Ultimate Cumberland Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. BRRRR is a plan for consistent growth. This strategy hinges on your ability to extract cash out when you refinance.

You improve the worth of the investment asset above what you spent purchasing and renovating it. Then you take the equity you created from the investment property in a “cash-out” refinance. You use that cash to get an additional rental and the operation starts again. You add appreciating investment assets to your balance sheet and rental income to your cash flow.

When your investment property collection is large enough, you may contract out its oversight and get passive income. Locate top Cumberland property management companies by browsing our list.

Factors to Consider

Population Growth

The increase or fall of an area’s population is an accurate gauge of the region’s long-term desirability for lease property investors. An increasing population often signals vibrant relocation which translates to additional tenants. Moving businesses are attracted to rising markets giving secure jobs to households who move there. Growing populations develop a reliable tenant mix that can keep up with rent growth and home purchasers who assist in keeping your asset prices high.

Property Taxes

Real estate taxes, maintenance, and insurance expenses are considered by long-term lease investors for determining costs to predict if and how the investment will pay off. Investment property located in excessive property tax locations will bring weaker profits. If property tax rates are excessive in a given location, you will want to look elsewhere.

Price to Rent Ratio

Price to rent ratio (p/r) is a market indicator that tells you how much you can plan to collect for rent. If median home prices are strong and median rents are small — a high p/r — it will take longer for an investment to recoup your costs and achieve good returns. You want to discover a lower p/r to be comfortable that you can establish your rental rates high enough to reach good returns.

Median Gross Rents

Median gross rents are a true benchmark of the approval of a rental market under discussion. Look for a stable increase in median rents year over year. Dropping rents are an alert to long-term rental investors.

Median Population Age

The median population age that you are on the hunt for in a vibrant investment market will be similar to the age of working adults. You will learn this to be accurate in communities where workers are relocating. When working-age people aren’t venturing into the city to succeed retirees, the median age will go higher. This is not good for the future economy of that region.

Employment Base Diversity

A varied employment base is something a wise long-term rental property owner will look for. If there are only a couple dominant hiring companies, and one of them moves or closes shop, it can cause you to lose paying customers and your real estate market prices to drop.

Unemployment Rate

It’s hard to maintain a secure rental market if there is high unemployment. Non-working individuals can’t pay for products or services. People who continue to have workplaces can discover their hours and salaries decreased. Even renters who are employed may find it challenging to keep up with their rent.

Income Rates

Median household and per capita income data is a useful indicator to help you discover the places where the renters you need are living. Increasing incomes also show you that rental fees can be increased throughout the life of the asset.

Number of New Jobs Created

An expanding job market translates into a constant source of renters. A higher number of jobs mean new tenants. Your objective of renting and purchasing more assets requires an economy that can produce enough jobs.

School Ratings

Community schools can have a significant impact on the property market in their locality. Well-respected schools are a requirement of business owners that are thinking about relocating. Relocating employers bring and draw prospective tenants. Homebuyers who move to the area have a good impact on housing values. For long-term investing, look for highly accredited schools in a prospective investment location.

Property Appreciation Rates

The foundation of a long-term investment method is to keep the asset. Investing in assets that you aim to maintain without being confident that they will appreciate in market worth is a formula for disaster. You don’t want to spend any time surveying cities that have substandard property appreciation rates.

A short-term rental is a furnished apartment or house where a renter stays for shorter than a month. Short-term rentals charge more rent each night than in long-term rental properties. Because of the high rotation of occupants, short-term rentals require additional frequent care and sanitation.

Typical short-term renters are holidaymakers, home sellers who are buying another house, and people on a business trip who want more than hotel accommodation. Any homeowner can convert their home into a short-term rental with the assistance given by virtual home-sharing websites like VRBO and AirBnB. Short-term rentals are viewed to be a good method to start investing in real estate.

Short-term rental units involve interacting with occupants more often than long-term rental units. As a result, investors handle problems regularly. You might need to cover your legal bases by hiring one of the top Cumberland investor friendly real estate attorneys.

Factors to Consider

Short-Term Rental Income

First, compute how much rental income you must have to meet your estimated return. Understanding the standard amount of rent being charged in the market for short-term rentals will help you select a good community to invest.

Median Property Prices

When acquiring investment housing for short-term rentals, you must determine how much you can pay. To check if a market has opportunities for investment, investigate the median property prices. You can also use median prices in localized neighborhoods within the market to select cities for investment.

