Ultimate Columbus Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term rental plan — Buy, Rehab, Rent, Refinance, Repeat. This is a strategy to grow your investment portfolio not just buy a single asset. It is a must that you are qualified to do a “cash-out” refinance loan for the method to be successful.

When you have concluded fixing the property, the market value should be more than your complete acquisition and fix-up spendings. The property is refinanced based on the ARV and the difference, or equity, comes to you in cash. This cash is put into the next property, and so on. You acquire additional houses or condos and constantly grow your lease income.

If your investment real estate collection is big enough, you may delegate its oversight and get passive income. Discover one of the best property management firms in Columbus MI with a review of our exhaustive directory.

Factors to Consider

Population Growth

Population increase or shrinking shows you if you can count on reliable results from long-term investments. If the population increase in an area is high, then additional tenants are definitely coming into the area. Employers see this as an appealing region to move their company, and for workers to situate their families. Growing populations maintain a dependable tenant reserve that can handle rent growth and home purchasers who help keep your property values up.

Property Taxes

Property taxes, just like insurance and maintenance expenses, may be different from market to market and should be reviewed cautiously when predicting potential profits. Excessive property tax rates will hurt a real estate investor’s profits. Communities with steep property taxes are not a dependable setting for short- or long-term investment and should be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property prices and median lease rates that will show you how much rent the market can handle. An investor will not pay a large amount for a house if they can only charge a low rent not enabling them to repay the investment in a reasonable timeframe. The less rent you can collect the higher the p/r, with a low p/r showing a better rent market.

Median Gross Rents

Median gross rents are an important sign of the strength of a rental market. Look for a consistent expansion in median rents year over year. You will not be able to reach your investment goals in a region where median gross rents are dropping.

Median Population Age

The median population age that you are on the hunt for in a dynamic investment environment will be similar to the age of working adults. You will find this to be true in cities where people are moving. A high median age shows that the existing population is leaving the workplace without being replaced by younger workers relocating in. A thriving investing environment can’t be supported by retired professionals.

Employment Base Diversity

A varied amount of enterprises in the market will expand your chances of strong profits. If people are employed by a few major businesses, even a minor interruption in their business could cause you to lose a lot of renters and increase your liability considerably.

Unemployment Rate

You won’t have a stable rental cash flow in a community with high unemployment. Non-working individuals can’t be customers of yours and of related businesses, which produces a domino effect throughout the region. Individuals who still keep their jobs can discover their hours and wages cut. This could result in missed rent payments and tenant defaults.

Income Rates

Median household and per capita income rates show you if enough preferred renters reside in that city. Your investment analysis will take into consideration rent and property appreciation, which will be determined by wage augmentation in the region.

Number of New Jobs Created

A growing job market produces a consistent source of tenants. The workers who are employed for the new jobs will have to have housing. This allows you to buy additional lease real estate and fill current empty units.

School Ratings

The reputation of school districts has an undeniable influence on property values throughout the community. Businesses that are considering moving prefer outstanding schools for their workers. Business relocation attracts more renters. New arrivals who purchase a residence keep real estate values high. You can’t run into a vibrantly soaring housing market without highly-rated schools.

Property Appreciation Rates

High property appreciation rates are a requirement for a successful long-term investment. You have to make sure that the chances of your property appreciating in value in that neighborhood are good. Inferior or declining property appreciation rates should remove a market from being considered.

A furnished house or condo where clients live for shorter than 4 weeks is called a short-term rental. The nightly rental prices are typically higher in short-term rentals than in long-term units. With tenants moving from one place to the next, short-term rentals need to be repaired and sanitized on a regular basis.

House sellers standing by to close on a new residence, holidaymakers, and corporate travelers who are stopping over in the area for a few days prefer renting a residential unit short term. Regular property owners can rent their houses or condominiums on a short-term basis with platforms such as AirBnB and VRBO. This makes short-term rental strategy an easy approach to pursue residential property investing.

Short-term rental properties require dealing with renters more repeatedly than long-term ones. This leads to the landlord being required to constantly handle grievances. You may need to cover your legal exposure by hiring one of the good Columbus real estate lawyers.

Factors to Consider

Short-Term Rental Income

You must define the range of rental income you are looking for based on your investment budget. A quick look at a market’s present average short-term rental rates will show you if that is a strong community for your plan.

