Ultimate Jenison Real Estate Investing Guide for 2024

BRRRR is an abbreviation of “Buy, Rehab, Rent, Refinance, Repeat”. When you intend to grow your investments, the BRRRR is a proven method to utilize. A critical part of this strategy is to be able to get a “cash-out” refinance.

When you are done with repairing the home, its value should be higher than your complete purchase and renovation expenses. After that, you withdraw the value you generated from the asset in a “cash-out” mortgage refinance. This money is placed into the next investment asset, and so on. You add income-producing assets to your balance sheet and lease revenue to your cash flow.

If your investment property portfolio is big enough, you might delegate its oversight and enjoy passive income. Discover top Jenison real estate managers by looking through our list.

Factors to Consider

Population Growth

The increase or decline of a market’s population is a valuable gauge of the region’s long-term attractiveness for lease property investors. An increasing population usually indicates vibrant relocation which means additional tenants. The community is attractive to businesses and employees to locate, work, and grow families. An expanding population builds a steady foundation of renters who will keep up with rent bumps, and a strong property seller’s market if you decide to unload any assets.

Property Taxes

Property taxes, similarly to insurance and upkeep expenses, may be different from place to market and should be considered carefully when assessing potential returns. Steep real estate tax rates will decrease a property investor’s income. Communities with excessive property taxes aren’t considered a stable setting for short- or long-term investment and need to be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property values and median lease rates that will show you how much rent the market can tolerate. The amount of rent that you can charge in a region will limit the sum you are willing to pay based on the number of years it will take to recoup those funds. A large price-to-rent ratio informs you that you can collect lower rent in that market, a small one says that you can charge more.

Median Gross Rents

Median gross rents are an important indicator of the strength of a lease market. Median rents should be going up to justify your investment. Declining rents are a red flag to long-term investor landlords.

Median Population Age

The median population age that you are on the hunt for in a robust investment market will be close to the age of salaried individuals. If people are moving into the city, the median age will not have a problem staying at the level of the labor force. If you see a high median age, your supply of tenants is declining. A vibrant economy can’t be sustained by retired professionals.

Employment Base Diversity

A varied employment base is something a wise long-term investor landlord will search for. When people are employed by a couple of major employers, even a small disruption in their operations might cost you a lot of renters and expand your exposure immensely.

Unemployment Rate

High unemployment results in fewer renters and an unpredictable housing market. Otherwise strong businesses lose customers when other businesses retrench workers. Individuals who still have workplaces may find their hours and wages reduced. This could cause delayed rent payments and tenant defaults.

Income Rates

Median household and per capita income information is a vital instrument to help you navigate the markets where the renters you want are residing. Historical salary statistics will communicate to you if salary growth will permit you to hike rental charges to achieve your profit calculations.

Number of New Jobs Created

The active economy that you are hunting for will be producing a large amount of jobs on a consistent basis. A larger amount of jobs equal additional tenants. Your plan of leasing and purchasing additional real estate requires an economy that can provide more jobs.

School Ratings

The reputation of school districts has an undeniable influence on home values across the city. Well-respected schools are a necessity for companies that are thinking about relocating. Relocating companies relocate and attract potential renters. Home values benefit thanks to additional employees who are homebuyers. You can’t run into a vibrantly soaring housing market without highly-rated schools.

Property Appreciation Rates

The essence of a long-term investment plan is to keep the investment property. Investing in properties that you aim to keep without being positive that they will appreciate in value is a blueprint for failure. Subpar or shrinking property value in a region under consideration is unacceptable.

A short-term rental is a furnished apartment or house where a tenant lives for shorter than a month. The per-night rental rates are typically higher in short-term rentals than in long-term units. Because of the high number of tenants, short-term rentals necessitate more frequent maintenance and tidying.

Short-term rentals are popular with clients travelling for work who are in the city for several nights, people who are migrating and want transient housing, and excursionists. House sharing portals such as AirBnB and VRBO have helped a lot of homeowners to get in on the short-term rental industry. Short-term rentals are viewed to be an effective way to get started on investing in real estate.

Short-term rentals involve engaging with occupants more repeatedly than long-term rentals. That means that landlords deal with disagreements more often. You may want to cover your legal exposure by engaging one of the top Jenison investor friendly real estate attorneys.

Factors to Consider

Short-Term Rental Income

You must decide how much rental income needs to be created to make your investment worthwhile. A city’s short-term rental income rates will promptly show you if you can predict to reach your estimated income range.

