Ultimate Johnson County Real Estate Investing Guide for 2024

The term BRRRR is an illustration of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. This is a way to expand your investment assets not just acquire one rental home. It is required that you are qualified to do a “cash-out” mortgage refinance for the strategy to work.

The After Repair Value (ARV) of the rental has to total more than the complete acquisition and rehab costs. Next, you withdraw the equity you produced from the investment property in a “cash-out” refinance. You utilize that cash to buy another rental and the process begins anew. You purchase additional houses or condos and repeatedly increase your lease revenues.

If an investor has a large collection of real properties, it is wise to employ a property manager and establish a passive income source. Discover the best Johnson County property management companies by browsing our directory.

Factors to Consider

Population Growth

The growth or shrinking of the population can tell you whether that community is desirable to rental investors. A growing population typically indicates ongoing relocation which equals additional tenants. Moving employers are drawn to increasing regions offering secure jobs to families who move there. This means dependable tenants, more lease revenue, and more possible buyers when you want to unload the asset.

Property Taxes

Property taxes, similarly to insurance and maintenance expenses, may differ from market to market and have to be reviewed carefully when predicting possible returns. Rental assets located in excessive property tax communities will have lower returns. Regions with excessive property taxes are not a reliable setting for short- and long-term investment and must be avoided.

Price to Rent Ratio

Price to rent ratio (p/r) is a market indicator that shows you the amount you can anticipate to charge for rent. The rate you can charge in a region will limit the price you are willing to pay depending on the number of years it will take to pay back those funds. You need to discover a low p/r to be comfortable that you can establish your rental rates high enough for good returns.

Median Gross Rents

Median gross rents are a significant indicator of the strength of a rental market. You should identify a market with regular median rent increases. If rents are shrinking, you can eliminate that area from deliberation.

Median Population Age

Median population age in a dependable long-term investment environment must mirror the usual worker’s age. This can also signal that people are relocating into the market. If you see a high median age, your stream of tenants is reducing. That is an unacceptable long-term financial picture.

Employment Base Diversity

Having diverse employers in the region makes the economy less unpredictable. If the locality’s workpeople, who are your tenants, are spread out across a diverse assortment of businesses, you will not lose all of your renters at once (together with your property’s market worth), if a major employer in the community goes out of business.

Unemployment Rate

It is not possible to achieve a reliable rental market if there is high unemployment. Unemployed residents are no longer clients of yours and of other companies, which creates a domino effect throughout the city. Individuals who still have workplaces may discover their hours and salaries cut. This could cause missed rent payments and tenant defaults.

Income Rates

Median household and per capita income will illustrate if the renters that you want are residing in the area. Historical salary statistics will communicate to you if wage increases will allow you to mark up rental fees to hit your investment return estimates.

Number of New Jobs Created

An increasing job market equals a steady source of renters. The workers who are employed for the new jobs will require a residence. Your strategy of renting and buying more real estate needs an economy that can produce more jobs.

School Ratings

Community schools can cause a huge effect on the housing market in their neighborhood. Business owners that are interested in moving want high quality schools for their workers. Moving companies bring and draw prospective renters. Homebuyers who relocate to the area have a beneficial influence on property values. You will not find a vibrantly soaring residential real estate market without reputable schools.

Property Appreciation Rates

Robust real estate appreciation rates are a requirement for a profitable long-term investment. Investing in properties that you intend to maintain without being positive that they will improve in price is a recipe for disaster. You do not want to spend any time surveying locations that have substandard property appreciation rates.

Residential real estate where tenants stay in furnished units for less than four weeks are called short-term rentals. The per-night rental prices are usually higher in short-term rentals than in long-term ones. These units could require more frequent care and sanitation.

Short-term rentals appeal to business travelers who are in town for a couple of nights, those who are relocating and need transient housing, and holidaymakers. House sharing platforms like AirBnB and VRBO have encouraged countless real estate owners to take part in the short-term rental business. Short-term rentals are viewed to be a smart approach to start investing in real estate.

The short-term rental strategy includes dealing with renters more frequently in comparison with annual lease units. This determines that property owners face disagreements more often. Think about covering yourself and your properties by adding one of property law attorneys in Johnson County MO to your team of professionals.

Factors to Consider

Short-Term Rental Income

You have to imagine the level of rental income you are aiming for according to your investment strategy. Understanding the average amount of rent being charged in the region for short-term rentals will enable you to choose a good area to invest.

