Ultimate Cumberland County Real Estate Investing Guide for 2024

The term BRRRR is a description of a long-term investment strategy — Buy, Rehab, Rent, Refinance, Repeat. This is a way to increase your investment assets rather than buy a single rental home. This method rests on your ability to withdraw cash out when you refinance.

The After Repair Value (ARV) of the asset has to total more than the total purchase and renovation costs. The investment property is refinanced based on the ARV and the difference, or equity, is given to you in cash. This cash is placed into one more investment asset, and so on. You buy more and more properties and constantly increase your lease income.

Once you have created a significant list of income producing properties, you may prefer to find others to oversee your operations while you collect mailbox income. Find one of the best property management professionals in Cumberland County ME with the help of our exhaustive list.

Factors to Consider

Population Growth

The increase or decline of an area’s population is an accurate benchmark of the community’s long-term attractiveness for lease property investors. If you find robust population growth, you can be sure that the area is pulling likely tenants to it. Relocating businesses are attracted to growing cities giving secure jobs to families who relocate there. An expanding population creates a certain base of tenants who can keep up with rent bumps, and an active property seller’s market if you decide to liquidate any investment assets.

Property Taxes

Property taxes, regular upkeep expenditures, and insurance specifically affect your revenue. Unreasonable costs in these categories jeopardize your investment’s returns. Markets with excessive property taxes are not a dependable setting for short- or long-term investment and need to be bypassed.

Price to Rent Ratio

Price to rent ratio (p/r) is a market indicator that shows you the amount you can predict to demand for rent. An investor can not pay a high amount for an investment property if they can only collect a limited rent not allowing them to repay the investment within a appropriate timeframe. A high price-to-rent ratio shows you that you can demand less rent in that location, a lower one informs you that you can charge more.

Median Gross Rents

Median gross rents are a specific benchmark of the acceptance of a rental market under discussion. You are trying to discover a market with repeating median rent increases. If rental rates are declining, you can eliminate that region from deliberation.

Median Population Age

Median population age in a reliable long-term investment environment should reflect the normal worker’s age. If people are migrating into the neighborhood, the median age will not have a problem staying in the range of the labor force. A high median age illustrates that the current population is leaving the workplace without being replaced by younger workers relocating there. A dynamic real estate market can’t be maintained by retired people.

Employment Base Diversity

Accommodating numerous employers in the locality makes the market less volatile. When your tenants are employed by a few major employers, even a minor problem in their operations could cause you to lose a lot of tenants and increase your risk enormously.

Unemployment Rate

High unemployment means fewer renters and a weak housing market. The unemployed can’t buy goods or services. The still employed workers might discover their own wages marked down. Even tenants who are employed may find it challenging to stay current with their rent.

Income Rates

Median household and per capita income stats help you to see if a high amount of ideal renters dwell in that location. Rising incomes also tell you that rental fees can be hiked over the life of the rental home.

Number of New Jobs Created

An expanding job market produces a steady supply of tenants. An economy that produces jobs also increases the amount of people who participate in the housing market. This assures you that you will be able to keep a high occupancy rate and buy additional properties.

School Ratings

Local schools will cause a huge effect on the property market in their area. Employers that are thinking about relocating prefer outstanding schools for their employees. Business relocation provides more tenants. Real estate market values rise with additional employees who are buying homes. Reputable schools are an important factor for a robust property investment market.

Property Appreciation Rates

Real estate appreciation rates are an indispensable part of your long-term investment plan. You need to know that the odds of your property appreciating in price in that location are strong. Subpar or shrinking property value in a region under evaluation is unacceptable.

A furnished residential unit where renters reside for less than 30 days is regarded as a short-term rental. Long-term rentals, like apartments, impose lower rental rates per night than short-term rentals. These properties may require more constant repairs and cleaning.

Short-term rentals are mostly offered to business travelers who are in the region for a couple of nights, people who are moving and need temporary housing, and people on vacation. House sharing portals like AirBnB and VRBO have helped many property owners to join in the short-term rental business. This makes short-term rental strategy a good technique to try residential real estate investing.

Short-term rentals require engaging with occupants more often than long-term rental units. This dictates that landlords handle disputes more frequently. Give some thought to handling your liability with the aid of any of the best real estate attorneys in Cumberland County ME.

