Ultimate Kent 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 plan to grow your investment assets not just own one investment property. A key piece of this strategy is to be able to do a “cash-out” refinance.

The After Repair Value (ARV) of the investment property has to equal more than the combined purchase and repair costs. Then you withdraw the equity you produced from the property in a “cash-out” mortgage refinance. This cash is placed into the next investment asset, and so on. You add appreciating investment assets to your portfolio and rental income to your cash flow.

Once you have created a considerable collection of income producing residential units, you might prefer to find others to oversee all operations while you enjoy mailbox income. Discover top Kent real estate managers by looking through our list.

Factors to Consider

Population Growth

Population increase or shrinking signals you if you can expect good returns from long-term investments. If you find good population expansion, you can be sure that the region is pulling potential tenants to it. The location is attractive to businesses and employees to situate, work, and have families. This means stable renters, higher rental income, and more possible buyers when you intend to sell your property.

Property Taxes

Real estate taxes, maintenance, and insurance costs are examined by long-term lease investors for calculating costs to assess if and how the investment will pay off. Steep real estate tax rates will hurt a property investor’s profits. Markets with excessive property taxes are not a stable situation for short- or long-term investment and must be bypassed.

Price to Rent Ratio

Price to rent ratio (p/r) is a market indicator that informs you the amount you can plan to charge for rent. An investor can not pay a steep price for an investment asset if they can only charge a modest rent not allowing them to pay the investment off in a suitable timeframe. You will prefer to discover a low p/r to be confident that you can set your rents high enough to reach good profits.

Median Gross Rents

Median gross rents are an accurate yardstick of the desirability of a rental market under consideration. You should discover a community with repeating median rent increases. You will not be able to reach your investment targets in an area where median gross rental rates are going down.

Median Population Age

Median population age in a strong long-term investment market should equal the normal worker’s age. You’ll discover this to be accurate in locations where people are relocating. If you discover a high median age, your supply of renters is becoming smaller. A dynamic investing environment can’t be maintained by retired individuals.

Employment Base Diversity

A varied number of companies in the location will boost your prospects for strong profits. When the area’s employees, who are your tenants, are hired by a varied assortment of businesses, you will not lose all of your renters at the same time (together with your property’s value), if a dominant employer in the city goes bankrupt.

Unemployment Rate

High unemployment means fewer renters and an unreliable housing market. People who don’t have a job won’t be able to buy goods or services. The still employed workers might find their own paychecks marked down. Existing tenants might fall behind on their rent in such cases.

Income Rates

Median household and per capita income will hint if the renters that you require are residing in the city. Increasing incomes also tell you that rental fees can be increased over the life of the investment property.

Number of New Jobs Created

The more jobs are continuously being provided in a city, the more stable your renter supply will be. An environment that creates jobs also increases the amount of participants in the housing market. Your strategy of renting and acquiring additional properties requires an economy that will create new jobs.

School Ratings

The quality of school districts has an undeniable impact on home market worth across the city. Employers that are interested in relocating prefer good schools for their employees. Moving employers relocate and draw prospective renters. Homebuyers who come to the region have a beneficial impact on real estate market worth. For long-term investing, be on the lookout for highly rated schools in a potential investment location.

Property Appreciation Rates

The basis of a long-term investment method is to hold the investment property. You need to be confident that your assets will grow in market value until you want to dispose of them. You don’t need to take any time reviewing regions showing poor property appreciation rates.

A furnished house or condo where tenants reside for shorter than 30 days is referred to as a short-term rental. Short-term rental businesses charge a higher rent a night than in long-term rental properties. Short-term rental properties could involve more frequent upkeep and cleaning.

Short-term rentals are popular with business travelers who are in the area for a few nights, those who are migrating and need short-term housing, and backpackers. Any property owner can turn their property into a short-term rental unit with the assistance provided by online home-sharing sites like VRBO and AirBnB. Short-term rentals are regarded as an effective approach to start investing in real estate.

Destination rental owners require interacting directly with the occupants to a greater extent than the owners of longer term leased units. This leads to the investor having to frequently deal with protests. Think about defending yourself and your properties by adding any of property law attorneys in Kent WA to your network of experts.

Factors to Consider

Short-Term Rental Income

You should find out how much revenue has to be created to make your effort lucrative. Knowing the typical amount of rental fees in the community for short-term rentals will enable you to select a preferable market to invest.

