Ultimate Kankakee County Real Estate Investing Guide for 2024

A long-term wealth growing strategy that includes Buying a home, Repairing, Renting, Refinancing it, and Repeating the process by spending the money from the mortgage refinance is called BRRRR. This is a strategy to expand your investment assets not just acquire one rental home. It is essential that you be able to obtain a “cash-out” refinance for the method to be successful.

The After Repair Value (ARV) of the rental needs to total more than the combined acquisition and repair expenses. Then you borrow a cash-out refinance loan that is based on the higher value, and you withdraw the balance. You utilize that cash to buy another asset and the procedure starts again. This program enables you to consistently grow your assets and your investment revenue.

When your investment real estate collection is big enough, you might outsource its management and receive passive income. Discover Kankakee County property management agencies when you search through our list of experts.

Factors to Consider

Population Growth

Population expansion or decline tells you if you can depend on strong results from long-term investments. If the population increase in a city is robust, then additional tenants are definitely coming into the region. Employers consider such an area as an attractive place to relocate their business, and for workers to situate their families. This means reliable tenants, greater rental income, and a greater number of possible buyers when you want to unload the asset.

Property Taxes

Property taxes, just like insurance and maintenance spendings, may differ from market to place and have to be reviewed carefully when predicting potential returns. Rental property situated in unreasonable property tax communities will provide less desirable profits. Communities with unreasonable property tax rates are not a stable environment for short- or long-term investment and should be avoided.

Price to Rent Ratio

Price to rent ratio (p/r) is a market signal that shows you how much you can predict to demand as rent. If median home values are high and median rents are low — a high p/r — it will take longer for an investment to repay your costs and reach good returns. You need to see a lower p/r to be confident that you can establish your rental rates high enough to reach acceptable returns.

Median Gross Rents

Median gross rents are a critical illustration of the stability of a rental market. Search for a consistent increase in median rents during a few years. If rents are declining, you can eliminate that location from discussion.

Median Population Age

Median population age should be close to the age of a typical worker if a market has a good source of renters. This can also signal that people are migrating into the region. A high median age shows that the current population is leaving the workplace with no replacement by younger people relocating there. A vibrant real estate market can’t be sustained by aged, non-working residents.

Employment Base Diversity

Accommodating multiple employers in the location makes the economy not as risky. When the area’s workpeople, who are your renters, are spread out across a diversified group of employers, you will not lose all of them at the same time (as well as your property’s market worth), if a significant employer in the community goes out of business.

Unemployment Rate

It’s impossible to have a secure rental market if there are many unemployed residents in it. Out-of-job citizens are no longer clients of yours and of other companies, which creates a domino effect throughout the market. People who still keep their jobs can discover their hours and wages reduced. Current renters could fall behind on their rent payments in these circumstances.

Income Rates

Median household and per capita income information is a helpful tool to help you navigate the markets where the renters you prefer are living. Increasing incomes also tell you that rental prices can be raised throughout the life of the rental home.

Number of New Jobs Created

The more jobs are constantly being generated in a community, the more dependable your tenant supply will be. An economy that produces jobs also boosts the number of stakeholders in the property market. Your plan of leasing and buying additional real estate requires an economy that will develop more jobs.

School Ratings

Local schools can have a strong effect on the real estate market in their area. Well-rated schools are a prerequisite for companies that are considering relocating. Reliable renters are a by-product of a robust job market. Housing prices benefit with new workers who are purchasing properties. Reputable schools are a vital requirement for a vibrant property investment market.

Property Appreciation Rates

Robust property appreciation rates are a necessity for a viable long-term investment. You need to have confidence that your real estate assets will appreciate in market value until you need to sell them. You don’t want to take any time exploring areas with unsatisfactory property appreciation rates.

Residential units where tenants live in furnished units for less than four weeks are referred to as short-term rentals. Short-term rental landlords charge a higher rate each night than in long-term rental business. Because of the increased rotation of occupants, short-term rentals require additional regular care and cleaning.

Usual short-term tenants are backpackers, home sellers who are relocating, and people traveling for business who require more than a hotel room. Any homeowner can convert their residence into a short-term rental with the services given by online home-sharing websites like VRBO and AirBnB. A convenient technique to get started on real estate investing is to rent a condo or house you currently keep for short terms.

Short-term rental unit landlords require working one-on-one with the tenants to a larger degree than the owners of annually leased units. That results in the owner being required to constantly deal with protests. Ponder covering yourself and your assets by joining any of real estate law firms in Kankakee County IL to your team of professionals.