Median Property Prices

Carefully calculate the budget that you can pay for new investment properties. To find out whether a community has possibilities for investment, check the median property prices. You can also employ median values in specific sub-markets within the market to choose communities for investment.

Price Per Square Foot

Price per square foot may be inaccurate if you are comparing different properties. If you are examining the same types of property, like condominiums or stand-alone single-family residences, the price per square foot is more consistent. You can use the price per square foot data to see a good broad idea of real estate values.

Short-Term Rental Occupancy Rate

A quick look at the location’s short-term rental occupancy rate will inform you whether there is a need in the region for additional short-term rentals. A high occupancy rate indicates that an additional amount of short-term rental space is needed. When the rental occupancy levels are low, there is not much space in the market and you should search in another location.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to calculate the value of an investment plan. You can compute the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by your cash investment. The percentage you get is your cash-on-cash return. If an investment is profitable enough to repay the capital spent promptly, you’ll have a high percentage. Loan-assisted projects will have a stronger cash-on-cash return because you’re using less of your money.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are commonly used by real property investors to estimate the worth of rental units. An investment property that has a high cap rate as well as charges typical market rents has a strong value. If cap rates are low, you can prepare to pay more money for rental units in that city. The cap rate is computed by dividing the Net Operating Income (NOI) by the asking price or market value. The answer is the annual return in a percentage.

Local Attractions

Important public events and entertainment attractions will attract tourists who want short-term rental houses. When a community has places that regularly produce must-see events, such as sports arenas, universities or colleges, entertainment venues, and amusement parks, it can attract people from outside the area on a regular basis. At particular times of the year, areas with outside activities in mountainous areas, at beach locations, or along rivers and lakes will bring in large numbers of visitors who require short-term residence.

When a real estate investor buys a property under market worth, fixes it and makes it more attractive and pricier, and then liquidates the property for revenue, they are known as a fix and flip investor. The secrets to a lucrative fix and flip are to pay less for the investment property than its present value and to accurately compute the amount needed to make it marketable.

Examine the values so that you are aware of the actual After Repair Value (ARV). Locate a region that has a low average Days On Market (DOM) indicator. To profitably “flip” a property, you need to sell the rehabbed house before you are required to spend capital maintaining it.

Assist motivated real estate owners in discovering your company by listing it in our catalogue of Johnson County companies that buy houses for cash and Johnson County property investors.

Additionally, coordinate with Johnson County bird dogs for real estate investors. Specialists in our catalogue specialize in procuring distressed property investment opportunities while they’re still off the market.

Factors to Consider

Median Home Price

When you hunt for a good location for property flipping, check the median house price in the community. Lower median home values are a hint that there should be an inventory of houses that can be acquired for less than market worth. You want inexpensive real estate for a profitable fix and flip.

When your review entails a fast drop in home market worth, it may be a heads up that you’ll find real property that fits the short sale requirements. You’ll find out about potential investments when you join up with Johnson County short sale facilitators. Discover more about this kind of investment by reading our guide How to Buy Short Sale Property.

Property Appreciation Rate

Are property prices in the community moving up, or on the way down? You are eyeing for a steady increase of the area’s property market rates. Rapid property value increases could show a market value bubble that is not reliable. When you are purchasing and liquidating rapidly, an unstable market can hurt your investment.

Average Renovation Costs

Look thoroughly at the potential rehab expenses so you’ll be aware whether you can achieve your targets. Other spendings, such as clearances, could inflate expenditure, and time which may also turn into additional disbursement. You need to know whether you will be required to employ other specialists, such as architects or engineers, so you can get prepared for those expenses.

Population Growth

Population statistics will inform you if there is solid necessity for real estate that you can produce. If there are buyers for your renovated homes, the statistics will show a positive population increase.

Median Population Age

The median population age is a contributing factor that you might not have included in your investment study. The median age in the market must be the age of the average worker. A high number of such people reflects a substantial pool of home purchasers. The requirements of retirees will most likely not be included your investment project plans.

Unemployment Rate

While researching a market for real estate investment, search for low unemployment rates. The unemployment rate in a potential investment region should be less than the national average. A very friendly investment city will have an unemployment rate lower than the state’s average. In order to purchase your rehabbed homes, your potential clients have to work, and their customers as well.

