Ultimate Johnson County Real Estate Investing Guide for 2024

The acronym BRRRR is a description of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a plan for repeated expansion. It is a must that you be able to receive a “cash-out” refinance for the method to work.

The After Repair Value (ARV) of the asset has to equal more than the combined acquisition and repair costs. After that, you pocket the value you produced out of the investment property in a “cash-out” mortgage refinance. You acquire your next asset with the cash-out capital and begin all over again. You add improving assets to your portfolio and rental income to your cash flow.

If an investor has a significant portfolio of real properties, it is wise to pay a property manager and designate a passive income stream. Locate Johnson County investment property management firms when you go through our list of experts.

Factors to Consider

Population Growth

The expansion or decrease of the population can indicate if that location is desirable to rental investors. A booming population usually illustrates vibrant relocation which means new renters. Relocating companies are drawn to increasing markets offering job security to people who move there. Rising populations maintain a reliable renter mix that can handle rent bumps and home purchasers who help keep your investment asset prices high.

Property Taxes

Real estate taxes, ongoing maintenance expenditures, and insurance directly impact your revenue. Investment assets situated in excessive property tax locations will bring lower profits. If property tax rates are unreasonable in a given location, you probably want to search elsewhere.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property prices and median rental rates that will show you how much rent the market can tolerate. The rate you can charge in a community will affect the amount you are able to pay based on the number of years it will take to repay those costs. A large price-to-rent ratio tells you that you can demand modest rent in that location, a smaller p/r tells you that you can charge more.

Median Gross Rents

Median gross rents let you see whether a location’s lease market is dependable. Search for a continuous expansion in median rents year over year. If rents are shrinking, you can scratch that region from deliberation.

Median Population Age

Median population age in a dependable long-term investment environment must equal the usual worker’s age. This may also show that people are moving into the region. A high median age signals that the existing population is aging out with no replacement by younger workers moving in. That is a poor long-term financial prospect.

Employment Base Diversity

A diversified employment base is what a wise long-term investor landlord will look for. If the locality’s workpeople, who are your renters, are employed by a varied combination of businesses, you cannot lose all of your renters at once (as well as your property’s market worth), if a significant company in the area goes out of business.

Unemployment Rate

It’s not possible to achieve a secure rental market if there is high unemployment. Otherwise strong businesses lose clients when other employers lay off workers. Individuals who continue to have jobs may discover their hours and wages reduced. Current tenants may delay their rent in these circumstances.

Income Rates

Median household and per capita income data is a helpful indicator to help you find the markets where the renters you prefer are residing. Your investment calculations will consider rental fees and investment real estate appreciation, which will be based on income augmentation in the area.

Number of New Jobs Created

The more jobs are continually being generated in a city, the more consistent your renter source will be. A higher number of jobs equal more tenants. This ensures that you can maintain a sufficient occupancy rate and buy additional properties.

School Ratings

School reputation in the district will have a large effect on the local residential market. When a business considers a market for possible relocation, they remember that first-class education is a prerequisite for their workforce. Moving businesses bring and attract prospective tenants. New arrivals who buy a residence keep home values high. You can’t find a vibrantly growing housing market without quality schools.

Property Appreciation Rates

The essence of a long-term investment method is to keep the property. You have to know that the odds of your property going up in value in that city are good. Low or decreasing property worth in a city under consideration is not acceptable.

Residential units where renters reside in furnished spaces for less than thirty days are referred to as short-term rentals. Long-term rental units, such as apartments, charge lower rental rates a night than short-term rentals. Because of the increased number of occupants, short-term rentals necessitate more regular care and tidying.

Home sellers waiting to move into a new residence, excursionists, and individuals traveling on business who are staying in the community for about week enjoy renting a residence short term. Anyone can transform their home into a short-term rental with the tools offered by virtual home-sharing sites like VRBO and AirBnB. Short-term rentals are deemed as an effective method to kick off investing in real estate.

The short-term rental housing business includes dealing with occupants more often compared to yearly rental properties. That results in the owner being required to regularly deal with grievances. You might want to cover your legal liability by engaging one of the top Johnson County investor friendly real estate attorneys.

Factors to Consider

Short-Term Rental Income

You must calculate how much revenue needs to be produced to make your effort financially rewarding. A city’s short-term rental income levels will quickly reveal to you if you can look forward to accomplish your projected rental income range.

