Ultimate Kennebunk Real Estate Investing Guide for 2024

The term BRRRR is a description of a long-term lease strategy — Buy, Rehab, Rent, Refinance, Repeat. This is a way to increase your investment assets not just purchase a single income generating property. This method revolves around your ability to extract money out when you refinance.

You add to the worth of the property above the amount you spent buying and fixing the asset. Then you obtain a cash-out refinance loan that is calculated on the superior property worth, and you extract the difference. You buy your next house with the cash-out money and start all over again. You buy additional assets and continually grow your rental revenues.

If your investment property collection is big enough, you can contract out its management and collect passive cash flow. Locate the best Kennebunk property management companies by browsing our directory.

Factors to Consider

Population Growth

The growth or fall of the population can illustrate whether that region is of interest to landlords. If the population increase in an area is robust, then additional renters are obviously moving into the community. Moving companies are attracted to rising areas giving secure jobs to families who relocate there. This means stable tenants, greater lease revenue, and more likely buyers when you want to sell the asset.

Property Taxes

Real estate taxes, ongoing upkeep spendings, and insurance directly influence your profitability. Investment property situated in unreasonable property tax cities will provide smaller returns. Areas with unreasonable property taxes aren’t considered a dependable situation for short- or long-term investment and need to be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of what amount of rent can be charged in comparison to the value of the property. An investor can not pay a high sum for a house if they can only charge a modest rent not letting them to pay the investment off in a appropriate timeframe. A large price-to-rent ratio informs you that you can demand less rent in that community, a small ratio says that you can collect more.

Median Gross Rents

Median gross rents demonstrate whether an area’s rental market is strong. Look for a repeating rise in median rents year over year. If rents are shrinking, you can drop that location from consideration.

Median Population Age

Median population age should be similar to the age of a typical worker if a location has a strong supply of renters. You will discover this to be true in locations where people are migrating. If you see a high median age, your supply of tenants is going down. This is not good for the forthcoming financial market of that market.

Employment Base Diversity

Having multiple employers in the locality makes the market not as unstable. When there are only one or two major employers, and either of such moves or closes down, it will lead you to lose tenants and your real estate market worth to drop.

Unemployment Rate

High unemployment results in a lower number of renters and an unsafe housing market. Unemployed individuals stop being clients of yours and of other companies, which causes a domino effect throughout the market. The still employed workers may find their own paychecks reduced. Existing renters could delay their rent payments in such cases.

Income Rates

Median household and per capita income will tell you if the renters that you need are living in the location. Improving wages also tell you that rents can be raised over the life of the property.

Number of New Jobs Created

The strong economy that you are on the lookout for will be producing plenty of jobs on a constant basis. A market that provides jobs also adds more people who participate in the housing market. Your objective of leasing and acquiring more properties requires an economy that will develop more jobs.

School Ratings

School rankings in the city will have a large influence on the local housing market. Employers that are thinking about relocating want superior schools for their employees. Relocating companies bring and draw potential tenants. Recent arrivals who purchase a residence keep housing market worth high. You will not run into a dynamically expanding residential real estate market without reputable schools.

Property Appreciation Rates

The basis of a long-term investment strategy is to hold the property. You have to be confident that your investment assets will appreciate in value until you need to dispose of them. You do not want to spend any time navigating areas showing below-standard property appreciation rates.

A short-term rental is a furnished unit where a renter lives for less than 30 days. Long-term rental units, like apartments, impose lower rental rates a night than short-term rentals. With renters moving from one place to the next, short-term rentals have to be maintained and cleaned on a continual basis.

Short-term rentals are used by business travelers who are in the city for a few nights, those who are migrating and want transient housing, and sightseers. Any property owner can transform their property into a short-term rental unit with the know-how offered by online home-sharing websites like VRBO and AirBnB. Short-term rentals are thought of as a smart method to embark upon investing in real estate.

The short-term rental housing strategy includes interaction with renters more often compared to annual rental units. That results in the investor having to constantly manage protests. Consider covering yourself and your properties by adding one of attorneys specializing in real estate in Kennebunk ME to your team of experts.

Factors to Consider

Short-Term Rental Income

You have to figure out how much revenue needs to be earned to make your investment financially rewarding. A glance at a city’s up-to-date typical short-term rental prices will show you if that is an ideal community for you.

