Ultimate Clay County Real Estate Investing Guide for 2024

A long-term investment method that involves Buying a house, Repairing, Renting, Refinancing it, and Repeating the procedure by employing the cash from the mortgage refinance is called BRRRR. When you plan to expand your investments, the BRRRR is a good method to use. A crucial piece of this formula is to be able to obtain a “cash-out” mortgage refinance.

You improve the value of the asset above the amount you spent acquiring and rehabbing it. Then you extract the value you created out of the asset in a “cash-out” mortgage refinance. You acquire your next rental with the cash-out funds and begin all over again. You purchase additional properties and repeatedly expand your rental income.

When an investor owns a substantial number of investment homes, it makes sense to employ a property manager and create a passive income stream. Discover top Clay County real estate managers by using our directory.

Factors to Consider

Population Growth

The rise or downturn of a market’s population is an accurate gauge of the region’s long-term desirability for lease property investors. If you see robust population growth, you can be certain that the area is pulling possible tenants to the location. The city is appealing to companies and workers to move, find a job, and grow families. This means stable renters, greater lease revenue, and more likely homebuyers when you intend to sell the asset.

Property Taxes

Property taxes, maintenance, and insurance expenses are examined by long-term rental investors for determining costs to assess if and how the investment will pay off. Investment assets located in high property tax cities will have smaller profits. High real estate tax rates may signal an unstable city where expenses can continue to rise and must be treated as a red flag.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property prices and median lease rates that will indicate how high of a rent the market can handle. An investor will not pay a high price for a property if they can only collect a low rent not allowing them to repay the investment within a realistic timeframe. A higher price-to-rent ratio signals you that you can charge modest rent in that community, a small ratio signals you that you can collect more.

Median Gross Rents

Median gross rents illustrate whether a city’s rental market is reliable. Hunt for a repeating rise in median rents year over year. You will not be able to reach your investment goals in an area where median gross rental rates are going down.

Median Population Age

Median population age will be similar to the age of a usual worker if a location has a strong stream of renters. This may also show that people are moving into the community. A high median age signals that the current population is retiring with no replacement by younger workers relocating there. That is a poor long-term economic scenario.

Employment Base Diversity

Accommodating a variety of employers in the region makes the market not as risky. When the community’s workpeople, who are your tenants, are spread out across a diversified assortment of employers, you cannot lose all all tenants at once (and your property’s value), if a significant employer in the city goes bankrupt.

Unemployment Rate

High unemployment results in fewer renters and an unsafe housing market. Historically successful businesses lose customers when other employers lay off employees. This can create more dismissals or fewer work hours in the market. Even renters who are employed may find it challenging to stay current with their rent.

Income Rates

Median household and per capita income will reflect if the tenants that you require are living in the region. Improving salaries also show you that rental rates can be increased over the life of the investment property.

Number of New Jobs Created

The more jobs are regularly being provided in a location, the more stable your renter pool will be. A higher number of jobs equal more renters. Your strategy of leasing and buying more rentals needs an economy that can create new jobs.

School Ratings

Local schools can make a strong influence on the real estate market in their city. When a business owner evaluates an area for potential relocation, they remember that good education is a prerequisite for their employees. Business relocation attracts more tenants. Homebuyers who move to the region have a good influence on property market worth. Superior schools are an essential factor for a strong property investment market.

Property Appreciation Rates

The essence of a long-term investment plan is to keep the investment property. You have to be certain that your property assets will appreciate in market value until you want to liquidate them. Substandard or decreasing property worth in an area under evaluation is unacceptable.

A furnished house or condo where renters reside for shorter than 30 days 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 high number of tenants, short-term rentals need additional recurring care and tidying.

Short-term rentals are popular with individuals traveling on business who are in the city for several days, those who are migrating and want transient housing, and people on vacation. House sharing sites such as AirBnB and VRBO have helped numerous homeowners to take part in the short-term rental business. Short-term rentals are regarded as a good approach to start investing in real estate.

Vacation rental unit owners require interacting directly with the tenants to a greater degree than the owners of yearly leased units. That leads to the landlord being required to constantly deal with complaints. You may need to cover your legal liability by hiring one of the top Clay County investor friendly real estate attorneys.

Factors to Consider

Short-Term Rental Income

First, calculate the amount of rental income you should have to achieve your estimated profits. Learning about the average rate of rental fees in the area for short-term rentals will enable you to select a preferable city to invest.