Factors to Consider

Short-Term Rental Income

Initially, find out how much rental income you must earn to reach your estimated profits. A glance at an area’s up-to-date average short-term rental rates will tell you if that is a good area for your project.

Median Property Prices

When buying real estate for short-term rentals, you need to know the budget you can spend. The median values of property will show you whether you can manage to participate in that city. You can also make use of median values in targeted sub-markets within the market to pick locations for investment.

Price Per Square Foot

Price per square foot gives a general picture of property values when considering similar real estate. If you are analyzing similar kinds of property, like condominiums or stand-alone single-family residences, the price per square foot is more reliable. If you keep this in mind, the price per square foot can give you a general view of property prices.

Short-Term Rental Occupancy Rate

The need for more rental properties in an area can be verified by studying the short-term rental occupancy level. A city that necessitates additional rental units will have a high occupancy rate. Low occupancy rates reflect that there are more than enough short-term units in that market.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to estimate the profitability of an investment. You can determine the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash being invested. The answer is a percentage. When a project is profitable enough to pay back the capital spent soon, you will get a high percentage. When you get financing for a fraction of the investment budget and use less of your own cash, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion compares property value to its yearly return. Typically, the less an investment property costs (or is worth), the higher the cap rate will be. If cap rates are low, you can assume to spend more cash for rental units in that location. You can determine the cap rate for possible investment property by dividing the Net Operating Income (NOI) by the Fair Market Value or listing price of the investment property. The percentage you will get is the property’s cap rate.

Local Attractions

Short-term renters are commonly people who come to a location to enjoy a recurring significant event or visit tourist destinations. When a city has sites that annually hold interesting events, such as sports coliseums, universities or colleges, entertainment halls, and amusement parks, it can invite visitors from outside the area on a recurring basis. Notable vacation spots are located in mountainous and coastal areas, near rivers, and national or state parks.

When an investor acquires a house for less than the market worth, rehabs it and makes it more attractive and pricier, and then disposes of it for revenue, they are known as a fix and flip investor. Your estimate of fix-up spendings must be precise, and you should be able to acquire the property for lower than market price.

Analyze the housing market so that you are aware of the exact After Repair Value (ARV). The average number of Days On Market (DOM) for houses sold in the community is crucial. As a ”rehabber”, you will want to liquidate the fixed-up home immediately so you can stay away from maintenance expenses that will lessen your revenue.

Assist motivated real estate owners in discovering your firm by placing it in our catalogue of Cumberland County cash real estate buyers and the best Cumberland County real estate investors.

Also, search for top real estate bird dogs in Cumberland County ME. Specialists on our list focus on procuring distressed property investment opportunities while they’re still unlisted.

Factors to Consider

Median Home Price

The area’s median housing price should help you spot a desirable community for flipping houses. You are searching for median prices that are modest enough to indicate investment opportunities in the region. This is a principal component of a fix and flip market.

If you notice a rapid weakening in property market values, this could indicate that there are conceivably homes in the market that qualify for a short sale. Real estate investors who partner with short sale specialists in Cumberland County ME receive continual notifications about potential investment real estate. Learn how this happens by reading our explanation ⁠— How to Buy a House in a Short Sale.

Property Appreciation Rate

The changes in property prices in a city are very important. Predictable surge in median values demonstrates a vibrant investment environment. Erratic value shifts are not beneficial, even if it’s a substantial and unexpected increase. Buying at an inopportune time in an unsteady market condition can be disastrous.

Average Renovation Costs

You’ll want to research building costs in any potential investment region. The manner in which the municipality processes your application will affect your project as well. To make an on-target financial strategy, you will need to understand if your construction plans will be required to use an architect or engineer.

Population Growth

Population growth is a good indicator of the strength or weakness of the region’s housing market. Flat or reducing population growth is an indication of a sluggish environment with not enough purchasers to validate your effort.

Median Population Age

The median citizens’ age is a straightforward indication of the presence of possible home purchasers. The median age in the city needs to be the age of the regular worker. People in the area’s workforce are the most dependable real estate purchasers. Older individuals are preparing to downsize, or relocate into senior-citizen or retiree communities.

Unemployment Rate

You need to have a low unemployment level in your investment community. An unemployment rate that is lower than the national average is a good sign. When the city’s unemployment rate is lower than the state average, that is an indicator of a desirable financial market. If they want to acquire your rehabbed property, your potential clients have to have a job, and their clients as well.