Median Property Prices

Carefully evaluate the amount that you are able to spend on additional investment properties. To see whether a region has possibilities for investment, look at the median property prices. You can narrow your property search by looking at median prices in the area’s sub-markets.

Price Per Square Foot

Price per square foot can be impacted even by the style and floor plan of residential properties. If you are looking at similar kinds of real estate, like condominiums or detached single-family homes, the price per square foot is more reliable. If you take note of this, the price per square foot can give you a general view of property prices.

Short-Term Rental Occupancy Rate

The number of short-term rental units that are currently tenanted in a community is critical information for a future rental property owner. A high occupancy rate signifies that a new supply of short-term rentals is needed. When the rental occupancy indicators are low, there isn’t enough need in the market and you must explore in a different place.

Short-Term Rental Cash-on-Cash Return

To understand if it’s a good idea to put your cash in a certain property or community, compute the cash-on-cash return. You can compute the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by your cash being invested. The answer will be a percentage. High cash-on-cash return shows that you will recoup your capital more quickly and the investment will be more profitable. When you take a loan for part of the investment amount and use less of your own funds, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Another metric indicates the market value of real estate as a cash flow asset — average short-term rental capitalization (cap) rate. Typically, the less money an investment asset costs (or is worth), the higher the cap rate will be. Low cap rates reflect more expensive real estate. Divide your expected Net Operating Income (NOI) by the investment property’s market worth or asking price. This shows you a percentage that is the yearly return, or cap rate.

Local Attractions

Short-term rental apartments are popular in places where vacationers are attracted by events and entertainment sites. Tourists go to specific areas to watch academic and sporting events at colleges and universities, be entertained by competitions, support their children as they participate in kiddie sports, have the time of their lives at yearly festivals, and stop by theme parks. At certain periods, places with outdoor activities in mountainous areas, seaside locations, or near rivers and lakes will attract large numbers of tourists who want short-term rental units.

When an investor purchases a house under market value, fixes it and makes it more attractive and pricier, and then liquidates the house for revenue, they are referred to as a fix and flip investor. Your calculation of fix-up spendings must be precise, and you have to be able to buy the property for lower than market value.

It is crucial for you to know what homes are going for in the city. The average number of Days On Market (DOM) for properties sold in the city is crucial. Disposing of real estate quickly will keep your costs low and maximize your profitability.

Help motivated property owners in finding your company by placing it in our directory of the best Jenison home cash buyers and top Jenison real estate investment firms.

Also, search for bird dogs for real estate investors in Jenison MI. These experts concentrate on rapidly discovering lucrative investment opportunities before they are listed on the market.

Factors to Consider

Median Home Price

The market’s median home price will help you locate a suitable community for flipping houses. You’re searching for median prices that are modest enough to suggest investment opportunities in the area. This is a fundamental component of a fix and flip market.

If you notice a quick drop in property values, this might indicate that there are potentially properties in the market that qualify for a short sale. Real estate investors who team with short sale specialists in Jenison MI receive regular notifications concerning potential investment real estate. Discover how this is done by reading our guide ⁠— How Do You Buy a Short Sale Property?.

Property Appreciation Rate

Are property values in the region moving up, or going down? You want an environment where real estate prices are steadily and continuously on an upward trend. Home purchase prices in the city need to be going up regularly, not quickly. You could wind up purchasing high and liquidating low in an hectic market.

Average Renovation Costs

Look closely at the potential renovation spendings so you will find out whether you can achieve your targets. The time it requires for getting permits and the municipality’s requirements for a permit request will also influence your plans. If you are required to have a stamped set of plans, you will need to incorporate architect’s charges in your budget.

Population Growth

Population increase is a strong indication of the potential or weakness of the area’s housing market. When the number of citizens isn’t growing, there isn’t going to be a good source of purchasers for your houses.

Median Population Age

The median citizens’ age is an indicator that you may not have included in your investment study. If the median age is the same as the one of the regular worker, it’s a positive indication. People in the local workforce are the most dependable home purchasers. The goals of retirees will most likely not suit your investment venture strategy.

Unemployment Rate

If you stumble upon a location that has a low unemployment rate, it’s a strong indicator of profitable investment prospects. The unemployment rate in a prospective investment market needs to be less than the country’s average. When it’s also lower than the state average, that’s much more desirable. Non-working individuals can’t acquire your real estate.

