Ultimate Exeter Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term investment strategy — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a plan for repeated expansion. It is critical that you be able to obtain a “cash-out” mortgage refinance for the plan to work.

When you have finished improving the investment property, its value has to be more than your complete acquisition and renovation spendings. Next, you take the value you created out of the property in a “cash-out” mortgage refinance. You acquire your next property with the cash-out sum and do it anew. You add improving investment assets to the balance sheet and rental income to your cash flow.

When your investment real estate portfolio is large enough, you might delegate its oversight and receive passive cash flow. Discover the best property management companies in Exeter ME by looking through our directory.

Factors to Consider

Population Growth

The expansion or deterioration of a community’s population is a valuable barometer of the area’s long-term desirability for lease property investors. If the population growth in a location is robust, then additional tenants are likely coming into the community. Relocating businesses are drawn to increasing communities giving job security to people who move there. This means stable tenants, more rental income, and more potential buyers when you want to sell the property.

Property Taxes

Property taxes, ongoing upkeep spendings, and insurance specifically influence your revenue. Unreasonable expenditures in these areas threaten your investment’s bottom line. Regions with high property tax rates are not a reliable environment for short- or long-term investment and should be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property values and median lease rates that will signal how much rent the market can handle. The price you can demand in an area will define the amount you are able to pay determined by the number of years it will take to repay those funds. A large p/r signals you that you can charge modest rent in that location, a low p/r informs you that you can demand more.

Median Gross Rents

Median gross rents are a clear illustration of the vitality of a rental market. Search for a steady rise in median rents during a few years. If rents are declining, you can eliminate that community from consideration.

Median Population Age

The median citizens’ age that you are hunting for in a vibrant investment market will be close to the age of working people. You will discover this to be accurate in markets where workers are migrating. If working-age people are not coming into the market to succeed retiring workers, the median age will go up. That is a weak long-term financial picture.

Employment Base Diversity

A diverse employment base is something a wise long-term rental property owner will look for. If there are only a couple significant employers, and one of them relocates or closes down, it will lead you to lose renters and your asset market worth to plunge.

Unemployment Rate

You won’t be able to benefit from a steady rental income stream in a locality with high unemployment. Unemployed citizens stop being customers of yours and of related companies, which creates a domino effect throughout the market. This can generate too many layoffs or reduced work hours in the location. This may increase the instances of delayed rent payments and lease defaults.

Income Rates

Median household and per capita income stats let you know if a high amount of ideal renters dwell in that market. Your investment budget will consider rental fees and property appreciation, which will be dependent on wage growth in the area.

Number of New Jobs Created

The more jobs are regularly being created in a community, the more dependable your renter supply will be. A higher number of jobs equal additional renters. This gives you confidence that you will be able to retain a high occupancy level and acquire additional rentals.

School Ratings

The quality of school districts has an undeniable influence on property prices across the area. Companies that are thinking about moving need outstanding schools for their workers. Dependable renters are a consequence of a steady job market. New arrivals who are looking for a residence keep real estate prices high. Highly-rated schools are an essential component for a robust real estate investment market.

Property Appreciation Rates

High real estate appreciation rates are a requirement for a lucrative long-term investment. You have to be certain that your real estate assets will rise in value until you need to move them. Substandard or dropping property worth in a market under evaluation is not acceptable.

Residential real estate where tenants stay in furnished spaces for less than a month are called short-term rentals. Short-term rental landlords charge more rent each night than in long-term rental business. Short-term rental homes could necessitate more frequent care and sanitation.

Typical short-term tenants are people on vacation, home sellers who are buying another house, and people traveling on business who require a more homey place than a hotel room. House sharing platforms like AirBnB and VRBO have encouraged countless homeowners to participate in the short-term rental industry. Short-term rentals are deemed as an effective way to start investing in real estate.

The short-term rental housing venture requires interaction with occupants more frequently in comparison with annual lease units. This determines that landlords face disputes more frequently. Think about protecting yourself and your properties by joining one of investor friendly real estate attorneys in Exeter ME to your team of experts.

Factors to Consider

Short-Term Rental Income

Initially, figure out the amount of rental income you must earn to reach your desired profits. A quick look at a city’s current typical short-term rental prices will show you if that is a good city for you.