Median Property Prices

Meticulously assess the budget that you can spend on additional investment assets. To check if a location has possibilities for investment, look at the median property prices. You can also employ median prices in specific sub-markets within the market to choose cities for investing.

Price Per Square Foot

Price per square foot could be confusing when you are examining different buildings. When the designs of potential properties are very contrasting, the price per sq ft may not make a correct comparison. You can use the price per square foot data to get a good overall idea of real estate values.

Short-Term Rental Occupancy Rate

A quick look at the community’s short-term rental occupancy rate will inform you whether there is a need in the district for more short-term rentals. A high occupancy rate means that an extra source of short-term rental space is wanted. Low occupancy rates reflect that there are already too many short-term units in that market.

Short-Term Rental Cash-on-Cash Return

To know if it’s a good idea to invest your funds in a specific investment asset or area, calculate the cash-on-cash return. Divide the Net Operating Income (NOI) by the amount of cash used. The result is shown as a percentage. If a project is profitable enough to return the amount invested soon, you will receive a high percentage. When you borrow a portion of the investment budget and spend less of your own cash, you will see a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

One measurement indicates the value of an investment property as a revenue-producing asset — average short-term rental capitalization (cap) rate. High cap rates show that properties are available in that area for reasonable prices. If cap rates are low, you can assume to pay more for rental units in that area. You can calculate the cap rate for potential investment property by dividing the Net Operating Income (NOI) by the market worth or asking price of the property. The result is the per-annum return in a percentage.

Local Attractions

Short-term rental apartments are desirable in locations where vacationers are attracted by events and entertainment sites. This includes top sporting tournaments, youth sports contests, colleges and universities, large concert halls and arenas, carnivals, and amusement parks. Notable vacation spots are situated in mountainous and coastal areas, along rivers, and national or state parks.

The fix and flip approach means acquiring a house that demands repairs or rehabbing, putting added value by upgrading the property, and then liquidating it for its full market value. To be successful, the investor needs to pay below market value for the property and calculate what it will cost to fix it.

It is critical for you to know what properties are selling for in the city. Select a community that has a low average Days On Market (DOM) metric. To successfully “flip” real estate, you have to dispose of the renovated house before you have to put out a budget maintaining it.

So that homeowners who need to get cash for their property can effortlessly discover you, promote your availability by using our directory of the best cash real estate buyers in Clay County MO along with top real estate investing companies in Clay County MO.

Also, search for top property bird dogs in Clay County MO. Professionals found here will assist you by immediately finding possibly successful deals prior to the opportunities being marketed.

Factors to Consider

Median Home Price

When you look for a suitable area for property flipping, examine the median housing price in the city. Low median home values are an indicator that there may be a steady supply of houses that can be bought below market worth. This is a crucial ingredient of a cost-effective fix and flip.

If you detect a sudden decrease in real estate values, this may signal that there are conceivably homes in the location that will work for a short sale. You will learn about potential investments when you join up with Clay County short sale specialists. Learn more about this kind of investment explained in our guide How to Buy a Short Sale House.

Property Appreciation Rate

The changes in real estate prices in a city are vital. You need a market where property market values are steadily and continuously ascending. Property purchase prices in the community should be going up steadily, not suddenly. Acquiring at the wrong moment in an unsteady market can be disastrous.

Average Renovation Costs

Look closely at the possible renovation costs so you’ll understand whether you can reach your projections. The way that the municipality processes your application will affect your investment too. To create an on-target financial strategy, you will want to find out if your construction plans will have to use an architect or engineer.

Population Growth

Population increase metrics provide a peek at housing need in the region. If there are purchasers for your restored real estate, the statistics will illustrate a positive population growth.

Median Population Age

The median population age is a direct indicator of the supply of preferable home purchasers. It shouldn’t be less or more than that of the average worker. A high number of such residents reflects a significant supply of homebuyers. Aging individuals are planning to downsize, or relocate into senior-citizen or assisted living neighborhoods.

Unemployment Rate

You aim to see a low unemployment level in your potential community. An unemployment rate that is lower than the country’s median is good. A really friendly investment location will have an unemployment rate lower than the state’s average. Non-working individuals won’t be able to buy your real estate.