Median Property Prices

You also need to determine the amount you can allow to invest. The median market worth of real estate will tell you if you can manage to invest in that community. You can customize your area survey by looking at the median values in particular sections of the community.

Price Per Square Foot

Price per sq ft can be affected even by the look and layout of residential properties. If you are analyzing similar kinds of property, like condos or individual single-family homes, the price per square foot is more reliable. You can use the price per square foot data to see a good general idea of property values.

Short-Term Rental Occupancy Rate

A quick check on the location’s short-term rental occupancy levels will inform you if there is an opportunity in the region for additional short-term rental properties. A high occupancy rate shows that an additional amount of short-term rental space is necessary. If landlords in the city are having challenges renting their current units, you will have difficulty finding renters for yours.

Short-Term Rental Cash-on-Cash Return

To understand if you should invest your capital in a particular property or market, calculate the cash-on-cash return. You can determine 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. If an investment is profitable enough to recoup the capital spent soon, you will receive a high percentage. When you take a loan for a fraction of the investment and spend less of your own money, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

One metric indicates the value of an investment property as a revenue-producing asset — average short-term rental capitalization (cap) rate. Generally, the less money a property will cost (or is worth), the higher the cap rate will be. When cap rates are low, you can expect to spend more cash for investment properties in that location. Divide your expected Net Operating Income (NOI) by the property’s market worth or purchase price. This gives you a percentage that is the yearly return, or cap rate.

Local Attractions

Short-term renters are commonly people who visit a community to attend a yearly major activity or visit unique locations. Tourists visit specific areas to attend academic and sporting events at colleges and universities, be entertained by competitions, support their children as they participate in fun events, party at yearly fairs, and drop by adventure parks. Famous vacation spots are located in mountainous and coastal points, near lakes, and national or state nature reserves.

The fix and flip approach means buying a house that needs repairs or restoration, putting more value by enhancing the building, and then liquidating it for a better market price. Your assessment of renovation expenses should be accurate, and you have to be capable of acquiring the house below market value.

It is critical for you to figure out what houses are going for in the region. You always have to research how long it takes for real estate to sell, which is shown by the Days on Market (DOM) data. As a “house flipper”, you’ll need to liquidate the improved house without delay so you can avoid carrying ongoing costs that will reduce your returns.

So that home sellers who need to get cash for their property can conveniently discover you, showcase your status by utilizing our list of the best cash real estate buyers in Columbus MI along with top real estate investing companies in Columbus MI.

In addition, search for real estate bird dogs in Columbus MI. Experts on our list concentrate on acquiring little-known investment opportunities while they are still under the radar.

Factors to Consider

Median Home Price

The region’s median housing price will help you find a desirable city for flipping houses. You are seeking for median prices that are modest enough to show investment opportunities in the market. This is a crucial ingredient of a cost-effective investment.

When area data signals a sudden drop in real estate market values, this can highlight the availability of potential short sale homes. Investors who partner with short sale processors in Columbus MI get regular notices about possible investment real estate. Learn more concerning this kind of investment described by our guide How to Buy a House as a Short Sale.

Property Appreciation Rate

Dynamics is the direction that median home prices are going. You have to have a city where property prices are constantly and consistently going up. Unpredictable market value shifts are not good, even if it is a substantial and unexpected growth. You may end up purchasing high and liquidating low in an unreliable market.

Average Renovation Costs

A careful review of the market’s construction costs will make a huge influence on your location choice. The time it takes for getting permits and the local government’s rules for a permit application will also impact your plans. To create a detailed budget, you’ll want to understand if your plans will be required to use an architect or engineer.

Population Growth

Population growth metrics let you take a look at housing need in the area. When there are purchasers for your renovated homes, the data will indicate a robust population growth.

Median Population Age

The median citizens’ age can additionally tell you if there are enough home purchasers in the city. The median age in the market must equal the one of the usual worker. People in the area’s workforce are the most dependable real estate buyers. People who are about to leave the workforce or are retired have very particular residency requirements.

Unemployment Rate

You need to have a low unemployment level in your investment area. The unemployment rate in a future investment market needs to be lower than the nation’s average. A very good investment community will have an unemployment rate lower than the state’s average. Jobless people cannot purchase your homes.