Factors to Consider

Short-Term Rental Income

First, compute the amount of rental revenue you must earn to achieve your anticipated profits. Understanding the average rate of rental fees in the market for short-term rentals will allow you to select a good community to invest.

Median Property Prices

You also need to determine the budget you can bear to invest. The median market worth of property will tell you if you can afford to invest in that area. You can customize your location survey by looking at the median market worth in specific sub-markets.

Price Per Square Foot

Price per square foot can be influenced even by the look and floor plan of residential properties. When the designs of available properties are very contrasting, the price per sq ft might not give an accurate comparison. It may be a quick way to gauge multiple sub-markets or properties.

Short-Term Rental Occupancy Rate

The number of short-term rental units that are currently filled in an area is important data for a future rental property owner. If almost all of the rentals have few vacancies, that market necessitates new rentals. Weak occupancy rates mean that there are more than too many short-term rentals in that community.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return can tell you if the purchase is a prudent use of your money. You can calculate the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash investment. The percentage you get is your cash-on-cash return. The higher the percentage, the more quickly your investment will be returned and you will begin making profits. If you take a loan for a fraction of the investment amount and use less of your cash, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are commonly employed by real property investors to assess the worth of rentals. As a general rule, the less money a unit will cost (or is worth), the higher the cap rate will be. When investment properties in a community have low cap rates, they generally will cost too much. You can calculate the cap rate for possible investment real estate by dividing the Net Operating Income (NOI) by the market worth or asking price of the residential property. This gives you a percentage that is the per-annum return, or cap rate.

Local Attractions

Short-term tenants are commonly individuals who come to an area to attend a recurrent special event or visit unique locations. Individuals visit specific regions to enjoy academic and sporting events at colleges and universities, be entertained by competitions, support their kids as they compete in kiddie sports, have the time of their lives at yearly festivals, and stop by amusement parks. At certain occasions, regions with outdoor activities in mountainous areas, seaside locations, or near rivers and lakes will attract a throng of people who want short-term housing.

When an investor buys a house for less than the market value, fixes it and makes it more attractive and pricier, and then disposes of the house for revenue, they are known as a fix and flip investor. The essentials to a profitable fix and flip are to pay less for the house than its actual market value and to accurately analyze the budget you need to make it saleable.

You also want to analyze the resale market where the home is positioned. You always have to analyze the amount of time it takes for real estate to close, which is illustrated by the Days on Market (DOM) information. As a “house flipper”, you will have to liquidate the improved house without delay so you can stay away from carrying ongoing costs that will lessen your profits.

To help motivated home sellers find you, place your business in our directories of companies that buy homes for cash in Kankakee County IL and real estate investors in Kankakee County IL.

Also, look for real estate bird dogs in Kankakee County IL. These specialists specialize in skillfully locating promising investment prospects before they hit the marketplace.

Factors to Consider

Median Home Price

Median property value data is a crucial gauge for assessing a prospective investment environment. You are hunting for median prices that are low enough to show investment opportunities in the community. This is an important element of a profit-making investment.

When area data shows a sharp decrease in real estate market values, this can highlight the availability of potential short sale real estate. Real estate investors who work with short sale processors in Kankakee County IL receive continual notices concerning potential investment real estate. You’ll find more information about short sales in our guide ⁠— How to Buy a Pre-Foreclosure Short Sale Home?.

Property Appreciation Rate

Are property values in the market moving up, or moving down? Steady growth in median prices demonstrates a strong investment market. Speedy market worth growth can reflect a market value bubble that isn’t practical. When you are acquiring and liquidating fast, an unstable environment can sabotage your investment.

Average Renovation Costs

Look thoroughly at the potential rehab spendings so you will be aware if you can reach your predictions. Other expenses, such as clearances, can increase your budget, and time which may also develop into an added overhead. You have to know whether you will need to hire other experts, like architects or engineers, so you can get ready for those spendings.

Population Growth

Population information will show you if there is a growing demand for houses that you can provide. If there are buyers for your restored real estate, the data will illustrate a positive population increase.

Median Population Age

The median residents’ age is a factor that you might not have included in your investment study. When the median age is equal to the one of the typical worker, it is a good indication. A high number of such residents indicates a significant supply of homebuyers. Individuals who are about to depart the workforce or are retired have very specific housing requirements.