Median Property Prices

Thoroughly evaluate the amount that you can afford to spare for new real estate. To see whether a market has potential for investment, investigate the median property prices. You can customize your property search by looking at median prices in the location’s sub-markets.

Price Per Square Foot

Price per sq ft can be influenced even by the look and layout of residential properties. A building with open entryways and high ceilings can’t be compared with a traditional-style residential unit with greater floor space. You can use the price per sq ft data to get a good overall picture of home values.

Short-Term Rental Occupancy Rate

A quick look at the area’s short-term rental occupancy rate will show you whether there is a need in the district for more short-term rental properties. A high occupancy rate means that a new supply of short-term rental space is needed. If the rental occupancy indicators are low, there isn’t enough place in the market and you should search in a different place.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to evaluate the value of an investment plan. You can calculate the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by your cash investment. The answer is a percentage. If a venture is profitable enough to recoup the capital spent fast, you will have a high percentage. Financed investment ventures can yield stronger cash-on-cash returns as you are spending less of your own resources.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are widely used by real estate investors to estimate the market value of rental properties. An investment property that has a high cap rate as well as charges typical market rental rates has a strong market value. When investment real estate properties in a market have low cap rates, they typically will cost too much. You can determine the cap rate for potential investment property by dividing the Net Operating Income (NOI) by the market worth or purchase price of the property. This presents you a percentage that is the annual return, or cap rate.

Local Attractions

Important festivals and entertainment attractions will attract vacationers who need short-term rental houses. If a city has sites that regularly produce interesting events, like sports coliseums, universities or colleges, entertainment halls, and adventure parks, it can draw people from out of town on a recurring basis. Popular vacation spots are located in mountain and beach areas, along rivers, and national or state parks.

The fix and flip investment plan involves purchasing a property that requires repairs or restoration, creating more value by upgrading the building, and then selling it for a better market worth. Your estimate of rehab costs must be on target, and you have to be capable of acquiring the house for less than market price.

Research the values so that you are aware of the accurate After Repair Value (ARV). Choose a city with a low average Days On Market (DOM) indicator. Liquidating the home without delay will help keep your expenses low and ensure your revenue.

So that property owners who need to liquidate their house can readily discover you, promote your status by utilizing our catalogue of the best property cash buyers in Kent WA along with top real estate investment firms in Kent WA.

Additionally, look for bird dogs for real estate investors in Kent WA. These professionals concentrate on rapidly uncovering profitable investment prospects before they are listed on the market.

Factors to Consider

Median Home Price

When you search for a promising location for property flipping, investigate the median housing price in the city. Lower median home values are a hint that there may be a good number of houses that can be bought below market value. This is a primary feature of a fix and flip market.

If regional information shows a fast drop in real estate market values, this can indicate the availability of potential short sale homes. You will find out about possible opportunities when you team up with Kent short sale negotiators. You will learn more information concerning short sales in our guide ⁠— How Can I Buy a Short Sale Home?.

Property Appreciation Rate

Are real estate values in the area going up, or moving down? You want a city where property prices are constantly and continuously on an upward trend. Unpredictable market value fluctuations are not good, even if it is a remarkable and quick growth. You could end up purchasing high and liquidating low in an unreliable market.

Average Renovation Costs

A comprehensive study of the area’s building expenses will make a huge influence on your market choice. The time it will take for getting permits and the municipality’s rules for a permit application will also impact your plans. If you have to present a stamped suite of plans, you’ll need to incorporate architect’s charges in your budget.

Population Growth

Population increase statistics allow you to take a look at housing demand in the area. If there are buyers for your renovated real estate, the data will demonstrate a robust population growth.

Median Population Age

The median citizens’ age is a factor that you may not have considered. If the median age is equal to the one of the average worker, it is a good indication. Employed citizens are the individuals who are active home purchasers. People who are planning to depart the workforce or are retired have very restrictive housing requirements.

Unemployment Rate

When assessing a community for investment, keep your eyes open for low unemployment rates. An unemployment rate that is less than the nation’s average is a good sign. If the community’s unemployment rate is lower than the state average, that’s a sign of a desirable financial market. Non-working individuals can’t purchase your homes.

