Ultimate El Paso County Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. If you desire to expand your investments, the BRRRR is a proven method to use. A vital part of this strategy is to be able to obtain a “cash-out” mortgage refinance.

You enhance the value of the asset beyond what you spent purchasing and renovating the property. Then you borrow a cash-out mortgage refinance loan that is computed on the higher value, and you take out the balance. You acquire your next house with the cash-out money and begin all over again. This strategy helps you to reliably expand your assets and your investment revenue.

When your investment real estate portfolio is substantial enough, you might delegate its oversight and receive passive cash flow. Discover top property management companies in El Paso County CO by using our list.

Factors to Consider

Population Growth

The growth or deterioration of a community’s population is a valuable barometer of the area’s long-term desirability for rental property investors. If the population increase in a location is strong, then additional tenants are likely relocating into the community. Businesses view this market as an attractive region to relocate their enterprise, and for employees to situate their families. Rising populations create a reliable tenant pool that can keep up with rent increases and home purchasers who assist in keeping your investment property values up.

Property Taxes

Real estate taxes, upkeep, and insurance spendings are examined by long-term rental investors for computing costs to estimate if and how the investment will pay off. Unreasonable expenditures in these areas threaten your investment’s profitability. If property taxes are unreasonable in a given community, you probably want to search somewhere else.

Price to Rent Ratio

The price to rent ratio (p/r) is a signal of what amount of rent can be collected compared to the purchase price of the property. The rate you can collect in a market will impact the amount you are willing to pay based on the number of years it will take to pay back those costs. You need to find a lower p/r to be confident that you can price your rents high enough to reach acceptable profits.

Median Gross Rents

Median gross rents are a clear indicator of the vitality of a rental market. You want to find a community with repeating median rent growth. Reducing rents are an alert to long-term rental investors.

Median Population Age

Median population age will be similar to the age of a normal worker if a market has a consistent stream of tenants. This can also show that people are migrating into the area. A high median age means that the current population is leaving the workplace with no replacement by younger workers relocating in. A thriving investing environment cannot be supported by retiring workers.

Employment Base Diversity

Accommodating multiple employers in the area makes the market less unstable. When the citizens are employed by a couple of dominant employers, even a small issue in their operations could cause you to lose a great deal of renters and increase your risk tremendously.

Unemployment Rate

It’s difficult to maintain a sound rental market if there is high unemployment. Unemployed individuals stop being clients of yours and of other businesses, which creates a ripple effect throughout the community. The remaining workers could see their own incomes marked down. This could result in missed rent payments and defaults.

Income Rates

Median household and per capita income levels show you if an adequate amount of preferred renters reside in that region. Historical income information will show you if income increases will enable you to raise rental rates to hit your income projections.

Number of New Jobs Created

The more jobs are regularly being provided in a community, the more consistent your tenant supply will be. An environment that produces jobs also increases the amount of people who participate in the real estate market. This ensures that you can sustain a sufficient occupancy level and acquire additional assets.

School Ratings

The status of school districts has a significant influence on home market worth throughout the city. Companies that are thinking about moving want good schools for their employees. Moving employers relocate and draw potential tenants. Homeowners who relocate to the community have a good influence on housing values. You can’t find a vibrantly expanding residential real estate market without reputable schools.

Property Appreciation Rates

Real estate appreciation rates are an imperative portion of your long-term investment scheme. You have to know that the chances of your asset appreciating in price in that neighborhood are strong. Weak or shrinking property worth in an area under assessment is unacceptable.

Residential real estate where renters stay in furnished spaces for less than thirty days are known as short-term rentals. Long-term rental units, such as apartments, impose lower rent a night than short-term ones. With renters coming and going, short-term rentals need to be maintained and sanitized on a continual basis.

House sellers waiting to relocate into a new house, people on vacation, and business travelers who are staying in the community for a few days prefer to rent apartments short term. House sharing portals like AirBnB and VRBO have encouraged countless real estate owners to get in on the short-term rental industry. This makes short-term rentals a convenient method to pursue residential property investing.

The short-term property rental business requires interaction with renters more often in comparison with annual rental units. This dictates that landlords handle disputes more frequently. You might want to cover your legal bases by hiring one of the top El Paso County investor friendly real estate law firms.

