Ultimate Kent Real Estate Investing Guide for 2024

A long-term investment method that involves Buying an asset, Rehabbing, Renting, Refinancing it, and Repeating the procedure by using the capital from the mortgage refinance is called BRRRR. BRRRR is a plan for consistent growth. This strategy rests on your capability to withdraw cash out when you refinance.

When you have finished improving the house, the value should be higher than your complete purchase and renovation expenses. After that, you take the equity you created from the asset in a “cash-out” refinance. You employ that cash to buy an additional asset and the operation begins again. This plan enables you to reliably add to your portfolio and your investment income.

If an investor owns a large number of investment properties, it seems smart to hire a property manager and establish a passive income stream. Locate Kent investment property management companies when you look through our directory of experts.

Factors to Consider

Population Growth

Population growth or decrease shows you if you can count on sufficient results from long-term investments. A booming population often indicates busy relocation which equals new tenants. Employers consider such an area as a desirable region to move their business, and for workers to situate their households. This means dependable tenants, greater rental income, and a greater number of likely buyers when you want to sell the rental.

Property Taxes

Real estate taxes, ongoing maintenance spendings, and insurance specifically impact your revenue. Investment property situated in unreasonable property tax cities will bring lower returns. Communities with unreasonable property tax rates are not a reliable situation for short- and long-term investment and must be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property prices and median lease rates that will indicate how much rent the market can allow. An investor will not pay a steep amount for an investment property if they can only demand a limited rent not enabling them to repay the investment in a realistic timeframe. You are trying to find a low p/r to be assured that you can price your rents high enough to reach good returns.

Median Gross Rents

Median gross rents are an important illustration of the strength of a lease market. Median rents should be going up to validate your investment. You will not be able to reach your investment goals in a city where median gross rents are shrinking.

Median Population Age

Median population age in a reliable long-term investment market must show the normal worker’s age. This can also illustrate that people are relocating into the region. If you find a high median age, your stream of renters is reducing. This is not good for the future economy of that market.

Employment Base Diversity

Having a variety of employers in the city makes the economy not as unstable. When the market’s workers, who are your tenants, are employed by a diverse number of companies, you will not lose all of them at the same time (and your property’s value), if a significant enterprise in the area goes out of business.

Unemployment Rate

High unemployment equals a lower number of renters and a weak housing market. Non-working individuals cannot purchase goods or services. Workers who continue to keep their workplaces can discover their hours and incomes decreased. Even renters who have jobs may find it hard to keep up with their rent.

Income Rates

Median household and per capita income levels tell you if an adequate amount of desirable tenants dwell in that area. Improving incomes also tell you that rental fees can be adjusted throughout your ownership of the rental home.

Number of New Jobs Created

A growing job market equates to a steady pool of renters. The workers who fill the new jobs will need a residence. This gives you confidence that you can retain a high occupancy level and buy more rentals.

School Ratings

The reputation of school districts has an important impact on home market worth throughout the city. Well-accredited schools are a prerequisite for businesses that are looking to relocate. Business relocation attracts more tenants. New arrivals who buy a residence keep housing prices strong. For long-term investing, be on the lookout for highly ranked schools in a prospective investment area.

Property Appreciation Rates

High real estate appreciation rates are a necessity for a viable long-term investment. Investing in properties that you intend to maintain without being confident that they will grow in price is a formula for disaster. Low or shrinking property appreciation rates should remove a location from the selection.

A furnished house or condo where renters reside for less than a month is referred to as a short-term rental. Long-term rentals, like apartments, impose lower rental rates per night than short-term rentals. With renters not staying long, short-term rentals need to be repaired and sanitized on a consistent basis.

Typical short-term tenants are backpackers, home sellers who are waiting to close on their replacement home, and corporate travelers who need something better than hotel accommodation. Any homeowner can convert their property into a short-term rental unit with the assistance provided by online home-sharing websites like VRBO and AirBnB. Short-term rentals are considered a good way to embark upon investing in real estate.

Vacation rental unit owners necessitate working one-on-one with the renters to a greater degree than the owners of longer term leased units. As a result, investors deal with problems repeatedly. Consider covering yourself and your assets by adding one of real estate law offices in Kent IL to your network of experts.

Factors to Consider

Short-Term Rental Income

You must determine the range of rental revenue you are looking for based on your investment budget. An area’s short-term rental income rates will quickly show you when you can anticipate to accomplish your estimated rental income levels.

