Ultimate Douglas County Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term rental strategy — Buy, Rehab, Rent, Refinance, Repeat. If you plan to grow your investments, the BRRRR is a proven strategy to employ. An important part of this plan is to be able to get a “cash-out” mortgage refinance.

You add to the worth of the investment property beyond what you spent acquiring and fixing the property. Then you obtain a cash-out mortgage refinance loan that is computed on the higher market value, and you take out the difference. This capital is put into one more investment property, and so on. This plan assists you to steadily increase your portfolio and your investment revenue.

If your investment property collection is large enough, you might delegate its oversight and get passive income. Locate Douglas County property management professionals when you look through our list of experts.

Factors to Consider

Population Growth

The expansion or downturn of a community’s population is a valuable gauge of the region’s long-term desirability for lease property investors. If you find good population increase, you can be confident that the region is pulling likely renters to it. Relocating employers are drawn to increasing locations offering reliable jobs to families who move there. A rising population builds a certain base of tenants who can handle rent raises, and a robust property seller’s market if you decide to sell your properties.

Property Taxes

Real estate taxes, maintenance, and insurance spendings are investigated by long-term lease investors for computing costs to estimate if and how the plan will be successful. Rental property located in high property tax areas will have smaller profits. If property taxes are excessive in a particular area, you probably need to look in a different location.

Price to Rent Ratio

The price to rent ratio (p/r) is a signal of how much rent can be demanded in comparison to the value of the asset. An investor will not pay a large sum for a house if they can only demand a small rent not letting them to repay the investment within a realistic time. A high p/r signals you that you can charge lower rent in that community, a small p/r tells you that you can demand more.

Median Gross Rents

Median gross rents are a specific barometer of the desirability of a rental market under consideration. Median rents must be increasing to justify your investment. You will not be able to achieve your investment predictions in a region where median gross rental rates are declining.

Median Population Age

The median residents’ age that you are searching for in a favorable investment market will be similar to the age of salaried people. If people are moving into the district, the median age will have no problem staying at the level of the employment base. If you find a high median age, your stream of tenants is going down. This is not good for the future economy of that region.

Employment Base Diversity

A diverse employment base is something a smart long-term rental property owner will look for. When the locality’s workers, who are your tenants, are spread out across a diversified number of employers, you can’t lose all of them at once (as well as your property’s market worth), if a significant employer in the market goes bankrupt.

Unemployment Rate

High unemployment means fewer renters and an unsteady housing market. People who don’t have a job won’t be able to purchase products or services. This can create a high amount of layoffs or fewer work hours in the city. Current tenants might delay their rent in such cases.

Income Rates

Median household and per capita income will illustrate if the tenants that you need are living in the community. Historical salary figures will reveal to you if wage increases will permit you to mark up rents to meet your profit calculations.

Number of New Jobs Created

An expanding job market results in a steady source of renters. An environment that produces jobs also increases the amount of participants in the property market. This enables you to acquire additional lease real estate and backfill existing vacant units.

School Ratings

School reputation in the area will have a strong influence on the local property market. When a company considers an area for potential expansion, they know that quality education is a must for their workers. Relocating companies relocate and attract prospective tenants. Property values increase with new employees who are buying homes. For long-term investing, search for highly ranked schools in a considered investment location.

Property Appreciation Rates

Strong property appreciation rates are a prerequisite for a profitable long-term investment. You need to be assured that your investment assets will grow in market value until you want to sell them. You don’t need to spend any time looking at areas with unsatisfactory property appreciation rates.

A furnished apartment where tenants live for shorter than 4 weeks is regarded as a short-term rental. Long-term rental units, like apartments, require lower rent a night than short-term rentals. Short-term rental apartments may involve more frequent upkeep and cleaning.

House sellers waiting to relocate into a new property, tourists, and individuals traveling on business who are staying in the area for a few days prefer renting a residence short term. House sharing platforms like AirBnB and VRBO have enabled countless residential property owners to get in on the short-term rental business. A convenient approach to get started on real estate investing is to rent a condo or house you currently keep for short terms.

Short-term rentals involve interacting with occupants more repeatedly than long-term rental units. As a result, landlords manage problems repeatedly. Think about managing your exposure with the aid of any of the good real estate lawyers in Douglas County KS.