Factors to Consider

Short-Term Rental Income

You need to calculate how much rental income needs to be earned to make your effort financially rewarding. A region’s short-term rental income levels will quickly show you if you can look forward to reach your estimated rental income levels.

Median Property Prices

You also have to know how much you can bear to invest. Scout for cities where the budget you have to have is appropriate for the present median property prices. You can fine-tune your real estate search by looking at median values in the city’s sub-markets.

Price Per Square Foot

Price per sq ft gives a broad picture of market values when analyzing similar units. If you are comparing the same types of real estate, like condominiums or detached single-family homes, the price per square foot is more consistent. You can use this criterion to obtain a good overall idea of real estate values.

Short-Term Rental Occupancy Rate

The number of short-term rentals that are currently filled in a market is critical knowledge for a landlord. If almost all of the rentals have renters, that community necessitates more rentals. If investors in the city are having challenges renting their existing units, you will have difficulty renting yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to determine the profitability of an investment venture. You can determine the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash being invested. The result is a percentage. If an investment is lucrative enough to reclaim the amount invested fast, you will get a high percentage. When you take a loan for part of the investment amount and put in less of your own money, you will realize a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This benchmark compares rental property worth to its yearly revenue. An investment property that has a high cap rate as well as charges average market rental prices has a strong value. When cap rates are low, you can prepare to spend more cash for rental units in that city. The cap rate is determined by dividing the Net Operating Income (NOI) by the asking price or market value. The answer is the annual return in a percentage.

Local Attractions

Short-term rental properties are preferred in cities where visitors are drawn by events and entertainment spots. Vacationers come to specific locations to watch academic and athletic activities at colleges and universities, be entertained by competitions, cheer for their kids as they participate in kiddie sports, have the time of their lives at yearly carnivals, and go to adventure parks. Popular vacation attractions are found in mountain and beach areas, near rivers, and national or state nature reserves.

The fix and flip approach entails buying a home that needs fixing up or rebuilding, putting more value by upgrading the property, and then liquidating it for its full market price. To keep the business profitable, the flipper needs to pay lower than the market price for the house and know what it will cost to repair it.

Explore the prices so that you understand the accurate After Repair Value (ARV). The average number of Days On Market (DOM) for homes sold in the community is important. As a “house flipper”, you’ll need to liquidate the repaired property immediately in order to eliminate maintenance expenses that will lessen your profits.

Help determined real property owners in finding your firm by placing it in our catalogue of El Paso County companies that buy houses for cash and the best El Paso County real estate investors.

Additionally, team up with El Paso County property bird dogs. Professionals found here will help you by rapidly locating possibly profitable ventures ahead of the projects being sold.

Factors to Consider

Median Home Price

When you hunt for a good region for property flipping, look into the median home price in the neighborhood. If values are high, there may not be a consistent source of run down houses in the market. This is a basic component of a fix and flip market.

If your review shows a quick drop in home values, it may be a heads up that you’ll uncover real estate that fits the short sale requirements. You can receive notifications concerning these possibilities by partnering with short sale processors in El Paso County CO. Uncover more about this sort of investment explained in our guide How Do I Buy a Short Sale Property?.

Property Appreciation Rate

Are home values in the market moving up, or moving down? You are looking for a reliable increase of the area’s home market values. Property values in the city should be growing steadily, not suddenly. Purchasing at the wrong point in an unstable environment can be disastrous.

Average Renovation Costs

You’ll have to research construction costs in any potential investment area. The way that the municipality goes about approving your plans will affect your venture as well. You have to be aware if you will be required to employ other experts, like architects or engineers, so you can get prepared for those costs.

Population Growth

Population increase figures provide a peek at housing need in the area. When there are buyers for your restored real estate, the numbers will show a positive population growth.

Median Population Age

The median population age will also show you if there are enough home purchasers in the region. When the median age is equal to the one of the average worker, it is a positive indication. A high number of such residents shows a substantial source of home purchasers. The needs of retired people will most likely not be a part of your investment venture plans.

Unemployment Rate

You aim to see a low unemployment rate in your considered region. It must definitely be less than the country’s average. When the local unemployment rate is lower than the state average, that’s an indication of a strong economy. To be able to purchase your fixed up houses, your clients need to be employed, and their customers as well.