Unemployment Rate

If you stumble upon a community that has a low unemployment rate, it is a strong evidence of likely investment prospects. It must definitely be lower than the nation’s average. A really reliable investment community will have an unemployment rate lower than the state’s average. If they want to buy your improved homes, your prospective clients are required to have a job, and their clients as well.

Income Rates

Median household and per capita income amounts advise you if you will obtain qualified home buyers in that region for your residential properties. When people acquire a home, they normally need to get a loan for the home purchase. Homebuyers’ capacity to qualify for a loan hinges on the level of their income. The median income data will tell you if the market is ideal for your investment project. Search for communities where the income is going up. To keep pace with inflation and increasing building and supply expenses, you should be able to periodically raise your purchase prices.

Number of New Jobs Created

The number of employment positions created on a consistent basis shows whether wage and population increase are viable. A growing job market indicates that more potential homeowners are receptive to investing in a home there. New jobs also draw wage earners moving to the area from another district, which further reinforces the real estate market.

Hard Money Loan Rates

Those who acquire, rehab, and sell investment properties prefer to employ hard money instead of conventional real estate financing. Doing this enables them negotiate desirable projects without delay. Discover hard money lenders in Kankakee County IL and compare their mortgage rates.

In case you are inexperienced with this loan product, understand more by using our article — How Does a Hard Money Loan Work in Real Estate?.

As a real estate wholesaler, you enter a contract to buy a house that some other investors might want. But you don’t close on the house: after you have the property under contract, you get a real estate investor to become the buyer for a price. The real estate investor then finalizes the purchase. The real estate wholesaler doesn’t sell the residential property — they sell the contract to buy one.

This business involves using a title company that’s experienced in the wholesale contract assignment procedure and is qualified and willing to handle double close deals. Find Kankakee County title companies that work with investors by reviewing our directory.

To learn how real estate wholesaling works, look through our comprehensive guide How Does Real Estate Wholesaling Work?. When following this investing tactic, add your company in our directory of the best home wholesalers in Kankakee County IL. That will help any possible customers to locate you and initiate a contact.

Factors to Consider

Median Home Prices

Median home prices are key to locating places where homes are being sold in your real estate investors’ purchase price range. Since real estate investors need properties that are on sale for less than market value, you will want to find below-than-average median prices as an implicit hint on the possible availability of residential real estate that you may acquire for less than market price.

A rapid depreciation in the value of real estate may cause the sudden appearance of houses with owners owing more than market worth that are hunted by wholesalers. Wholesaling short sales frequently brings a number of different advantages. Nevertheless, it also produces a legal liability. Get more details on how to wholesale a short sale home in our exhaustive article. When you are ready to start wholesaling, hunt through Kankakee County top short sale legal advice experts as well as Kankakee County top-rated foreclosure lawyers directories to locate the best advisor.

Property Appreciation Rate

Median home purchase price dynamics are also critical. Investors who plan to keep real estate investment properties will need to know that home values are constantly increasing. Both long- and short-term investors will avoid a location where home values are decreasing.

Population Growth

Population growth data is essential for your intended purchase contract buyers. An expanding population will have to have more housing. Real estate investors realize that this will include both rental and owner-occupied housing units. When a population isn’t expanding, it does not need additional houses and real estate investors will invest in other areas.

Median Population Age

A robust housing market necessitates people who are initially leasing, then moving into homeownership, and then buying up in the housing market. A place with a large employment market has a consistent pool of tenants and buyers. That’s why the area’s median age should be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income in a stable real estate investment market need to be improving. Income hike demonstrates a city that can absorb lease rate and housing price surge. Investors want this in order to meet their expected profits.

Unemployment Rate

Real estate investors whom you reach out to to take on your contracts will consider unemployment stats to be an important bit of knowledge. High unemployment rate triggers more tenants to make late rent payments or default altogether. This adversely affects long-term real estate investors who need to lease their real estate. Real estate investors can’t count on renters moving up into their homes if unemployment rates are high. This is a challenge for short-term investors buying wholesalers’ agreements to repair and flip a house.

Number of New Jobs Created

The number of more jobs being created in the city completes an investor’s evaluation of a prospective investment site. Additional jobs produced attract more workers who require places to lease and buy. This is beneficial for both short-term and long-term real estate investors whom you depend on to acquire your sale contracts.