Income Rates

The residents’ wage stats show you if the location’s financial environment is stable. The majority of individuals who purchase a house have to have a mortgage loan. The borrower’s salary will dictate how much they can afford and whether they can buy a home. The median income stats will show you if the location is ideal for your investment endeavours. Scout for locations where salaries are improving. If you need to augment the price of your homes, you need to be certain that your clients’ income is also rising.

Number of New Jobs Created

The number of jobs created on a steady basis tells whether wage and population growth are sustainable. Houses are more effortlessly sold in a market with a dynamic job environment. With a higher number of jobs appearing, more prospective home purchasers also migrate to the community from other locations.

Hard Money Loan Rates

Fix-and-flip investors often utilize hard money loans rather than conventional financing. This strategy lets investors make desirable deals without delay. Find real estate hard money lenders in Columbus MI and compare their rates.

In case you are unfamiliar with this loan product, understand more by studying our informative blog post — What Is a Hard Money Loan in Real Estate?.

Wholesaling is a real estate investment plan that involves locating homes that are attractive to real estate investors and signing a purchase contract. However you do not buy the home: once you control the property, you get an investor to take your place for a price. The owner sells the property under contract to the investor instead of the wholesaler. The real estate wholesaler does not liquidate the property — they sell the rights to buy it.

This method includes utilizing a title company that’s experienced in the wholesale purchase and sale agreement assignment procedure and is able and predisposed to handle double close deals. Locate title companies that specialize in real estate property investments in Columbus MI in our directory.

To learn how wholesaling works, study our insightful guide How Does Real Estate Wholesaling Work?. When pursuing this investment method, place your firm in our list of the best property wholesalers in Columbus MI. This will let your possible investor purchasers locate and contact you.

Factors to Consider

Median Home Prices

Median home values in the area under consideration will immediately notify you if your investors’ target properties are situated there. As investors prefer properties that are available for less than market value, you will have to take note of lower median purchase prices as an implied tip on the potential supply of homes that you may purchase for less than market value.

A fast depreciation in the price of property might cause the sudden availability of properties with negative equity that are desired by wholesalers. This investment method frequently carries numerous particular benefits. Nevertheless, it also produces a legal liability. Learn details regarding wholesaling short sales with our complete guide. Once you’re keen to begin wholesaling, look through Columbus top short sale attorneys as well as Columbus top-rated foreclosure law firms directories to discover the appropriate counselor.

Property Appreciation Rate

Median home purchase price trends are also important. Some investors, like buy and hold and long-term rental landlords, specifically want to find that home values in the city are expanding consistently. Shrinking purchase prices indicate an unequivocally poor leasing and home-selling market and will chase away investors.

Population Growth

Population growth figures are something that real estate investors will look at carefully. When they know the population is expanding, they will conclude that new housing units are a necessity. Real estate investors realize that this will involve both leasing and purchased residential housing. A place with a dropping community will not draw the investors you require to buy your purchase contracts.

Median Population Age

A strong housing market needs individuals who are initially renting, then moving into homebuyers, and then moving up in the housing market. To allow this to happen, there needs to be a stable workforce of prospective renters and homebuyers. A market with these characteristics will display a median population age that mirrors the wage-earning resident’s age.

Income Rates

The median household and per capita income demonstrate consistent growth over time in cities that are good for real estate investment. Increases in lease and purchase prices will be aided by growing income in the area. Property investors stay out of communities with poor population salary growth numbers.

Unemployment Rate

Real estate investors will take into consideration the region’s unemployment rate. Tenants in high unemployment locations have a tough time paying rent on schedule and many will stop making rent payments entirely. This adversely affects long-term investors who plan to lease their real estate. Tenants can’t move up to homeownership and current owners can’t liquidate their property and shift up to a more expensive residence. This can prove to be difficult to find fix and flip investors to buy your buying contracts.

Number of New Jobs Created

The number of jobs generated per annum is an essential element of the housing framework. People settle in a location that has additional job openings and they need housing. Whether your client supply is made up of long-term or short-term investors, they will be drawn to an area with consistent job opening production.

Average Renovation Costs

Repair costs will be important to many real estate investors, as they typically acquire cheap distressed houses to fix. Short-term investors, like house flippers, don’t make money when the acquisition cost and the improvement costs amount to more than the After Repair Value (ARV) of the property. Give priority status to lower average renovation costs.

