Ultimate Kent County Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. If you intend to increase your investments, the BRRRR is a good method to follow. It is required that you are qualified to obtain a “cash-out” refinance for the system to be successful.

When you have concluded fixing the investment property, its market value must be more than your total purchase and rehab costs. Then you borrow a cash-out mortgage refinance loan that is computed on the higher value, and you withdraw the balance. This capital is put into the next investment property, and so on. You buy more and more properties and continually grow your rental revenues.

If your investment property portfolio is big enough, you can delegate its management and enjoy passive income. Locate top property management companies in Kent County MI by browsing our list.

Factors to Consider

Population Growth

The expansion or downturn of a market’s population is a valuable barometer of the community’s long-term attractiveness for rental property investors. If the population increase in a city is high, then new tenants are assuredly coming into the community. Businesses view this as an attractive region to situate their enterprise, and for workers to move their households. A rising population builds a reliable base of tenants who can stay current with rent raises, and an active seller’s market if you need to sell your investment assets.

Property Taxes

Real estate taxes, regular maintenance expenses, and insurance directly decrease your revenue. Investment property situated in excessive property tax areas will provide smaller returns. High property tax rates may signal an unreliable city where costs can continue to expand and should be considered a red flag.

Price to Rent Ratio

The price to rent ratio (p/r) is a clue to how much rent can be charged compared to the cost of the property. How much you can charge in a region will determine the sum you are able to pay based on the time it will take to recoup those funds. A higher p/r informs you that you can set less rent in that area, a lower ratio informs you that you can collect more.

Median Gross Rents

Median gross rents are a significant illustration of the stability of a lease market. You need to find a market with regular median rent expansion. Declining rents are an alert to long-term rental investors.

Median Population Age

Median population age should be close to the age of a normal worker if a location has a good supply of tenants. If people are migrating into the region, the median age will not have a problem remaining in the range of the workforce. A high median age shows that the existing population is leaving the workplace without being replaced by younger people migrating in. That is an unacceptable long-term financial picture.

Employment Base Diversity

A diverse employment base is what an intelligent long-term rental property owner will look for. When there are only one or two dominant employers, and one of such moves or goes out of business, it will make you lose tenants and your asset market worth to decline.

Unemployment Rate

It’s hard to have a steady rental market if there is high unemployment. Normally profitable businesses lose clients when other businesses lay off employees. This can create increased retrenchments or shorter work hours in the location. Remaining tenants may fall behind on their rent in these conditions.

Income Rates

Median household and per capita income levels tell you if a high amount of suitable tenants reside in that city. Your investment research will consider rental charge and asset appreciation, which will be based on salary raise in the region.

Number of New Jobs Created

The vibrant economy that you are hunting for will be generating a high number of jobs on a regular basis. More jobs mean new renters. This assures you that you can keep a high occupancy level and acquire additional rentals.

School Ratings

Community schools will have a strong impact on the real estate market in their city. Businesses that are interested in moving prefer high quality schools for their workers. Business relocation produces more renters. Homebuyers who relocate to the community have a positive influence on housing prices. For long-term investing, hunt for highly graded schools in a considered investment location.

Property Appreciation Rates

Real estate appreciation rates are an integral component of your long-term investment plan. You have to know that the chances of your investment going up in value in that area are strong. You do not want to take any time looking at regions with weak property appreciation rates.

A furnished house or condo where clients reside for less than 30 days is considered a short-term rental. Long-term rental units, such as apartments, require lower payment per night than short-term ones. With renters coming and going, short-term rentals have to be repaired and sanitized on a constant basis.

Average short-term renters are tourists, home sellers who are waiting to close on their replacement home, and people traveling for business who prefer more than hotel accommodation. Anyone can turn their home into a short-term rental with the tools provided by online home-sharing platforms like VRBO and AirBnB. Short-term rentals are regarded as a good way to start investing in real estate.

Short-term rentals demand engaging with tenants more frequently than long-term rental units. As a result, owners manage difficulties repeatedly. Consider covering yourself and your assets by joining one of real estate law experts in Kent County MI to your network of experts.

Factors to Consider

Short-Term Rental Income

You must decide how much rental income has to be generated to make your investment pay itself off. Knowing the usual amount of rent being charged in the market for short-term rentals will help you select a profitable place to invest.

