Ultimate Highland Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. BRRRR is a strategy for consistent growth. This plan revolves around your ability to withdraw cash out when you refinance.

When you are done with repairing the investment property, its market value has to be higher than your total purchase and fix-up costs. Then you receive a cash-out mortgage refinance loan that is computed on the larger property worth, and you extract the balance. This cash is put into one more property, and so on. You buy additional houses or condos and continually expand your rental revenues.

When you’ve built a substantial group of income producing residential units, you might prefer to hire someone else to manage all rental business while you get mailbox income. Discover one of the best property management professionals in Highland KS with the help of our complete directory.

Factors to Consider

Population Growth

The growth or decline of an area’s population is an accurate gauge of the community’s long-term desirability for rental investors. If you discover strong population growth, you can be certain that the market is drawing likely tenants to it. Businesses think of such a region as an attractive place to situate their business, and for workers to situate their households. Rising populations create a strong renter mix that can keep up with rent raises and homebuyers who help keep your investment property values high.

Property Taxes

Real estate taxes, ongoing maintenance expenditures, and insurance directly decrease your profitability. Unreasonable costs in these categories threaten your investment’s profitability. Steep property tax rates may signal an unstable area where expenditures can continue to rise and should be considered a red flag.

Price to Rent Ratio

Price to rent ratio (p/r) is a market indicator that informs you how much you can anticipate to charge for rent. An investor will not pay a steep sum for an investment property if they can only collect a low rent not letting them to repay the investment within a realistic timeframe. The less rent you can demand the higher the p/r, with a low p/r signalling a better rent market.

Median Gross Rents

Median gross rents are a specific benchmark of the acceptance of a lease market under examination. Median rents should be expanding to justify your investment. You will not be able to realize your investment targets in a community where median gross rental rates are declining.

Median Population Age

Median population age in a dependable long-term investment environment should equal the typical worker’s age. If people are migrating into the region, the median age will not have a problem remaining in the range of the employment base. When working-age people aren’t entering the region to replace retirees, the median age will rise. An active economy cannot be sustained by retiring workers.

Employment Base Diversity

A varied employment base is something a smart long-term rental property owner will look for. When the community’s working individuals, who are your renters, are hired by a varied group of companies, you can’t lose all of your renters at once (as well as your property’s market worth), if a major company in the location goes bankrupt.

Unemployment Rate

It is impossible to achieve a sound rental market when there is high unemployment. People who don’t have a job will not be able to purchase products or services. This can cause a large number of layoffs or shrinking work hours in the city. This could result in missed rents and defaults.

Income Rates

Median household and per capita income stats let you know if a sufficient number of desirable renters dwell in that community. Historical salary data will reveal to you if income raises will allow you to mark up rental fees to hit your profit calculations.

Number of New Jobs Created

The more jobs are continuously being provided in a city, the more consistent your renter inflow will be. More jobs mean additional tenants. Your plan of leasing and buying additional assets requires an economy that can provide more jobs.

School Ratings

School ratings in the district will have a strong influence on the local property market. Business owners that are thinking about moving need good schools for their workers. Moving companies relocate and attract potential tenants. Homeowners who relocate to the city have a beneficial influence on real estate prices. For long-term investing, be on the lookout for highly rated schools in a prospective investment location.

Property Appreciation Rates

Robust real estate appreciation rates are a requirement for a profitable long-term investment. You have to see that the chances of your asset raising in price in that neighborhood are good. You do not want to spend any time examining areas showing depressed property appreciation rates.

A furnished residential unit where tenants stay for less than 30 days is called a short-term rental. Long-term rentals, like apartments, charge lower rent a night than short-term rentals. With tenants fast turnaround, short-term rental units need to be repaired and sanitized on a continual basis.

Short-term rentals are used by individuals on a business trip who are in the city for several nights, those who are relocating and need temporary housing, and backpackers. Any property owner can transform their home into a short-term rental with the tools made available by online home-sharing platforms like VRBO and AirBnB. A convenient approach to get into real estate investing is to rent a property you already own for short terms.

Short-term rentals require dealing with tenants more repeatedly than long-term rentals. Because of this, owners handle difficulties regularly. You might need to protect your legal bases by engaging one of the best Highland investor friendly real estate lawyers.

Factors to Consider

Short-Term Rental Income

First, calculate the amount of rental income you should have to achieve your projected profits. A city’s short-term rental income levels will promptly tell you when you can predict to achieve your estimated rental income figures.