Factors to Consider

Short-Term Rental Income

You should find the amount of rental revenue you are aiming for based on your investment calculations. Knowing the typical amount of rent being charged in the community for short-term rentals will allow you to select a profitable location to invest.

Median Property Prices

When purchasing investment housing for short-term rentals, you have to calculate how much you can allot. The median values of real estate will tell you if you can afford to be in that community. You can fine-tune your area search by studying the median values in specific sub-markets.

Price Per Square Foot

Price per square foot can be affected even by the design and layout of residential units. When the designs of available homes are very contrasting, the price per sq ft may not show a definitive comparison. You can use the price per square foot metric to see a good general idea of housing values.

Short-Term Rental Occupancy Rate

The ratio of short-term rentals that are currently tenanted in an area is crucial information for a rental unit buyer. If almost all of the rental properties have tenants, that community requires new rentals. If investors in the market are having issues filling their current properties, you will have difficulty renting yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to calculate the profitability of an investment plan. Divide the Net Operating Income (NOI) by the total amount of cash put in. The answer comes as a percentage. The higher it is, the faster your invested cash will be recouped and you’ll start realizing profits. If you borrow part of the investment budget and spend less of your own funds, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Another measurement conveys the value of a property as a revenue-producing asset — average short-term rental capitalization (cap) rate. As a general rule, the less money an investment property will cost (or is worth), the higher the cap rate will be. Low cap rates reflect higher-priced rental units. The cap rate is computed by dividing the Net Operating Income (NOI) by the asking price or market worth. The percentage you get is the investment property’s cap rate.

Local Attractions

Short-term rental apartments are preferred in communities where tourists are drawn by activities and entertainment spots. When a region has places that periodically hold must-see events, like sports arenas, universities or colleges, entertainment centers, and adventure parks, it can invite visitors from other areas on a constant basis. Must-see vacation spots are found in mountainous and beach areas, along lakes, and national or state parks.

The fix and flip investment plan involves purchasing a house that needs fixing up or renovation, putting additional value by upgrading the property, and then liquidating it for a higher market price. Your estimate of improvement expenses should be accurate, and you need to be able to buy the unit for less than market price.

It’s important for you to know the rates homes are being sold for in the area. The average number of Days On Market (DOM) for homes listed in the area is crucial. Disposing of real estate fast will keep your expenses low and guarantee your returns.

Assist motivated real estate owners in locating your business by listing it in our catalogue of Douglas County cash property buyers and the best Douglas County real estate investment companies.

Also, look for property bird dogs in Douglas County KS. Experts located on our website will help you by rapidly finding potentially successful deals prior to them being listed.

Factors to Consider

Median Home Price

The area’s median housing value should help you determine a suitable neighborhood for flipping houses. Modest median home values are an indicator that there is a steady supply of real estate that can be bought below market worth. This is a crucial element of a profitable rehab and resale project.

When you see a fast weakening in property market values, this could mean that there are conceivably homes in the market that will work for a short sale. You’ll learn about potential investments when you join up with Douglas County short sale processors. Discover how this is done by reviewing our guide ⁠— How to Successfully Buy a Short Sale House.

Property Appreciation Rate

The shifts in real property values in a location are critical. You’re searching for a constant increase of local home values. Speedy property value increases could indicate a value bubble that is not reliable. When you are purchasing and selling rapidly, an unstable environment can harm you.

Average Renovation Costs

You’ll need to evaluate building expenses in any potential investment location. The manner in which the municipality goes about approving your plans will affect your investment as well. You want to be aware whether you will have to employ other professionals, like architects or engineers, so you can get ready for those expenses.

Population Growth

Population growth statistics allow you to take a look at housing need in the market. When the population isn’t expanding, there isn’t going to be an adequate source of purchasers for your houses.

Median Population Age

The median citizens’ age will also show you if there are enough home purchasers in the region. It should not be less or more than that of the average worker. People in the local workforce are the most dependable home buyers. Aging individuals are getting ready to downsize, or relocate into age-restricted or retiree neighborhoods.

Unemployment Rate

When you find an area demonstrating a low unemployment rate, it is a strong evidence of good investment opportunities. The unemployment rate in a future investment community needs to be lower than the national average. A really strong investment region will have an unemployment rate less than the state’s average. Jobless people can’t acquire your homes.