Median Property Prices

Carefully compute the budget that you can spend on additional investment properties. To see if a community has opportunities for investment, study the median property prices. You can calibrate your community survey by studying the median market worth in particular sections of the community.

Price Per Square Foot

Price per square foot may be misleading when you are looking at different buildings. A building with open entrances and high ceilings cannot be compared with a traditional-style property with greater floor space. If you remember this, the price per square foot may give you a basic idea of real estate prices.

Short-Term Rental Occupancy Rate

The percentage of short-term rental properties that are presently rented in an area is important data for a landlord. A high occupancy rate signifies that a fresh supply of short-term rentals is wanted. If investors in the market are having problems filling their existing units, you will have difficulty finding renters for yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to assess the profitability of an investment. Divide the Net Operating Income (NOI) by the total amount of cash put in. The answer will be a percentage. When an investment is profitable enough to reclaim the capital spent quickly, you’ll get a high percentage. Loan-assisted projects will have a higher cash-on-cash return because you’re utilizing less of your cash.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are generally used by real estate investors to calculate the worth of rentals. An investment property that has a high cap rate as well as charging average market rental rates has a good market value. Low cap rates signify higher-priced properties. You can calculate the cap rate for possible investment real estate by dividing the Net Operating Income (NOI) by the Fair Market Value or purchase price of the investment property. The percentage you will obtain is the investment property’s cap rate.

Local Attractions

Important public events and entertainment attractions will attract tourists who will look for short-term housing. When a city has places that regularly produce interesting events, such as sports coliseums, universities or colleges, entertainment venues, and amusement parks, it can attract people from out of town on a regular basis. Must-see vacation spots are located in mountainous and coastal points, near waterways, and national or state nature reserves.

To fix and flip a residential property, you should pay lower than market value, perform any needed repairs and improvements, then liquidate it for full market price. Your estimate of fix-up costs has to be on target, and you should be capable of acquiring the unit for lower than market price.

It is vital for you to understand how much houses are being sold for in the city. The average number of Days On Market (DOM) for properties sold in the region is important. As a “house flipper”, you’ll want to put up for sale the repaired house immediately so you can avoid upkeep spendings that will lessen your returns.

Help motivated real estate owners in discovering your firm by featuring your services in our directory of Kent companies that buy houses for cash and top Kent property investment companies.

In addition, coordinate with Kent real estate bird dogs. These specialists concentrate on rapidly locating lucrative investment opportunities before they come on the market.

Factors to Consider

Median Home Price

The market’s median home price could help you find a suitable neighborhood for flipping houses. If purchase prices are high, there might not be a steady reserve of fixer-upper real estate available. This is a principal component of a fix and flip market.

If area information signals a sharp decline in real property market values, this can indicate the accessibility of possible short sale properties. You’ll hear about potential opportunities when you join up with Kent short sale processors. Learn more regarding this kind of investment by reading our guide What to Know When Buying a Short Sale House.

Property Appreciation Rate

Are real estate prices in the city going up, or moving down? You are eyeing for a reliable increase of the area’s housing prices. Property market worth in the region need to be going up consistently, not abruptly. When you are purchasing and liquidating rapidly, an uncertain environment can sabotage your investment.

Average Renovation Costs

Look thoroughly at the potential renovation spendings so you will understand whether you can reach your goals. The time it will require for getting permits and the local government’s requirements for a permit request will also affect your plans. If you need to present a stamped suite of plans, you’ll need to incorporate architect’s fees in your costs.

Population Growth

Population growth is a good indicator of the strength or weakness of the area’s housing market. Flat or decelerating population growth is an indication of a weak market with not an adequate supply of buyers to justify your risk.

Median Population Age

The median citizens’ age is a direct sign of the availability of ideal home purchasers. If the median age is the same as that of the typical worker, it is a good sign. These can be the people who are probable homebuyers. Older people are preparing to downsize, or relocate into senior-citizen or retiree communities.

Unemployment Rate

If you see a city that has a low unemployment rate, it’s a strong indicator of profitable investment prospects. An unemployment rate that is less than the national median is what you are looking for. When the region’s unemployment rate is lower than the state average, that is a sign of a desirable investing environment. In order to purchase your repaired houses, your buyers are required to be employed, and their customers too.