Price Per Square Foot

Price per square foot gives a basic idea of values when considering similar real estate. A house with open entryways and vaulted ceilings can’t be compared with a traditional-style residential unit with more floor space. Price per sq ft may be a quick way to compare several sub-markets or homes.

Short-Term Rental Occupancy Rate

The percentage of short-term rental units that are currently tenanted in a location is critical data for a future rental property owner. A high occupancy rate indicates that a new supply of short-term rentals is required. If investors in the area are having issues renting their current properties, you will have difficulty filling yours.

Short-Term Rental Cash-on-Cash Return

To understand whether it’s a good idea to put your cash in a specific rental unit or community, look at the cash-on-cash return. You can compute the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash investment. The result is a percentage. If an investment is high-paying enough to reclaim the capital spent soon, you’ll get a high percentage. When you borrow part of the investment budget and spend less of your cash, you will see a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion shows the comparability of investment property worth to its per-annum return. Basically, the less money an investment asset costs (or is worth), the higher the cap rate will be. Low cap rates show higher-priced real estate. Divide your expected Net Operating Income (NOI) by the property’s value or listing price. This gives you a percentage that is the annual return, or cap rate.

Local Attractions

Short-term renters are often people who visit a region to attend a yearly important event or visit tourist destinations. Individuals go to specific locations to attend academic and sporting events at colleges and universities, be entertained by professional sports, cheer for their kids as they participate in kiddie sports, have fun at yearly fairs, and go to theme parks. Popular vacation sites are located in mountainous and coastal points, near rivers, and national or state nature reserves.

The fix and flip strategy involves buying a home that demands improvements or restoration, generating additional value by upgrading the property, and then reselling it for a higher market price. Your evaluation of renovation spendings has to be correct, and you should be able to purchase the home for lower than market price.

It’s crucial for you to be aware of the rates properties are being sold for in the city. Look for a community with a low average Days On Market (DOM) indicator. As a “house flipper”, you’ll need to liquidate the renovated property without delay so you can eliminate carrying ongoing costs that will lower your profits.

In order that real property owners who have to sell their home can easily find you, showcase your status by utilizing our list of the best cash home buyers in Cumberland ME along with top real estate investors in Cumberland ME.

Additionally, search for top bird dogs for real estate investors in Cumberland ME. These professionals specialize in skillfully uncovering promising investment prospects before they hit the marketplace.

Factors to Consider

Median Home Price

When you hunt for a profitable area for house flipping, look into the median housing price in the district. You are searching for median prices that are low enough to reveal investment opportunities in the community. This is a vital component of a cost-effective investment.

When market data shows a sudden decrease in real estate market values, this can indicate the accessibility of possible short sale houses. Real estate investors who team with short sale facilitators in Cumberland ME receive continual notices regarding potential investment real estate. Learn more regarding this type of investment explained in our guide How to Buy a Home on Short Sale.

Property Appreciation Rate

Are home values in the community moving up, or on the way down? Steady upward movement in median prices reveals a strong investment environment. Speedy market worth growth may show a value bubble that is not sustainable. When you’re buying and liquidating rapidly, an unstable market can sabotage your investment.

Average Renovation Costs

Look carefully at the potential rehab expenses so you will find out if you can achieve your goals. The way that the local government processes your application will have an effect on your project as well. To draft a detailed financial strategy, you’ll need to understand whether your plans will have to use an architect or engineer.

Population Growth

Population statistics will inform you whether there is steady demand for residential properties that you can supply. Flat or negative population growth is an indicator of a weak market with not enough purchasers to validate your effort.

Median Population Age

The median citizens’ age is a direct indicator of the supply of desirable homebuyers. The median age in the region should equal the one of the typical worker. A high number of such people shows a substantial pool of homebuyers. The needs of retirees will most likely not be a part of your investment venture strategy.

Unemployment Rate

If you see a region that has a low unemployment rate, it’s a good indicator of good investment possibilities. It must definitely be less than the US average. If it is also lower than the state average, that is even better. If you don’t have a dynamic employment environment, a region cannot supply you with enough home purchasers.