Median Property Prices

Meticulously compute the amount that you want to spare for new investment properties. Hunt for areas where the purchase price you count on correlates with the present median property prices. You can customize your property hunt by estimating median prices in the region’s sub-markets.

Price Per Square Foot

Price per square foot could be inaccurate if you are looking at different buildings. A house with open entryways and vaulted ceilings cannot be compared with a traditional-style property with larger floor space. If you remember this, the price per sq ft may give you a general view of real estate prices.

Short-Term Rental Occupancy Rate

The ratio of short-term rental units that are presently filled in a community is critical information for a landlord. An area that needs more rental units will have a high occupancy level. Low occupancy rates reflect that there are already enough short-term units in that area.

Short-Term Rental Cash-on-Cash Return

To find out whether it’s a good idea to put your money in a certain investment asset or location, calculate the cash-on-cash return. Divide the Net Operating Income (NOI) by the amount of cash used. The return is shown as a percentage. High cash-on-cash return shows that you will get back your funds more quickly and the investment will have a higher return. Sponsored investment ventures will reach higher cash-on-cash returns because you will be spending less of your own funds.

Average Short-Term Rental Capitalization (Cap) Rates

Another measurement illustrates the value of a property as a revenue-producing asset — average short-term rental capitalization (cap) rate. High cap rates mean that investment properties are accessible in that city for fair prices. If investment properties in a community have low cap rates, they typically will cost too much. The cap rate is determined by dividing the Net Operating Income (NOI) by the asking price or market worth. This gives you a ratio that is the annual return, or cap rate.

Local Attractions

Important festivals and entertainment attractions will attract vacationers who need short-term rental houses. This includes professional sporting tournaments, kiddie sports competitions, schools and universities, big concert halls and arenas, carnivals, and theme parks. Outdoor scenic spots such as mountainous areas, waterways, beaches, and state and national nature reserves will also invite potential renters.

When a home flipper acquires a property below market value, fixes it so that it becomes more attractive and pricier, and then liquidates it for a profit, they are referred to as a fix and flip investor. The secrets to a profitable investment are to pay a lower price for the investment property than its current value and to precisely calculate the amount needed to make it saleable.

You also have to understand the real estate market where the home is situated. You always have to research how long it takes for listings to sell, which is illustrated by the Days on Market (DOM) information. To effectively “flip” real estate, you have to dispose of the renovated home before you have to come up with cash maintaining it.

So that property owners who have to sell their home can conveniently find you, showcase your availability by using our catalogue of the best cash home buyers in Highland KS along with top real estate investors in Highland KS.

In addition, search for the best real estate bird dogs in Highland KS. Experts in our catalogue focus on securing distressed property investment opportunities while they’re still unlisted.

Factors to Consider

Median Home Price

When you search for a desirable region for house flipping, review the median house price in the district. If purchase prices are high, there might not be a reliable amount of run down properties in the location. This is an important component of a profitable rehab and resale project.

If you see a rapid weakening in property market values, this might indicate that there are potentially houses in the area that will work for a short sale. You can receive notifications concerning these possibilities by working with short sale processors in Highland KS. Uncover more regarding this type of investment explained in our guide How Do You Buy a Short Sale Home?.

Property Appreciation Rate

The shifts in real property values in a city are critical. Fixed increase in median values indicates a strong investment environment. Unsteady value fluctuations aren’t beneficial, even if it’s a substantial and unexpected surge. Buying at the wrong time in an unreliable market can be devastating.

Average Renovation Costs

You will have to evaluate building costs in any potential investment location. The time it takes for acquiring permits and the local government’s requirements for a permit application will also affect your plans. You have to know whether you will be required to use other professionals, such as architects or engineers, so you can get ready for those expenses.

Population Growth

Population data will show you whether there is steady need for housing that you can supply. Flat or declining population growth is an indicator of a weak market with not an adequate supply of buyers to justify your effort.

Median Population Age

The median citizens’ age is a simple indicator of the supply of potential homebuyers. When the median age is the same as that of the usual worker, it is a positive sign. Individuals in the regional workforce are the most dependable house purchasers. People who are preparing to leave the workforce or are retired have very particular residency requirements.

Unemployment Rate

If you run across a market with a low unemployment rate, it is a strong evidence of lucrative investment possibilities. It should definitely be less than the nation’s average. If it’s also lower than the state average, that’s much more attractive. To be able to acquire your improved property, your buyers are required to have a job, and their customers too.