Income Rates

Median household and per capita income are a reliable sign of the stability of the real estate market in the region. Most individuals who acquire a house need a home mortgage loan. Their salary will show the amount they can afford and whether they can buy a property. You can see from the city’s median income if enough people in the community can manage to purchase your houses. Specifically, income growth is important if you need to scale your investment business. Construction costs and home prices increase periodically, and you want to be sure that your prospective clients’ wages will also improve.

Number of New Jobs Created

Knowing how many jobs appear annually in the area adds to your confidence in an area’s economy. A larger number of residents acquire houses if their region’s economy is adding new jobs. Qualified skilled workers taking into consideration buying real estate and deciding to settle prefer relocating to cities where they will not be unemployed.

Hard Money Loan Rates

Fix-and-flip property investors frequently employ hard money loans rather than conventional loans. This strategy allows them negotiate profitable projects without holdups. Research Douglas County private money lenders and compare lenders’ fees.

Those who are not experienced in regard to hard money financing can learn what they should learn with our resource for newbies — How Does a Hard Money Loan Work?.

In real estate wholesaling, you locate a residential property that investors would consider a good investment opportunity and sign a contract to buy it. However you don’t close on the house: after you control the property, you allow another person to become the buyer for a price. The property is sold to the investor, not the wholesaler. The real estate wholesaler does not sell the property under contract itself — they just sell the rights to buy it.

The wholesaling form of investing includes the engagement of a title insurance company that understands wholesale transactions and is informed about and engaged in double close purchases. Find real estate investor friendly title companies in Douglas County KS on our list.

Discover more about the way to wholesale property from our definitive guide — Real Estate Wholesaling Explained for Beginners. While you manage your wholesaling venture, place your firm in HouseCashin’s directory of Douglas County top house wholesalers. This will let your possible investor buyers discover and call you.

Factors to Consider

Median Home Prices

Median home values in the community will show you if your preferred price level is viable in that market. Below average median values are a good indication that there are plenty of houses that could be purchased below market price, which investors have to have.

A rapid decrease in the price of property might cause the accelerated availability of homes with negative equity that are wanted by wholesalers. This investment method often brings numerous uncommon advantages. Nonetheless, there could be risks as well. Find out more concerning wholesaling short sale properties from our complete article. If you choose to give it a go, make sure you have one of short sale attorneys in Douglas County KS and property foreclosure attorneys in Douglas County KS to confer with.

Property Appreciation Rate

Property appreciation rate completes the median price data. Some real estate investors, like buy and hold and long-term rental landlords, particularly want to find that home prices in the community are growing over time. Decreasing market values show an equally poor rental and home-selling market and will chase away real estate investors.

Population Growth

Population growth data is critical for your prospective contract purchasers. When the population is expanding, more residential units are required. There are a lot of individuals who rent and plenty of clients who purchase homes. A location with a dropping community does not attract the real estate investors you need to buy your purchase contracts.

Median Population Age

A reliable residential real estate market for real estate investors is strong in all aspects, especially tenants, who turn into home purchasers, who move up into more expensive homes. To allow this to take place, there has to be a reliable employment market of potential renters and homebuyers. That is why the area’s median age should be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income should be increasing in a good real estate market that real estate investors want to participate in. Income improvement shows a location that can absorb rental rate and real estate purchase price increases. That will be important to the real estate investors you want to work with.

Unemployment Rate

Real estate investors will pay a lot of attention to the location’s unemployment rate. High unemployment rate prompts a lot of tenants to make late rent payments or default completely. Long-term investors will not acquire a house in a community like this. Real estate investors cannot count on renters moving up into their properties when unemployment rates are high. Short-term investors will not take a chance on getting stuck with a house they can’t sell easily.

Number of New Jobs Created

The amount of new jobs being generated in the area completes an investor’s review of a future investment site. New jobs generated mean plenty of workers who require houses to rent and purchase. This is advantageous for both short-term and long-term real estate investors whom you count on to acquire your contracted properties.

Average Renovation Costs

Improvement expenses will be crucial to many investors, as they typically purchase bargain distressed properties to repair. The price, plus the costs of renovation, must be lower than the After Repair Value (ARV) of the real estate to allow for profit. Look for lower average renovation costs.

