on the lookout for median prices that are low enough to hint on investment opportunities in the market. This is a primary element of a fix and flip market.

If your investigation shows a quick weakening in housing market worth, it may be a heads up that you will discover real property that meets the short sale criteria. Investors who partner with short sale negotiators in Clay County KS get regular notices regarding possible investment properties. You’ll learn valuable data concerning short sales in our extensive blog post ⁠— How Do I Buy a Short Sale Home?.

Property Appreciation Rate

The movements in real estate values in a community are vital. Predictable surge in median values indicates a vibrant investment environment. Accelerated price increases can suggest a market value bubble that is not reliable. When you’re acquiring and selling fast, an erratic market can hurt your venture.

Average Renovation Costs

Look closely at the possible rehab spendings so you will find out whether you can achieve your goals. The manner in which the local government processes your application will have an effect on your venture as well. To draft a detailed financial strategy, you will want to understand whether your construction plans will be required to use an architect or engineer.

Population Growth

Population data will show you if there is steady need for housing that you can provide. When there are buyers for your rehabbed homes, it will illustrate a strong population increase.

Median Population Age

The median citizens’ age can additionally show you if there are enough homebuyers in the community. When the median age is the same as that of the average worker, it is a good indication. People in the local workforce are the most stable home buyers. The needs of retirees will probably not be included your investment project plans.

Unemployment Rate

While evaluating a region for investment, keep your eyes open for low unemployment rates. An unemployment rate that is less than the nation’s median is a good sign. If it is also lower than the state average, that is even better. If you don’t have a vibrant employment base, a city can’t supply you with abundant homebuyers.

Income Rates

The residents’ income figures tell you if the region’s financial environment is strong. When people purchase a house, they normally need to borrow money for the home purchase. Home purchasers’ capacity to get issued a loan depends on the size of their salaries. The median income data tell you if the community is beneficial for your investment efforts. You also prefer to see wages that are expanding continually. Building costs and housing purchase prices rise over time, and you want to be sure that your prospective customers’ wages will also climb up.

Number of New Jobs Created

The number of jobs created on a regular basis reflects if income and population increase are feasible. A higher number of people buy homes if the area’s economy is creating jobs. Additional jobs also lure workers coming to the area from another district, which further invigorates the real estate market.

Hard Money Loan Rates

Investors who work with upgraded residential units frequently utilize hard money funding in place of regular financing. This strategy allows investors negotiate desirable deals without hindrance. Discover hard money lenders in Clay County KS and compare their mortgage rates.

Anyone who needs to understand more about hard money financing products can discover what they are as well as the way to use them by reading our guide titled What Is Hard Money Financing?.

Wholesaling is a real estate investment strategy that entails scouting out homes that are interesting to real estate investors and putting them under a purchase contract. However you don’t close on the home: once you control the property, you allow a real estate investor to become the buyer for a fee. The seller sells the home to the investor not the wholesaler. You’re selling the rights to buy the property, not the property itself.

This method includes utilizing a title firm that is experienced in the wholesale purchase and sale agreement assignment operation and is qualified and inclined to coordinate double close transactions. Locate investor friendly title companies in Clay County KS in our directory.

Learn more about how wholesaling works from our extensive guide — Real Estate Wholesaling Explained for Beginners. As you manage your wholesaling activities, put your company in HouseCashin’s directory of Clay County top house wholesalers. That will allow any potential clients to see you and initiate a contact.

Factors to Consider

Median Home Prices

Median home values in the area will inform you if your preferred price level is achievable in that location. Below average median prices are a solid indication that there are plenty of homes that could be acquired below market price, which real estate investors have to have.

A rapid decline in the value of real estate could cause the sudden appearance of homes with negative equity that are wanted by wholesalers. This investment plan frequently delivers several unique benefits. Nevertheless, be cognizant of the legal challenges. Find out about this from our guide Can I Wholesale a Short Sale Home?. Once you are keen to begin wholesaling, search through Clay County top short sale lawyers as well as Clay County top-rated mortgage foreclosure lawyers directories to discover the appropriate advisor.

Property Appreciation Rate

Median home market value fluctuations explain in clear detail the housing value picture. Some investors, including buy and hold and long-term rental landlords, particularly need to find that residential property values in the region are expanding over time. Declining prices illustrate an equally poor leasing and home-selling market and will scare away investors.

Population Growth

Population growth information is something that your potential real estate investors will be familiar with. If the community is growing, new residential units are required. They are aware that this will combine both rental and purchased housing units. When a place is declining in population, it does not require additional residential units and real estate investors will not be active there.

Median Population Age

Real estate investors have to work in a reliable property market where there is a good supply of renters, newbie homeowners, and upwardly mobile residents buying bigger properties. A region that has a huge employment market has a constant supply of tenants and purchasers. A community with these features will have a median population age that matches the employed adult’s age.

Income Rates

The median household and per capita income in a reliable real estate investment market have to be on the upswing. Surges in lease and purchase prices have to be backed up by improving wages in the market. Investors want this if they are to achieve their projected profits.

