Ultimate Jenkintown Real Estate Investing Guide for 2024

The acronym BRRRR is a description of a long-term lease strategy — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a system for consistent expansion. This plan hinges on your ability to take cash out when you refinance.

You add to the worth of the investment property above the amount you spent purchasing and rehabbing the asset. After that, you pocket the value you created from the asset in a “cash-out” refinance. This money is placed into one more property, and so on. You acquire more and more properties and continually expand your lease income.

If an investor holds a substantial collection of investment properties, it is wise to hire a property manager and designate a passive income source. Discover Jenkintown investment property management firms when you search through our list of experts.

Factors to Consider

Population Growth

The growth or fall of the population can illustrate whether that location is of interest to rental investors. If the population increase in a city is high, then more tenants are assuredly coming into the community. Moving employers are drawn to rising locations giving reliable jobs to families who relocate there. This means dependable tenants, higher rental revenue, and more likely homebuyers when you intend to sell the rental.

Property Taxes

Real estate taxes, upkeep, and insurance expenses are considered by long-term lease investors for calculating costs to estimate if and how the investment strategy will be viable. Investment assets located in unreasonable property tax areas will have less desirable profits. Locations with excessive property tax rates are not a dependable situation for short- or long-term investment and need to be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is a clue to how high of a rent can be collected in comparison to the value of the investment property. An investor can not pay a steep price for a rental home if they can only collect a modest rent not enabling them to repay the investment within a reasonable time. The less rent you can charge the higher the price-to-rent ratio, with a low p/r showing a more robust rent market.

Median Gross Rents

Median gross rents are an accurate benchmark of the approval of a rental market under consideration. Median rents should be expanding to justify your investment. Shrinking rents are a bad signal to long-term investor landlords.

Median Population Age

Median population age in a good long-term investment environment must show the typical worker’s age. You’ll learn this to be true in areas where people are relocating. A high median age illustrates that the current population is aging out without being replaced by younger workers migrating there. That is a weak long-term financial prospect.

Employment Base Diversity

Having multiple employers in the location makes the economy less risky. If the residents are employed by only several dominant employers, even a minor disruption in their operations could cause you to lose a great deal of tenants and raise your liability considerably.

Unemployment Rate

It’s not possible to have a steady rental market when there are many unemployed residents in it. Out-of-work citizens stop being clients of yours and of other companies, which causes a domino effect throughout the city. People who continue to keep their jobs may find their hours and salaries cut. Even tenants who have jobs may find it difficult to stay current with their rent.

Income Rates

Median household and per capita income will illustrate if the tenants that you require are residing in the region. Your investment calculations will include rent and asset appreciation, which will be based on wage raise in the market.

Number of New Jobs Created

A growing job market produces a steady supply of renters. The employees who are hired for the new jobs will need housing. Your strategy of leasing and purchasing more assets requires an economy that will create new jobs.

School Ratings

School quality in the city will have a significant impact on the local property market. When a company evaluates an area for possible expansion, they know that first-class education is a must-have for their workers. Moving companies relocate and draw potential tenants. Recent arrivals who need a residence keep property market worth strong. For long-term investing, search for highly graded schools in a potential investment area.

Property Appreciation Rates

High property appreciation rates are a necessity for a viable long-term investment. Investing in properties that you expect to maintain without being certain that they will rise in price is a recipe for failure. You do not need to allot any time navigating cities showing subpar property appreciation rates.

Residential units where renters live in furnished accommodations for less than thirty days are known as short-term rentals. The per-night rental prices are normally higher in short-term rentals than in long-term ones. Because of the high rotation of tenants, short-term rentals require additional recurring care and sanitation.

Average short-term renters are people taking a vacation, home sellers who are waiting to close on their replacement home, and people traveling for business who want something better than a hotel room. House sharing sites like AirBnB and VRBO have encouraged a lot of real estate owners to participate in the short-term rental business. Short-term rentals are considered a good approach to kick off investing in real estate.

Short-term rental landlords require working directly with the tenants to a larger degree than the owners of longer term leased properties. This leads to the investor having to constantly manage complaints. You may need to protect your legal liability by working with one of the top Jenkintown investor friendly real estate law firms.

Factors to Consider

Short-Term Rental Income

Initially, determine the amount of rental income you need to reach your estimated profits. A region’s short-term rental income rates will promptly show you if you can expect to achieve your estimated rental income figures.

