Ultimate Kennebec County Real Estate Investing Guide for 2024

The acronym BRRRR is a description of a long-term rental plan — Buy, Rehab, Rent, Refinance, Repeat. When you desire to increase your investments, the BRRRR is an excellent plan to employ. This plan depends on your capability to withdraw money out when you refinance.

You add to the worth of the asset above the amount you spent buying and rehabbing the asset. Next, you extract the equity you created out of the investment property in a “cash-out” mortgage refinance. This capital is placed into one more property, and so on. You acquire more and more houses or condos and constantly expand your lease revenues.

When you have created a large group of income creating properties, you can decide to hire someone else to oversee all operations while you collect recurring net revenues. Find one of the best property management professionals in Kennebec County ME with the help of our comprehensive list.

Factors to Consider

Population Growth

The rise or fall of a region’s population is a good gauge of the area’s long-term desirability for rental investors. A growing population often illustrates active relocation which means additional renters. Moving companies are drawn to increasing cities offering secure jobs to people who relocate there. This equates to dependable tenants, greater rental income, and a greater number of potential buyers when you need to sell the asset.

Property Taxes

Property taxes, similarly to insurance and upkeep expenses, may be different from place to place and should be reviewed cautiously when assessing possible returns. Unreasonable expenses in these categories jeopardize your investment’s bottom line. If property taxes are unreasonable in a particular community, you probably prefer to look in another place.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property values and median lease rates that will signal how much rent the market can handle. If median real estate values are steep and median rents are low — a high p/r, it will take longer for an investment to recoup your costs and reach good returns. You need to find a lower p/r to be assured that you can price your rental rates high enough for acceptable profits.

Median Gross Rents

Median gross rents are a critical indicator of the strength of a lease market. Median rents must be going up to justify your investment. If rents are declining, you can scratch that area from consideration.

Median Population Age

The median citizens’ age that you are on the lookout for in a dynamic investment environment will be near the age of working people. If people are moving into the neighborhood, the median age will not have a problem staying at the level of the employment base. If you see a high median age, your stream of tenants is going down. That is an unacceptable long-term financial picture.

Employment Base Diversity

A higher supply of enterprises in the market will boost your chances of better profits. When the residents are concentrated in a few major enterprises, even a slight disruption in their business could cause you to lose a great deal of renters and expand your liability immensely.

Unemployment Rate

High unemployment results in smaller amount of renters and an unreliable housing market. Historically profitable companies lose customers when other businesses retrench workers. The still employed people could find their own salaries cut. This may result in missed rent payments and defaults.

Income Rates

Median household and per capita income stats let you know if a high amount of ideal renters reside in that location. Historical wage statistics will show you if wage increases will enable you to raise rental charges to hit your investment return predictions.

Number of New Jobs Created

An increasing job market produces a constant stream of tenants. A market that creates jobs also increases the amount of players in the real estate market. This reassures you that you can retain an acceptable occupancy level and buy additional assets.

School Ratings

Local schools will cause a huge effect on the real estate market in their location. Employers that are interested in relocating require good schools for their employees. Business relocation creates more renters. Recent arrivals who are looking for a residence keep real estate values strong. Quality schools are a necessary requirement for a reliable property investment market.

Property Appreciation Rates

High property appreciation rates are a must for a viable long-term investment. You need to know that the odds of your real estate going up in price in that area are strong. Low or dropping property appreciation rates will remove a region from being considered.

A furnished property where tenants live for less than 30 days is regarded as a short-term rental. Long-term rental units, such as apartments, impose lower payment per night than short-term ones. Short-term rental units might involve more constant care and sanitation.

Short-term rentals are used by business travelers who are in town for a couple of days, those who are migrating and want short-term housing, and backpackers. Anyone can convert their residence into a short-term rental with the know-how made available by online home-sharing portals like VRBO and AirBnB. This makes short-term rental strategy a good way to try residential real estate investing.

Short-term rental units require interacting with renters more frequently than long-term rental units. That determines that property owners deal with disputes more regularly. Think about covering yourself and your properties by joining one of real estate law experts in Kennebec County ME to your network of professionals.

Factors to Consider

Short-Term Rental Income

You have to find the amount of rental income you’re aiming for based on your investment plan. A market’s short-term rental income levels will promptly reveal to you when you can assume to reach your estimated income figures.