Income Rates

The residents’ wage statistics can brief you if the local financial environment is stable. When families purchase a property, they usually have to obtain financing for the purchase. To get a home loan, a home buyer should not be using for a house payment a larger amount than a specific percentage of their wage. You can determine from the area’s median income if enough people in the area can manage to buy your properties. Look for cities where salaries are growing. To stay even with inflation and rising building and supply expenses, you need to be able to regularly raise your prices.

Number of New Jobs Created

Understanding how many jobs appear every year in the community can add to your assurance in a region’s economy. An expanding job market indicates that a higher number of potential homeowners are confident in buying a house there. Experienced skilled employees looking into purchasing a property and settling opt for migrating to cities where they will not be unemployed.

Hard Money Loan Rates

Real estate investors who work with upgraded properties frequently use hard money loans in place of traditional funding. This enables them to immediately pick up desirable real estate. Research the best Clay County hard money lenders and contrast lenders’ fees.

If you are unfamiliar with this financing product, understand more by reading our article — Hard Money Loans Guide for Real Estate Investors.

As a real estate wholesaler, you enter a contract to purchase a house that other investors will want. When an investor who approves of the property is spotted, the purchase contract is sold to the buyer for a fee. The owner sells the home to the real estate investor not the wholesaler. The real estate wholesaler does not sell the property under contract itself — they just sell the purchase and sale agreement.

This business involves employing a title company that is knowledgeable about the wholesale purchase and sale agreement assignment procedure and is capable and predisposed to handle double close transactions. Locate Clay County title companies that specialize in real estate property investments by utilizing our directory.

To learn how wholesaling works, look through our comprehensive guide How Does Real Estate Wholesaling Work?. When pursuing this investing method, list your firm in our list of the best home wholesalers in Clay County MO. That way your prospective customers will know about you and contact you.

Factors to Consider

Median Home Prices

Median home values in the region will tell you if your preferred price range is achievable in that city. Lower median purchase prices are a good indicator that there are plenty of residential properties that can be acquired for less than market price, which real estate investors have to have.

A fast depreciation in the value of property might cause the swift availability of houses with negative equity that are desired by wholesalers. This investment strategy regularly provides multiple uncommon advantages. Nevertheless, there might be liabilities as well. Gather additional details on how to wholesale a short sale property in our extensive guide. Once you’re keen to start wholesaling, look through Clay County top short sale real estate attorneys as well as Clay County top-rated property foreclosure attorneys directories to discover the appropriate counselor.

Property Appreciation Rate

Median home purchase price trends are also important. Some investors, such as buy and hold and long-term rental investors, particularly need to know that residential property prices in the community are going up over time. Both long- and short-term investors will avoid an area where housing purchase prices are depreciating.

Population Growth

Population growth stats are an important indicator that your future real estate investors will be knowledgeable in. If the population is expanding, additional housing is needed. They understand that this will involve both leasing and purchased housing units. If a population isn’t multiplying, it doesn’t need new residential units and investors will invest in other locations.

Median Population Age

A vibrant housing market prefers people who start off renting, then moving into homebuyers, and then moving up in the residential market. To allow this to be possible, there has to be a reliable workforce of prospective tenants and homeowners. That’s why the region’s median age should be the age of skilled workers in the employment market.

Income Rates

The median household and per capita income show consistent growth historically in cities that are desirable for real estate investment. Increases in rent and purchase prices have to be backed up by improving wages in the market. Investors want this if they are to achieve their anticipated returns.

Unemployment Rate

Investors whom you offer to purchase your contracts will deem unemployment statistics to be a key piece of information. Tenants in high unemployment communities have a tough time paying rent on schedule and a lot of them will skip payments entirely. This is detrimental to long-term investors who intend to lease their investment property. Investors can’t count on tenants moving up into their properties if unemployment rates are high. Short-term investors won’t risk being pinned down with a unit they can’t sell quickly.

Number of New Jobs Created

Understanding how frequently new jobs are generated in the community can help you determine if the real estate is positioned in a robust housing market. Job formation implies more workers who require housing. Employment generation is beneficial for both short-term and long-term real estate investors whom you depend on to close your contracts.

Average Renovation Costs

An influential variable for your client real estate investors, specifically fix and flippers, are rehab costs in the area. Short-term investors, like fix and flippers, will not earn anything when the acquisition cost and the improvement expenses total to a larger sum than the After Repair Value (ARV) of the property. Lower average repair expenses make a community more desirable for your main customers — rehabbers and other real estate investors.

