Ultimate Delaware County Real Estate Investing Guide for 2024

BRRRR means “Buy, Rehab, Rent, Refinance, Repeat”. BRRRR is a system for consistent growth. It is required that you are qualified to do a “cash-out” refinance loan for the method to work.

You enhance the worth of the investment asset beyond the amount you spent purchasing and rehabbing the property. The rental is refinanced using the ARV and the balance, or equity, is given to you in cash. This money is placed into a different investment property, and so on. This program helps you to consistently enhance your portfolio and your investment revenue.

After you have created a substantial group of income generating properties, you can prefer to hire someone else to manage your operations while you enjoy repeating net revenues. Find the best real estate management companies in Delaware County PA by browsing our list.

Factors to Consider

Population Growth

Population expansion or shrinking tells you if you can expect reliable returns from long-term property investments. If the population growth in a city is robust, then more tenants are likely moving into the community. Employers view this as an appealing place to move their enterprise, and for workers to move their families. Growing populations grow a strong renter pool that can keep up with rent bumps and home purchasers who help keep your investment property values up.

Property Taxes

Real estate taxes, just like insurance and upkeep costs, can be different from place to place and should be considered carefully when estimating potential returns. Unreasonable payments in these categories jeopardize your investment’s profitability. If property taxes are excessive in a specific city, you will need to look in another place.

Price to Rent Ratio

The price to rent ratio (p/r) is a signal of how high of a rent can be collected compared to the acquisition price of the investment property. The price you can collect in a region will affect the sum you are able to pay based on the number of years it will take to recoup those funds. A large price-to-rent ratio tells you that you can set less rent in that area, a lower one says that you can charge more.

Median Gross Rents

Median gross rents show whether a community’s lease market is robust. Look for a consistent expansion in median rents during a few years. If rental rates are shrinking, you can scratch that location from deliberation.

Median Population Age

Median population age in a strong long-term investment market should mirror the typical worker’s age. If people are migrating into the area, the median age will not have a problem staying at the level of the employment base. A high median age shows that the current population is leaving the workplace with no replacement by younger workers migrating in. That is a weak long-term financial picture.

Employment Base Diversity

A larger amount of enterprises in the community will boost your prospects for strong returns. If your renters are employed by a couple of dominant businesses, even a small disruption in their operations could cost you a lot of renters and raise your exposure tremendously.

Unemployment Rate

It’s impossible to achieve a reliable rental market when there are many unemployed residents in it. Non-working people stop being clients of yours and of other companies, which creates a domino effect throughout the city. Workers who continue to keep their workplaces may find their hours and salaries cut. This could cause delayed rents and defaults.

Income Rates

Median household and per capita income levels let you know if enough qualified renters dwell in that city. Improving wages also tell you that rental payments can be hiked throughout your ownership of the investment property.

Number of New Jobs Created

An increasing job market produces a constant stream of tenants. The workers who take the new jobs will need a place to live. This enables you to acquire additional rental assets and fill current vacant units.

School Ratings

School quality in the city will have a big influence on the local property market. Well-ranked schools are a requirement of employers that are thinking about relocating. Relocating companies relocate and draw potential tenants. Homebuyers who relocate to the area have a good influence on real estate values. You will not find a vibrantly soaring housing market without reputable schools.

Property Appreciation Rates

Property appreciation rates are an essential ingredient of your long-term investment plan. You have to make sure that your investment assets will grow in market value until you need to dispose of them. Inferior or shrinking property value in a community under evaluation is inadmissible.

A short-term rental is a furnished unit where a renter lives for less than a month. The nightly rental prices are typically higher in short-term rentals than in long-term units. Because of the increased number of renters, short-term rentals necessitate more regular care and sanitation.

Usual short-term renters are vacationers, home sellers who are in-between homes, and corporate travelers who need something better than hotel accommodation. Ordinary real estate owners can rent their houses or condominiums on a short-term basis through portals like AirBnB and VRBO. This makes short-term rentals an easy way to endeavor real estate investing.

Short-term rental owners necessitate interacting personally with the tenants to a larger extent than the owners of longer term rented properties. That determines that landlords handle disputes more frequently. You might need to cover your legal exposure by hiring one of the top Delaware County real estate lawyers.

Factors to Consider

Short-Term Rental Income

You need to figure out how much rental income has to be earned to make your effort pay itself off. Being aware of the usual rate of rental fees in the region for short-term rentals will allow you to select a good community to invest.