Income Rates

The population’s wage stats can brief you if the local financial environment is stable. When property hunters buy a home, they usually have to take a mortgage for the home purchase. Homebuyers’ ability to qualify for a mortgage relies on the level of their wages. Median income will let you analyze if the standard homebuyer can buy the houses you plan to put up for sale. Particularly, income increase is crucial if you plan to grow your investment business. Building costs and housing prices increase periodically, and you want to know that your target clients’ salaries will also get higher.

Number of New Jobs Created

The number of jobs created each year is useful information as you consider investing in a particular location. An increasing job market means that a larger number of prospective home buyers are amenable to buying a home there. New jobs also lure people arriving to the area from other places, which further revitalizes the real estate market.

Hard Money Loan Rates

Fix-and-flip real estate investors regularly borrow hard money loans in place of typical financing. Hard money funds allow these buyers to pull the trigger on current investment opportunities without delay. Look up Cumberland hard money loan companies and compare lenders’ costs.

Investors who aren’t experienced regarding hard money financing can discover what they should know with our article for newbie investors — How Hard Money Loans Work.

As a real estate wholesaler, you enter a sale and purchase agreement to purchase a home that some other real estate investors will want. When a real estate investor who approves of the property is found, the sale and purchase agreement is assigned to them for a fee. The owner sells the home to the investor not the real estate wholesaler. The real estate wholesaler doesn’t sell the property under contract itself — they just sell the purchase agreement.

This method requires employing a title company that’s knowledgeable about the wholesale contract assignment procedure and is qualified and predisposed to handle double close transactions. Search for title companies for wholesalers in Cumberland ME in HouseCashin’s list.

To understand how wholesaling works, study our informative article What Is Wholesaling in Real Estate Investing?. As you choose wholesaling, include your investment business on our list of the best wholesale real estate companies in Cumberland ME. That way your desirable customers will see your offering and contact you.

Factors to Consider

Median Home Prices

Median home prices are essential to locating communities where homes are selling in your real estate investors’ purchase price level. Since real estate investors prefer properties that are on sale for less than market value, you will have to see reduced median purchase prices as an implied hint on the possible source of properties that you may buy for lower than market price.

A fast drop in the market value of real estate may cause the swift availability of houses with more debt than value that are wanted by wholesalers. This investment plan often delivers multiple different advantages. Nonetheless, be aware of the legal liability. Learn about this from our in-depth blog post Can You Wholesale a Short Sale?. When you are ready to begin wholesaling, look through Cumberland top short sale law firms as well as Cumberland top-rated property foreclosure attorneys lists to find the appropriate advisor.

Property Appreciation Rate

Median home value fluctuations clearly illustrate the home value picture. Some investors, such as buy and hold and long-term rental landlords, particularly want to see that residential property prices in the community are going up consistently. A weakening median home price will illustrate a vulnerable leasing and housing market and will turn off all kinds of real estate investors.

Population Growth

Population growth figures are an indicator that real estate investors will consider thoroughly. If the population is growing, additional residential units are needed. There are a lot of individuals who rent and more than enough clients who purchase homes. A community with a dropping community does not attract the real estate investors you want to purchase your contracts.

Median Population Age

Real estate investors need to participate in a dependable housing market where there is a substantial source of renters, newbie homebuyers, and upwardly mobile locals switching to larger houses. To allow this to be possible, there has to be a solid employment market of potential renters and homeowners. That’s why the city’s median age needs to be the age of skilled workers in the employment market.

Income Rates

The median household and per capita income display steady improvement continuously in locations that are favorable for investment. Income improvement proves a community that can deal with rental rate and home purchase price increases. Investors want this if they are to meet their projected profits.

Unemployment Rate

Real estate investors whom you approach to take on your sale contracts will deem unemployment stats to be a significant piece of information. Renters in high unemployment areas have a hard time staying current with rent and a lot of them will skip payments entirely. Long-term real estate investors will not buy a home in a place like this. Investors can’t count on tenants moving up into their homes when unemployment rates are high. Short-term investors won’t take a chance on getting cornered with real estate they cannot resell fast.

Number of New Jobs Created

Knowing how soon additional employment opportunities are produced in the market can help you determine if the real estate is located in a good housing market. Job formation means additional employees who need a place to live. This is helpful for both short-term and long-term real estate investors whom you rely on to close your contracts.

Average Renovation Costs

An influential consideration for your client real estate investors, especially house flippers, are renovation costs in the market. Short-term investors, like fix and flippers, won’t reach profitability when the purchase price and the repair costs amount to a larger sum than the After Repair Value (ARV) of the home. The cheaper it is to update an asset, the better the city is for your future contract buyers.

