Ultimate Exeter Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. When you plan to expand your investments, the BRRRR is a good plan to use. An important part of this strategy is to be able to get a “cash-out” refinance.

You enhance the value of the asset beyond what you spent purchasing and renovating it. The investment property is refinanced based on the ARV and the balance, or equity, comes to you in cash. You employ that cash to acquire an additional home and the procedure begins anew. You add improving investment assets to your portfolio and lease revenue to your cash flow.

When your investment property portfolio is big enough, you can outsource its oversight and collect passive income. Locate good property management companies by looking through our list.

Factors to Consider

Population Growth

The rise or deterioration of an area’s population is an accurate barometer of the community’s long-term desirability for rental property investors. If the population growth in a market is strong, then more renters are likely coming into the area. The city is attractive to companies and employees to move, work, and create households. A rising population builds a reliable foundation of tenants who can handle rent raises, and an active property seller’s market if you need to liquidate any investment properties.

Property Taxes

Real estate taxes, maintenance, and insurance costs are investigated by long-term lease investors for forecasting costs to predict if and how the investment strategy will be viable. Excessive property tax rates will decrease a real estate investor’s returns. Regions with excessive property tax rates aren’t considered a stable setting for short- or long-term investment and must be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property values and median rental rates that will signal how high of a rent the market can tolerate. How much you can charge in a region will define the sum you are able to pay based on how long it will take to repay those funds. The lower rent you can collect the higher the p/r, with a low p/r showing a more profitable rent market.

Median Gross Rents

Median gross rents are an accurate yardstick of the acceptance of a lease market under examination. Median rents must be growing to warrant your investment. If rental rates are declining, you can drop that community from discussion.

Median Population Age

Median population age should be close to the age of a usual worker if a region has a strong source of tenants. This can also show that people are moving into the city. A high median age signals that the existing population is retiring with no replacement by younger people relocating there. That is an unacceptable long-term financial picture.

Employment Base Diversity

A diverse employment base is something a wise long-term rental property owner will hunt for. If the market’s workers, who are your tenants, are employed by a varied group of businesses, you can’t lose all all tenants at the same time (and your property’s market worth), if a significant company in the location goes bankrupt.

Unemployment Rate

It is a challenge to achieve a sound rental market when there is high unemployment. Historically profitable businesses lose clients when other businesses lay off workers. The remaining people might see their own wages cut. Existing renters could become late with their rent in this scenario.

Income Rates

Median household and per capita income will show you if the renters that you want are living in the community. Increasing salaries also tell you that rents can be raised throughout the life of the asset.

Number of New Jobs Created

A growing job market translates into a steady stream of renters. The employees who fill the new jobs will require a residence. Your objective of renting and purchasing more assets requires an economy that will provide enough jobs.

School Ratings

School reputation in the area will have a huge influence on the local property market. Employers that are thinking about relocating prefer top notch schools for their employees. Moving companies bring and draw potential tenants. Recent arrivals who purchase a residence keep real estate prices strong. You will not find a dynamically growing housing market without quality schools.

Property Appreciation Rates

The essence of a long-term investment plan is to keep the property. You want to see that the chances of your asset raising in value in that community are likely. Inferior or shrinking property appreciation rates should exclude a community from the selection.

A furnished residence where renters stay for shorter than 30 days is regarded as a short-term rental. The nightly rental rates are always higher in short-term rentals than in long-term units. Because of the increased turnover rate, short-term rentals need more recurring maintenance and tidying.

Average short-term renters are tourists, home sellers who are relocating, and people on a business trip who need something better than a hotel room. Any property owner can turn their home into a short-term rental with the know-how made available by online home-sharing portals like VRBO and AirBnB. Short-term rentals are thought of as an effective technique to start investing in real estate.

Short-term rental units involve dealing with tenants more repeatedly than long-term rental units. This results in the landlord having to regularly deal with grievances. You might want to cover your legal liability by hiring one of the top Exeter investor friendly real estate law firms.

Factors to Consider

Short-Term Rental Income

Initially, determine the amount of rental revenue you must have to meet your desired profits. Being aware of the usual amount of rent being charged in the community for short-term rentals will allow you to select a desirable area to invest.

