Ultimate Cummings Real Estate Investing Guide for 2024

BRRRR is an abbreviation of “Buy, Rehab, Rent, Refinance, Repeat”. This is a plan to grow your investment portfolio rather than own one rental home. This strategy depends on your ability to extract money out when you refinance.

You add to the worth of the asset beyond what you spent purchasing and fixing the asset. The house is refinanced using the ARV and the balance, or equity, is given to you in cash. You purchase your next asset with the cash-out capital and start anew. This plan allows you to steadily enhance your portfolio and your investment income.

After you’ve built a large portfolio of income creating assets, you may choose to hire others to manage all operations while you enjoy recurring net revenues. Discover Cummings investment property management firms when you look through our list of experts.

Factors to Consider

Population Growth

The growth or deterioration of a community’s population is a good benchmark of the market’s long-term attractiveness for lease property investors. An increasing population often signals ongoing relocation which equals additional tenants. Relocating companies are drawn to rising areas giving reliable jobs to families who relocate there. An expanding population builds a certain foundation of tenants who will keep up with rent bumps, and an active seller’s market if you need to liquidate your properties.

Property Taxes

Real estate taxes, just like insurance and maintenance spendings, may vary from market to market and must be considered carefully when estimating potential returns. Investment property located in high property tax areas will provide less desirable returns. If property tax rates are unreasonable in a specific area, you will prefer to look in a different location.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property prices and median rental rates that will show you how much rent the market can tolerate. If median home values are steep and median rents are weak — a high p/r, it will take longer for an investment to repay your costs and reach good returns. A high price-to-rent ratio tells you that you can demand modest rent in that market, a small one tells you that you can collect more.

Median Gross Rents

Median gross rents let you see whether a community’s rental market is strong. You need to identify a community with regular median rent increases. You will not be able to achieve your investment targets in a market where median gross rents are declining.

Median Population Age

Median population age in a dependable long-term investment environment must show the normal worker’s age. If people are moving into the area, the median age will have no problem remaining in the range of the employment base. A high median age signals that the existing population is retiring without being replaced by younger workers migrating in. A vibrant economy cannot be bolstered by aged, non-working residents.

Employment Base Diversity

A diverse employment base is something a smart long-term investor landlord will search for. If there are only one or two major hiring companies, and one of them moves or closes shop, it will make you lose paying customers and your property market rates to plunge.

Unemployment Rate

It is difficult to achieve a stable rental market if there is high unemployment. Out-of-work residents stop being customers of yours and of other businesses, which produces a domino effect throughout the region. Workers who still keep their workplaces can discover their hours and incomes reduced. Existing tenants could delay their rent payments in these conditions.

Income Rates

Median household and per capita income information is a helpful indicator to help you navigate the communities where the tenants you are looking for are residing. Your investment budget will include rent and property appreciation, which will be based on income augmentation in the area.

Number of New Jobs Created

The more jobs are regularly being provided in a market, the more dependable your renter inflow will be. A market that produces jobs also boosts the number of participants in the real estate market. Your objective of renting and acquiring additional assets requires an economy that will develop more jobs.

School Ratings

Local schools will make a major impact on the housing market in their area. Well-ranked schools are a necessity for employers that are thinking about relocating. Moving businesses relocate and draw prospective renters. Property prices benefit with new workers who are purchasing properties. For long-term investing, be on the lookout for highly ranked schools in a prospective investment market.

Property Appreciation Rates

The essence of a long-term investment plan is to hold the investment property. You have to see that the odds of your asset raising in value in that city are strong. You do not want to take any time examining cities showing unsatisfactory property appreciation rates.

Residential properties where tenants live in furnished accommodations for less than four weeks are referred to as short-term rentals. Long-term rental units, like apartments, impose lower rent per night than short-term rentals. Short-term rental properties could need more constant repairs and sanitation.

Short-term rentals are used by clients travelling for work who are in the city for a few nights, those who are relocating and need transient housing, and people on vacation. Ordinary property owners can rent their houses or condominiums on a short-term basis using platforms like AirBnB and VRBO. Short-term rentals are considered a good technique to start investing in real estate.

Vacation rental landlords require working one-on-one with the occupants to a larger degree than the owners of longer term rented properties. This results in the investor having to frequently manage protests. You might want to protect your legal exposure by hiring one of the best Cummings law firms for real estate.