Investing in mortgage notes (loans) works when the loan can be purchased for a lower amount than the remaining balance. The borrower makes subsequent payments to the mortgage note investor who has become their current mortgage lender.

When a mortgage loan is being repaid on time, it is thought of as a performing note. These notes are a steady generator of cash flow. Non-performing notes can be restructured or you can acquire the property at a discount by conducting foreclosure.

At some time, you could accrue a mortgage note collection and notice you are needing time to service your loans on your own. In this case, you can opt to enlist one of note servicing companies in Cumberland ME that would essentially convert your investment into passive cash flow.

If you determine that this model is a good fit for you, put your company in our list of Cumberland top mortgage note buying companies. Joining will make your business more visible to lenders providing desirable opportunities to note investors like you.

Factors to Consider

Foreclosure Rates

Low foreclosure rates are an indication that the area has investment possibilities for performing note investors. Non-performing loan investors can carefully make use of locations with high foreclosure rates too. However, foreclosure rates that are high often signal a weak real estate market where selling a foreclosed house would be a no easy task.

Foreclosure Laws

It is imperative for note investors to understand the foreclosure laws in their state. They’ll know if their state dictates mortgage documents or Deeds of Trust. A mortgage requires that you go to court for approval to foreclose. You simply have to file a notice and start foreclosure steps if you’re using a Deed of Trust.

Mortgage Interest Rates

Mortgage note investors inherit the interest rate of the mortgage loan notes that they buy. That interest rate will significantly impact your returns. Mortgage interest rates are critical to both performing and non-performing mortgage note investors.

Conventional lenders charge dissimilar interest rates in different regions of the US. The stronger risk assumed by private lenders is shown in higher loan interest rates for their mortgage loans compared to traditional mortgage loans.

A mortgage loan note buyer needs to know the private and conventional mortgage loan rates in their areas all the time.

Demographics

When note investors are determining where to invest, they’ll consider the demographic statistics from considered markets. Investors can interpret a lot by studying the extent of the populace, how many people are employed, what they earn, and how old the people are.
Performing note buyers want homeowners who will pay without delay, creating a stable revenue stream of loan payments.

Investors who buy non-performing notes can also take advantage of growing markets. If these note investors need to foreclose, they will require a vibrant real estate market to liquidate the REO property.

Property Values

As a note buyer, you must search for borrowers having a cushion of equity. This increases the chance that a potential foreclosure liquidation will make the lender whole. The combined effect of mortgage loan payments that reduce the loan balance and yearly property value growth raises home equity.

Property Taxes

Escrows for real estate taxes are most often paid to the lender along with the mortgage loan payment. When the taxes are payable, there needs to be sufficient money in escrow to handle them. If loan payments are not being made, the mortgage lender will have to either pay the property taxes themselves, or they become past due. If property taxes are past due, the government’s lien jumps over all other liens to the front of the line and is paid first.

If property taxes keep growing, the client’s house payments also keep rising. Homeowners who have difficulty handling their loan payments might fall farther behind and eventually default.

Real Estate Market Strength

Both performing and non-performing note buyers can do business in a growing real estate environment. The investors can be confident that, when necessary, a defaulted property can be sold at a price that is profitable.

A strong market could also be a profitable environment for initiating mortgage notes. This is a profitable stream of income for accomplished investors.

A REIT, or Real Estate Investment Trust, is a company that invests in income-producing real estate. This was first conceived as a way to enable the typical person to invest in real estate. Shares in REITs are economical to most people.

Shareholders’ investment in a REIT falls under passive investing. Investment liability is spread across a portfolio of properties. Shares in a REIT can be liquidated when it’s desirable for you. One thing you can’t do with REIT shares is to determine the investment assets. You are confined to the REIT’s collection of assets for investment.

Real estate investment funds are essentially mutual funds that focus on real estate firms, including REITs. Any actual property is possessed by the real estate companies, not the fund. These funds make it easier for more investors to invest in real estate properties. Whereas REITs have to distribute dividends to its shareholders, funds do not. The return to you is generated by increase in the worth of the stock.

Investors are able to pick a fund that concentrates on particular segments of the real estate industry but not particular markets for each real estate property investment. Your decision as an investor is to choose a fund that you believe in to supervise your real estate investments.