Income Rates

The citizens’ wage statistics show you if the community’s financial market is stable. When home buyers acquire a property, they typically have to take a mortgage for the home purchase. Their income will show how much they can borrow and if they can buy a property. Median income can help you analyze whether the regular home purchaser can afford the houses you are going to market. Search for areas where wages are increasing. To stay even with inflation and rising construction and supply expenses, you need to be able to regularly mark up your rates.

Number of New Jobs Created

The number of employment positions created on a continual basis shows if salary and population growth are feasible. Homes are more effortlessly liquidated in a market with a vibrant job market. Qualified trained workers looking into buying real estate and deciding to settle prefer moving to communities where they won’t be unemployed.

Hard Money Loan Rates

Investors who sell rehabbed residential units often use hard money loans instead of traditional mortgage. Hard money funds allow these investors to take advantage of hot investment opportunities without delay. Look up Johnson County hard money loan companies and contrast lenders’ fees.

Someone who wants to know about hard money funding options can learn what they are as well as how to use them by reviewing our guide titled What Does Hard Money Mean in Real Estate?.

As a real estate wholesaler, you enter a contract to purchase a house that some other real estate investors might want. An investor then ”purchases” the sale and purchase agreement from you. The owner sells the home to the investor not the real estate wholesaler. The real estate wholesaler does not liquidate the property — they sell the rights to purchase it.

Wholesaling hinges on the assistance of a title insurance firm that is okay with assignment of purchase contracts and knows how to proceed with a double closing. Look for wholesale friendly title companies in Johnson County MO that we collected for you.

To understand how real estate wholesaling works, read our insightful article How Does Real Estate Wholesaling Work?. When following this investing method, list your business in our list of the best home wholesalers in Johnson County MO. This will help any desirable customers to see you and reach out.

Factors to Consider

Median Home Prices

Median home values are instrumental to discovering places where homes are being sold in your investors’ price range. An area that has a large supply of the marked-down residential properties that your investors need will display a lower median home purchase price.

A fast decline in the value of property could generate the swift appearance of houses with negative equity that are wanted by wholesalers. This investment plan frequently brings multiple different perks. However, there may be liabilities as well. Discover more regarding wholesaling short sale properties with our extensive explanation. When you have decided to try wholesaling short sale homes, make sure to engage someone on the directory of the best short sale attorneys in Johnson County MO and the best foreclosure law offices in Johnson County MO to advise you.

Property Appreciation Rate

Median home value dynamics are also vital. Investors who plan to liquidate their investment properties in the future, like long-term rental landlords, want a location where property purchase prices are increasing. Shrinking values indicate an equivalently weak rental and home-selling market and will chase away real estate investors.

Population Growth

Population growth information is an important indicator that your potential real estate investors will be familiar with. A growing population will need more residential units. This includes both rental and resale real estate. If a population is not growing, it doesn’t need new houses and real estate investors will search in other locations.

Median Population Age

Real estate investors have to participate in a reliable real estate market where there is a sufficient supply of renters, newbie homeowners, and upwardly mobile citizens switching to bigger properties. For this to be possible, there needs to be a solid employment market of potential tenants and homebuyers. When the median population age mirrors the age of wage-earning citizens, it signals a favorable residential market.

Income Rates

The median household and per capita income display steady improvement continuously in regions that are good for investment. Income improvement proves an area that can keep up with rental rate and home purchase price surge. Investors avoid locations with unimpressive population income growth statistics.

Unemployment Rate

Real estate investors whom you offer to purchase your sale contracts will regard unemployment stats to be a key bit of information. High unemployment rate causes a lot of tenants to delay rental payments or miss payments entirely. Long-term real estate investors won’t buy real estate in an area like that. High unemployment causes problems that will keep interested investors from purchasing a house. This makes it hard to find fix and flip investors to purchase your contracts.

Number of New Jobs Created

Understanding how frequently new employment opportunities are generated in the market can help you find out if the property is situated in a dynamic housing market. People move into a region that has new jobs and they need a place to reside. Long-term investors, such as landlords, and short-term investors that include rehabbers, are drawn to areas with strong job creation rates.

Average Renovation Costs

Rehabilitation costs have a important impact on a real estate investor’s returns. Short-term investors, like house flippers, will not earn anything if the purchase price and the rehab expenses amount to a higher amount than the After Repair Value (ARV) of the house. Seek lower average renovation costs.