Median Property Prices

Carefully assess the amount that you can afford to spend on additional investment assets. To find out whether a city has potential for investment, investigate the median property prices. You can narrow your area search by analyzing the median price in particular sections of the community.

Price Per Square Foot

Price per square foot can be confusing when you are comparing different units. If you are examining similar types of property, like condos or individual single-family homes, the price per square foot is more consistent. If you take this into account, the price per square foot can give you a basic idea of real estate prices.

Short-Term Rental Occupancy Rate

The number of short-term rental properties that are presently rented in a location is critical knowledge for a landlord. An area that demands new rental properties will have a high occupancy rate. If investors in the area are having problems renting their current units, you will have trouble finding renters for yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a way to assess the value of an investment. Divide the Net Operating Income (NOI) by the total amount of cash invested. The resulting percentage is your cash-on-cash return. If an investment is profitable enough to repay the investment budget soon, you will have a high percentage. If you borrow a fraction of the investment budget and spend less of your capital, you will realize a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This benchmark compares rental property worth to its yearly revenue. An investment property that has a high cap rate and charges average market rental rates has a strong value. If cap rates are low, you can expect to pay a higher amount for real estate in that city. You can determine the cap rate for potential investment real estate by dividing the Net Operating Income (NOI) by the market worth or listing price of the residential property. This presents you a ratio that is the annual return, or cap rate.

Local Attractions

Big festivals and entertainment attractions will draw visitors who want short-term rental properties. This includes major sporting events, youth sports activities, schools and universities, big auditoriums and arenas, fairs, and amusement parks. Outdoor scenic spots like mountainous areas, lakes, coastal areas, and state and national nature reserves will also draw future renters.

The fix and flip approach involves acquiring a property that demands repairs or restoration, putting added value by upgrading the property, and then selling it for its full market price. Your calculation of repair expenses must be on target, and you need to be able to buy the unit for lower than market value.

You also have to evaluate the housing market where the property is positioned. Locate an area that has a low average Days On Market (DOM) indicator. To profitably “flip” real estate, you must liquidate the repaired home before you are required to come up with funds maintaining it.

In order that property owners who have to liquidate their home can easily discover you, showcase your availability by using our catalogue of the best cash home buyers in Kennebec County ME along with the best real estate investment firms in Kennebec County ME.

Additionally, work with Kennebec County real estate bird dogs. Professionals on our list concentrate on securing distressed property investment opportunities while they’re still under the radar.

Factors to Consider

Median Home Price

Median real estate value data is an important tool for assessing a future investment market. Lower median home prices are a sign that there should be a steady supply of homes that can be acquired below market value. You must have inexpensive properties for a successful deal.

If your research shows a sudden weakening in house values, it might be a heads up that you’ll find real property that meets the short sale requirements. You will hear about potential opportunities when you join up with Kennebec County short sale processors. Learn more about this type of investment detailed in our guide How to Buy a Short Sale Property.

Property Appreciation Rate

Are property prices in the area moving up, or on the way down? You need a region where property prices are constantly and continuously going up. Housing values in the market should be increasing steadily, not suddenly. Buying at an inopportune period in an unstable market can be disastrous.

Average Renovation Costs

You’ll have to analyze construction expenses in any potential investment location. The time it takes for getting permits and the municipality’s requirements for a permit application will also affect your decision. To draft an on-target financial strategy, you will want to understand if your construction plans will be required to use an architect or engineer.

Population Growth

Population statistics will tell you whether there is a growing necessity for real estate that you can supply. If there are buyers for your repaired properties, the data will show a positive population growth.

Median Population Age

The median population age can also tell you if there are adequate homebuyers in the market. When the median age is equal to the one of the regular worker, it’s a good indication. Workforce can be the people who are possible home purchasers. The demands of retirees will most likely not fit into your investment project plans.

Unemployment Rate

When you find a community with a low unemployment rate, it’s a good indication of profitable investment possibilities. An unemployment rate that is lower than the national average is preferred. A positively friendly investment community will have an unemployment rate less than the state’s average. If you don’t have a vibrant employment base, a community cannot supply you with enough home purchasers.