Unemployment Rate

Investors whom you offer to take on your contracts will deem unemployment figures to be a significant piece of information. High unemployment rate triggers many tenants to delay rental payments or miss payments entirely. Long-term real estate investors who depend on timely rental income will lose revenue in these areas. Renters cannot step up to ownership and existing owners can’t sell their property and move up to a larger residence. This is a problem for short-term investors purchasing wholesalers’ agreements to repair and flip a property.

Number of New Jobs Created

Learning how frequently fresh jobs appear in the area can help you determine if the home is located in a dynamic housing market. Job generation signifies a higher number of workers who need a place to live. This is good for both short-term and long-term real estate investors whom you rely on to take on your sale contracts.

Average Renovation Costs

Updating expenses have a big impact on a real estate investor’s profit. The purchase price, plus the costs of improvement, should total to less than the After Repair Value (ARV) of the home to create profit. Give priority status to lower average renovation costs.

This strategy includes obtaining debt (mortgage note) from a lender for less than the balance owed. When this occurs, the investor becomes the borrower’s mortgage lender.

When a loan is being repaid on time, it is considered a performing loan. Performing loans provide repeating income for you. Some note investors look for non-performing loans because when the mortgage investor cannot successfully re-negotiate the loan, they can always take the property at foreclosure for a below market price.

At some time, you could create a mortgage note portfolio and find yourself needing time to handle it on your own. At that stage, you may want to employ our directory of Clay County top residential mortgage servicers and redesignate your notes as passive investments.

If you choose to pursue this method, add your project to our list of real estate note buyers in Clay County KS. Joining will make your business more noticeable to lenders providing profitable possibilities to note buyers like you.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a sign that the market has opportunities for performing note buyers. High rates could signal investment possibilities for non-performing loan note investors, however they need to be careful. If high foreclosure rates are causing a weak real estate market, it could be tough to get rid of the collateral property if you foreclose on it.

Foreclosure Laws

It’s important for note investors to know the foreclosure regulations in their state. Are you working with a Deed of Trust or a mortgage? With a mortgage, a court has to allow a foreclosure. You simply need to file a public notice and start foreclosure steps if you are using a Deed of Trust.

Mortgage Interest Rates

The interest rate is set in the mortgage notes that are purchased by mortgage note investors. That mortgage interest rate will unquestionably affect your investment returns. Mortgage interest rates are critical to both performing and non-performing mortgage note buyers.

Traditional lenders charge different mortgage loan interest rates in different locations of the United States. Loans provided by private lenders are priced differently and may be more expensive than conventional loans.

Successful note investors regularly check the mortgage interest rates in their community offered by private and traditional lenders.

Demographics

A community’s demographics data help mortgage note investors to focus their work and properly use their resources. It’s crucial to find out whether an adequate number of people in the neighborhood will continue to have reliable employment and wages in the future.
A youthful expanding community with a strong job market can provide a reliable revenue flow for long-term note buyers searching for performing notes.

The identical community may also be appropriate for non-performing mortgage note investors and their exit plan. If non-performing investors need to foreclose, they will have to have a strong real estate market in order to sell the collateral property.

Property Values

The more equity that a homebuyer has in their home, the more advantageous it is for you as the mortgage loan holder. When you have to foreclose on a mortgage loan with lacking equity, the sale may not even repay the amount invested in the note. The combined effect of loan payments that lessen the loan balance and annual property value growth expands home equity.

Property Taxes

Typically, lenders accept the property taxes from the customer each month. So the lender makes sure that the real estate taxes are taken care of when due. The lender will need to take over if the payments stop or they risk tax liens on the property. Tax liens leapfrog over any other liens.

Since tax escrows are included with the mortgage loan payment, growing taxes indicate larger house payments. Homeowners who are having difficulty making their loan payments could drop farther behind and ultimately default.

Real Estate Market Strength

A vibrant real estate market having regular value increase is beneficial for all kinds of mortgage note investors. They can be confident that, if need be, a foreclosed collateral can be sold for an amount that makes a profit.

A strong real estate market can also be a potential area for originating mortgage notes. This is a desirable stream of revenue for accomplished investors.

Some real estate investment companies are structured as a trust called Real Estate Investment Trusts or REITs. Before REITs existed, investing in properties was too pricey for the majority of people. Shares in REITs are economical to most investors.

Shareholders’ participation in a REIT classifies as passive investment. The risk that the investors are assuming is distributed among a collection of investment properties. Participants have the ability to unload their shares at any moment. But REIT investors do not have the ability to pick individual investment properties or markets. Their investment is confined to the real estate properties selected by their REIT.

Mutual funds that contain shares of real estate firms are termed real estate investment funds. The investment real estate properties are not held by the fund — they’re owned by the companies in which the fund invests. This is another way for passive investors to allocate their portfolio with real estate without the high initial investment or exposure. Whereas REITs are meant to distribute dividends to its members, funds don’t. Like any stock, investment funds’ values grow and drop with their share market value.

You can find a real estate fund that specializes in a particular kind of real estate firm, like residential, but you can’t select the fund’s investment assets or locations. As passive investors, fund members are content to permit the directors of the fund determine all investment determinations.