Factors to Consider

Short-Term Rental Income

You have to calculate the range of rental revenue you’re targeting based on your investment budget. Learning about the typical amount of rental fees in the area for short-term rentals will help you pick a good community to invest.

Median Property Prices

Thoroughly calculate the amount that you can spend on new investment properties. To find out if a market has potential for investment, look at the median property prices. You can narrow your area survey by looking at the median price in specific sub-markets.

Price Per Square Foot

Price per square foot can be impacted even by the look and floor plan of residential units. If you are looking at similar kinds of property, like condos or individual single-family homes, the price per square foot is more consistent. It can be a quick way to compare multiple neighborhoods or properties.

Short-Term Rental Occupancy Rate

The demand for more rentals in a city can be seen by studying the short-term rental occupancy level. A market that demands additional rental units will have a high occupancy rate. If landlords in the community are having issues filling their existing units, you will have difficulty renting yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a way to estimate the profitability of an investment. Take your expected Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The percentage you get is your cash-on-cash return. When an investment is lucrative enough to repay the investment budget quickly, you’ll receive a high percentage. When you get financing for part of the investment and put in less of your own cash, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) levels are generally employed by real estate investors to estimate the market value of rental units. An income-generating asset that has a high cap rate as well as charging typical market rents has a high value. When cap rates are low, you can assume to pay more money for real estate in that location. The cap rate is determined by dividing the Net Operating Income (NOI) by the price or market worth. The answer is the yearly return in a percentage.

Local Attractions

Important festivals and entertainment attractions will draw vacationers who want short-term housing. People visit specific cities to attend academic and sporting events at colleges and universities, be entertained by professional sports, cheer for their kids as they compete in kiddie sports, party at yearly carnivals, and stop by theme parks. At particular occasions, regions with outdoor activities in the mountains, seaside locations, or along rivers and lakes will bring in large numbers of tourists who need short-term housing.

When a real estate investor purchases a house cheaper than its market worth, renovates it so that it becomes more valuable, and then sells the home for a profit, they are known as a fix and flip investor. To keep the business profitable, the investor must pay less than the market worth for the property and compute the amount it will take to renovate it.

You also want to know the real estate market where the house is situated. Select a region that has a low average Days On Market (DOM) indicator. To successfully “flip” real estate, you must dispose of the repaired house before you have to put out capital to maintain it.

To help distressed property sellers find you, place your firm in our catalogues of property cash buyers in Cummings KS and property investors in Cummings KS.

Additionally, work with Cummings bird dogs for real estate investors. These professionals specialize in quickly locating lucrative investment opportunities before they are listed on the marketplace.

Factors to Consider

Median Home Price

The area’s median housing price could help you locate a desirable neighborhood for flipping houses. When values are high, there may not be a steady reserve of fixer-upper residential units available. This is a fundamental element of a fix and flip market.

If your examination indicates a rapid decrease in real property values, it may be a sign that you’ll uncover real estate that meets the short sale criteria. You can receive notifications concerning these possibilities by working with short sale processors in Cummings KS. Discover more about this type of investment described by our guide How to Buy a House as a Short Sale.

Property Appreciation Rate

The movements in real estate values in a region are very important. You’re eyeing for a constant growth of the area’s property values. Housing market values in the market should be growing constantly, not suddenly. When you’re acquiring and selling swiftly, an uncertain market can sabotage your investment.

Average Renovation Costs

You’ll want to evaluate building costs in any potential investment region. The manner in which the local government goes about approving your plans will have an effect on your venture too. If you have to present a stamped suite of plans, you will need to include architect’s rates in your costs.

Population Growth

Population increase metrics allow you to take a look at housing demand in the city. If the population is not expanding, there isn’t going to be an ample supply of purchasers for your houses.

Median Population Age

The median citizens’ age is a clear sign of the accessibility of desirable homebuyers. The median age better not be lower or higher than that of the usual worker. People in the local workforce are the most stable home buyers. Older individuals are planning to downsize, or relocate into senior-citizen or assisted living communities.

Unemployment Rate

When you run across a community with a low unemployment rate, it’s a strong evidence of good investment opportunities. The unemployment rate in a future investment location needs to be lower than the national average. When it’s also lower than the state average, it’s even better. Without a robust employment environment, a city won’t be able to supply you with abundant homebuyers.