Median Property Prices

Thoroughly compute the amount that you can spend on new real estate. Search for communities where the purchase price you need corresponds with the existing median property worth. You can narrow your property search by estimating median market worth in the region’s sub-markets.

Price Per Square Foot

Price per sq ft gives a basic picture of market values when looking at similar units. A building with open foyers and vaulted ceilings can’t be contrasted with a traditional-style residential unit with larger floor space. If you keep this in mind, the price per square foot may give you a general idea of property prices.

Short-Term Rental Occupancy Rate

The need for new rental properties in a community can be determined by analyzing the short-term rental occupancy rate. A city that necessitates additional rental units will have a high occupancy level. If investors in the community are having problems filling their current properties, you will have trouble finding renters for yours.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return will inform you if the venture is a smart use of your own funds. You can determine the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by the cash you are putting in. The answer is a percentage. High cash-on-cash return shows that you will get back your investment more quickly and the purchase will be more profitable. When you take a loan for a fraction of the investment budget and use less of your money, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion shows the comparability of rental property value to its per-annum return. Generally, the less a property will cost (or is worth), the higher the cap rate will be. Low cap rates show more expensive properties. You can get the cap rate for potential investment real estate by dividing the Net Operating Income (NOI) by the Fair Market Value or asking price of the residential property. This gives you a percentage that is the annual return, or cap rate.

Local Attractions

Short-term rental units are desirable in places where visitors are drawn by events and entertainment venues. If a location has places that periodically hold exciting events, such as sports stadiums, universities or colleges, entertainment centers, and theme parks, it can invite visitors from other areas on a recurring basis. Famous vacation attractions are found in mountain and beach points, alongside waterways, and national or state nature reserves.

To fix and flip real estate, you have to buy it for less than market price, complete any required repairs and improvements, then liquidate it for better market value. Your calculation of improvement costs must be accurate, and you have to be capable of purchasing the property for lower than market value.

It’s vital for you to know how much properties are being sold for in the market. The average number of Days On Market (DOM) for properties listed in the city is critical. To effectively “flip” a property, you have to dispose of the rehabbed home before you are required to put out a budget maintaining it.

So that home sellers who have to get cash for their property can effortlessly find you, showcase your availability by utilizing our catalogue of companies that buy homes for cash in Exeter CA along with top real estate investors in Exeter CA.

Also, coordinate with Exeter bird dogs for real estate investors. Experts found on our website will help you by rapidly discovering conceivably profitable ventures prior to the opportunities being marketed.

Factors to Consider

Median Home Price

When you look for a good location for real estate flipping, research the median home price in the city. Low median home prices are a sign that there is a steady supply of houses that can be purchased for less than market value. This is an essential ingredient of a lucrative fix and flip.

When your review entails a fast drop in property values, it might be a signal that you’ll discover real property that meets the short sale requirements. You will learn about potential opportunities when you partner up with Exeter short sale specialists. You’ll discover additional information about short sales in our article ⁠— How to Buy a Pre-Foreclosure Short Sale Home?.

Property Appreciation Rate

Dynamics relates to the track that median home prices are treading. You want an area where property prices are steadily and continuously moving up. Real estate values in the community should be going up consistently, not abruptly. When you’re buying and selling fast, an uncertain environment can harm you.

Average Renovation Costs

Look thoroughly at the possible rehab spendings so you’ll be aware if you can reach your predictions. The time it will take for getting permits and the municipality’s requirements for a permit request will also impact your plans. You need to understand if you will be required to hire other contractors, like architects or engineers, so you can get prepared for those costs.

Population Growth

Population growth is a good indicator of the potential or weakness of the community’s housing market. When the population is not going up, there is not going to be an adequate pool of homebuyers for your real estate.

Median Population Age

The median citizens’ age is a clear sign of the supply of preferred homebuyers. When the median age is equal to that of the typical worker, it’s a positive sign. A high number of such citizens shows a significant source of home purchasers. The goals of retired people will most likely not be a part of your investment project strategy.

Unemployment Rate

When checking an area for investment, keep your eyes open for low unemployment rates. It must always be less than the nation’s average. When the city’s unemployment rate is less than the state average, that is an indicator of a preferable financial market. Unemployed people can’t buy your houses.