Median Property Prices

When acquiring real estate for short-term rentals, you should figure out the budget you can afford. Scout for areas where the budget you prefer correlates with the present median property prices. You can also utilize median market worth in specific sections within the market to select cities for investment.

Price Per Square Foot

Price per square foot can be influenced even by the style and floor plan of residential units. If you are looking at the same kinds of property, like condos or separate single-family residences, the price per square foot is more consistent. You can use the price per sq ft metric to get a good overall idea of property values.

Short-Term Rental Occupancy Rate

The number of short-term rental units that are presently occupied in a location is crucial information for a future rental property owner. When the majority of the rental properties have few vacancies, that city demands new rentals. When the rental occupancy rates are low, there is not much need in the market and you should look elsewhere.

Short-Term Rental Cash-on-Cash Return

To determine if you should put your cash in a specific investment asset or region, evaluate the cash-on-cash return. Take your projected Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The result you get is a percentage. The higher it is, the quicker your invested cash will be recouped and you’ll start generating profits. If you borrow a portion of the investment and spend less of your cash, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Another metric shows the market value of real estate as a revenue-producing asset — average short-term rental capitalization (cap) rate. High cap rates indicate that rental units are available in that location for decent prices. When cap rates are low, you can assume to pay more money for real estate in that location. You can get the cap rate for potential investment real estate by dividing the Net Operating Income (NOI) by the market worth or asking price of the investment property. The percentage you get is the property’s cap rate.

Local Attractions

Big public events and entertainment attractions will entice visitors who want short-term rental houses. Vacationers visit specific regions to attend academic and sporting events at colleges and universities, see professional sports, support their kids as they participate in fun events, have fun at yearly festivals, and go to adventure parks. Natural scenic attractions like mountainous areas, lakes, coastal areas, and state and national parks will also draw future tenants.

To fix and flip a home, you should get it for less than market worth, conduct any required repairs and updates, then sell it for full market price. The essentials to a lucrative fix and flip are to pay a lower price for the house than its existing value and to carefully analyze the cost to make it saleable.

You also want to understand the resale market where the property is situated. You always have to research the amount of time it takes for real estate to sell, which is determined by the Days on Market (DOM) metric. Liquidating real estate fast will help keep your costs low and ensure your revenue.

Assist compelled real estate owners in discovering your company by listing your services in our directory of the best Kent County home cash buyers and the best Kent County real estate investment companies.

Additionally, coordinate with Kent County real estate bird dogs. Specialists on our list specialize in securing desirable investments while they are still off the market.

Factors to Consider

Median Home Price

The location’s median housing price should help you spot a good neighborhood for flipping houses. You are hunting for median prices that are low enough to suggest investment possibilities in the region. This is a necessary feature of a fix and flip market.

If market data signals a quick decrease in real estate market values, this can highlight the availability of potential short sale houses. Investors who partner with short sale specialists in Kent County MI get continual notices regarding possible investment real estate. Learn more concerning this sort of investment described by our guide How to Buy Short Sale Homes.

Property Appreciation Rate

Are real estate prices in the region going up, or moving down? Stable surge in median values articulates a vibrant investment market. Housing values in the area should be increasing constantly, not rapidly. Buying at a bad moment in an unreliable market can be problematic.

Average Renovation Costs

A comprehensive analysis of the city’s building expenses will make a substantial influence on your location choice. The manner in which the local government goes about approving your plans will affect your investment too. To create a detailed budget, you will have to know whether your construction plans will be required to use an architect or engineer.

Population Growth

Population growth figures provide a look at housing demand in the community. If there are buyers for your fixed up properties, it will show a robust population increase.

Median Population Age

The median citizens’ age is a contributing factor that you might not have included in your investment study. The median age in the community must equal the age of the usual worker. People in the local workforce are the most stable house purchasers. Aging people are getting ready to downsize, or relocate into age-restricted or assisted living communities.

Unemployment Rate

You want to see a low unemployment level in your potential area. An unemployment rate that is lower than the country’s average is what you are looking for. If it’s also less than the state average, that’s even more desirable. If you don’t have a dynamic employment base, an area cannot supply you with abundant home purchasers.