Median Property Prices

You also need to determine the budget you can spare to invest. Scout for communities where the purchase price you count on corresponds with the existing median property prices. You can calibrate your location survey by studying the median market worth in specific sub-markets.

Price Per Square Foot

Price per sq ft may be misleading when you are looking at different units. A home with open foyers and vaulted ceilings cannot be contrasted with a traditional-style property with larger floor space. If you take this into account, the price per sq ft can give you a basic idea of real estate prices.

Short-Term Rental Occupancy Rate

The necessity for additional rental properties in a market can be verified by analyzing the short-term rental occupancy rate. When most of the rental properties have few vacancies, that area necessitates more rentals. If investors in the community are having challenges filling their existing properties, you will have trouble renting yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a way to assess the profitability of an investment plan. You can calculate the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by the cash you are putting in. The result is a percentage. High cash-on-cash return demonstrates that you will regain your money more quickly and the investment will be more profitable. When you borrow part of the investment budget and spend less of your money, you will realize a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are commonly utilized by real estate investors to evaluate the market value of investment opportunities. In general, the less a unit costs (or is worth), the higher the cap rate will be. If cap rates are low, you can assume to spend more cash for investment properties in that location. The cap rate is determined by dividing the Net Operating Income (NOI) by the price or market worth. The percentage you get is the property’s cap rate.

Local Attractions

Short-term tenants are often travellers who come to a community to attend a recurring special activity or visit unique locations. If a community has places that annually produce interesting events, like sports arenas, universities or colleges, entertainment halls, and amusement parks, it can draw people from outside the area on a recurring basis. Famous vacation attractions are located in mountainous and beach points, alongside lakes, and national or state nature reserves.

When a real estate investor acquires a property below market worth, renovates it and makes it more attractive and pricier, and then sells it for a profit, they are called a fix and flip investor. Your evaluation of renovation spendings should be correct, and you need to be capable of purchasing the home for lower than market worth.

Examine the values so that you know the actual After Repair Value (ARV). You always have to investigate the amount of time it takes for listings to sell, which is determined by the Days on Market (DOM) data. As a “house flipper”, you’ll need to liquidate the fixed-up real estate right away so you can eliminate carrying ongoing costs that will lower your profits.

To help distressed home sellers locate you, enter your business in our lists of home cash buyers in Jenkintown PA and property investors in Jenkintown PA.

Additionally, look for the best real estate bird dogs in Jenkintown PA. These experts concentrate on rapidly locating promising investment opportunities before they come on the open market.

Factors to Consider

Median Home Price

Median property value data is a valuable tool for estimating a prospective investment market. If values are high, there may not be a reliable supply of run down properties in the location. You must have lower-priced houses for a successful deal.

If you notice a quick drop in property values, this might indicate that there are possibly houses in the city that will work for a short sale. You will be notified concerning these possibilities by partnering with short sale negotiation companies in Jenkintown PA. Learn more concerning this type of investment explained in our guide How Do I Buy a Short Sale Property?.

Property Appreciation Rate

The shifts in real estate market worth in an area are very important. Predictable increase in median prices reveals a strong investment market. Housing purchase prices in the market need to be growing constantly, not quickly. You may end up purchasing high and selling low in an unreliable market.

Average Renovation Costs

A comprehensive review of the city’s construction costs will make a significant influence on your area choice. The time it will require for getting permits and the municipality’s requirements for a permit application will also impact your decision. To make an accurate financial strategy, you will need to understand if your plans will have to involve an architect or engineer.

Population Growth

Population increase statistics allow you to take a peek at housing need in the region. If the population isn’t increasing, there isn’t going to be an adequate supply of homebuyers for your properties.

Median Population Age

The median population age will also show you if there are adequate homebuyers in the market. When the median age is the same as the one of the regular worker, it is a positive indication. A high number of such citizens reflects a significant source of home purchasers. Individuals who are planning to leave the workforce or have already retired have very restrictive residency needs.

Unemployment Rate

When assessing an area for real estate investment, keep your eyes open for low unemployment rates. The unemployment rate in a future investment area should be less than the nation’s average. If it’s also lower than the state average, it’s even more attractive. Non-working people cannot purchase your houses.