Income Rates

The population’s income stats show you if the region’s financial environment is strong. Most people normally take a mortgage to buy real estate. Homebuyers’ ability to get approval for a loan hinges on the size of their income. Median income will help you analyze if the regular home purchaser can buy the property you are going to flip. You also prefer to have wages that are increasing continually. Construction costs and home prices increase periodically, and you want to be sure that your potential customers’ income will also get higher.

Number of New Jobs Created

The number of jobs created every year is important information as you reflect on investing in a particular market. A growing job market indicates that a larger number of people are receptive to purchasing a house there. With a higher number of jobs generated, more prospective homebuyers also come to the community from other cities.

Hard Money Loan Rates

Short-term investors often use hard money loans in place of conventional financing. This enables them to rapidly buy undervalued real property. Discover the best hard money lenders in Exeter CA so you may review their fees.

Someone who wants to understand more about hard money loans can discover what they are as well as how to use them by studying our article titled How Hard Money Lending Works.

Wholesaling is a real estate investment strategy that involves scouting out homes that are attractive to investors and putting them under a purchase contract. But you do not purchase it: after you have the property under contract, you get someone else to take your place for a fee. The owner sells the property under contract to the real estate investor not the wholesaler. The real estate wholesaler does not liquidate the residential property — they sell the contract to purchase it.

This strategy requires using a title company that is familiar with the wholesale contract assignment operation and is capable and willing to handle double close deals. Search for title services for wholesale investors in Exeter CA in our directory.

Learn more about how wholesaling works from our extensive guide — Real Estate Wholesaling Explained for Beginners. When employing this investment method, list your business in our list of the best home wholesalers in Exeter CA. This will help your future investor customers find and contact you.

Factors to Consider

Median Home Prices

Median home values in the market under review will quickly show you if your investors’ target properties are located there. Below average median prices are a good indicator that there are enough properties that can be acquired for less than market price, which investors need to have.

A quick depreciation in the market value of property could cause the abrupt appearance of homes with more debt than value that are wanted by wholesalers. Short sale wholesalers frequently gain benefits using this method. Nevertheless, be aware of the legal risks. Get more information on how to wholesale a short sale property in our complete guide. Once you have chosen to try wholesaling these properties, make sure to employ someone on the list of the best short sale legal advice experts in Exeter CA and the best mortgage foreclosure lawyers in Exeter CA to advise you.

Property Appreciation Rate

Median home price trends are also vital. Real estate investors who need to liquidate their investment properties later, like long-term rental landlords, need a market where real estate market values are going up. A shrinking median home value will indicate a vulnerable leasing and housing market and will disappoint all sorts of real estate investors.

Population Growth

Population growth statistics are a contributing factor that your potential real estate investors will be knowledgeable in. When they find that the community is growing, they will presume that additional housing units are a necessity. Investors realize that this will include both rental and purchased housing units. When a region is declining in population, it doesn’t require new housing and real estate investors will not invest there.

Median Population Age

Real estate investors want to see a steady property market where there is a considerable pool of renters, first-time homebuyers, and upwardly mobile citizens moving to bigger properties. To allow this to happen, there needs to be a solid workforce of prospective renters and homeowners. That’s why the location’s median age needs to be the age of skilled workers in the employment market.

Income Rates

The median household and per capita income in a robust real estate investment market have to be increasing. If tenants’ and homebuyers’ incomes are going up, they can absorb surging lease rates and home purchase prices. Investors have to have this in order to meet their anticipated profits.

Unemployment Rate

Investors will pay a lot of attention to the community’s unemployment rate. High unemployment rate prompts more renters to make late rent payments or miss payments completely. Long-term investors who depend on reliable rental payments will do poorly in these areas. High unemployment builds poverty that will keep people from buying a property. This is a problem for short-term investors purchasing wholesalers’ contracts to renovate and flip a home.

Number of New Jobs Created

The number of more jobs being produced in the area completes an investor’s study of a prospective investment spot. New citizens move into a region that has new jobs and they look for a place to live. Long-term real estate investors, such as landlords, and short-term investors which include flippers, are drawn to communities with consistent job creation rates.

Average Renovation Costs

An indispensable consideration for your client investors, particularly fix and flippers, are rehab costs in the area. When a short-term investor rehabs a building, they need to be prepared to liquidate it for a larger amount than the entire sum they spent for the acquisition and the improvements. Give priority status to lower average renovation costs.