Income Rates

The population’s wage statistics inform you if the city’s financial environment is scalable. When home buyers acquire a house, they usually need to borrow money for the home purchase. To be issued a mortgage loan, a person should not be spending for a house payment greater than a specific percentage of their income. Median income will help you determine if the typical home purchaser can buy the homes you intend to put up for sale. In particular, income increase is critical if you need to scale your business. To stay even with inflation and soaring building and material expenses, you should be able to periodically raise your prices.

Number of New Jobs Created

The number of jobs appearing per year is valuable information as you contemplate on investing in a specific market. A larger number of citizens buy houses if their community’s economy is adding new jobs. Competent trained professionals looking into purchasing real estate and settling choose moving to places where they won’t be jobless.

Hard Money Loan Rates

Fix-and-flip real estate investors often utilize hard money loans in place of typical financing. This strategy allows them complete lucrative projects without delay. Discover top hard money lenders for real estate investors in Kent IL so you can compare their fees.

Those who aren’t well-versed concerning hard money lenders can learn what they ought to understand with our guide for newbies — What Is a Hard Money Lender in Real Estate?.

Wholesaling is a real estate investment plan that entails scouting out homes that are appealing to investors and signing a purchase contract. When a real estate investor who needs the property is found, the sale and purchase agreement is assigned to the buyer for a fee. The seller sells the property under contract to the investor instead of the real estate wholesaler. The real estate wholesaler doesn’t sell the residential property itself — they simply sell the rights to buy it.

This business requires utilizing a title firm that’s familiar with the wholesale purchase and sale agreement assignment procedure and is qualified and willing to coordinate double close transactions. Search for title companies for wholesalers in Kent IL in HouseCashin’s list.

Our extensive guide to wholesaling can be found here: A-to-Z Guide to Property Wholesaling. As you go about your wholesaling venture, insert your firm in HouseCashin’s directory of Kent top home wholesalers. This will let your possible investor buyers discover and reach you.

Factors to Consider

Median Home Prices

Median home prices in the community being considered will quickly show you if your real estate investors’ preferred properties are located there. As real estate investors prefer investment properties that are on sale for lower than market price, you will need to see reduced median prices as an implied hint on the possible supply of houses that you may purchase for less than market worth.

Rapid weakening in real property market worth may result in a supply of homes with no equity that appeal to short sale property buyers. Wholesaling short sales often brings a collection of unique perks. But, be cognizant of the legal liability. Discover more regarding wholesaling short sales with our exhaustive guide. When you have chosen to try wholesaling these properties, make certain to hire someone on the list of the best short sale lawyers in Kent IL and the best real estate foreclosure attorneys in Kent IL to help you.

Property Appreciation Rate

Median home value changes clearly illustrate the home value in the market. Real estate investors who intend to keep investment properties will have to know that home market values are steadily going up. Both long- and short-term investors will stay away from a region where home values are depreciating.

Population Growth

Population growth data is an important indicator that your future investors will be aware of. If the population is multiplying, additional residential units are needed. Investors understand that this will include both rental and purchased residential housing. When a city is shrinking in population, it does not necessitate more housing and real estate investors will not be active there.

Median Population Age

Investors have to work in a robust property market where there is a substantial source of tenants, newbie homebuyers, and upwardly mobile citizens switching to more expensive homes. A place that has a huge employment market has a steady supply of tenants and purchasers. A market with these features will have a median population age that matches the wage-earning person’s age.

Income Rates

The median household and per capita income demonstrate stable growth continuously in regions that are favorable for real estate investment. Income increment proves an area that can absorb rental rate and housing listing price increases. Investors have to have this in order to reach their expected profits.

Unemployment Rate

Real estate investors whom you approach to purchase your sale contracts will regard unemployment numbers to be a key bit of information. Overdue rent payments and default rates are widespread in regions with high unemployment. Long-term investors won’t purchase a home in a market like that. High unemployment creates problems that will keep people from purchasing a home. This is a problem for short-term investors purchasing wholesalers’ contracts to renovate and flip a house.

Number of New Jobs Created

Understanding how frequently fresh jobs are produced in the market can help you see if the real estate is located in a strong housing market. Job creation signifies additional workers who require a place to live. Long-term investors, such as landlords, and short-term investors such as rehabbers, are drawn to regions with good job production rates.

Average Renovation Costs

An important factor for your client investors, specifically fix and flippers, are renovation expenses in the area. The cost of acquisition, plus the expenses for renovation, should total to lower than the After Repair Value (ARV) of the real estate to ensure profit. The cheaper it is to update a property, the friendlier the place is for your future purchase agreement buyers.