Income Rates

The citizens’ income levels tell you if the local financial market is stable. Most people normally take a mortgage to buy a house. To be eligible for a home loan, a borrower shouldn’t be using for housing greater than a particular percentage of their salary. You can figure out based on the region’s median income whether a good supply of people in the area can afford to purchase your properties. Search for places where the income is growing. If you need to raise the asking price of your homes, you need to be positive that your clients’ salaries are also increasing.

Number of New Jobs Created

Finding out how many jobs appear per annum in the city adds to your assurance in an area’s economy. A higher number of residents acquire homes when their city’s economy is generating jobs. Competent trained workers looking into buying a home and deciding to settle prefer moving to cities where they won’t be jobless.

Hard Money Loan Rates

Investors who flip rehabbed homes frequently utilize hard money funding in place of conventional funding. This strategy enables investors negotiate lucrative ventures without holdups. Discover the best private money lenders in Kent WA so you may review their fees.

An investor who needs to understand more about hard money loans can learn what they are and how to employ them by reviewing our guide titled How to Use Hard Money Lenders.

As a real estate wholesaler, you enter a contract to buy a house that other investors will want. A real estate investor then ”purchases” the sale and purchase agreement from you. The property under contract is bought by the real estate investor, not the wholesaler. The real estate wholesaler doesn’t sell the property — they sell the contract to buy it.

Wholesaling relies on the participation of a title insurance firm that is comfortable with assignment of purchase contracts and comprehends how to work with a double closing. Find Kent title companies that specialize in real estate property investments by using our directory.

Learn more about how wholesaling works from our comprehensive guide — Real Estate Wholesaling 101. As you conduct your wholesaling business, insert your company in HouseCashin’s list of Kent top real estate wholesalers. This will help your future investor customers discover and contact you.

Factors to Consider

Median Home Prices

Median home values in the region will tell you if your designated price point is possible in that market. A community that has a sufficient source of the reduced-value properties that your clients need will show a below-than-average median home purchase price.

Rapid weakening in real estate values might lead to a supply of houses with no equity that appeal to short sale investors. Wholesaling short sale homes frequently brings a collection of particular perks. But it also raises a legal liability. Gather more data on how to wholesale a short sale home in our thorough explanation. Once you are keen to start wholesaling, look through Kent top short sale real estate attorneys as well as Kent top-rated foreclosure lawyers directories to find the right counselor.

Property Appreciation Rate

Median home purchase price trends are also vital. Some real estate investors, including buy and hold and long-term rental landlords, specifically want to see that home values in the city are growing steadily. Shrinking market values indicate an unequivocally weak rental and home-selling market and will chase away investors.

Population Growth

Population growth stats are an indicator that investors will look at carefully. A growing population will require more housing. There are a lot of people who lease and more than enough customers who buy houses. A place with a dropping community will not draw the real estate investors you want to buy your contracts.

Median Population Age

Real estate investors want to be a part of a strong housing market where there is a good source of tenants, newbie homebuyers, and upwardly mobile citizens moving to more expensive houses. To allow this to be possible, there needs to be a dependable employment market of potential renters and homebuyers. When the median population age matches the age of working locals, it illustrates a reliable real estate market.

Income Rates

The median household and per capita income in a robust real estate investment market have to be on the upswing. If renters’ and homeowners’ incomes are getting bigger, they can manage rising rental rates and home prices. Real estate investors have to have this if they are to achieve their estimated profitability.

Unemployment Rate

Investors whom you contact to take on your sale contracts will deem unemployment figures to be an essential bit of information. High unemployment rate causes more tenants to delay rental payments or default altogether. This upsets long-term real estate investors who intend to lease their investment property. High unemployment creates concerns that will stop people from buying a property. This can prove to be hard to reach fix and flip real estate investors to purchase your buying contracts.

Number of New Jobs Created

The frequency of jobs produced each year is a vital component of the residential real estate picture. New jobs generated draw a large number of workers who require spaces to lease and purchase. Long-term investors, such as landlords, and short-term investors such as rehabbers, are drawn to cities with strong job appearance rates.

Average Renovation Costs

An influential consideration for your client investors, especially house flippers, are renovation expenses in the market. The price, plus the expenses for rehabilitation, must amount to less than the After Repair Value (ARV) of the house to create profit. The cheaper it is to renovate a house, the more lucrative the city is for your potential purchase agreement clients.