Income Rates

Median household and per capita income are a great gauge of the scalability of the home-purchasing environment in the city. When people acquire a property, they usually need to take a mortgage for the home purchase. Homebuyers’ capacity to be provided a loan depends on the size of their wages. You can see from the location’s median income whether enough individuals in the region can manage to buy your real estate. Specifically, income growth is critical if you plan to expand your business. If you want to raise the asking price of your houses, you want to be certain that your customers’ salaries are also rising.

Number of New Jobs Created

Knowing how many jobs appear every year in the city adds to your confidence in a city’s investing environment. More people acquire homes when the city’s economy is generating jobs. Competent skilled employees looking into purchasing a property and settling choose relocating to communities where they will not be out of work.

Hard Money Loan Rates

Fix-and-flip investors regularly utilize hard money loans instead of conventional loans. Hard money loans enable these investors to move forward on hot investment opportunities right away. Locate private money lenders for real estate in Jenison MI and compare their interest rates.

If you are inexperienced with this funding product, learn more by using our informative blog post — Hard Money Loans Guide for Real Estate Investors.

In real estate wholesaling, you search for a property that real estate investors would think is a lucrative opportunity and sign a contract to purchase the property. A real estate investor then ”purchases” the contract from you. The seller sells the property under contract to the real estate investor instead of the real estate wholesaler. You are selling the rights to the purchase contract, not the house itself.

This business involves using a title firm that is experienced in the wholesale purchase and sale agreement assignment operation and is capable and willing to coordinate double close purchases. Discover investor friendly title companies in Jenison MI on our list.

To learn how wholesaling works, read our detailed article How Does Real Estate Wholesaling Work?. When you choose wholesaling, add your investment project in our directory of the best wholesale property investors in Jenison MI. This way your possible clientele will see your location and contact you.

Factors to Consider

Median Home Prices

Median home prices are key to locating areas where properties are selling in your real estate investors’ price point. Since investors want investment properties that are on sale for lower than market value, you will have to find below-than-average median prices as an implicit tip on the possible supply of houses that you may buy for below market value.

A rapid depreciation in the value of real estate might cause the accelerated appearance of properties with owners owing more than market worth that are wanted by wholesalers. This investment method regularly carries several uncommon perks. But it also raises a legal risk. Discover details about wholesaling a short sale property from our exhaustive explanation. Once you have decided to attempt wholesaling short sales, make certain to employ someone on the directory of the best short sale law firms in Jenison MI and the best foreclosure lawyers in Jenison MI to help you.

Property Appreciation Rate

Median home value fluctuations clearly illustrate the housing value picture. Investors who intend to hold investment assets will need to know that home market values are constantly increasing. Shrinking purchase prices illustrate an equally weak rental and home-selling market and will dismay real estate investors.

Population Growth

Population growth figures are crucial for your potential contract purchasers. An increasing population will need more housing. This combines both leased and resale properties. A region with a shrinking community will not interest the investors you need to purchase your contracts.

Median Population Age

A reliable residential real estate market for investors is strong in all aspects, particularly tenants, who evolve into homeowners, who transition into more expensive homes. A region that has a big workforce has a constant source of renters and buyers. When the median population age corresponds with the age of employed residents, it shows a reliable real estate market.

Income Rates

The median household and per capita income in a robust real estate investment market need to be on the upswing. Surges in rent and asking prices have to be backed up by improving salaries in the area. Real estate investors stay away from places with poor population salary growth numbers.

Unemployment Rate

The location’s unemployment stats are an important factor for any prospective wholesale property buyer. Delayed lease payments and lease default rates are prevalent in communities with high unemployment. This upsets long-term real estate investors who need to lease their property. Real estate investors can’t depend on renters moving up into their properties when unemployment rates are high. This is a challenge for short-term investors purchasing wholesalers’ agreements to rehab and flip a home.

Number of New Jobs Created

The amount of fresh jobs being produced in the region completes a real estate investor’s review of a potential investment spot. Job creation implies a higher number of workers who require a place to live. Long-term real estate investors, such as landlords, and short-term investors which include flippers, are attracted to markets with good job creation rates.

Average Renovation Costs

Rehab spendings have a big impact on a rehabber’s profit. Short-term investors, like fix and flippers, don’t earn anything if the price and the renovation costs equal to a higher amount than the After Repair Value (ARV) of the home. The cheaper it is to update an asset, the more lucrative the community is for your future purchase agreement clients.