Median Property Prices

You also have to determine the budget you can manage to invest. Look for communities where the budget you prefer correlates with the present median property values. You can tailor your area survey by analyzing the median values in specific sub-markets.

Price Per Square Foot

Price per square foot gives a general idea of property prices when looking at similar units. If you are examining similar kinds of property, like condominiums or separate single-family residences, the price per square foot is more consistent. It may be a fast method to compare multiple sub-markets or residential units.

Short-Term Rental Occupancy Rate

The percentage of short-term rental properties that are presently rented in an area is vital knowledge for a rental unit buyer. A city that necessitates additional rental units will have a high occupancy level. Weak occupancy rates mean that there are more than enough short-term rental properties in that community.

Short-Term Rental Cash-on-Cash Return

To know whether it’s a good idea to invest your cash in a specific rental unit or location, evaluate the cash-on-cash return. Divide the Net Operating Income (NOI) by the amount of cash put in. The answer is a percentage. If a project is lucrative enough to recoup the investment budget quickly, you will receive a high percentage. Funded projects will have a stronger cash-on-cash return because you are using less of your funds.

Average Short-Term Rental Capitalization (Cap) Rates

Another measurement shows the value of an investment property as a return-yielding asset — average short-term rental capitalization (cap) rate. Usually, the less an investment property will cost (or is worth), the higher the cap rate will be. Low cap rates signify higher-priced real estate. Divide your estimated Net Operating Income (NOI) by the property’s market value or purchase price. This gives you a ratio that is the yearly return, or cap rate.

Local Attractions

Short-term tenants are often tourists who come to an area to enjoy a yearly important event or visit places of interest. People visit specific communities to enjoy academic and sporting events at colleges and universities, be entertained by professional sports, support their kids as they participate in fun events, have the time of their lives at annual fairs, and go to theme parks. Famous vacation spots are found in mountainous and coastal points, alongside lakes, and national or state parks.

When a property investor buys a house for less than the market value, renovates it so that it becomes more valuable, and then sells the property for a profit, they are called a fix and flip investor. To be successful, the investor needs to pay below market worth for the house and calculate what it will take to rehab it.

It’s a must for you to understand how much houses are being sold for in the area. You always have to investigate the amount of time it takes for properties to sell, which is illustrated by the Days on Market (DOM) metric. As a ”rehabber”, you will need to put up for sale the fixed-up property right away so you can avoid maintenance expenses that will reduce your profits.

Help compelled property owners in discovering your business by featuring it in our catalogue of Delaware County all cash home buyers and the best Delaware County real estate investment firms.

Additionally, look for property bird dogs in Delaware County PA. Experts on our list concentrate on procuring distressed property investment opportunities while they’re still off the market.

Factors to Consider

Median Home Price

When you hunt for a desirable region for house flipping, check the median house price in the neighborhood. You’re hunting for median prices that are low enough to suggest investment possibilities in the city. This is a basic element of a fix and flip market.

When your review indicates a sudden weakening in real property market worth, it could be a signal that you will uncover real estate that meets the short sale criteria. Real estate investors who work with short sale specialists in Delaware County PA receive continual notices about potential investment real estate. You will find more information about short sales in our article ⁠— What to Know About Buying a Short Sale Property?.

Property Appreciation Rate

The movements in real estate values in a region are vital. You are eyeing for a stable appreciation of the city’s real estate market values. Home values in the area should be growing consistently, not quickly. When you’re buying and liquidating fast, an unstable environment can harm your venture.

Average Renovation Costs

A thorough analysis of the area’s renovation expenses will make a significant influence on your area selection. The way that the local government goes about approving your plans will have an effect on your venture too. You need to understand whether you will be required to use other contractors, such as architects or engineers, so you can get ready for those costs.

Population Growth

Population statistics will inform you whether there is an expanding need for residential properties that you can provide. Flat or decelerating population growth is a sign of a poor environment with not a good amount of purchasers to justify your investment.

Median Population Age

The median residents’ age is a straightforward indicator of the availability of possible homebuyers. It mustn’t be less or more than that of the usual worker. Individuals in the local workforce are the most steady home buyers. People who are preparing to exit the workforce or have already retired have very specific housing needs.