Mortgage note investing professionals buy a loan from mortgage lenders if the investor can get the note for less than the balance owed. When this occurs, the note investor takes the place of the debtor’s lender.

Loans that are being repaid on time are thought of as performing notes. These loans are a stable source of passive income. Non-performing mortgage notes can be re-negotiated or you can buy the collateral for less than face value by completing foreclosure.

Eventually, you could accrue a number of mortgage note investments and not have the time to manage them without assistance. In this event, you can hire one of mortgage loan servicing companies in Columbus MI that would basically turn your portfolio into passive cash flow.

If you choose to adopt this investment plan, you ought to include your business in our directory of the best companies that buy mortgage notes in Columbus MI. Being on our list places you in front of lenders who make desirable investment possibilities available to note investors such as you.

Factors to Consider

Foreclosure Rates

Performing loan buyers try to find areas with low foreclosure rates. If the foreclosures happen too often, the place might still be good for non-performing note investors. However, foreclosure rates that are high sometimes indicate a weak real estate market where unloading a foreclosed unit might be a problem.

Foreclosure Laws

Note investors want to understand the state’s laws regarding foreclosure before buying notes. Many states require mortgage documents and some require Deeds of Trust. When using a mortgage, a court has to agree to a foreclosure. You don’t need the court’s permission with a Deed of Trust.

Mortgage Interest Rates

The interest rate is determined in the mortgage loan notes that are acquired by note investors. That interest rate will undoubtedly affect your returns. Interest rates are crucial to both performing and non-performing mortgage note investors.

Conventional interest rates can vary by as much as a quarter of a percent around the country. Loans offered by private lenders are priced differently and can be higher than traditional mortgage loans.

Note investors should always be aware of the prevailing local mortgage interest rates, private and traditional, in possible note investment markets.

Demographics

When mortgage note investors are deciding on where to buy notes, they research the demographic data from likely markets. The location’s population increase, unemployment rate, job market increase, wage standards, and even its median age hold important data for note buyers.
Investors who prefer performing notes look for communities where a high percentage of younger individuals maintain good-paying jobs.

Non-performing mortgage note purchasers are looking at related factors for different reasons. A resilient local economy is required if investors are to find homebuyers for properties they’ve foreclosed on.

Property Values

As a mortgage note investor, you should look for borrowers having a comfortable amount of equity. If the lender has to foreclose on a mortgage loan without much equity, the foreclosure auction may not even repay the amount invested in the note. Rising property values help improve the equity in the house as the homeowner lessens the balance.

Property Taxes

Usually, mortgage lenders accept the property taxes from the borrower each month. When the taxes are due, there should be adequate funds in escrow to pay them. If the borrower stops paying, unless the note holder remits the property taxes, they will not be paid on time. When taxes are delinquent, the municipality’s lien leapfrogs any other liens to the head of the line and is satisfied first.

If an area has a history of rising property tax rates, the total home payments in that city are steadily increasing. Borrowers who have a hard time making their loan payments may drop farther behind and ultimately default.

Real Estate Market Strength

An active real estate market with regular value growth is helpful for all categories of mortgage note buyers. The investors can be confident that, when need be, a foreclosed collateral can be sold at a price that is profitable.

Strong markets often present opportunities for note buyers to originate the first mortgage loan themselves. This is a profitable source of income for successful investors.

A REIT, or Real Estate Investment Trust, means a company that invests in income-producing real estate. REITs are invented to enable everyday people to buy into properties. REIT shares are not too costly to the majority of investors.

REIT investing is called passive investing. The exposure that the investors are accepting is spread within a selection of investment properties. Shareholders have the ability to unload their shares at any moment. However, REIT investors don’t have the option to choose individual assets or markets. You are restricted to the REIT’s selection of properties for investment.

Real estate investment funds are in essence mutual funds that concentrate on real estate firms, including REITs. The investment properties aren’t owned by the fund — they are possessed by the companies in which the fund invests. This is an additional way for passive investors to allocate their portfolio with real estate avoiding the high entry-level cost or exposure. Whereas REITs must disburse dividends to its members, funds do not. Like any stock, investment funds’ values grow and go down with their share market value.

You may select a fund that concentrates on specific segments of the real estate business but not specific markets for individual real estate property investment. As passive investors, fund members are happy to let the management team of the fund make all investment determinations.