Income Rates

The citizens’ income stats can brief you if the location’s economy is stable. Most people usually obtain financing to buy a house. Home purchasers’ eligibility to be approved for financing relies on the size of their wages. The median income levels will tell you if the region is ideal for your investment efforts. You also prefer to see incomes that are increasing consistently. Construction spendings and home purchase prices rise over time, and you need to be sure that your prospective customers’ income will also climb up.

Number of New Jobs Created

Knowing how many jobs are generated yearly in the region adds to your confidence in a community’s economy. Homes are more quickly liquidated in a region that has a dynamic job environment. New jobs also attract people migrating to the city from elsewhere, which additionally revitalizes the property market.

Hard Money Loan Rates

Real estate investors who flip renovated real estate frequently utilize hard money financing in place of conventional funding. This allows investors to quickly pick up distressed assets. Look up Kent County hard money companies and study financiers’ costs.

People who aren’t experienced concerning hard money lenders can find out what they need to understand with our article for newbie investors — What Is Hard Money in Real Estate?.

In real estate wholesaling, you locate a residential property that real estate investors may consider a good opportunity and enter into a contract to buy it. When a real estate investor who needs the residential property is found, the purchase contract is sold to them for a fee. The investor then completes the transaction. You are selling the rights to the purchase contract, not the house itself.

The wholesaling method of investing involves the use of a title company that comprehends wholesale deals and is knowledgeable about and involved in double close purchases. Locate title companies for real estate investors in Kent County MI on our website.

To learn how wholesaling works, read our comprehensive article What Is Wholesaling in Real Estate Investing?. While you go about your wholesaling activities, place your company in HouseCashin’s directory of Kent County top home wholesalers. This will allow any desirable partners to see you and reach out.

Factors to Consider

Median Home Prices

Median home values in the city under consideration will quickly notify you whether your investors’ required properties are located there. Since real estate investors want properties that are available for less than market value, you will need to find reduced median prices as an implied hint on the possible supply of residential real estate that you could buy for less than market value.

A rapid decrease in the market value of property may generate the sudden availability of properties with owners owing more than market worth that are wanted by wholesalers. Short sale wholesalers can receive benefits from this method. However, there may be risks as well. Learn more concerning wholesaling a short sale property from our exhaustive instructions. If you determine to give it a go, make certain you employ one of short sale real estate attorneys in Kent County MI and foreclosure lawyers in Kent County MI to confer with.

Property Appreciation Rate

Median home purchase price trends are also vital. Real estate investors who want to resell their investment properties later on, such as long-term rental investors, need a market where real estate prices are going up. Both long- and short-term real estate investors will stay away from an area where home prices are depreciating.

Population Growth

Population growth data is a contributing factor that your future real estate investors will be knowledgeable in. If they know the population is expanding, they will conclude that more residential units are needed. This involves both rental and resale properties. If a population isn’t expanding, it doesn’t need more houses and investors will invest in other areas.

Median Population Age

A vibrant housing market prefers individuals who are initially renting, then shifting into homebuyers, and then buying up in the housing market. To allow this to happen, there has to be a solid employment market of potential tenants and homebuyers. A place with these characteristics will have a median population age that mirrors the working citizens’ age.

Income Rates

The median household and per capita income will be improving in a strong real estate market that real estate investors want to work in. Income growth shows a market that can absorb rent and real estate price surge. Experienced investors avoid locations with unimpressive population wage growth indicators.

Unemployment Rate

Real estate investors whom you offer to buy your sale contracts will deem unemployment levels to be a significant piece of information. Late lease payments and default rates are worse in locations with high unemployment. This upsets long-term real estate investors who want to lease their property. Tenants cannot level up to homeownership and existing homeowners cannot liquidate their property and move up to a larger house. This can prove to be difficult to locate fix and flip real estate investors to take on your purchase agreements.

Number of New Jobs Created

Knowing how frequently additional job openings are created in the region can help you see if the real estate is positioned in a strong housing market. New citizens move into a region that has additional job openings and they look for a place to live. No matter if your buyer supply consists of long-term or short-term investors, they will be attracted to a city with regular job opening generation.

Average Renovation Costs

Repair expenses will be critical to most investors, as they typically acquire low-cost rundown houses to repair. Short-term investors, like house flippers, can’t earn anything when the purchase price and the repair expenses equal to more money than the After Repair Value (ARV) of the home. Seek lower average renovation costs.