Mortgage note investment professionals obtain a loan from mortgage lenders when the investor can buy the note for a lower price than the outstanding debt amount. By doing so, you become the mortgage lender to the initial lender’s borrower.

Loans that are being paid on time are thought of as performing loans. Performing loans give you stable passive income. Investors also obtain non-performing loans that they either rework to assist the debtor or foreclose on to buy the property below actual worth.

One day, you could accrue a group of mortgage note investments and not have the time to oversee them by yourself. When this happens, you might select from the best loan servicing companies in Exeter CA which will make you a passive investor.

When you conclude that this model is perfect for you, insert your name in our directory of Exeter top companies that buy mortgage notes. When you’ve done this, you’ll be seen by the lenders who promote lucrative investment notes for acquisition by investors like you.

Factors to Consider

Foreclosure Rates

Performing loan purchasers are on lookout for markets that have low foreclosure rates. High rates may indicate opportunities for non-performing mortgage note investors, but they need to be careful. If high foreclosure rates are causing an underperforming real estate market, it may be difficult to resell the property if you foreclose on it.

Foreclosure Laws

It is necessary for mortgage note investors to study the foreclosure regulations in their state. Some states require mortgage documents and others require Deeds of Trust. Lenders might have to obtain the court’s okay to foreclose on a home. Note owners do not need the judge’s permission with a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage notes have a negotiated interest rate. Your investment return will be influenced by the interest rate. Regardless of which kind of note investor you are, the loan note’s interest rate will be critical for your predictions.

The mortgage loan rates quoted by conventional lenders aren’t the same in every market. Loans offered by private lenders are priced differently and may be more expensive than conventional mortgage loans.

Profitable mortgage note buyers routinely check the mortgage interest rates in their area offered by private and traditional mortgage companies.

Demographics

When note investors are determining where to buy notes, they will consider the demographic dynamics from possible markets. The community’s population increase, employment rate, employment market growth, pay levels, and even its median age contain valuable information for note buyers.
A young growing region with a strong employment base can generate a stable revenue stream for long-term note buyers searching for performing notes.

Non-performing mortgage note buyers are interested in related elements for various reasons. A strong local economy is needed if investors are to locate buyers for collateral properties they’ve foreclosed on.

Property Values

The more equity that a borrower has in their home, the more advantageous it is for the mortgage loan holder. If you have to foreclose on a mortgage loan with little equity, the foreclosure auction may not even repay the balance invested in the note. As mortgage loan payments reduce the amount owed, and the value of the property goes up, the homeowner’s equity goes up too.

Property Taxes

Payments for house taxes are usually sent to the lender along with the mortgage loan payment. The mortgage lender passes on the taxes to the Government to make sure they are paid promptly. The lender will need to compensate if the mortgage payments cease 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 house payments also keep growing. This makes it complicated for financially challenged borrowers to meet their obligations, so the mortgage loan might become delinquent.

Real Estate Market Strength

Both performing and non-performing note buyers can do well in a good real estate market. It is crucial to understand that if you need to foreclose on a property, you won’t have difficulty getting an acceptable price for it.

Mortgage note investors additionally have an opportunity to originate mortgage loans directly to borrowers in stable real estate communities. This is a profitable source of revenue for accomplished investors.

Many real estate investment businesses are structured as trusts termed Real Estate Investment Trusts or REITs. This was initially done as a method to enable the regular investor to invest in real estate. Shares in REITs are affordable for the majority of investors.

Shareholders in REITs are entirely passive investors. Investment risk is diversified across a package of properties. Shares in a REIT can be sold when it’s convenient for you. Members in a REIT aren’t able to advise or pick real estate properties for investment. You are confined to the REIT’s selection of properties for investment.

Mutual funds that own shares of real estate companies are known as real estate investment funds. Any actual real estate property is possessed by the real estate companies, not the fund. This is another method for passive investors to diversify their investments with real estate avoiding the high initial expense or liability. Investment funds aren’t required to pay dividends unlike a REIT. The worth of a fund to an investor is the expected appreciation of the price of its shares.

You may choose a fund that specializes in a predetermined kind of real estate you are familiar with, but you don’t get to pick the location of each real estate investment. You must count on the fund’s managers to determine which markets and properties are chosen for investment.