Median Property Prices

Thoroughly evaluate the amount that you can spend on additional investment properties. The median values of property will show you if you can manage to participate in that community. You can customize your property hunt by evaluating median values in the location’s sub-markets.

Price Per Square Foot

Price per sq ft can be misleading if you are looking at different properties. When the styles of potential properties are very different, the price per square foot might not give a correct comparison. You can use the price per sq ft criterion to see a good general view of property values.

Short-Term Rental Occupancy Rate

The necessity for new rental properties in a region can be checked by evaluating the short-term rental occupancy level. If most of the rental properties have renters, that market demands additional rental space. Low occupancy rates reflect that there are more than too many short-term rental properties in that location.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return can inform you if the investment is a good use of your own funds. Divide the Net Operating Income (NOI) by the total amount of cash used. The result you get is a percentage. High cash-on-cash return demonstrates that you will recoup your cash quicker and the purchase will earn more profit. When you get financing for part of the investment budget and spend less of your cash, you will see 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. Generally, the less an investment asset will cost (or is worth), the higher the cap rate will be. When cap rates are low, you can assume to pay a higher amount for rental units in that area. You can get the cap rate for possible investment real estate by dividing the Net Operating Income (NOI) by the Fair Market Value or listing price of the property. The answer is the per-annum return in a percentage.

Local Attractions

Short-term tenants are often tourists who come to an area to enjoy a recurrent important event or visit tourist destinations. Tourists visit specific areas to attend academic and sporting events at colleges and universities, be entertained by professional sports, cheer for their kids as they compete in kiddie sports, party at yearly carnivals, and stop by adventure parks. Popular vacation sites are situated in mountain and beach points, alongside lakes, and national or state parks.

When a home flipper buys a house for less than the market worth, renovates it and makes it more attractive and pricier, and then sells the property for a profit, they are referred to as a fix and flip investor. To keep the business profitable, the flipper has to pay below market value for the property and compute how much it will take to repair the home.

It’s critical for you to understand how much properties are selling for in the community. You always have to research how long it takes for listings to sell, which is illustrated by the Days on Market (DOM) data. As a “house flipper”, you will want to sell the improved house without delay so you can eliminate upkeep spendings that will diminish your revenue.

To help motivated home sellers find you, enter your business in our directories of cash property buyers in Exeter ME and property investors in Exeter ME.

Also, hunt for bird dogs for real estate investors in Exeter ME. These specialists concentrate on quickly discovering lucrative investment ventures before they come on the marketplace.

Factors to Consider

Median Home Price

Median home value data is a vital tool for assessing a potential investment community. You’re seeking for median prices that are modest enough to indicate investment opportunities in the region. This is a basic ingredient of a fix and flip market.

When regional data indicates a rapid decrease in property market values, this can highlight the availability of possible short sale properties. You’ll find out about possible investments when you join up with Exeter short sale processing companies. You’ll find additional information concerning short sales in our article ⁠— How Can I Buy a Short Sale Home?.

Property Appreciation Rate

Are real estate prices in the community moving up, or going down? You’re looking for a constant growth of the city’s housing values. Unreliable price shifts are not good, even if it is a substantial and quick growth. Buying at the wrong period in an unsteady environment can be disastrous.

Average Renovation Costs

You’ll need to look into construction costs in any prospective investment location. The way that the local government goes about approving your plans will have an effect on your project too. You have to know whether you will be required to employ other experts, like architects or engineers, so you can get prepared for those expenses.

Population Growth

Population data will tell you if there is an expanding necessity for residential properties that you can supply. Flat or negative population growth is an indicator of a sluggish market with not enough purchasers to validate your investment.

Median Population Age

The median population age can additionally tell you if there are qualified home purchasers in the market. The median age should not be lower or higher than that of the typical worker. A high number of such residents indicates a substantial supply of home purchasers. Individuals who are preparing to depart the workforce or have already retired have very restrictive residency requirements.

Unemployment Rate

When researching an area for real estate investment, search for low unemployment rates. The unemployment rate in a future investment area should be less than the US average. When the local unemployment rate is less than the state average, that’s an indication of a preferable financial market. In order to buy your improved property, your potential clients have to have a job, and their clients too.