Mortgage note investing includes buying a loan (mortgage note) from a mortgage holder at a discount. By doing so, the investor becomes the lender to the first lender’s borrower.

When a mortgage loan is being paid as agreed, it is considered a performing loan. Performing loans give you monthly passive income. Non-performing notes can be re-negotiated or you could acquire the property for less than face value by conducting foreclosure.

Someday, you could have a large number of mortgage notes and need more time to service them without help. In this event, you could hire one of note servicing companies in Kent County MI that will basically convert your investment into passive income.

When you want to attempt this investment model, you should place your venture in our list of the best promissory note buyers in Kent County MI. Once you do this, you will be seen by the lenders who promote lucrative investment notes for procurement by investors such as yourself.

Factors to consider

Foreclosure Rates

Performing loan purchasers try to find communities showing low foreclosure rates. Non-performing mortgage note investors can cautiously take advantage of cities with high foreclosure rates as well. If high foreclosure rates have caused a weak real estate market, it may be challenging to liquidate the property after you foreclose on it.

Foreclosure Laws

Professional mortgage note investors are fully knowledgeable about their state’s regulations concerning foreclosure. They will know if the state requires mortgages or Deeds of Trust. While using a mortgage, a court will have to allow a foreclosure. Note owners do not have to have the judge’s agreement with a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage notes contain a negotiated interest rate. This is an important determinant in the returns that you achieve. Interest rates influence the strategy of both types of note investors.

Conventional interest rates can vary by as much as a quarter of a percent around the United States. Mortgage loans issued by private lenders are priced differently and may be more expensive than conventional mortgages.

A mortgage loan note buyer ought to know the private and conventional mortgage loan rates in their areas all the time.

Demographics

When note investors are determining where to purchase notes, they will review the demographic indicators from potential markets. It is critical to find out whether a sufficient number of citizens in the region will continue to have stable employment and wages in the future.
A youthful expanding market with a strong job market can provide a reliable income stream for long-term investors hunting for performing notes.

The identical community may also be appropriate for non-performing mortgage note investors and their exit plan. A resilient regional economy is needed if they are to find buyers for properties they’ve foreclosed on.

Property Values

As a note investor, you will look for borrowers with a comfortable amount of equity. If you have to foreclose on a mortgage loan with lacking equity, the foreclosure auction may not even repay the amount invested in the note. Appreciating property values help raise the equity in the collateral as the homeowner reduces the balance.

Property Taxes

Many borrowers pay real estate taxes to lenders in monthly portions when they make their loan payments. By the time the taxes are due, there needs to be enough payments being held to take care of them. If mortgage loan payments aren’t current, the mortgage lender will have to either pay the taxes themselves, or the property taxes become past due. Tax liens leapfrog over all other liens.

If a municipality has a record of rising tax rates, the combined home payments in that market are constantly expanding. This makes it difficult for financially weak homeowners to stay current, so the loan could become delinquent.

Real Estate Market Strength

A place with growing property values offers excellent opportunities for any mortgage note buyer. It’s crucial to understand that if you have to foreclose on a property, you won’t have trouble getting a good price for the collateral property.

Strong markets often present opportunities for note buyers to make the first mortgage loan themselves. This is a profitable stream of income for successful investors.

Many real estate investment firms are built as a trust termed Real Estate Investment Trusts or REITs. REITs are developed to enable ordinary people to invest in real estate. The typical investor has the funds to invest in a REIT.

REIT investing is known as passive investing. REITs handle investors’ liability with a varied group of properties. Shares may be sold whenever it is desirable for the investor. One thing you can’t do with REIT shares is to determine the investment properties. The assets that the REIT chooses to acquire are the ones your money is used for.

Mutual funds that hold shares of real estate companies are referred to as real estate investment funds. The investment real estate properties are not held by the fund — they are possessed by the businesses the fund invests in. Investment funds are considered an affordable method to incorporate real estate properties in your appropriation of assets without needless liability. Where REITs have to distribute dividends to its members, funds do not. As with any stock, investment funds’ values rise and decrease with their share price.

You may select a fund that focuses on a predetermined category of real estate you are familiar with, but you don’t get to select the location of every real estate investment. You must count on the fund’s directors to determine which locations and properties are chosen for investment.