Median Property Prices

You also need to decide the amount you can spare to invest. To find out if a community has potential for investment, examine the median property prices. You can also utilize median prices in localized areas within the market to pick locations for investing.

Price Per Square Foot

Price per square foot provides a basic idea of market values when considering comparable units. When the styles of available homes are very different, the price per square foot may not show an accurate comparison. You can use the price per sq ft metric to see a good general picture of housing values.

Short-Term Rental Occupancy Rate

A quick look at the area’s short-term rental occupancy rate will show you if there is an opportunity in the district for additional short-term rental properties. An area that necessitates additional rental housing will have a high occupancy rate. If investors in the community are having issues filling their existing properties, you will have difficulty filling yours.

Short-Term Rental Cash-on-Cash Return

To know if you should invest your funds in a certain investment asset or community, evaluate the cash-on-cash return. Take your expected Net Operating Income (NOI) and divide it by your investment cash budget. The result will be a percentage. When a project is high-paying enough to recoup the investment budget soon, you will receive a high percentage. When you get financing for a fraction of the investment and put in less of your own funds, you will see a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) levels are commonly employed by real estate investors to estimate the market value of investment opportunities. High cap rates indicate that rental units are accessible in that city for reasonable prices. When properties in an area have low cap rates, they usually will cost more money. The cap rate is determined by dividing the Net Operating Income (NOI) by the listing price or market worth. This gives you a ratio that is the per-annum return, or cap rate.

Local Attractions

Short-term tenants are often tourists who visit a region to attend a yearly important event or visit tourist destinations. Vacationers come to specific places to enjoy academic and sporting events at colleges and universities, be entertained by professional sports, support their children as they participate in fun events, have the time of their lives at annual festivals, and drop by amusement parks. Must-see vacation sites are located in mountain and beach areas, near rivers, and national or state nature reserves.

When an investor buys a house for less than the market worth, rehabs it so that it becomes more attractive and pricier, and then resells the house for revenue, they are referred to as a fix and flip investor. The essentials to a profitable fix and flip are to pay a lower price for the house than its actual worth and to accurately compute the budget you need to make it saleable.

Look into the housing market so that you know the accurate After Repair Value (ARV). You always need to analyze the amount of time it takes for listings to sell, which is shown by the Days on Market (DOM) data. As a ”rehabber”, you’ll have to put up for sale the upgraded property immediately in order to avoid upkeep spendings that will reduce your profits.

Help compelled real estate owners in discovering your company by featuring it in our catalogue of Johnson County companies that buy homes for cash and top Johnson County real estate investing companies.

Also, look for bird dogs for real estate investors in Johnson County KS. These professionals concentrate on rapidly locating promising investment prospects before they come on the open market.

Factors to Consider

Median Home Price

Median property price data is an important indicator for evaluating a prospective investment region. When purchase prices are high, there may not be a stable reserve of fixer-upper houses in the location. This is a vital element of a profit-making fix and flip.

When your examination entails a quick drop in real estate market worth, it might be a heads up that you’ll uncover real estate that meets the short sale requirements. You will hear about potential opportunities when you join up with Johnson County short sale specialists. You will uncover more information about short sales in our article ⁠— What to Know About Buying a Short Sale Property?.

Property Appreciation Rate

The movements in property market worth in a region are critical. You’re eyeing for a stable growth of the area’s property prices. Volatile price fluctuations are not good, even if it is a remarkable and unexpected increase. You may wind up buying high and liquidating low in an hectic market.

Average Renovation Costs

You’ll want to evaluate construction expenses in any future investment community. The time it will take for getting permits and the municipality’s regulations for a permit application will also impact your decision. If you are required to show a stamped suite of plans, you will need to incorporate architect’s rates in your expenses.

Population Growth

Population information will show you if there is an increasing necessity for residential properties that you can supply. Flat or reducing population growth is a sign of a feeble market with not an adequate supply of purchasers to justify your investment.

Median Population Age

The median population age is a simple sign of the presence of qualified homebuyers. The median age in the market needs to be the one of the regular worker. A high number of such citizens shows a stable pool of home purchasers. People who are preparing to depart the workforce or are retired have very particular housing requirements.

Unemployment Rate

You need to have a low unemployment rate in your considered region. The unemployment rate in a potential investment region should be lower than the country’s average. If the region’s unemployment rate is lower than the state average, that is a sign of a desirable financial market. To be able to acquire your rehabbed homes, your clients need to have a job, and their customers as well.