Income Rates

Median household and per capita income are a solid sign of the scalability of the housing conditions in the community. Most homebuyers need to take a mortgage to purchase a house. The borrower’s income will determine the amount they can borrow and whether they can purchase a house. You can see from the region’s median income if enough people in the area can manage to purchase your houses. Look for regions where wages are going up. Construction costs and housing prices rise from time to time, and you need to know that your prospective customers’ wages will also improve.

Number of New Jobs Created

The number of employment positions created on a steady basis tells if income and population increase are sustainable. More citizens buy homes when the city’s financial market is generating jobs. With additional jobs created, new potential buyers also relocate to the area from other towns.

Hard Money Loan Rates

Fix-and-flip real estate investors frequently employ hard money loans instead of typical financing. This enables investors to rapidly buy distressed assets. Locate top-rated hard money lenders in Jenkintown PA so you may review their fees.

People who are not experienced regarding hard money lending can uncover what they need to understand with our article for newbie investors — What Is Hard Money Lending?.

Wholesaling is a real estate investment approach that requires finding houses that are interesting to real estate investors and signing a purchase contract. When an investor who wants the residential property is spotted, the contract is sold to the buyer for a fee. The contracted property is bought by the real estate investor, not the real estate wholesaler. The wholesaler does not sell the property under contract itself — they only sell the purchase contract.

The wholesaling mode of investing involves the engagement of a title insurance firm that understands wholesale deals and is knowledgeable about and engaged in double close purchases. Search for title services for wholesale investors in Jenkintown PA in our directory.

Our in-depth guide to wholesaling can be viewed here: Ultimate Guide to Wholesaling Real Estate. When you opt for wholesaling, add your investment company in our directory of the best wholesale property investors in Jenkintown PA. This will let your possible investor customers locate and reach you.

Factors to Consider

Median Home Prices

Median home values in the community will tell you if your designated price point is possible in that location. As real estate investors want properties that are on sale for less than market value, you will need to take note of below-than-average median purchase prices as an implicit hint on the possible source of properties that you could buy for less than market value.

A rapid downturn in real estate worth may lead to a large number of ’upside-down’ residential units that short sale investors look for. Short sale wholesalers frequently gain advantages from this strategy. But it also creates a legal risk. Learn about this from our in-depth blog post Can You Wholesale a Short Sale?. Once you’re prepared to start wholesaling, look through Jenkintown top short sale attorneys as well as Jenkintown top-rated foreclosure law offices lists to locate the appropriate counselor.

Property Appreciation Rate

Median home purchase price dynamics are also important. Real estate investors who intend to keep real estate investment assets will want to know that home values are regularly going up. Dropping values show an unequivocally weak rental and housing market and will scare away investors.

Population Growth

Population growth information is a predictor that investors will look at carefully. When the population is expanding, new residential units are needed. They realize that this will combine both rental and purchased housing units. When a population is not expanding, it doesn’t require additional houses and investors will look in other areas.

Median Population Age

A good residential real estate market for investors is agile in all areas, notably renters, who become home purchasers, who move up into larger houses. For this to take place, there needs to be a stable workforce of potential renters and homeowners. A place with these attributes will display a median population age that is equivalent to the wage-earning resident’s age.

Income Rates

The median household and per capita income in a strong real estate investment market have to be going up. If tenants’ and home purchasers’ wages are increasing, they can absorb soaring lease rates and residential property purchase costs. That will be crucial to the property investors you are looking to attract.

Unemployment Rate

The community’s unemployment rates are a crucial consideration for any future wholesale property purchaser. High unemployment rate forces more tenants to delay rental payments or default altogether. This hurts long-term investors who need to lease their investment property. Investors cannot rely on renters moving up into their houses if unemployment rates are high. This is a challenge for short-term investors buying wholesalers’ contracts to repair and resell a property.

Number of New Jobs Created

The frequency of jobs created per year is a crucial element of the residential real estate picture. Job generation implies added workers who have a need for housing. No matter if your purchaser pool consists of long-term or short-term investors, they will be attracted to a region with stable job opening generation.

Average Renovation Costs

An indispensable variable for your client real estate investors, specifically house flippers, are renovation costs in the location. Short-term investors, like house flippers, won’t make a profit if the price and the rehab expenses total to a larger sum than the After Repair Value (ARV) of the home. The less you can spend to update a property, the more lucrative the area is for your future contract buyers.