Average Renovation Costs

An influential factor for your client investors, specifically house flippers, are renovation costs in the location. When a short-term investor improves a home, they need to be prepared to sell it for more than the entire cost of the purchase and the repairs. Give priority status to lower average renovation costs.

This strategy includes purchasing a loan (mortgage note) from a mortgage holder at a discount. When this occurs, the investor becomes the client’s mortgage lender.

When a mortgage loan is being paid as agreed, it’s considered a performing loan. These notes are a steady generator of passive income. Note investors also obtain non-performing mortgages that the investors either restructure to help the borrower or foreclose on to acquire the collateral less than actual worth.

At some time, you could create a mortgage note portfolio and find yourself needing time to service your loans by yourself. In this event, you may want to employ one of loan portfolio servicing companies in Kankakee County IL that will basically convert your portfolio into passive income.

Should you decide that this plan is perfect for you, insert your firm in our directory of Kankakee County top mortgage note buying companies. Showing up on our list sets you in front of lenders who make lucrative investment possibilities accessible to note investors such as you.

Factors to consider

Foreclosure Rates

Performing loan buyers research communities having low foreclosure rates. Non-performing note investors can cautiously make use of places that have high foreclosure rates too. The neighborhood should be strong enough so that note investors can foreclose and unload collateral properties if needed.

Foreclosure Laws

It’s imperative for mortgage note investors to understand the foreclosure regulations in their state. Some states require mortgage paperwork and some use Deeds of Trust. A mortgage dictates that you go to court for permission to foreclose. Lenders do not have to have the judge’s agreement with a Deed of Trust.

Mortgage Interest Rates

The mortgage interest rate is memorialized in the mortgage notes that are bought by mortgage note investors. That mortgage interest rate will undoubtedly impact your profitability. Interest rates are critical to both performing and non-performing note investors.

Conventional interest rates can be different by up to a 0.25% throughout the country. Private loan rates can be slightly more than traditional interest rates due to the larger risk taken on by private mortgage lenders.

A mortgage note buyer needs to know the private as well as conventional mortgage loan rates in their communities all the time.

Demographics

A lucrative mortgage note investment plan uses a review of the region by using demographic information. It’s crucial to find out if enough citizens in the community will continue to have good paying employment and incomes in the future.
A youthful growing community with a vibrant job market can contribute a consistent income flow for long-term mortgage note investors hunting for performing notes.

The same region could also be appropriate for non-performing note investors and their exit strategy. A strong local economy is needed if they are to locate buyers for properties they’ve foreclosed on.

Property Values

As a note investor, you will look for deals with a cushion of equity. This enhances the possibility that a potential foreclosure liquidation will make the lender whole. The combination of loan payments that reduce the loan balance and annual property market worth growth raises home equity.

Property Taxes

Usually, mortgage lenders receive the house tax payments from the borrower every month. By the time the taxes are due, there should be enough funds in escrow to pay them. If loan payments are not current, the lender will have to either pay the taxes themselves, or the taxes become delinquent. Tax liens leapfrog over all other liens.

If a municipality has a record of rising tax rates, the total home payments in that market are steadily increasing. Borrowers who have trouble affording their mortgage payments may fall farther behind and ultimately default.

Real Estate Market Strength

Both performing and non-performing note investors can be profitable in a strong real estate environment. It is crucial to know that if you have to foreclose on a collateral, you will not have difficulty receiving an appropriate price for the collateral property.

A growing real estate market could also be a lucrative place for initiating mortgage notes. It’s a supplementary stage of a mortgage note investor’s career.

A REIT, or Real Estate Investment Trust, means a business that makes investments in income-generating assets. This was originally done as a way to empower the everyday investor to invest in real property. The average investor has the funds to invest in a REIT.

REIT investing is known as passive investing. The risk that the investors are taking is diversified among a selection of investment real properties. Participants have the capability to sell their shares at any time. Members in a REIT are not able to recommend or choose real estate properties for investment. Their investment is limited to the investment properties owned by their REIT.

Real estate investment funds are in essence mutual funds that concentrate on real estate firms, such as REITs. The investment properties are not held by the fund — they’re possessed by the companies in which the fund invests. Investment funds are an inexpensive method to combine real estate in your allocation of assets without needless liability. Fund members may not get regular disbursements like REIT shareholders do. The value of a fund to someone is the anticipated increase of the value of its shares.

You can pick a fund that concentrates on particular segments of the real estate industry but not particular locations for individual real estate investment. Your selection as an investor is to choose a fund that you rely on to manage your real estate investments.