Acquiring mortgage notes (loans) works when the loan can be purchased for less than the remaining balance. The debtor makes future mortgage payments to the mortgage note investor who is now their current mortgage lender.

Performing notes mean mortgage loans where the homeowner is always current on their mortgage payments. These loans are a stable generator of cash flow. Some mortgage note investors look for non-performing notes because if the mortgage note investor can’t successfully re-negotiate the loan, they can always acquire the property at foreclosure for a low amount.

Eventually, you may grow a selection of mortgage note investments and lack the ability to handle them by yourself. In this case, you can employ one of home loan servicers in Kent IL that would basically turn your portfolio into passive cash flow.

When you conclude that this strategy is perfect for you, place your name in our list of Kent top mortgage note buying companies. Joining will make you more noticeable to lenders offering profitable opportunities to note buyers like you.

Factors to Consider

Foreclosure Rates

Performing note investors research regions with low foreclosure rates. If the foreclosures are frequent, the community might still be good for non-performing note buyers. The neighborhood should be active enough so that investors can foreclose and resell collateral properties if needed.

Foreclosure Laws

It is important for note investors to know the foreclosure regulations in their state. They’ll know if their law dictates mortgages or Deeds of Trust. While using a mortgage, a court has to agree to a foreclosure. A Deed of Trust authorizes the lender to file a public notice and start foreclosure.

Mortgage Interest Rates

Mortgage note investors inherit the interest rate of the mortgage loan notes that they buy. This is an important determinant in the returns that lenders reach. Mortgage interest rates are crucial to both performing and non-performing mortgage note investors.

Traditional interest rates can vary by as much as a quarter of a percent throughout the US. Mortgage loans issued by private lenders are priced differently and can be higher than traditional mortgages.

A note buyer should know the private and conventional mortgage loan rates in their markets at any given time.

Demographics

A market’s demographics details help note investors to focus their work and properly use their assets. It’s critical to know whether an adequate number of people in the area will continue to have reliable employment and incomes in the future.
A youthful growing market with a diverse employment base can contribute a reliable income stream for long-term mortgage note investors looking for performing notes.

Investors who look for non-performing notes can also make use of stable markets. When foreclosure is called for, the foreclosed property is more easily sold in a growing real estate market.

Property Values

The greater the equity that a homeowner has in their property, the more advantageous it is for you as the mortgage lender. If the value isn’t much more than the mortgage loan balance, and the mortgage lender has to foreclose, the collateral might not generate enough to repay the lender. The combined effect of mortgage loan payments that reduce the mortgage loan balance and yearly property market worth growth raises home equity.

Property Taxes

Normally, mortgage lenders receive the house tax payments from the homeowner every month. When the taxes are due, there should be adequate payments being held to take care of them. The lender will need to take over if the house payments stop or they risk tax liens on the property. If taxes are delinquent, the government’s lien jumps over any other liens to the head of the line and is taken care of first.

Because tax escrows are included with the mortgage payment, increasing taxes mean larger mortgage loan payments. Overdue homeowners might not be able to keep up with increasing loan payments and could interrupt paying altogether.

Real Estate Market Strength

A vibrant real estate market showing consistent value increase is helpful for all categories of note investors. They can be confident that, when necessary, a foreclosed property can be unloaded at a price that is profitable.

Mortgage note investors also have an opportunity to make mortgage loans directly to homebuyers in reliable real estate areas. This is a desirable source of income for successful investors.

A REIT, or Real Estate Investment Trust, means a company that makes investments in income-generating assets. Before REITs were created, investing in properties used to be too expensive for most people. REIT shares are affordable for most people.

Participants in such organizations are entirely passive investors. The liability that the investors are accepting is diversified among a group of investment assets. Shares in a REIT may be sold whenever it’s desirable for the investor. However, REIT investors do not have the ability to choose individual real estate properties or markets. Their investment is limited to the real estate properties chosen by the REIT.

Real estate investment funds are essentially mutual funds that concentrate on real estate companies, such as REITs. The fund doesn’t own properties — it owns interest in real estate firms. This is an additional method for passive investors to diversify their portfolio with real estate without the high startup expense or risks. Where REITs must distribute dividends to its participants, funds don’t. The worth of a fund to someone is the anticipated increase of the worth of its shares.

You may select a fund that concentrates on a predetermined type of real estate you’re knowledgeable about, but you don’t get to select the market of every real estate investment. As passive investors, fund participants are glad to permit the directors of the fund handle all investment selections.