Note investing involves buying a loan (mortgage note) from a mortgage holder at a discount. The client makes remaining loan payments to the note investor who is now their current lender.

When a mortgage loan is being repaid on time, it’s considered a performing loan. Performing loans are a stable generator of cash flow. Non-performing notes can be rewritten or you can acquire the collateral at a discount via a foreclosure process.

At some point, you may accrue a mortgage note portfolio and notice you are lacking time to service it by yourself. At that juncture, you may want to employ our list of Kent top mortgage loan servicing companies and reclassify your notes as passive investments.

If you find that this model is a good fit for you, include your business in our directory of Kent top companies that buy mortgage notes. Showing up on our list sets you in front of lenders who make lucrative investment opportunities available to note investors such as you.

Factors to Consider

Foreclosure Rates

Investors looking for current mortgage loans to acquire will want to find low foreclosure rates in the market. If the foreclosures happen too often, the community could nonetheless be desirable for non-performing note investors. The neighborhood needs to be strong enough so that note investors can complete foreclosure and unload collateral properties if necessary.

Foreclosure Laws

Professional mortgage note investors are thoroughly knowledgeable about their state’s regulations for foreclosure. Many states utilize mortgage documents and some utilize Deeds of Trust. A mortgage requires that you go to court for permission to start foreclosure. You merely need to file a public notice and begin foreclosure steps if you’re working with a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage notes contain a negotiated interest rate. Your investment return will be influenced by the interest rate. Interest rates are significant to both performing and non-performing note investors.

The mortgage rates set by conventional lending institutions are not identical everywhere. Private loan rates can be a little more than conventional loan rates considering the larger risk accepted by private mortgage lenders.

Mortgage note investors ought to always be aware of the prevailing local interest rates, private and traditional, in potential investment markets.

Demographics

A lucrative mortgage note investment strategy uses a study of the community by utilizing demographic data. The area’s population growth, unemployment rate, employment market increase, income standards, and even its median age contain pertinent information for note investors.
Performing note buyers look for homebuyers who will pay without delay, generating a consistent income source of mortgage payments.

Note buyers who buy non-performing notes can also take advantage of strong markets. A resilient regional economy is required if they are to locate buyers for properties they’ve foreclosed on.

Property Values

As a mortgage note investor, you should look for deals that have a cushion of equity. If the property value isn’t higher than the loan amount, and the lender decides to start foreclosure, the house might not generate enough to payoff the loan. As mortgage loan payments lessen the balance owed, and the market value of the property appreciates, the homeowner’s equity increases.

Property Taxes

Usually, lenders accept the house tax payments from the borrower each month. So the mortgage lender makes certain that the property taxes are paid when payable. The mortgage lender will need to compensate if the house payments cease or the lender risks tax liens on the property. When property taxes are past due, the government’s lien leapfrogs all other liens to the front of the line and is satisfied first.

If property taxes keep increasing, the homebuyer’s mortgage payments also keep increasing. Borrowers who are having trouble handling their loan payments could drop farther behind and sooner or later default.

Real Estate Market Strength

Both performing and non-performing note investors can succeed in a growing real estate environment. It’s critical to understand that if you need to foreclose on a collateral, you will not have difficulty receiving an appropriate price for the collateral property.

Strong markets often show opportunities for private investors to generate the initial mortgage loan themselves. This is a good stream of income for accomplished investors.

Many real estate investment firms are conceived as a trust termed Real Estate Investment Trusts or REITs. This was first invented as a method to permit the everyday person to invest in real estate. REIT shares are affordable to the majority of investors.

Participants in such organizations are totally passive investors. REITs oversee investors’ exposure with a varied collection of assets. Shares in a REIT can be liquidated whenever it is agreeable for you. But REIT investors do not have the ability to select specific investment properties or markets. Their investment is limited to the properties chosen by the REIT.

Real estate investment funds are basically mutual funds focusing on real estate businesses, such as REITs. The fund doesn’t hold real estate — it holds interest in real estate companies. This is an additional method for passive investors to allocate their investments with real estate avoiding the high initial expense or liability. Fund participants might not receive regular disbursements like REIT shareholders do. The profit to investors is generated by changes in the value of the stock.

You can select a fund that specializes in a targeted type of real estate you’re aware of, but you do not get to determine the geographical area of every real estate investment. You must depend on the fund’s managers to decide which locations and assets are picked for investment.