Median Property Prices

Carefully compute the amount that you are able to pay for additional investment properties. Hunt for communities where the purchase price you need correlates with the existing median property values. You can customize your area survey by looking at the median price in particular sub-markets.

Price Per Square Foot

Price per square foot could be inaccurate if you are comparing different buildings. A building with open entrances and high ceilings can’t be contrasted with a traditional-style residential unit with greater floor space. If you take note of this, the price per square foot may give you a basic view of local prices.

Short-Term Rental Occupancy Rate

The necessity for more rental properties in a community can be verified by going over the short-term rental occupancy rate. If nearly all of the rental properties are full, that community necessitates new rental space. If property owners in the area are having challenges filling their current units, you will have trouble finding renters for yours.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return will tell you if the investment is a good use of your money. You can determine the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash being invested. The percentage you get is your cash-on-cash return. The higher the percentage, the quicker your investment will be recouped and you will begin gaining profits. Loan-assisted ventures will have a higher cash-on-cash return because you are spending less of your funds.

Average Short-Term Rental Capitalization (Cap) Rates

Another measurement shows the value of a property as a revenue-producing asset — average short-term rental capitalization (cap) rate. A rental unit that has a high cap rate and charges typical market rental rates has a strong value. If cap rates are low, you can assume to spend more money for real estate in that community. Divide your expected Net Operating Income (NOI) by the property’s market worth or listing price. This shows you a ratio that is the year-over-year return, or cap rate.

Local Attractions

Short-term rental properties are popular in areas where visitors are drawn by activities and entertainment spots. If an area has places that regularly hold exciting events, like sports coliseums, universities or colleges, entertainment halls, and amusement parks, it can draw people from other areas on a constant basis. Notable vacation attractions are found in mountainous and coastal points, alongside lakes, and national or state parks.

To fix and flip real estate, you need to pay lower than market worth, conduct any required repairs and updates, then sell the asset for full market value. The keys to a successful investment are to pay a lower price for the house than its as-is value and to accurately analyze the amount needed to make it sellable.

Research the housing market so that you know the exact After Repair Value (ARV). The average number of Days On Market (DOM) for properties listed in the market is critical. To successfully “flip” real estate, you need to resell the rehabbed house before you are required to shell out funds to maintain it.

To help distressed residence sellers find you, place your firm in our directories of cash house buyers in Kennebunk ME and real estate investment companies in Kennebunk ME.

Additionally, hunt for bird dogs for real estate investors in Kennebunk ME. Professionals in our catalogue concentrate on securing distressed property investment opportunities while they’re still off the market.

Factors to Consider

Median Home Price

Median real estate price data is a valuable tool for evaluating a prospective investment region. You’re on the lookout for median prices that are low enough to suggest investment opportunities in the area. This is a necessary component of a fix and flip market.

If market data indicates a fast decline in property market values, this can highlight the availability of potential short sale real estate. Investors who work with short sale negotiators in Kennebunk ME receive regular notices regarding potential investment real estate. You will discover additional information about short sales in our guide ⁠— What Is the Process to Buy a Short Sale House?.

Property Appreciation Rate

The changes in property values in a location are critical. You’re looking for a stable increase of the city’s property prices. Erratic value fluctuations are not good, even if it is a substantial and quick growth. When you are acquiring and liquidating quickly, an erratic market can harm you.

Average Renovation Costs

You will have to estimate building expenses in any prospective investment community. The manner in which the local government goes about approving your plans will affect your venture as well. To make an accurate budget, you will need to find out whether your construction plans will be required to use an architect or engineer.

Population Growth

Population growth figures provide a look at housing need in the area. If the number of citizens isn’t increasing, there isn’t going to be an adequate source of purchasers for your properties.

Median Population Age

The median population age is a factor that you might not have thought about. The median age in the city needs to equal the one of the typical worker. Workforce can be the people who are probable home purchasers. People who are planning to leave the workforce or have already retired have very specific housing needs.

Unemployment Rate

If you find a community showing a low unemployment rate, it is a good sign of likely investment prospects. An unemployment rate that is less than the national average is a good sign. If it’s also lower than the state average, that is much better. To be able to buy your improved homes, your clients need to work, and their clients as well.