Income Rates

Median household and per capita income numbers show you if you will get adequate buyers in that place for your residential properties. Most families usually get a loan to buy real estate. To be eligible for a mortgage loan, a person can’t be spending for monthly repayments more than a specific percentage of their wage. The median income stats show you if the community is good for your investment efforts. In particular, income growth is important if you need to grow your investment business. Building spendings and home prices go up over time, and you want to be sure that your potential clients’ wages will also climb up.

Number of New Jobs Created

The number of jobs generated each year is vital insight as you consider investing in a particular market. A higher number of citizens acquire homes if their area’s financial market is creating jobs. Additional jobs also lure employees coming to the city from other districts, which also strengthens the property market.

Hard Money Loan Rates

Investors who purchase, renovate, and liquidate investment properties are known to employ hard money and not typical real estate financing. This allows investors to rapidly buy undervalued properties. Review the best Exeter private money lenders and study lenders’ charges.

Someone who needs to know about hard money funding options can discover what they are and the way to employ them by reading our guide titled How to Use Hard Money Lenders.

As a real estate wholesaler, you sign a purchase contract to buy a house that some other real estate investors will want. When an investor who wants the property is spotted, the sale and purchase agreement is sold to them for a fee. The real buyer then completes the acquisition. The real estate wholesaler does not liquidate the property — they sell the contract to buy one.

This business requires employing a title firm that’s knowledgeable about the wholesale purchase and sale agreement assignment operation and is qualified and willing to coordinate double close deals. Discover Exeter title companies for real estate investors by utilizing our directory.

Our complete guide to wholesaling can be read here: A-to-Z Guide to Property Wholesaling. As you go about your wholesaling activities, place your firm in HouseCashin’s directory of Exeter top house wholesalers. This way your potential clientele will know about you and reach out to you.

Factors to Consider

Median Home Prices

Median home prices in the area will show you if your designated purchase price point is achievable in that location. Since investors prefer investment properties that are on sale for less than market value, you will want to take note of below-than-average median prices as an implicit tip on the possible availability of houses that you may buy for lower than market price.

Rapid worsening in real estate market worth could result in a supply of homes with no equity that appeal to short sale investors. This investment method regularly brings numerous particular perks. Nevertheless, be aware of the legal challenges. Obtain additional data on how to wholesale a short sale with our exhaustive guide. Once you are keen to begin wholesaling, search through Exeter top short sale attorneys as well as Exeter top-rated property foreclosure attorneys directories to find the best advisor.

Property Appreciation Rate

Property appreciation rate boosts the median price stats. Real estate investors who want to sell their properties later, like long-term rental landlords, require a region where real estate values are growing. A weakening median home value will illustrate a poor rental and home-buying market and will disappoint all kinds of investors.

Population Growth

Population growth information is critical for your potential contract buyers. A growing population will require additional housing. There are many people who lease and plenty of clients who buy homes. When a community isn’t multiplying, it doesn’t need new housing and investors will look elsewhere.

Median Population Age

A vibrant housing market necessitates people who are initially leasing, then shifting into homeownership, and then moving up in the housing market. A community with a large employment market has a constant supply of renters and purchasers. A community with these attributes will show a median population age that corresponds with the wage-earning resident’s age.

Income Rates

The median household and per capita income will be increasing in a promising real estate market that real estate investors want to work in. Income growth shows a community that can handle lease rate and real estate purchase price raises. Real estate investors stay away from places with unimpressive population wage growth numbers.

Unemployment Rate

Investors will carefully evaluate the location’s unemployment rate. Tenants in high unemployment regions have a tough time staying current with rent and a lot of them will miss rent payments entirely. Long-term investors who depend on timely lease income will do poorly in these communities. High unemployment builds concerns that will prevent interested investors from buying a house. This is a challenge for short-term investors buying wholesalers’ agreements to renovate and flip a house.

Number of New Jobs Created

The number of new jobs appearing in the community completes a real estate investor’s estimation of a potential investment spot. Job generation implies a higher number of employees who require a place to live. Whether your buyer base consists of long-term or short-term investors, they will be drawn to a place with constant job opening generation.

Average Renovation Costs

Rehab spendings have a strong influence on a real estate investor’s profit. When a short-term investor flips a house, they have to be able to sell it for a higher price than the combined cost of the acquisition and the upgrades. The less you can spend to fix up a house, the more lucrative the community is for your prospective purchase agreement buyers.