Income Rates

Median household and per capita income levels explain to you whether you can see qualified home purchasers in that area for your residential properties. When property hunters acquire a house, they usually have to take a mortgage for the purchase. To be approved for a mortgage loan, a home buyer cannot spend for monthly repayments more than a specific percentage of their salary. The median income numbers will show you if the location is appropriate for your investment project. You also need to see salaries that are going up consistently. Construction costs and housing purchase prices go up periodically, and you need to be sure that your potential homebuyers’ income will also climb up.

Number of New Jobs Created

Finding out how many jobs are generated every year in the region adds to your confidence in a city’s real estate market. Residential units are more effortlessly liquidated in a city with a robust job environment. With more jobs generated, more potential home purchasers also migrate to the community from other places.

Hard Money Loan Rates

Investors who purchase, rehab, and liquidate investment homes like to employ hard money instead of traditional real estate funding. Hard money funds empower these buyers to pull the trigger on existing investment projects right away. Find private money lenders in Johnson County KS and analyze their interest rates.

In case you are inexperienced with this loan type, discover more by using our guide — What Are Hard Money Loans?.

In real estate wholesaling, you search for a house that investors would think is a profitable opportunity and sign a contract to purchase it. An investor then “buys” the contract from you. The seller sells the house to the investor instead of the real estate wholesaler. The real estate wholesaler doesn’t sell the property itself — they only sell the purchase and sale agreement.

This strategy requires using a title company that is familiar with the wholesale contract assignment operation and is able and inclined to handle double close transactions. Locate Johnson County title services for real estate investors by reviewing our directory.

To understand how real estate wholesaling works, read our informative article What Is Wholesaling in Real Estate Investing?. When you select wholesaling, add your investment business on our list of the best investment property wholesalers in Johnson County KS. This will enable any desirable customers to locate you and reach out.

Factors to Consider

Median Home Prices

Median home prices in the area being assessed will immediately show you whether your investors’ required properties are situated there. A market that has a large source of the below-market-value residential properties that your investors want will show a lower median home price.

A rapid depreciation in the price of real estate might cause the accelerated availability of houses with more debt than value that are hunted by wholesalers. This investment plan often carries several particular benefits. But, be aware of the legal liability. Find out details regarding wholesaling short sales with our extensive explanation. Once you have resolved to try wholesaling short sales, make sure to hire someone on the directory of the best short sale real estate attorneys in Johnson County KS and the best foreclosure lawyers in Johnson County KS to help you.

Property Appreciation Rate

Property appreciation rate enhances the median price data. Many investors, such as buy and hold and long-term rental investors, particularly need to see that home prices in the community are increasing steadily. A declining median home value will show a poor rental and home-buying market and will turn off all types of real estate investors.

Population Growth

Population growth data is crucial for your intended contract assignment buyers. If they see that the community is growing, they will decide that new residential units are a necessity. There are a lot of people who lease and additional clients who buy houses. When a community isn’t multiplying, it does not need more residential units and investors will search elsewhere.

Median Population Age

Real estate investors want to see a dynamic housing market where there is a sufficient source of tenants, newbie homeowners, and upwardly mobile citizens moving to bigger houses. A community with a large employment market has a steady supply of renters and buyers. That’s why the community’s median age should be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income show steady growth continuously in locations that are favorable for real estate investment. Income hike shows a location that can handle rental rate and home price increases. That will be important to the investors you want to attract.

Unemployment Rate

The community’s unemployment stats are a critical factor for any potential sales agreement buyer. High unemployment rate triggers many tenants to make late rent payments or default entirely. Long-term real estate investors won’t buy real estate in an area like this. Tenants cannot level up to homeownership and existing owners can’t put up for sale their property and shift up to a more expensive house. Short-term investors will not take a chance on getting pinned down with a unit they cannot sell quickly.

Number of New Jobs Created

Knowing how soon fresh employment opportunities are created in the community can help you determine if the real estate is positioned in a vibrant housing market. People move into a market that has fresh jobs and they need a place to reside. Long-term investors, like landlords, and short-term investors such as flippers, are gravitating to places with impressive job appearance rates.

Average Renovation Costs

Renovation expenses will be crucial to many investors, as they usually purchase bargain rundown houses to rehab. When a short-term investor repairs a building, they have to be able to unload it for a larger amount than the combined sum they spent for the purchase and the rehabilitation. Give preference to lower average renovation costs.