Income Rates

Median household and per capita income rates show you if you will find enough home purchasers in that region for your homes. Most people usually take a mortgage to buy a home. Home purchasers’ ability to get issued a loan depends on the level of their wages. Median income can let you analyze whether the typical home purchaser can afford the homes you intend to flip. Look for locations where salaries are improving. To keep pace with inflation and increasing building and material costs, you need to be able to periodically adjust your purchase prices.

Number of New Jobs Created

The number of jobs appearing each year is vital data as you reflect on investing in a particular region. A higher number of citizens acquire houses if the area’s economy is adding new jobs. Experienced skilled workers taking into consideration purchasing real estate and settling opt for migrating to regions where they won’t be out of work.

Hard Money Loan Rates

Fix-and-flip investors normally utilize hard money loans rather than traditional loans. This enables them to quickly purchase desirable real estate. Find private money lenders in Kennebunk ME and compare their rates.

Anyone who wants to understand more about hard money financing products can discover what they are and the way to employ them by studying our article titled What Is Hard Money Lending for Real Estate?.

As a real estate wholesaler, you enter a sale and purchase agreement to purchase a home that some other investors might want. But you do not purchase the house: once you have the property under contract, you allow another person to take your place for a price. The seller sells the property to the investor not the real estate wholesaler. The wholesaler doesn’t sell the residential property itself — they only sell the purchase agreement.

Wholesaling relies on the assistance of a title insurance firm that is experienced with assigned contracts and comprehends how to deal with a double closing. Discover Kennebunk title services for wholesale investors by reviewing our list.

To learn how real estate wholesaling works, look through our insightful guide How Does Real Estate Wholesaling Work?. As you choose wholesaling, include your investment venture in our directory of the best wholesale real estate companies in Kennebunk ME. That way your prospective clientele will see you and reach out to you.

Factors to Consider

Median Home Prices

Median home prices in the region being assessed will roughly inform you if your real estate investors’ target investment opportunities are located there. A place that has a substantial pool of the marked-down residential properties that your clients require will display a below-than-average median home purchase price.

A quick decline in home values may be followed by a large selection of ’upside-down’ properties that short sale investors hunt for. This investment method frequently carries numerous uncommon benefits. Nonetheless, be cognizant of the legal risks. Obtain additional information on how to wholesale a short sale property in our exhaustive instructions. Once you are prepared to begin wholesaling, search through Kennebunk top short sale law firms as well as Kennebunk top-rated mortgage foreclosure lawyers directories to locate the best counselor.

Property Appreciation Rate

Median home price dynamics are also critical. Investors who plan to resell their properties in the future, such as long-term rental landlords, require a location where residential property market values are growing. A weakening median home value will illustrate a poor leasing and home-buying market and will exclude all sorts of real estate investors.

Population Growth

Population growth information is essential for your intended contract buyers. When the community is multiplying, new residential units are needed. There are more people who rent and additional clients who purchase houses. If a community isn’t growing, it does not need additional housing and investors will look elsewhere.

Median Population Age

Investors want to participate in a steady housing market where there is a good pool of renters, newbie homebuyers, and upwardly mobile residents switching to bigger residences. This requires a strong, stable labor force of citizens who feel optimistic enough to step up in the real estate market. 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 improvement continuously in communities that are good for real estate investment. If renters’ and homebuyers’ incomes are expanding, they can handle surging rental rates and residential property prices. That will be important to the property investors you want to reach.

Unemployment Rate

Investors will pay close attention to the location’s unemployment rate. Renters in high unemployment regions have a tough time making timely rent payments and many will skip rent payments altogether. This adversely affects long-term investors who want to lease their real estate. High unemployment builds concerns that will prevent people from buying a home. This is a challenge for short-term investors purchasing wholesalers’ agreements to renovate and flip a property.

Number of New Jobs Created

Understanding how often new job openings appear in the area can help you see if the property is located in a reliable housing market. New citizens relocate into a market that has more job openings and they require a place to reside. This is advantageous for both short-term and long-term real estate investors whom you count on to buy your sale contracts.

Average Renovation Costs

An important variable for your client real estate investors, especially fix and flippers, are rehabilitation costs in the location. The price, plus the costs of renovation, should amount to less than the After Repair Value (ARV) of the property to allow for profitability. Seek lower average renovation costs.

This strategy includes obtaining debt (mortgage note) from a lender for less than the balance owed. The borrower makes subsequent loan payments to the investor who has become their new mortgage lender.