Acquiring mortgage notes (loans) is successful when the mortgage note can be bought for less than the remaining balance. This way, you become the mortgage lender to the first lender’s client.

Loans that are being repaid on time are considered performing loans. Performing notes are a stable generator of passive income. Some note investors look for non-performing loans because if the note investor can’t successfully re-negotiate the mortgage, they can always acquire the collateral property at foreclosure for a below market amount.

At some point, you may grow a mortgage note portfolio and find yourself lacking time to oversee it by yourself. At that time, you may want to use our list of Exeter top loan portfolio servicing companies and reclassify your notes as passive investments.

When you find that this model is best for you, insert your name in our list of Exeter top real estate note buying companies. Joining will make you more visible to lenders providing profitable opportunities to note investors like yourself.

Factors to Consider

Foreclosure Rates

Performing note buyers try to find markets showing low foreclosure rates. Non-performing loan investors can cautiously take advantage of cities that have high foreclosure rates as well. If high foreclosure rates are causing a weak real estate environment, it may be tough to get rid of the collateral property if you seize it through foreclosure.

Foreclosure Laws

It is imperative for mortgage note investors to understand the foreclosure regulations in their state. Many states require mortgage paperwork and others utilize Deeds of Trust. With a mortgage, a court has to agree to a foreclosure. You don’t need the court’s agreement with a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage loan notes contain an agreed interest rate. That rate will undoubtedly influence your profitability. Interest rates impact the strategy of both kinds of mortgage note investors.

Conventional lenders charge different mortgage loan interest rates in various parts of the country. Mortgage loans supplied by private lenders are priced differently and can be more expensive than traditional loans.

A note buyer ought to be aware of the private as well as traditional mortgage loan rates in their regions at any given time.

Demographics

An effective note investment plan incorporates a study of the market by utilizing demographic information. Mortgage note investors can learn a great deal by looking at the size of the population, how many citizens are employed, how much they make, and how old the people are.
Investors who like performing notes seek regions where a high percentage of younger individuals have higher-income jobs.

Non-performing note purchasers are reviewing comparable indicators for other reasons. A vibrant local economy is required if they are to locate buyers for collateral properties on which they have foreclosed.

Property Values

The more equity that a homeowner has in their property, the better it is for you as the mortgage lender. If the value isn’t higher than the loan amount, and the lender needs to start foreclosure, the house might not sell for enough to repay the lender. As loan payments decrease the balance owed, and the value of the property appreciates, the borrower’s equity increases.

Property Taxes

Many borrowers pay property taxes to lenders in monthly installments while sending their loan payments. When the property taxes are due, there should be adequate funds in escrow to handle them. If loan payments are not being made, the lender will have to choose between paying the property taxes themselves, or they become delinquent. When property taxes are past due, the government’s lien leapfrogs any other liens to the front of the line and is paid first.

Because tax escrows are combined with the mortgage loan payment, increasing taxes mean larger house payments. This makes it hard for financially weak borrowers to make their payments, so the loan might become delinquent.

Real Estate Market Strength

A vibrant real estate market having good value increase is beneficial for all kinds of note investors. Because foreclosure is an important element of mortgage note investment strategy, increasing property values are essential to discovering a strong investment market.

Note investors additionally have a chance to create mortgage notes directly to homebuyers in consistent real estate regions. This is a desirable stream of income for successful investors.

A REIT, or Real Estate Investment Trust, means a business that makes investments in income-producing properties. REITs were created to allow ordinary investors to buy into real estate. REIT shares are not too costly to the majority of people.

REIT investing is known as passive investing. The risk that the investors are assuming is diversified within a collection of investment assets. Shares can be liquidated whenever it’s agreeable for you. Investors in a REIT aren’t able to recommend or submit real estate properties for investment. The assets that the REIT picks to purchase are the assets you invest in.

Mutual funds that own shares of real estate companies are referred to as real estate investment funds. The fund doesn’t hold real estate — it holds interest in real estate companies. This is another way for passive investors to diversify their portfolio with real estate without the high startup investment or risks. Fund participants might not receive typical disbursements like REIT members do. The benefit to you is generated by appreciation in the worth of the stock.

You may choose a fund that specializes in a predetermined kind of real estate you are familiar with, but you don’t get to determine the location of every real estate investment. Your selection as an investor is to select a fund that you trust to handle your real estate investments.