Income Rates

Median household and per capita income are a reliable indicator of the robustness of the real estate market in the location. Most homebuyers have to borrow money to buy a house. To obtain approval for a mortgage loan, a home buyer should not be spending for a house payment a larger amount than a particular percentage of their salary. You can see from the area’s median income whether enough people in the city can manage to purchase your properties. Specifically, income growth is vital if you want to grow your business. To stay even with inflation and increasing construction and supply costs, you have to be able to periodically adjust your rates.

Number of New Jobs Created

The number of jobs created on a steady basis shows whether salary and population growth are feasible. More residents buy houses if the region’s financial market is generating jobs. Qualified skilled workers looking into buying real estate and deciding to settle opt for relocating to areas where they will not be out of work.

Hard Money Loan Rates

Real estate investors who work with rehabbed real estate regularly utilize hard money financing instead of traditional mortgage. This plan lets investors negotiate profitable ventures without holdups. Locate private money lenders in Kennebec County ME and analyze their interest rates.

Investors who are not well-versed in regard to hard money lending can uncover what they need to understand with our detailed explanation for those who are only starting — What Does Hard Money Mean?.

As a real estate wholesaler, you sign a purchase contract to buy a property that some other investors will need. When a real estate investor who wants the property is found, the sale and purchase agreement is sold to them for a fee. The property under contract is sold to the real estate investor, not the wholesaler. The real estate wholesaler does not liquidate the property — they sell the rights to purchase one.

The wholesaling form of investing includes the employment of a title firm that grasps wholesale deals and is savvy about and active in double close deals. Look for title companies for wholesalers in Kennebec County ME that we collected for you.

To know how wholesaling works, read our informative article Complete Guide to Real Estate Wholesaling as an Investment Strategy. When following this investment tactic, place your firm in our directory of the best real estate wholesalers in Kennebec County ME. This way your prospective audience will know about your location and contact you.

Factors to Consider

Median Home Prices

Median home values are instrumental to spotting regions where residential properties are selling in your investors’ price point. Lower median values are a solid indicator that there are plenty of houses that could be bought under market value, which real estate investors prefer to have.

Accelerated deterioration in real estate market values could result in a supply of houses with no equity that appeal to short sale property buyers. Short sale wholesalers can gain benefits using this strategy. Nevertheless, there may be challenges as well. Obtain more data on how to wholesale a short sale house in our exhaustive guide. Once you’re prepared to begin wholesaling, search through Kennebec County top short sale law firms as well as Kennebec County top-rated foreclosure lawyers directories to discover the appropriate counselor.

Property Appreciation Rate

Median home value movements clearly illustrate the home value picture. Many real estate investors, including buy and hold and long-term rental investors, notably need to find that home values in the market are expanding consistently. Shrinking market values indicate an equally poor leasing and home-selling market and will dismay investors.

Population Growth

Population growth statistics are an indicator that real estate investors will consider in greater detail. An expanding population will have to have more residential units. This combines both rental and ‘for sale’ properties. A region that has a declining population will not draw the investors you want to purchase your contracts.

Median Population Age

Investors have to see a thriving property market where there is a sufficient supply of tenants, newbie homebuyers, and upwardly mobile citizens moving to better houses. This requires a vibrant, reliable labor force of citizens who feel optimistic enough to step up in the real estate market. That is why the region’s median age should be the age of skilled workers in the employment market.

Income Rates

The median household and per capita income show constant improvement continuously in locations that are desirable for real estate investment. Income growth shows a market that can manage rent and real estate purchase price raises. That will be important to the real estate investors you want to attract.

Unemployment Rate

Investors will pay a lot of attention to the market’s unemployment rate. Delayed lease payments and lease default rates are widespread in regions with high unemployment. Long-term investors who depend on steady lease income will lose money in these communities. High unemployment creates unease that will stop interested investors from purchasing a home. Short-term investors will not take a chance on being cornered with a house they cannot resell quickly.

Number of New Jobs Created

The frequency of new jobs being produced in the market completes an investor’s estimation of a future investment spot. Job creation implies more employees who need a place to live. Long-term investors, such as landlords, and short-term investors like rehabbers, are drawn to locations with impressive job production rates.

Average Renovation Costs

Updating costs have a major effect on a rehabber’s returns. Short-term investors, like fix and flippers, don’t make money if the purchase price and the rehab costs amount to a larger sum than the After Repair Value (ARV) of the home. Below average improvement costs make a market more desirable for your main clients — rehabbers and long-term investors.