Income Rates

Median household and per capita income are a solid sign of the scalability of the home-buying conditions in the city. Most families have to obtain financing to purchase real estate. To be approved for a home loan, a person can’t be using for a house payment a larger amount than a certain percentage of their income. The median income stats will show you if the area is preferable for your investment efforts. Scout for cities where salaries are improving. If you want to increase the asking price of your homes, you want to be positive that your clients’ salaries are also rising.

Number of New Jobs Created

The number of jobs created on a steady basis shows if wage and population growth are viable. Houses are more effortlessly liquidated in a region with a vibrant job environment. Experienced trained employees looking into purchasing a house and settling opt for moving to cities where they won’t be unemployed.

Hard Money Loan Rates

Those who buy, renovate, and sell investment real estate prefer to employ hard money and not conventional real estate financing. Doing this lets them complete lucrative ventures without hindrance. Find private money lenders for real estate in Cumberland County ME and contrast their mortgage rates.

In case you are inexperienced with this financing type, understand more by studying our guide — Hard Money Loans Guide for Real Estate Investors.

In real estate wholesaling, you find a house that real estate investors may consider a profitable deal and sign a sale and purchase agreement to buy the property. When an investor who wants the property is found, the sale and purchase agreement is assigned to them for a fee. The real estate investor then completes the acquisition. You are selling the rights to the purchase contract, not the home itself.

This method requires using a title company that’s knowledgeable about the wholesale contract assignment procedure and is qualified and inclined to handle double close purchases. Find title companies for real estate investors in Cumberland County ME in our directory.

Our in-depth guide to wholesaling can be read here: A-to-Z Guide to Property Wholesaling. When pursuing this investment tactic, place your company in our list of the best real estate wholesalers in Cumberland County ME. This will allow any potential customers to discover you and reach out.

Factors to Consider

Median Home Prices

Median home prices are instrumental to spotting places where properties are selling in your investors’ price point. An area that has a substantial pool of the below-market-value properties that your clients require will show a below-than-average median home purchase price.

Rapid weakening in real estate prices may result in a number of properties with no equity that appeal to short sale investors. Short sale wholesalers frequently reap perks from this opportunity. But, be cognizant of the legal liability. Obtain additional data on how to wholesale short sale real estate in our thorough article. When you’re prepared to begin wholesaling, hunt through Cumberland County top short sale attorneys as well as Cumberland County top-rated mortgage foreclosure attorneys directories to locate the best counselor.

Property Appreciation Rate

Property appreciation rate completes the median price stats. Investors who need to resell their properties later, like long-term rental landlords, want a location where residential property values are growing. Both long- and short-term investors will stay away from an area where residential prices are dropping.

Population Growth

Population growth figures are a predictor that real estate investors will analyze in greater detail. When they see that the community is multiplying, they will decide that new housing is needed. There are many individuals who lease and plenty of clients who purchase houses. If a location is losing people, it does not necessitate more residential units and real estate investors will not invest there.

Median Population Age

A dynamic housing market needs residents who are initially leasing, then moving into homebuyers, and then moving up in the residential market. For this to take place, there has to be a stable workforce of potential tenants and homebuyers. That is why the market’s median age needs to be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income show steady growth continuously in places that are ripe for investment. Income increment demonstrates a location that can absorb rental rate and home purchase price increases. Successful investors stay away from areas with unimpressive population salary growth numbers.

Unemployment Rate

Real estate investors whom you offer to close your contracts will deem unemployment levels to be a key bit of information. Late rent payments and default rates are higher in regions with high unemployment. This adversely affects long-term investors who want to rent their residential property. High unemployment creates concerns that will prevent interested investors from purchasing a house. This makes it challenging to reach fix and flip investors to buy your purchase agreements.

Number of New Jobs Created

The amount of jobs created per annum is a vital part of the housing picture. New jobs generated mean more employees who need places to rent and buy. Employment generation is helpful for both short-term and long-term real estate investors whom you count on to acquire your contracts.

Average Renovation Costs

Rehab costs have a large impact on a flipper’s profit. The purchase price, plus the costs of renovation, must amount to less than the After Repair Value (ARV) of the house to allow for profitability. Look for lower average renovation costs.