This strategy involves buying debt (mortgage note) from a mortgage holder for less than the balance owed. When this occurs, the note investor takes the place of the debtor’s lender.

When a mortgage loan is being paid as agreed, it is considered a performing loan. They earn you monthly passive income. Note investors also invest in non-performing loans that they either re-negotiate to assist the debtor or foreclose on to purchase the collateral below market value.

Ultimately, you may accrue a group of mortgage note investments and lack the ability to manage the portfolio alone. In this event, you can employ one of home loan servicers in Jenison MI that would essentially turn your investment into passive income.

Should you determine to employ this plan, append your business to our list of mortgage note buyers in Jenison MI. This will make you more visible to lenders providing profitable possibilities to note buyers like you.

Factors to Consider

Foreclosure Rates

Mortgage note investors searching for stable-performing loans to buy will hope to see low foreclosure rates in the region. High rates may indicate investment possibilities for non-performing mortgage note investors, however they have to be careful. But foreclosure rates that are high can signal a weak real estate market where getting rid of a foreclosed house will likely be difficult.

Foreclosure Laws

Mortgage note investors need to know the state’s regulations concerning foreclosure prior to pursuing this strategy. Are you faced with a Deed of Trust or a mortgage? When using a mortgage, a court has to allow a foreclosure. Note owners do not need the court’s agreement with a Deed of Trust.

Mortgage Interest Rates

The mortgage interest rate is memorialized in the mortgage loan notes that are purchased by investors. That rate will unquestionably affect your returns. No matter which kind of investor you are, the note’s interest rate will be critical for your estimates.

Conventional interest rates can vary by as much as a quarter of a percent across the United States. Private loan rates can be moderately more than traditional interest rates considering the greater risk taken on by private lenders.

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

Demographics

A lucrative note investment plan includes an assessment of the region by using demographic data. It is essential to know whether enough citizens in the area will continue to have reliable jobs and incomes in the future.
Performing note investors seek homeowners who will pay on time, generating a repeating income stream of loan payments.

Investors who acquire non-performing notes can also take advantage of strong markets. If these note buyers have to foreclose, they’ll need a thriving real estate market in order to unload the defaulted property.

Property Values

The greater the equity that a homebuyer has in their home, the more advantageous it is for you as the mortgage lender. This increases the chance that a possible foreclosure liquidation will repay the amount owed. As mortgage loan payments lessen the balance owed, and the value of the property increases, the borrower’s equity grows.

Property Taxes

Most often, mortgage lenders collect the house tax payments from the homebuyer each month. The lender pays the property taxes to the Government to ensure they are paid on time. If the homeowner stops performing, unless the loan owner pays the property taxes, they won’t be paid on time. Tax liens leapfrog over all other liens.

If a community has a history of increasing property tax rates, the total house payments in that city are steadily expanding. Delinquent customers might not be able to keep up with increasing loan payments and could cease paying altogether.

Real Estate Market Strength

A city with growing property values promises strong potential for any mortgage note investor. It is crucial to understand that if you need to foreclose on a collateral, you won’t have trouble getting an acceptable price for the collateral property.

A vibrant market might also be a lucrative place for initiating mortgage notes. It’s a supplementary phase of a mortgage note buyer’s career.

A REIT, or Real Estate Investment Trust, means a company that invests in income-producing properties. Before REITs were invented, real estate investing was considered too expensive for most citizens. REIT shares are economical for most investors.

Investing in a REIT is a kind of passive investing. REITs oversee investors’ risk with a diversified group of assets. Shares in a REIT can be liquidated when it’s desirable for the investor. But REIT investors do not have the capability to pick particular assets or locations. Their investment is limited to the assets owned by their REIT.

Real estate investment funds are in essence mutual funds focusing on real estate companies, such as REITs. Any actual real estate property is owned by the real estate businesses rather than the fund. This is another method for passive investors to allocate their investments with real estate avoiding the high initial expense or liability. Whereas REITs have to distribute dividends to its shareholders, funds do not. Like other stocks, investment funds’ values rise and fall with their share market value.

Investors are able to choose a fund that focuses on particular segments of the real estate business but not particular areas for each real estate property investment. As passive investors, fund participants are happy to permit the management team of the fund handle all investment choices.