This strategy means obtaining debt (mortgage note) from a lender at a discount. This way, you become the lender to the first lender’s client.

When a mortgage loan is being repaid on time, it’s thought of as a performing note. Performing notes bring consistent cash flow for investors. Some note investors buy non-performing loans because when he or she can’t satisfactorily rework the loan, they can always obtain the property at foreclosure for a below market price.

At some time, you may grow a mortgage note portfolio and find yourself lacking time to service it by yourself. At that point, you might want to utilize our catalogue of Kennebec County top loan servicing companies] and reclassify your notes as passive investments.

If you find that this plan is ideal for you, include your firm in our directory of Kennebec County top real estate note buying companies. This will help you become more noticeable to lenders offering desirable possibilities to note investors like yourself.

Factors to consider

Foreclosure Rates

Investors hunting for valuable mortgage loans to purchase will prefer to uncover low foreclosure rates in the community. Non-performing note investors can carefully take advantage of places with high foreclosure rates too. If high foreclosure rates are causing a weak real estate market, it might be tough to liquidate the property after you seize it through foreclosure.

Foreclosure Laws

Experienced mortgage note investors are completely well-versed in their state’s laws regarding foreclosure. Are you dealing with a mortgage or a Deed of Trust? While using a mortgage, a court has to approve a foreclosure. A Deed of Trust allows the lender to file a notice and continue to foreclosure.

Mortgage Interest Rates

Purchased mortgage notes contain a negotiated interest rate. This is a significant factor in the returns that lenders earn. No matter the type of mortgage note investor you are, the note’s interest rate will be crucial for your predictions.

The mortgage rates charged by traditional lenders are not the same everywhere. Private loan rates can be a little higher than conventional interest rates considering the greater risk taken on by private lenders.

A mortgage note investor should be aware of the private as well as conventional mortgage loan rates in their regions at any given time.

Demographics

A lucrative mortgage note investment plan incorporates an analysis of the region by utilizing demographic information. It’s essential to know whether a sufficient number of residents in the market will continue to have stable jobs and wages in the future.
Performing note investors want clients who will pay without delay, creating a stable income flow of loan payments.

The identical region might also be profitable for non-performing note investors and their end-game strategy. If non-performing note investors need to foreclose, they’ll require a vibrant real estate market in order to liquidate the repossessed property.

Property Values

As a note investor, you must try to find deals with a cushion of equity. When the investor has to foreclose on a loan without much equity, the foreclosure auction may not even repay the balance invested in the note. The combination of mortgage loan payments that lessen the mortgage loan balance and yearly property value appreciation increases home equity.

Property Taxes

Usually, lenders accept the property taxes from the homeowner every month. When the taxes are payable, there needs to be enough funds being held to handle them. If loan payments are not being made, the mortgage lender will have to either pay the property taxes themselves, or the property taxes become past due. Property tax liens leapfrog over all other liens.

Because tax escrows are combined with the mortgage payment, rising taxes indicate larger mortgage payments. This makes it tough for financially strapped homeowners to meet their obligations, so the loan could become delinquent.

Real Estate Market Strength

Both performing and non-performing note investors can be profitable in a vibrant real estate environment. Because foreclosure is a critical element of mortgage note investment strategy, growing real estate values are essential to finding a strong investment market.

Vibrant markets often create opportunities for private investors to generate the initial loan themselves. For veteran investors, this is a valuable part of their investment plan.

A REIT, or Real Estate Investment Trust, is a business that invests in income-generating assets. REITs are invented to enable average people to buy into properties. REIT shares are not too costly to the majority of investors.

Investing in a REIT is called passive investing. The risk that the investors are taking is spread within a group of investment assets. Shareholders have the capability to sell their shares at any time. One thing you can’t do with REIT shares is to select the investment assets. The land and buildings that the REIT decides to purchase are the ones your capital is used to purchase.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate firms. The fund doesn’t own real estate — it owns shares in real estate firms. These funds make it possible for additional investors to invest in real estate properties. Real estate investment funds aren’t obligated to pay dividends like a REIT. The worth of a fund to someone is the projected growth of the worth of its shares.

You can select a fund that concentrates on a predetermined type of real estate you are expert in, but you don’t get to select the location of every real estate investment. Your selection as an investor is to select a fund that you rely on to manage your real estate investments.