Buying mortgage notes (loans) works when the mortgage loan can be obtained for a lower amount than the remaining balance. When this happens, the note investor becomes the client’s lender.

Performing loans mean mortgage loans where the debtor is consistently on time with their loan payments. Performing loans are a stable provider of cash flow. Note investors also purchase non-performing loans that they either re-negotiate to assist the borrower or foreclose on to buy the collateral below market value.

Someday, you might have a lot of mortgage notes and need more time to manage them without help. At that juncture, you might need to employ our list of Johnson County top mortgage loan servicing companies and reassign your notes as passive investments.

Should you choose to pursue this plan, affix your venture to our list of promissory note buyers in Johnson County MO. Joining will help you become more visible to lenders providing lucrative possibilities to note investors like yourself.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a sign that the community has investment possibilities for performing note buyers. Non-performing mortgage note investors can carefully make use of places with high foreclosure rates as well. If high foreclosure rates are causing a slow real estate market, it could be tough to get rid of the collateral property after you seize it through foreclosure.

Foreclosure Laws

It is critical for mortgage note investors to know the foreclosure regulations in their state. Are you faced with a mortgage or a Deed of Trust? With a mortgage, a court will have to agree to a foreclosure. You only need to file a public notice and start foreclosure process if you are working with a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage loan notes contain a negotiated interest rate. That mortgage interest rate will significantly influence your investment returns. Interest rates impact the strategy of both types of mortgage note investors.

Traditional lenders price dissimilar interest rates in various parts of the country. The stronger risk assumed by private lenders is shown in bigger loan interest rates for their mortgage loans in comparison with traditional mortgage loans.

Mortgage note investors should consistently know the present local mortgage interest rates, private and conventional, in possible mortgage note investment markets.

Demographics

A region’s demographics data allow note investors to streamline their efforts and properly use their resources. Note investors can discover a great deal by estimating the extent of the population, how many people have jobs, the amount they earn, and how old the citizens are.
Performing note buyers want clients who will pay without delay, creating a consistent revenue flow of mortgage payments.

Note buyers who buy non-performing notes can also make use of growing markets. If these note investors want to foreclose, they will have to have a vibrant real estate market when they unload the collateral property.

Property Values

The more equity that a borrower has in their home, the better it is for their mortgage note owner. When you have to foreclose on a loan with lacking equity, the sale might not even pay back the amount owed. The combined effect of loan payments that lower the loan balance and yearly property market worth growth increases home equity.

Property Taxes

Normally, mortgage lenders receive the house tax payments from the borrower each month. So the mortgage lender makes certain that the property taxes are taken care of when due. If the borrower stops performing, unless the loan owner remits the taxes, they won’t be paid on time. Property tax liens leapfrog over all other liens.

Since tax escrows are included with the mortgage loan payment, growing property taxes mean higher house payments. Homeowners who have a hard time making their mortgage payments might fall farther behind and eventually default.

Real Estate Market Strength

Both performing and non-performing note buyers can thrive in a strong real estate environment. The investors can be assured that, if need be, a repossessed property can be liquidated for an amount that is profitable.

Vibrant markets often create opportunities for note buyers to originate the initial mortgage loan themselves. For veteran investors, this is a profitable part of their investment plan.

Some real estate investment organizations are organized as trusts termed Real Estate Investment Trusts or REITs. REITs are developed to allow everyday people to buy into real estate. Many investors these days are capable of investing in a REIT.

Participants in these trusts are entirely passive investors. REITs handle investors’ risk with a varied collection of assets. Investors can sell their REIT shares anytime they choose. One thing you can’t do with REIT shares is to determine the investment properties. Their investment is confined to the investment properties chosen by the REIT.

Mutual funds that own shares of real estate businesses are known as real estate investment funds. The investment properties are not held by the fund — they’re possessed by the businesses in which the fund invests. These funds make it easier for a wider variety of people to invest in real estate. Fund members might not receive typical distributions the way that REIT shareholders do. Like other stocks, investment funds’ values go up and drop with their share value.

You can locate a real estate fund that specializes in a particular type of real estate company, such as residential, but you can’t select the fund’s investment properties or markets. Your choice as an investor is to choose a fund that you trust to oversee your real estate investments.