Income Rates

The citizens’ wage statistics tell you if the region’s economy is scalable. When home buyers acquire a home, they normally have to obtain financing for the home purchase. Their salary will dictate how much they can afford and if they can buy a home. You can figure out from the city’s median income if many people in the community can afford to purchase your real estate. Particularly, income growth is vital if you want to expand your investment business. To keep up with inflation and rising construction and supply expenses, you need to be able to periodically adjust your purchase prices.

Number of New Jobs Created

The number of jobs created on a steady basis shows whether wage and population increase are viable. Homes are more effortlessly sold in an area that has a vibrant job environment. With a higher number of jobs generated, new potential homebuyers also relocate to the city from other districts.

Hard Money Loan Rates

People who buy, rehab, and liquidate investment properties are known to engage hard money instead of regular real estate loans. Hard money loans allow these buyers to move forward on hot investment opportunities without delay. Locate top hard money lenders for real estate investors in Cummings KS so you can review their charges.

If you are unfamiliar with this loan vehicle, discover more by studying our article — Hard Money Loans Guide for Real Estate Investors.

As a real estate wholesaler, you sign a purchase contract to buy a residential property that some other real estate investors might need. A real estate investor then ”purchases” the purchase contract from you. The investor then settles the transaction. You’re selling the rights to the contract, not the house itself.

The wholesaling mode of investing involves the use of a title insurance company that comprehends wholesale transactions and is savvy about and involved in double close transactions. Discover title services for real estate investors in Cummings KS in our directory.

Our complete guide to wholesaling can be viewed here: Ultimate Guide to Wholesaling Real Estate. When following this investment method, add your business in our list of the best property wholesalers in Cummings KS. This way your prospective customers will see your availability and reach out to you.

Factors to Consider

Median Home Prices

Median home prices in the region will show you if your preferred purchase price point is viable in that city. A community that has a good source of the reduced-value investment properties that your customers need will show a lower median home price.

Accelerated weakening in real estate market values could result in a supply of houses with no equity that appeal to short sale property buyers. Short sale wholesalers frequently receive perks from this opportunity. Nonetheless, there may be liabilities as well. Learn more regarding wholesaling short sale properties with our exhaustive guide. Once you’re ready to begin wholesaling, hunt through Cummings top short sale attorneys as well as Cummings top-rated foreclosure attorneys lists to locate the appropriate advisor.

Property Appreciation Rate

Median home price dynamics are also critical. Investors who plan to liquidate their investment properties anytime soon, such as long-term rental investors, need a location where residential property prices are going up. Decreasing market values illustrate an equivalently poor leasing and home-selling market and will chase away real estate investors.

Population Growth

Population growth information is an indicator that investors will analyze carefully. A growing population will have to have additional housing. This involves both leased and ‘for sale’ properties. If a population is not expanding, it doesn’t require more housing and investors will search elsewhere.

Median Population Age

A vibrant housing market necessitates people who are initially leasing, then transitioning into homeownership, and then buying up in the housing market. A city that has a big workforce has a consistent pool of renters and purchasers. When the median population age mirrors the age of employed people, it demonstrates a robust property market.

Income Rates

The median household and per capita income in a good real estate investment market need to be going up. Surges in lease and listing prices will be backed up by improving wages in the region. Investors have to have this in order to reach their expected profitability.

Unemployment Rate

Investors will thoroughly estimate the area’s unemployment rate. Tenants in high unemployment areas have a hard time making timely rent payments and some of them will stop making payments completely. Long-term real estate investors will not take a house in an area like that. Tenants can’t level up to ownership and existing owners cannot sell their property and go up to a more expensive residence. Short-term investors won’t risk being cornered with a property they can’t sell quickly.

Number of New Jobs Created

The number of jobs produced annually is an essential part of the residential real estate framework. New jobs generated result in a large number of employees who look for houses to lease and purchase. This is helpful for both short-term and long-term real estate investors whom you depend on to acquire your contracts.

Average Renovation Costs

Renovation spendings will be critical to many real estate investors, as they usually acquire low-cost rundown homes to rehab. When a short-term investor renovates a building, they need to be able to dispose of it for a higher price than the whole expense for the purchase and the upgrades. The less expensive it is to renovate a house, the more attractive the place is for your potential contract clients.