Mortgage note investors obtain debt from lenders if they can get it for less than face value. This way, the investor becomes the mortgage lender to the original lender’s client.

Loans that are being paid on time are considered performing notes. Performing loans give repeating income for investors. Some note investors buy non-performing loans because if the mortgage note investor cannot successfully re-negotiate the loan, they can always purchase the property at foreclosure for a below market price.

At some point, you might create a mortgage note portfolio and notice you are lacking time to oversee it by yourself. When this happens, you might pick from the best mortgage servicers in Douglas County KS which will make you a passive investor.

If you decide that this plan is best for you, place your company in our list of Douglas County top real estate note buying companies. Joining will make you more noticeable to lenders providing profitable opportunities to note investors like you.

Factors to consider

Foreclosure Rates

Performing note purchasers are on lookout for markets showing low foreclosure rates. High rates might indicate investment possibilities for non-performing note investors, but they have to be cautious. But foreclosure rates that are high often indicate a weak real estate market where liquidating a foreclosed home might be tough.

Foreclosure Laws

Investors should know the state’s regulations concerning foreclosure prior to investing in mortgage notes. Many states utilize mortgage documents and others require Deeds of Trust. With a mortgage, a court will have to allow a foreclosure. You only need to file a notice and begin foreclosure steps if you’re utilizing a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage loan notes come with an agreed interest rate. That interest rate will undoubtedly impact your returns. No matter the type of mortgage note investor you are, the loan note’s interest rate will be critical to your forecasts.

Conventional interest rates can be different by up to a quarter of a percent across the US. Private loan rates can be moderately more than traditional interest rates because of the larger risk dealt with by private mortgage lenders.

Mortgage note investors ought to always be aware of the present market interest rates, private and traditional, in potential investment markets.

Demographics

If note investors are choosing where to purchase mortgage notes, they’ll review the demographic statistics from potential markets. Note investors can learn a great deal by reviewing the extent of the population, how many citizens are employed, what they earn, and how old the citizens are.
Performing note investors require homeowners who will pay on time, developing a consistent income source of loan payments.

Investors who purchase non-performing notes can also make use of vibrant markets. In the event that foreclosure is required, the foreclosed collateral property is more easily liquidated in a growing real estate market.

Property Values

Note holders like to see as much home equity in the collateral property as possible. This improves the chance that a potential foreclosure sale will make the lender whole. The combined effect of mortgage loan payments that lessen the mortgage loan balance and annual property market worth appreciation raises home equity.

Property Taxes

Usually homeowners pay property taxes to mortgage lenders in monthly portions along with their mortgage loan payments. The mortgage lender passes on the taxes to the Government to make sure the taxes are paid on time. If mortgage loan payments are not being made, the lender will have to choose between paying the taxes themselves, or the property taxes become delinquent. Tax liens leapfrog over any other liens.

If a community has a record of rising property tax rates, the combined home payments in that city are consistently increasing. Borrowers who have difficulty making their loan payments may fall farther behind and ultimately default.

Real Estate Market Strength

A place with growing property values promises good potential for any mortgage note investor. It is critical to understand that if you need to foreclose on a collateral, you won’t have difficulty receiving an appropriate price for it.

Note investors additionally have an opportunity to create mortgage notes directly to homebuyers in strong real estate areas. For veteran investors, this is a useful part of their investment strategy.

A REIT, or Real Estate Investment Trust, means a business that invests in income-producing properties. REITs were developed to permit average investors to buy into properties. Many investors these days are able to invest in a REIT.

Shareholders in such organizations are entirely passive investors. Investment liability is spread across a package of real estate. Shares may be sold when it is beneficial for you. One thing you can’t do with REIT shares is to choose the investment properties. Their investment is confined to the real estate properties owned by the REIT.

Mutual funds that hold shares of real estate firms are termed real estate investment funds. Any actual real estate property is owned by the real estate firms, not the fund. This is an additional method for passive investors to allocate their investments with real estate avoiding the high startup investment or liability. Funds aren’t obligated to distribute dividends unlike a REIT. The benefit to the investor is created by increase in the worth of the stock.

You can locate a real estate fund that focuses on a particular type of real estate business, like commercial, but you can’t choose the fund’s investment assets or markets. As passive investors, fund members are satisfied to permit the administration of the fund determine all investment choices.