Unemployment Rate

You need to have a low unemployment level in your considered market. An unemployment rate that is lower than the country’s median is preferred. A very strong investment location will have an unemployment rate lower than the state’s average. Jobless people can’t buy your houses.

Income Rates

Median household and per capita income are a reliable indication of the robustness of the housing conditions in the community. Most buyers need to borrow money to buy real estate. Home purchasers’ eligibility to qualify for a loan rests on the level of their salaries. The median income statistics tell you if the community is preferable for your investment project. Specifically, income growth is crucial if you want to grow your business. Building spendings and housing purchase prices go up over time, and you need to know that your prospective homebuyers’ wages will also climb up.

Number of New Jobs Created

The number of employment positions created on a continual basis tells if salary and population increase are feasible. More residents acquire houses if the region’s economy is creating jobs. Competent trained workers looking into purchasing a property and settling opt for migrating to cities where they will not be unemployed.

Hard Money Loan Rates

People who purchase, repair, and liquidate investment properties prefer to engage hard money instead of typical real estate funding. This lets investors to quickly pick up desirable real estate. Find real estate hard money lenders in Delaware County PA and estimate their rates.

Someone who wants to learn about hard money loans can discover what they are and the way to employ them by reviewing our resource for newbies titled How Do Hard Money Lenders Work?.

In real estate wholesaling, you locate a home that real estate investors would count as a good deal and sign a purchase contract to purchase the property. A real estate investor then “buys” the contract from you. The real estate investor then settles the transaction. The wholesaler doesn’t sell the residential property — they sell the contract to buy it.

The wholesaling mode of investing involves the use of a title insurance company that grasps wholesale transactions and is savvy about and involved in double close deals. Discover Delaware County title companies for real estate investors by reviewing our list.

To know how wholesaling works, study our informative article Complete Guide to Real Estate Wholesaling as an Investment Strategy. When using this investment strategy, add your firm in our list of the best house wholesalers in Delaware County PA. This will help any desirable customers to locate you and get in touch.

Factors to Consider

Median Home Prices

Median home prices in the city being assessed will immediately show you if your investors’ required real estate are located there. Low median values are a good indication that there are enough residential properties that might be bought below market worth, which real estate investors have to have.

A quick drop in the price of real estate may cause the accelerated availability of houses with owners owing more than market worth that are desired by wholesalers. This investment method often brings several uncommon perks. However, there may be challenges as well. Learn about this from our detailed article Can You Wholesale a Short Sale?. If you determine to give it a go, make sure you employ one of short sale real estate attorneys in Delaware County PA and mortgage foreclosure lawyers in Delaware County PA to consult with.

Property Appreciation Rate

Median home price trends are also vital. Investors who plan to maintain investment assets will want to discover that residential property values are consistently going up. Both long- and short-term investors will avoid a location where residential market values are going down.

Population Growth

Population growth stats are something that your future investors will be familiar with. When they realize the community is expanding, they will presume that more housing is needed. There are many people who rent and plenty of clients who buy homes. A location that has a shrinking population will not attract the real estate investors you require to purchase your contracts.

Median Population Age

Real estate investors want to work in a dependable property market where there is a good source of renters, newbie homebuyers, and upwardly mobile citizens switching to bigger residences. A place with a large workforce has a constant pool of tenants and purchasers. A city with these characteristics will have a median population age that is equivalent to the wage-earning adult’s age.

Income Rates

The median household and per capita income display steady improvement historically in regions that are favorable for investment. Income hike shows a market that can keep up with rent and housing purchase price raises. Experienced investors stay out of cities with poor population income growth stats.

Unemployment Rate

The area’s unemployment numbers are a critical aspect for any potential contracted house purchaser. Late rent payments and default rates are worse in cities with high unemployment. Long-term investors won’t acquire a home in a city like that. Real estate investors cannot rely on renters moving up into their homes when unemployment rates are high. Short-term investors will not take a chance on being cornered with a property they cannot resell immediately.

Number of New Jobs Created

The amount of jobs generated each year is a crucial component of the housing structure. Job generation suggests added employees who require a place to live. Long-term investors, like landlords, and short-term investors like flippers, are drawn to markets with impressive job production rates.

Average Renovation Costs

An imperative variable for your client investors, particularly fix and flippers, are renovation costs in the city. The purchase price, plus the costs of rehabbing, must be lower than the After Repair Value (ARV) of the property to allow for profit. Give preference to lower average renovation costs.