Loans that are being repaid as agreed are called performing loans. These loans are a steady provider of passive income. Investors also obtain non-performing mortgages that the investors either rework to assist the client or foreclose on to buy the collateral less than market value.

Someday, you might grow a number of mortgage note investments and lack the ability to oversee the portfolio by yourself. In this case, you might enlist one of third party loan servicing companies in Kennebunk ME that will basically convert your investment into passive income.

Should you choose to employ this strategy, affix your business to our directory of real estate note buying companies in Kennebunk ME. Once you’ve done this, you’ll be noticed by the lenders who announce profitable investment notes for procurement by investors such as yourself.

Factors to Consider

Foreclosure Rates

Low foreclosure rates are a sign that the area has investment possibilities for performing note investors. If the foreclosures happen too often, the neighborhood may nevertheless be good for non-performing note buyers. But foreclosure rates that are high can indicate a slow real estate market where selling a foreclosed unit may be a no easy task.

Foreclosure Laws

Professional mortgage note investors are thoroughly well-versed in their state’s laws for foreclosure. They’ll know if their state dictates mortgage documents or Deeds of Trust. You may have to obtain the court’s approval to foreclose on a property. A Deed of Trust allows you to file a public notice and proceed to foreclosure.

Mortgage Interest Rates

Mortgage note investors inherit the interest rate of the loan notes that they obtain. This is an important component in the returns that lenders achieve. Regardless of the type of investor you are, the mortgage loan note’s interest rate will be critical to your calculations.

Traditional interest rates may be different by as much as a 0.25% around the United States. Mortgage loans supplied by private lenders are priced differently and may be higher than conventional mortgage loans.

Note investors should consistently know the present market interest rates, private and traditional, in possible note investment markets.

Demographics

A region’s demographics information allow note buyers to streamline their work and appropriately distribute their resources. It’s critical to find out whether an adequate number of people in the area will continue to have good employment and wages in the future.
A young growing market with a strong job market can provide a reliable income stream for long-term investors looking for performing notes.

The identical area may also be good for non-performing mortgage note investors and their end-game plan. In the event that foreclosure is required, the foreclosed house is more easily unloaded in a growing market.

Property Values

As a mortgage note investor, you must search for deals that have a cushion of equity. If the investor has to foreclose on a mortgage loan without much equity, the foreclosure sale may not even cover the amount invested in the note. The combined effect of loan payments that reduce the loan balance and annual property market worth appreciation expands home equity.

Property Taxes

Typically, lenders accept the property taxes from the homeowner each month. By the time the taxes are due, there needs to be sufficient funds in escrow to pay them. The lender will have to take over if the mortgage payments cease or the investor risks tax liens on the property. Tax liens go ahead of any other liens.

If a region has a history of increasing property tax rates, the total home payments in that municipality are steadily expanding. This makes it tough for financially weak borrowers to make their payments, and the mortgage loan could become delinquent.

Real Estate Market Strength

A strong real estate market having strong value increase is good for all types of mortgage note investors. They can be assured that, if necessary, a defaulted property can be unloaded at a price that makes a profit.

Strong markets often show opportunities for private investors to originate the initial mortgage loan themselves. For experienced investors, this is a valuable part of their business strategy.

A REIT, or Real Estate Investment Trust, is a business that invests in income-producing properties. Before REITs appeared, investing in properties was considered too costly for many investors. REIT shares are not too costly to most people.

Shareholders’ involvement in a REIT classifies as passive investing. REITs oversee investors’ risk with a diversified selection of assets. Investors are able to liquidate their REIT shares whenever they choose. One thing you cannot do with REIT shares is to determine the investment assets. The assets that the REIT picks to acquire are the assets you invest in.

Real estate investment funds are essentially mutual funds focusing on real estate companies, including REITs. The investment assets aren’t held by the fund — they are owned by the businesses in which the fund invests. This is another method for passive investors to spread their investments with real estate avoiding the high entry-level investment or liability. Real estate investment funds aren’t required to pay dividends like a REIT. The worth of a fund to someone is the anticipated appreciation of the price of the shares.

You can choose a fund that focuses on a selected kind of real estate you are aware of, but you don’t get to choose the location of every real estate investment. You have to count on the fund’s managers to determine which markets and assets are chosen for investment.