Income Rates

Median household and per capita income rates explain to you whether you can obtain adequate home purchasers in that city for your homes. Most home purchasers normally take a mortgage to buy a house. The borrower’s wage will determine the amount they can borrow and whether they can purchase a home. The median income data will tell you if the community is beneficial for your investment endeavours. Search for places where salaries are rising. To keep up with inflation and soaring building and material costs, you have to be able to regularly raise your purchase prices.

Number of New Jobs Created

Knowing how many jobs are generated each year in the community adds to your confidence in a region’s economy. Homes are more quickly liquidated in a region that has a dynamic job market. Additional jobs also entice people moving to the area from other places, which further reinforces the property market.

Hard Money Loan Rates

Short-term real estate investors often employ hard money loans in place of traditional loans. Doing this lets investors complete desirable ventures without delay. Look up El Paso County private money lenders for real estate investors and analyze financiers’ fees.

Someone who wants to learn about hard money funding options can discover what they are as well as how to employ them by reading our guide titled What Does Hard Money Mean in Real Estate?.

Wholesaling is a real estate investment plan that requires finding residential properties that are interesting to investors and signing a purchase contract. An investor then ”purchases” the sale and purchase agreement from you. The real buyer then completes the purchase. You are selling the rights to the contract, not the home itself.

The wholesaling mode of investing includes the engagement of a title company that grasps wholesale deals and is informed about and engaged in double close deals. Discover El Paso County title services for wholesale investors by using our list.

Read more about how wholesaling works from our definitive guide — Wholesale Real Estate Investing 101 for Beginners. When following this investment strategy, place your company in our list of the best home wholesalers in El Paso County CO. This will let your possible investor purchasers find and call you.

Factors to Consider

Median Home Prices

Median home prices in the region under review will roughly notify you if your real estate investors’ required investment opportunities are located there. As real estate investors want investment properties that are available for lower than market value, you will need to take note of below-than-average median prices as an implied tip on the possible availability of homes that you could acquire for less than market price.

A rapid drop in real estate prices may be followed by a hefty number of ’upside-down’ properties that short sale investors look for. This investment method regularly brings several different advantages. Nevertheless, it also raises a legal risk. Get additional details on how to wholesale a short sale in our thorough article. Once you’re prepared to start wholesaling, search through El Paso County top short sale lawyers as well as El Paso County top-rated foreclosure lawyers directories to locate the right advisor.

Property Appreciation Rate

Median home purchase price dynamics are also critical. Some investors, like buy and hold and long-term rental landlords, notably want to find that residential property prices in the city are growing over time. A weakening median home price will indicate a weak leasing and home-buying market and will eliminate all kinds of real estate investors.

Population Growth

Population growth figures are important for your prospective purchase contract purchasers. If they see that the community is growing, they will presume that additional residential units are required. This involves both rental and ‘for sale’ properties. A place that has a shrinking community will not interest the investors you want to purchase your contracts.

Median Population Age

A vibrant housing market necessitates people who start off leasing, then shifting into homebuyers, and then buying up in the residential market. A location that has a large employment market has a constant pool of renters and purchasers. A location with these characteristics will show a median population age that corresponds with the working citizens’ age.

Income Rates

The median household and per capita income demonstrate steady increases continuously in cities that are good for investment. Increases in lease and listing prices will be supported by rising income in the market. Property investors stay out of cities with poor population income growth numbers.

Unemployment Rate

Investors whom you approach to close your sale contracts will deem unemployment stats to be a crucial piece of knowledge. Overdue lease payments and lease default rates are worse in areas with high unemployment. This adversely affects long-term real estate investors who plan to lease their real estate. Renters can’t step up to property ownership and existing owners can’t sell their property and shift up to a larger house. Short-term investors will not take a chance on being pinned down with a house they can’t sell without delay.

Number of New Jobs Created

The amount of jobs created per year is an essential part of the residential real estate structure. Job formation implies additional employees who require housing. Long-term real estate investors, such as landlords, and short-term investors such as flippers, are attracted to communities with consistent job production rates.

Average Renovation Costs

Rehabilitation costs have a major impact on a real estate investor’s profit. Short-term investors, like home flippers, can’t earn anything when the purchase price and the renovation expenses equal to more money than the After Repair Value (ARV) of the house. Give preference to lower average renovation costs.

Mortgage note investing professionals purchase a loan from lenders if the investor can get the loan below the outstanding debt amount. The client makes subsequent loan payments to the mortgage note investor who has become their new mortgage lender.