Note investment professionals buy debt from lenders when they can purchase the note for a lower price than the outstanding debt amount. When this happens, the note investor becomes the debtor’s lender.

When a mortgage loan is being repaid on time, it is thought of as a performing note. Performing notes earn stable revenue for investors. Some note investors buy non-performing loans because if he or she can’t satisfactorily re-negotiate the mortgage, they can always obtain the collateral property at foreclosure for a below market amount.

Eventually, you could have a large number of mortgage notes and have a hard time finding more time to manage them by yourself. In this event, you could hire one of third party loan servicing companies in Delaware County PA that would basically turn your portfolio into passive cash flow.

Should you determine that this strategy is ideal for you, insert your business in our list of Delaware County top real estate note buyers. When you do this, you will be discovered by the lenders who promote profitable investment notes for acquisition by investors like yourself.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a sign that the community has opportunities for performing note purchasers. Non-performing note investors can cautiously make use of locations with high foreclosure rates as well. The locale should be active enough so that note investors can foreclose and resell collateral properties if required.

Foreclosure Laws

Professional mortgage note investors are completely aware of their state’s laws for foreclosure. Are you faced with a mortgage or a Deed of Trust? A mortgage dictates that the lender goes to court for authority to start foreclosure. Note owners do not have to have the court’s approval with a Deed of Trust.

Mortgage Interest Rates

The interest rate is set in the mortgage notes that are purchased by investors. Your mortgage note investment return will be impacted by the mortgage interest rate. Mortgage interest rates are significant to both performing and non-performing mortgage note buyers.

The mortgage loan rates set by conventional lenders aren’t equal everywhere. Private loan rates can be a little higher than traditional loan rates due to the more significant risk taken by private lenders.

A mortgage note buyer needs to be aware of the private and conventional mortgage loan rates in their areas at any given time.

Demographics

A market’s demographics stats allow note buyers to streamline their efforts and properly distribute their resources. The market’s population growth, employment rate, job market growth, pay standards, and even its median age hold valuable facts for you.
Performing note buyers need borrowers who will pay as agreed, developing a repeating revenue source of loan payments.

Mortgage note investors who acquire non-performing notes can also take advantage of dynamic markets. A vibrant regional economy is needed if they are to find homebuyers for collateral properties they’ve foreclosed on.

Property Values

The more equity that a homebuyer has in their home, the better it is for their mortgage note owner. If the property value isn’t higher than the mortgage loan amount, and the lender decides to start foreclosure, the house might not realize enough to payoff the loan. Growing property values help increase the equity in the house as the borrower reduces the balance.

Property Taxes

Most borrowers pay real estate taxes via lenders in monthly portions along with their mortgage loan payments. The lender passes on the payments to the Government to make certain they are paid on time. The lender will have to make up the difference if the house payments stop or they risk tax liens on the property. Property tax liens go ahead of any other liens.

If property taxes keep going up, the client’s mortgage payments also keep going up. Borrowers who have a hard time handling their mortgage payments might drop farther behind and sooner or later default.

Real Estate Market Strength

Both performing and non-performing note buyers can do well in a good real estate market. They can be assured that, when need be, a foreclosed collateral can be unloaded for an amount that is profitable.

A strong real estate market can also be a potential community for originating mortgage notes. It’s a supplementary stage of a mortgage note buyer’s career.

A REIT, or Real Estate Investment Trust, is a firm that invests in income-producing assets. REITs were invented to empower everyday investors to buy into real estate. REIT shares are not too costly for the majority of investors.

REIT investing is known as passive investing. REITs handle investors’ liability with a varied collection of assets. Investors are able to liquidate their REIT shares whenever they want. One thing you cannot do with REIT shares is to select the investment real estate properties. Their investment is limited to the real estate properties chosen by the REIT.

A Real Estate Investment Fund is a mutual fund that owns stocks of real estate firms. The fund doesn’t hold real estate — it owns interest in real estate businesses. This is an additional way for passive investors to spread their portfolio with real estate without the high startup expense or risks. Where REITs must distribute dividends to its participants, funds don’t. Like any stock, investment funds’ values increase and fall with their share market value.

Investors may pick a fund that concentrates on specific categories of the real estate industry but not particular markets for individual property investment. As passive investors, fund shareholders are content to allow the management team of the fund make all investment choices.