Acquiring mortgage notes (loans) pays off when the loan can be obtained for a lower amount than the remaining balance. By doing this, the investor becomes the mortgage lender to the original lender’s debtor.

Loans that are being paid off as agreed are thought of as performing notes. These loans are a steady source of passive income. Non-performing loans can be rewritten or you can acquire the collateral for less than face value via foreclosure.

At some point, you may grow a mortgage note portfolio and start needing time to service it on your own. When this develops, you could choose from the best loan portfolio servicing companies in Johnson County KS which will designate you as a passive investor.

When you want to adopt this investment plan, you ought to include your business in our list of the best real estate note buying companies in Johnson County KS. This will help you become more visible to lenders offering profitable opportunities to note buyers like yourself.

Factors to consider

Foreclosure Rates

Performing note investors research areas showing low foreclosure rates. Non-performing loan investors can cautiously take advantage of locations with high foreclosure rates as well. But foreclosure rates that are high may indicate an anemic real estate market where getting rid of a foreclosed unit might be challenging.

Foreclosure Laws

Experienced mortgage note investors are completely well-versed in their state’s laws for foreclosure. They’ll know if their state dictates mortgage documents or Deeds of Trust. Lenders might need to obtain the court’s permission to foreclose on a property. Note owners don’t need the judge’s approval with a Deed of Trust.

Mortgage Interest Rates

Mortgage note investors take over the interest rate of the loan notes that they buy. Your mortgage note investment return will be influenced by the mortgage interest rate. Mortgage interest rates are critical to both performing and non-performing note investors.

Traditional lenders charge dissimilar mortgage interest rates in various regions of the United States. Loans supplied by private lenders are priced differently and may be higher than conventional loans.

Profitable mortgage note buyers continuously check the rates in their area set by private and traditional mortgage companies.

Demographics

If note buyers are deciding on where to buy notes, they’ll examine the demographic statistics from considered markets. Investors can interpret a lot by looking at the size of the population, how many residents have jobs, how much they earn, and how old the citizens are.
Performing note investors seek homebuyers who will pay without delay, generating a repeating revenue stream of loan payments.

Investors who buy non-performing notes can also take advantage of dynamic markets. If these note buyers need to foreclose, they’ll have to have a vibrant real estate market when they unload the REO property.

Property Values

As a mortgage note buyer, you will look for borrowers having a cushion of equity. This improves the chance that a potential foreclosure liquidation will make the lender whole. The combined effect of mortgage loan payments that lessen the mortgage loan balance and annual property market worth growth raises home equity.

Property Taxes

Usually homeowners pay real estate taxes to mortgage lenders in monthly portions together with their mortgage loan payments. When the property taxes are due, there should be sufficient money in escrow to take care of them. The mortgage lender will have to take over if the payments cease or the investor risks tax liens on the property. Property tax liens take priority over any other liens.

Because tax escrows are included with the mortgage payment, rising taxes mean higher house payments. Homeowners who are having difficulty handling their loan payments could fall farther behind and eventually default.

Real Estate Market Strength

A vibrant real estate market with strong value increase is helpful for all kinds of mortgage note investors. The investors can be confident that, when necessary, a repossessed property can be liquidated for an amount that makes a profit.

Mortgage note investors additionally have an opportunity to originate mortgage loans directly to borrowers in sound real estate communities. It is an added phase of a note buyer’s career.

Many real estate investment businesses are formed as a trust termed Real Estate Investment Trusts or REITs. REITs were invented to enable everyday people to buy into real estate. Most investors these days are able to invest in a REIT.

Shareholders’ investment in a REIT is considered passive investment. The risk that the investors are accepting is diversified within a collection of investment properties. Shares may be sold when it’s beneficial for you. But REIT investors do not have the ability to pick individual real estate properties or locations. You are confined to the REIT’s collection of assets for investment.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate companies. The fund does not own real estate — it holds shares in real estate businesses. This is an additional way for passive investors to allocate their investments with real estate without the high initial cost or exposure. Where REITs are required to distribute dividends to its members, funds do not. The value of a fund to an investor is the projected growth of the worth of the shares.

You can choose a fund that concentrates on a predetermined kind of real estate you are aware of, but you do not get to choose the geographical area of each real estate investment. Your selection as an investor is to choose a fund that you rely on to manage your real estate investments.