Income Rates

Median household and per capita income levels advise you if you can get adequate buyers in that market for your houses. Most individuals who purchase a home have to have a mortgage loan. Homebuyers’ capacity to borrow a loan hinges on the size of their income. The median income data will tell you if the region is preferable for your investment efforts. You also want to have salaries that are increasing consistently. If you want to raise the asking price of your residential properties, you want to be certain that your customers’ wages are also improving.

Number of New Jobs Created

The number of employment positions created on a consistent basis reflects whether wage and population increase are viable. An increasing job market indicates that a larger number of people are amenable to purchasing a home there. Competent skilled professionals looking into buying a property and settling prefer relocating to regions where they won’t be out of work.

Hard Money Loan Rates

Those who buy, repair, and sell investment real estate opt to engage hard money and not regular real estate financing. This plan enables them complete profitable deals without delay. Review top-rated Highland hard money lenders and look at financiers’ costs.

In case you are unfamiliar with this loan type, understand more by using our informative blog post — What Are Hard Money Loans?.

Wholesaling is a real estate investment plan that requires scouting out homes that are attractive to investors and signing a purchase contract. However you don’t buy the home: after you have the property under contract, you get another person to take your place for a price. The real estate investor then completes the transaction. The wholesaler doesn’t sell the property under contract itself — they just sell the purchase and sale agreement.

The wholesaling mode of investing involves the use of a title company that comprehends wholesale deals and is informed about and engaged in double close transactions. Locate investor friendly title companies in Highland KS in our directory.

Learn more about how wholesaling works from our definitive guide — Real Estate Wholesaling 101. When you choose wholesaling, include your investment project in our directory of the best wholesale real estate investors in Highland KS. This way your likely clientele will learn about your location and reach out to you.

Factors to Consider

Median Home Prices

Median home prices in the city under consideration will immediately show you whether your real estate investors’ required properties are located there. A region that has a large pool of the below-market-value investment properties that your customers require will have a low median home price.

A rapid depreciation in the price of real estate could generate the sudden availability of houses with owners owing more than market worth that are hunted by wholesalers. Short sale wholesalers can gain perks using this strategy. However, be aware of the legal risks. Obtain additional information on how to wholesale a short sale home with our extensive instructions. When you’ve decided to attempt wholesaling short sale homes, make sure to engage someone on the directory of the best short sale attorneys in Highland KS and the best mortgage foreclosure attorneys in Highland KS to help you.

Property Appreciation Rate

Median home price movements explain in clear detail the housing value picture. Investors who want to maintain investment assets will have to discover that home values are constantly going up. Both long- and short-term real estate investors will stay away from an area where residential purchase prices are dropping.

Population Growth

Population growth information is an indicator that real estate investors will analyze in greater detail. An increasing population will have to have additional housing. Investors are aware that this will involve both leasing and purchased housing units. An area with a declining population does not attract the real estate investors you want to buy your purchase contracts.

Median Population Age

A dynamic housing market necessitates individuals who start off leasing, then shifting into homebuyers, and then buying up in the residential market. A community that has a large employment market has a strong supply of renters and buyers. A community with these characteristics will display a median population age that is equivalent to the working adult’s age.

Income Rates

The median household and per capita income will be rising in a strong residential market that real estate investors want to operate in. If renters’ and home purchasers’ salaries are expanding, they can manage surging lease rates and real estate prices. Investors have to have this if they are to reach their estimated returns.

Unemployment Rate

Real estate investors whom you reach out to to close your sale contracts will deem unemployment numbers to be an important bit of knowledge. Renters in high unemployment regions have a tough time staying current with rent and a lot of them will stop making payments altogether. Long-term real estate investors who count on timely lease income will lose revenue in these cities. Real estate investors can’t count on renters moving up into their houses when unemployment rates are high. This is a concern for short-term investors purchasing wholesalers’ contracts to rehab and resell a property.

Number of New Jobs Created

The amount of more jobs being created in the community completes an investor’s review of a prospective investment location. New jobs generated lead to more employees who look for properties to rent and buy. This is beneficial for both short-term and long-term real estate investors whom you rely on to acquire your contracts.

Average Renovation Costs

Improvement expenses will be essential to most investors, as they typically purchase low-cost distressed homes to renovate. The cost of acquisition, plus the expenses for rehabbing, should be lower than the After Repair Value (ARV) of the house to ensure profit. Seek lower average renovation costs.