This strategy involves buying a loan (mortgage note) from a mortgage holder at a discount. The client makes future payments to the mortgage note investor who is now their current mortgage lender.

Loans that are being repaid on time are considered performing loans. Performing loans give consistent income for investors. Note investors also purchase non-performing loans that the investors either restructure to assist the borrower or foreclose on to purchase the collateral less than actual value.

Ultimately, you could grow a selection of mortgage note investments and be unable to oversee them by yourself. In this case, you could hire one of third party loan servicing companies in Clay County MO that will essentially convert your investment into passive income.

Should you decide to try this investment strategy, you ought to put your venture in our list of the best mortgage note buyers in Clay County MO. This will make you more visible to lenders providing desirable possibilities to note investors like yourself.

Factors to consider

Foreclosure Rates

Performing note buyers try to find markets showing low foreclosure rates. Non-performing note investors can cautiously take advantage of cities with high foreclosure rates too. If high foreclosure rates have caused a weak real estate environment, it might be difficult to get rid of the collateral property after you foreclose on it.

Foreclosure Laws

Successful mortgage note investors are completely knowledgeable about their state’s regulations regarding foreclosure. They’ll know if their law dictates mortgages or Deeds of Trust. A mortgage dictates that the lender goes to court for approval to foreclose. Investors don’t need the court’s permission with a Deed of Trust.

Mortgage Interest Rates

The mortgage interest rate is set in the mortgage loan notes that are purchased by investors. Your investment profits will be affected by the interest rate. No matter which kind of investor you are, the note’s interest rate will be critical to your forecasts.

Traditional interest rates may be different by as much as a quarter of a percent around the US. Mortgage loans offered by private lenders are priced differently and can be more expensive than conventional mortgage loans.

Note investors ought to always know the current local interest rates, private and conventional, in potential mortgage note investment markets.

Demographics

A market’s demographics trends assist mortgage note buyers to focus their efforts and effectively use their assets. It’s essential to find out if a sufficient number of citizens in the community will continue to have reliable employment and incomes in the future.
Investors who like performing notes look for markets where a high percentage of younger residents maintain good-paying jobs.

Non-performing note buyers are interested in similar elements for other reasons. If these investors want to foreclose, they’ll need a stable real estate market when they liquidate the repossessed property.

Property Values

As a mortgage note buyer, you will look for borrowers having a cushion of equity. If the lender has to foreclose on a mortgage loan with lacking equity, the sale might not even pay back the balance invested in the note. As mortgage loan payments lessen the amount owed, and the market value of the property goes up, the borrower’s equity grows.

Property Taxes

Escrows for real estate taxes are typically sent to the lender along with the mortgage loan payment. The lender pays the payments to the Government to ensure they are paid promptly. If the borrower stops paying, unless the mortgage lender pays the taxes, they won’t be paid on time. When taxes are delinquent, the government’s lien jumps over all other liens to the head of the line and is paid first.

Since tax escrows are collected with the mortgage loan payment, rising taxes indicate higher house payments. Past due clients may not have the ability to keep up with growing mortgage loan payments and might interrupt making payments altogether.

Real Estate Market Strength

A place with growing property values has strong opportunities for any note buyer. Since foreclosure is a necessary component of note investment strategy, increasing real estate values are critical to finding a desirable investment market.

Growing markets often show opportunities for private investors to generate the initial mortgage loan themselves. This is a strong stream of revenue for accomplished investors.

A trust owning income-generating real estate properties and that sells shares to investors is a REIT — Real Estate Investment Trust. REITs are developed to empower average people to buy into real estate. Shares in REITs are affordable to the majority of people.

REIT investing is termed passive investing. REITs handle investors’ risk with a varied selection of real estate. Investors are able to sell their REIT shares anytime they need. One thing you cannot do with REIT shares is to choose the investment properties. You are restricted to the REIT’s selection of real estate properties for investment.

A Real Estate Investment Fund is a mutual fund that possesses stocks of real estate firms. The fund does not own properties — it owns interest in real estate firms. Investment funds are an inexpensive method to incorporate real estate properties in your allotment of assets without unnecessary liability. Where REITs are required to distribute dividends to its shareholders, funds don’t. The value of a fund to an investor is the projected appreciation of the value of the fund’s shares.

You can select a fund that concentrates on a targeted category of real estate you’re knowledgeable about, but you don’t get to choose the geographical area of each real estate investment. You must rely on the fund’s managers to decide which locations and properties are selected for investment.