Performing notes mean loans where the borrower is consistently on time with their mortgage payments. Performing notes bring stable revenue for you. Some note investors buy non-performing loans because when he or she cannot satisfactorily rework the mortgage, they can always take the property at foreclosure for a low amount.

At some time, you may accrue a mortgage note portfolio and notice you are needing time to manage your loans on your own. When this occurs, you could pick from the best loan servicers in El Paso County CO which will designate you as a passive investor.

When you choose to adopt this investment plan, you should include your venture in our directory of the best real estate note buyers in El Paso County CO. When you do this, you will be discovered by the lenders who announce profitable investment notes for acquisition by investors like yourself.

Factors to consider

Foreclosure Rates

Mortgage note investors hunting for stable-performing loans to acquire will hope to find low foreclosure rates in the area. High rates could indicate opportunities for non-performing mortgage note investors, however they have to be cautious. However, foreclosure rates that are high can signal a slow real estate market where selling a foreclosed unit will likely be difficult.

Foreclosure Laws

It’s important for note investors to study the foreclosure regulations in their state. They will know if their state dictates mortgages or Deeds of Trust. Lenders may have to get the court’s okay to foreclose on a home. A Deed of Trust permits the lender to file a notice and continue to foreclosure.

Mortgage Interest Rates

Acquired mortgage notes contain an agreed interest rate. That mortgage interest rate will undoubtedly affect your returns. Interest rates impact the plans of both types of note investors.

Traditional lenders charge dissimilar interest rates in various regions of the country. The stronger risk accepted by private lenders is shown in bigger loan interest rates for their mortgage loans compared to conventional mortgage loans.

Experienced mortgage note buyers routinely review the rates in their community set by private and traditional mortgage companies.

Demographics

When note buyers are deciding on where to invest, they’ll look closely at the demographic indicators from considered markets. Investors can learn a lot by estimating the extent of the populace, how many people are working, how much they earn, and how old the people are.
A young growing area with a strong employment base can contribute a consistent income flow for long-term mortgage note investors searching for performing notes.

The same region may also be good for non-performing mortgage note investors and their exit plan. A resilient local economy is required if investors are to find homebuyers for properties they’ve foreclosed on.

Property Values

Lenders need to see as much home equity in the collateral property as possible. This enhances the likelihood that a potential foreclosure auction will repay the amount owed. Appreciating property values help improve the equity in the home as the homeowner pays down the balance.

Property Taxes

Most homeowners pay property taxes through mortgage lenders in monthly portions along with their loan payments. By the time the taxes are payable, there should be sufficient payments being held to handle them. The lender will have to make up the difference if the payments halt or the lender risks tax liens on the property. If taxes are delinquent, the government’s lien jumps over all other liens to the front of the line and is paid first.

Because tax escrows are collected with the mortgage loan payment, growing taxes indicate larger mortgage payments. This makes it tough for financially strapped borrowers to stay current, so the loan could become delinquent.

Real Estate Market Strength

Both performing and non-performing note buyers can be profitable in a growing real estate market. It’s crucial to know that if you are required to foreclose on a collateral, you won’t have trouble receiving an appropriate price for the property.

Note investors additionally have a chance to make mortgage notes directly to borrowers in strong real estate markets. It is a supplementary stage of a note investor’s career.

Some real estate investment businesses are structured as trusts termed Real Estate Investment Trusts or REITs. REITs were developed to permit everyday investors to invest in real estate. The average person can afford to invest in a REIT.

Shareholders’ participation in a REIT falls under passive investing. REITs handle investors’ risk with a diversified collection of assets. Investors can unload their REIT shares whenever they choose. But REIT investors do not have the capability to select particular investment properties or markets. The assets that the REIT chooses to purchase are the ones your funds are used to buy.

Mutual funds containing shares of real estate companies are known as real estate investment funds. The investment assets are not held by the fund — they are possessed by the companies the fund invests in. These funds make it easier for additional people to invest in real estate properties. Funds aren’t obligated to distribute dividends unlike a REIT. The profit to investors is generated by growth in the value of the stock.

You can select a real estate fund that specializes in a distinct type of real estate business, such as residential, but you cannot choose the fund’s investment properties or locations. Your decision as an investor is to select a fund that you trust to handle your real estate investments.