Note investors obtain a loan from lenders if they can get the note for a lower price than the outstanding debt amount. By doing so, the purchaser becomes the mortgage lender to the first lender’s client.

Loans that are being repaid as agreed are called performing notes. Performing notes give stable income for investors. Some mortgage note investors like non-performing loans because if the note investor cannot successfully restructure the mortgage, they can always acquire the property at foreclosure for a low price.

Eventually, you could produce a selection of mortgage note investments and lack the ability to handle the portfolio alone. When this occurs, you could pick from the best loan servicers in Highland KS which will make you a passive investor.

Should you decide to adopt this investment strategy, you ought to include your project in our directory of the best mortgage note buyers in Highland KS. This will make your business more noticeable to lenders offering desirable possibilities to note buyers like yourself.

Factors to Consider

Foreclosure Rates

Investors hunting for stable-performing loans to acquire will want to find low foreclosure rates in the community. If the foreclosures happen too often, the market may nonetheless be profitable for non-performing note investors. If high foreclosure rates have caused an underperforming real estate environment, it could be difficult to liquidate the property if you seize it through foreclosure.

Foreclosure Laws

Successful mortgage note investors are completely aware of their state’s laws concerning foreclosure. Some states require mortgage paperwork and others use Deeds of Trust. With a mortgage, a court has to allow a foreclosure. Lenders do not have to have the court’s permission with a Deed of Trust.

Mortgage Interest Rates

The interest rate is indicated in the mortgage notes that are acquired by mortgage note investors. That interest rate will unquestionably influence your profitability. No matter which kind of note investor you are, the loan note’s interest rate will be significant for your calculations.

Traditional lenders price different mortgage loan interest rates in various regions of the country. The stronger risk taken on by private lenders is shown in higher loan interest rates for their mortgage loans compared to traditional loans.

Note investors should always be aware of the present local interest rates, private and traditional, in potential investment markets.

Demographics

A region’s demographics data assist mortgage note buyers to target their efforts and effectively use their resources. It’s critical to determine whether enough people in the region will continue to have good employment and incomes in the future.
A youthful growing region with a diverse employment base can contribute a consistent income flow for long-term note investors searching for performing notes.

Note buyers who buy non-performing notes can also take advantage of vibrant markets. A vibrant local economy is needed if they are to find homebuyers for properties they’ve foreclosed on.

Property Values

Mortgage lenders like to see as much home equity in the collateral as possible. When the value is not higher than the mortgage loan balance, and the lender has to foreclose, the home might not generate enough to payoff the loan. The combined effect of loan payments that reduce the loan balance and annual property value appreciation expands home equity.

Property Taxes

Usually homeowners pay property taxes through lenders in monthly portions when they make their loan payments. By the time the taxes are due, there needs to be enough funds being held to handle them. The lender will have to make up the difference if the house payments stop or the investor risks tax liens on the property. When property taxes are past due, the municipality’s lien leapfrogs any other liens to the front of the line and is taken care of first.

If property taxes keep increasing, the customer’s loan payments also keep increasing. Homeowners who are having a hard time affording their loan payments may drop farther behind and ultimately default.

Real Estate Market Strength

A community with growing property values has good opportunities for any note investor. It’s crucial to understand that if you have to foreclose on a collateral, you won’t have difficulty receiving an appropriate price for it.

Mortgage note investors also have an opportunity to make mortgage loans directly to borrowers in strong real estate communities. This is a good source of revenue for accomplished investors.

A REIT, or Real Estate Investment Trust, means a company that makes investments in income-producing assets. This was first conceived as a way to permit the regular investor to invest in real estate. REIT shares are affordable to most investors.

Shareholders’ investment in a REIT is passive investment. Investment liability is spread throughout a group of investment properties. Investors can liquidate their REIT shares whenever they want. However, REIT investors do not have the option to select individual assets or locations. You are restricted to the REIT’s selection of assets for investment.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate firms. The investment real estate properties aren’t owned by the fund — they are held by the businesses the fund invests in. This is an additional method for passive investors to spread their investments with real estate avoiding the high startup cost or risks. Whereas REITs must distribute dividends to its participants, funds do not. The value of a fund to an investor is the projected growth of the worth of the fund’s shares.

You are able to select a fund that focuses on particular categories of the real estate industry but not specific markets for individual property investment. As passive investors, fund members are happy to permit the administration of the fund handle all investment choices.