Note investment professionals buy a loan from lenders if they can obtain the note for less than the balance owed. The debtor makes future loan payments to the mortgage note investor who is now their new lender.

When a loan is being repaid on time, it’s considered a performing note. Performing loans earn you monthly passive income. Non-performing notes can be re-negotiated or you may acquire the collateral at a discount by initiating a foreclosure procedure.

Someday, you might produce a group of mortgage note investments and be unable to handle the portfolio alone. In this event, you can opt to employ one of mortgage loan servicing companies in Cummings KS that will basically convert your portfolio into passive cash flow.

If you decide to pursue this plan, affix your venture to our list of mortgage note buying companies in Cummings KS. Appearing on our list places you in front of lenders who make lucrative investment possibilities available to note buyers such as you.

Factors to Consider

Foreclosure Rates

Performing loan purchasers seek regions that have low foreclosure rates. If the foreclosure rates are high, the area may still be good for non-performing note investors. If high foreclosure rates are causing an underperforming real estate market, it might be tough to get rid of the collateral property after you foreclose on it.

Foreclosure Laws

Professional mortgage note investors are completely well-versed in their state’s regulations regarding foreclosure. They will know if the law dictates mortgages or Deeds of Trust. A mortgage dictates that the lender goes to court for permission to start foreclosure. Note owners don’t need the judge’s approval with a Deed of Trust.

Mortgage Interest Rates

The mortgage interest rate is set in the mortgage loan notes that are purchased by investors. That rate will significantly impact your profitability. Mortgage interest rates are important to both performing and non-performing note buyers.

The mortgage rates charged by traditional mortgage lenders aren’t the same in every market. Private loan rates can be a little more than traditional interest rates because of the greater risk dealt with by private mortgage lenders.

Mortgage note investors ought to consistently know the prevailing local interest rates, private and conventional, in possible mortgage note investment markets.

Demographics

A market’s demographics trends assist note investors to target their work and properly distribute their resources. Note investors can discover a lot by reviewing the extent of the populace, how many people are employed, the amount they make, and how old the residents are.
Mortgage note investors who like performing notes search for places where a high percentage of younger residents hold good-paying jobs.

Note investors who purchase non-performing mortgage notes can also make use of vibrant markets. If non-performing mortgage note investors need to foreclose, they’ll have to have a strong real estate market to sell the REO property.

Property Values

As a note investor, you will try to find deals having a cushion of equity. This enhances the possibility that a possible foreclosure liquidation will make the lender whole. The combination of loan payments that lower the loan balance and annual property value appreciation raises home equity.

Property Taxes

Usually homeowners pay property taxes to lenders in monthly installments along with their mortgage loan payments. So the mortgage lender makes sure that the real estate taxes are taken care of when payable. The lender will need to compensate if the payments cease or they risk tax liens on the property. Tax liens leapfrog over all other liens.

If property taxes keep increasing, the borrowers’ mortgage payments also keep rising. This makes it complicated for financially strapped homeowners to meet their obligations, so the mortgage loan might become delinquent.

Real Estate Market Strength

A stable real estate market having consistent value appreciation is good for all kinds of note buyers. Since foreclosure is a critical component of mortgage note investment strategy, growing real estate values are crucial to locating a good investment market.

Mortgage note investors also have a chance to create mortgage notes directly to borrowers in stable real estate communities. This is a desirable stream of revenue for successful investors.

A REIT, or Real Estate Investment Trust, is a business that makes investments in income-generating properties. This was originally invented as a way to empower the regular person to invest in real property. Most investors these days are able to invest in a REIT.

Shareholders in such organizations are completely passive investors. Investment exposure is spread throughout a group of investment properties. Investors can unload their REIT shares anytime they choose. Something you cannot do with REIT shares is to choose the investment assets. You are confined to the REIT’s collection of assets for investment.

Mutual funds containing shares of real estate firms are referred to as real estate investment funds. The investment properties aren’t held by the fund — they are possessed by the firms in which the fund invests. Investment funds are considered an inexpensive method to include real estate in your allotment of assets without unnecessary risks. Whereas REITs are meant to disburse dividends to its participants, funds do not. The value of a fund to someone is the expected growth of the price of the fund’s shares.

You may choose a fund that concentrates on a predetermined kind of real estate you are expert in, but you don’t get to determine the market of each real estate investment. As passive investors, fund members are glad to allow the administration of the fund determine all investment choices.