This strategy includes purchasing debt (mortgage note) from a lender at a discount. By doing this, the investor becomes the mortgage lender to the initial lender’s debtor.

Loans that are being repaid as agreed are called performing notes. Performing notes provide stable cash flow for investors. Note investors also buy non-performing mortgages that they either re-negotiate to help the debtor or foreclose on to acquire the collateral less than actual worth.

At some time, you may grow a mortgage note portfolio and find yourself needing time to handle your loans on your own. In this case, you can employ one of note servicing companies in Cumberland County ME that will basically convert your portfolio into passive income.

When you conclude that this model is a good fit for you, insert your business in our directory of Cumberland County top mortgage note buyers. Showing up on our list sets you in front of lenders who make desirable investment possibilities available to note buyers such as you.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a sign that the community has opportunities for performing note buyers. Non-performing note investors can carefully take advantage of places with high foreclosure rates too. The neighborhood needs to be strong enough so that note investors can complete foreclosure and get rid of collateral properties if called for.

Foreclosure Laws

It’s important for mortgage note investors to know the foreclosure laws in their state. Many states utilize mortgage paperwork and some use Deeds of Trust. You may have to receive the court’s okay to foreclose on a property. A Deed of Trust authorizes the lender to file a notice and start foreclosure.

Mortgage Interest Rates

Purchased mortgage loan notes have a negotiated interest rate. This is a big component in the returns that lenders earn. Regardless of which kind of mortgage note investor you are, the note’s interest rate will be important for your estimates.

Conventional lenders price dissimilar mortgage interest rates in different parts of the country. Private loan rates can be slightly more than conventional loan rates due to the more significant risk dealt with by private mortgage lenders.

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

Demographics

If note investors are determining where to purchase notes, they’ll consider the demographic data from likely markets. The neighborhood’s population growth, unemployment rate, employment market growth, wage standards, and even its median age hold valuable facts for note buyers.
Mortgage note investors who like performing mortgage notes look for areas where a large number of younger residents hold good-paying jobs.

Investors who look for non-performing mortgage notes can also take advantage of growing markets. A strong regional economy is prescribed if they are to locate homebuyers for properties they’ve foreclosed on.

Property Values

Note holders like to find as much home equity in the collateral as possible. This increases the likelihood that a potential foreclosure auction will repay the amount owed. As loan payments reduce the balance owed, and the value of the property appreciates, the borrower’s equity increases.

Property Taxes

Escrows for property taxes are normally paid to the mortgage lender along with the mortgage loan payment. That way, the lender makes certain that the taxes are paid when due. If loan payments are not current, the mortgage lender will have to either pay the taxes themselves, or the property taxes become past due. Property tax liens go ahead of all other liens.

If an area has a history of growing property tax rates, the combined home payments in that region are constantly expanding. Delinquent clients might not be able to keep paying increasing payments and might interrupt making payments altogether.

Real Estate Market Strength

A city with appreciating property values promises excellent potential for any note investor. They can be assured that, when need be, a defaulted property can be liquidated for an amount that makes a profit.

Note investors additionally have an opportunity to make mortgage notes directly to borrowers in consistent real estate areas. This is a desirable source of revenue for experienced investors.

A trust investing in income-generating real estate and that sells shares to investors is a REIT — Real Estate Investment Trust. Before REITs existed, investing in properties used to be too costly for the majority of investors. Shares in REITs are affordable to the majority of people.

Shareholders’ investment in a REIT classifies as passive investing. Investment risk is spread across a portfolio of real estate. Shareholders have the option to unload their shares at any moment. However, REIT investors do not have the option to select particular properties or markets. Their investment is confined to the assets chosen by their REIT.

Mutual funds that contain shares of real estate firms are called real estate investment funds. The fund doesn’t own properties — it holds interest in real estate businesses. Investment funds may be a cost-effective way to combine real estate in your allocation of assets without needless exposure. Where REITs are meant to disburse dividends to its participants, funds do not. The value of a fund to someone is the projected appreciation of the price of the fund’s shares.

You may select a fund that focuses on a targeted type of real estate you are familiar with, but you do not get to choose the location of every real estate investment. As passive investors, fund shareholders are satisfied to allow the management team of the fund handle all investment determinations.