Note investing means purchasing debt (mortgage note) from a mortgage holder at a discount. The borrower makes remaining mortgage payments to the mortgage note investor who has become their new mortgage lender.

When a mortgage loan is being paid as agreed, it’s thought of as a performing loan. These loans are a stable source of passive income. Non-performing mortgage notes can be rewritten or you could buy the collateral at a discount by conducting a foreclosure procedure.

One day, you could have multiple mortgage notes and necessitate additional time to handle them on your own. In this case, you might employ one of third party mortgage servicers in Jenkintown PA that will basically turn your investment into passive cash flow.

If you choose to employ this plan, append your project to our list of mortgage note buying companies in Jenkintown PA. Once you’ve done this, you’ll be discovered by the lenders who publicize desirable investment notes for procurement by investors such as you.

Factors to Consider

Foreclosure Rates

Low foreclosure rates are an indication that the market has opportunities for performing note purchasers. If the foreclosure rates are high, the location could nonetheless be desirable for non-performing note buyers. The locale needs to be active enough so that investors can complete foreclosure and get rid of properties if required.

Foreclosure Laws

Experienced mortgage note investors are completely knowledgeable about their state’s laws concerning foreclosure. They’ll know if their state dictates mortgages or Deeds of Trust. When using a mortgage, a court has to approve a foreclosure. A Deed of Trust enables the lender to file a public notice and start foreclosure.

Mortgage Interest Rates

Mortgage note investors take over the interest rate of the mortgage loan notes that they purchase. That interest rate will undoubtedly influence your investment returns. Interest rates influence the plans of both types of note investors.

The mortgage loan rates charged by traditional mortgage lenders are not identical everywhere. Mortgage loans supplied by private lenders are priced differently and can be higher than traditional mortgages.

Profitable mortgage note buyers continuously search the rates in their region offered by private and traditional mortgage companies.

Demographics

A market’s demographics data assist mortgage note buyers to target their efforts and effectively distribute their assets. Mortgage note investors can discover a great deal by looking at the size of the population, how many residents have jobs, how much they make, and how old the citizens are.
Performing note buyers look for clients who will pay without delay, generating a stable income flow of mortgage payments.

Mortgage note investors who purchase non-performing mortgage notes can also take advantage of growing markets. If non-performing note investors want to foreclose, they will have to have a strong real estate market when they sell the collateral property.

Property Values

The greater the equity that a homeowner has in their property, the better it is for the mortgage note owner. This enhances the chance that a potential foreclosure sale will make the lender whole. Appreciating property values help increase the equity in the property as the homeowner reduces the amount owed.

Property Taxes

Usually homeowners pay real estate taxes via lenders in monthly installments together with their mortgage loan payments. So the lender makes sure that the real estate taxes are submitted when payable. If the homebuyer stops paying, unless the note holder takes care of the taxes, they won’t be paid on time. If a tax lien is put in place, it takes a primary position over the your note.

Since property tax escrows are combined with the mortgage loan payment, increasing property taxes indicate larger mortgage loan payments. Borrowers who have trouble affording their mortgage payments might drop farther behind and sooner or later default.

Real Estate Market Strength

A strong real estate market having consistent value increase is good for all categories of note buyers. As foreclosure is an important component of mortgage note investment strategy, increasing real estate values are critical to locating a profitable investment market.

Mortgage note investors additionally have a chance to make mortgage loans directly to borrowers in strong real estate regions. This is a strong source of income for experienced investors.

Many real estate investment firms are structured as trusts called Real Estate Investment Trusts or REITs. REITs are developed to allow everyday investors to buy into real estate. Many people currently are able to invest in a REIT.

Investing in a REIT is called passive investing. Investment exposure is diversified across a package of properties. Shares in a REIT may be unloaded whenever it is convenient for the investor. However, REIT investors don’t have the ability to pick specific properties or locations. You are restricted to the REIT’s selection of real estate properties for investment.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate firms. Any actual real estate is owned by the real estate businesses rather than the fund. Investment funds are considered an affordable method to include real estate in your allocation of assets without needless risks. Funds are not required to pay dividends like a REIT. The return to you is produced by appreciation in the worth of the stock.

Investors can pick a fund that concentrates on particular segments of the real estate industry but not particular areas for individual real estate investment. As passive investors, fund shareholders are happy to permit the directors of the fund determine all investment decisions.