Ultimate Kern County Real Estate Investing Guide for 2024

A long-term investment plan that involves Buying a house, Rehabbing, Renting, Refinancing it, and Repeating the process by using the money from the mortgage refinance is called BRRRR. If you plan to expand your investments, the BRRRR is a good strategy to use. A crucial part of this plan is to be able to get a “cash-out” mortgage refinance.

When you are done with improving the house, the market value should be higher than your combined purchase and rehab costs. Then you take a cash-out refinance loan that is computed on the higher value, and you pocket the difference. You use that money to purchase another house and the procedure begins again. This strategy assists you to reliably add to your portfolio and your investment revenue.

When an investor holds a large portfolio of investment homes, it seems smart to pay a property manager and create a passive income stream. Find one of the best property management firms in Kern County CA with a review of our comprehensive directory.

Factors to Consider

Population Growth

The rise or decrease of the population can indicate whether that community is appealing to landlords. An increasing population usually signals busy relocation which means new renters. The community is desirable to companies and employees to situate, work, and grow families. This equals dependable tenants, higher lease revenue, and a greater number of possible homebuyers when you intend to sell your rental.

Property Taxes

Real estate taxes, regular upkeep expenditures, and insurance directly affect your returns. High payments in these categories threaten your investment’s returns. If property tax rates are unreasonable in a specific area, you will prefer to search elsewhere.

Price to Rent Ratio

Price to rent ratio (p/r) is a market signal that informs you how much you can predict to charge for rent. An investor can not pay a large amount for a rental home if they can only demand a small rent not enabling them to repay the investment in a suitable time. The less rent you can demand the higher the p/r, with a low p/r illustrating a more robust rent market.

Median Gross Rents

Median gross rents are an accurate barometer of the approval of a lease market under examination. You should find a site with consistent median rent growth. You will not be able to achieve your investment targets in an area where median gross rental rates are dropping.

Median Population Age

Median population age in a reliable long-term investment market must show the normal worker’s age. This can also show that people are relocating into the city. If you find a high median age, your source of renters is declining. A thriving investing environment cannot be supported by aged, non-working residents.

Employment Base Diversity

A diversified employment base is what a smart long-term rental property investor will hunt for. If the community’s workers, who are your tenants, are employed by a diverse group of employers, you can’t lose all all tenants at once (together with your property’s value), if a major enterprise in the location goes out of business.

Unemployment Rate

High unemployment means a lower number of tenants and an unsafe housing market. The unemployed cannot pay for goods or services. This can result in a high amount of layoffs or shorter work hours in the location. Existing renters might delay their rent in these conditions.

Income Rates

Median household and per capita income rates help you to see if a sufficient number of ideal tenants reside in that area. Your investment budget will use rental charge and investment real estate appreciation, which will depend on wage augmentation in the community.

Number of New Jobs Created

A growing job market translates into a constant source of renters. The workers who are employed for the new jobs will need a place to live. This gives you confidence that you will be able to sustain a high occupancy rate and purchase additional rentals.

School Ratings

Community schools will cause a strong impact on the real estate market in their location. Businesses that are considering moving prefer top notch schools for their employees. Reliable renters are a by-product of a vibrant job market. Property market values increase thanks to additional employees who are buying homes. You will not find a dynamically soaring residential real estate market without reputable schools.

Property Appreciation Rates

Real estate appreciation rates are an important portion of your long-term investment scheme. You want to see that the odds of your real estate increasing in market worth in that location are good. Inferior or dropping property appreciation rates should eliminate a location from the selection.

A furnished house or condo where renters live for shorter than a month is regarded as a short-term rental. Long-term rental units, like apartments, impose lower rental rates a night than short-term ones. Because of the high number of occupants, short-term rentals entail additional regular upkeep and tidying.

Normal short-term renters are backpackers, home sellers who are waiting to close on their replacement home, and business travelers who require more than hotel accommodation. Any property owner can turn their property into a short-term rental unit with the know-how provided by virtual home-sharing platforms like VRBO and AirBnB. An easy method to get into real estate investing is to rent real estate you already possess for short terms.

The short-term property rental strategy involves interaction with occupants more often in comparison with yearly rental units. That dictates that landlords deal with disputes more often. Give some thought to managing your liability with the support of one of the good real estate attorneys in Kern County CA.

Factors to Consider

Short-Term Rental Income

First, compute the amount of rental income you must earn to achieve your projected profits. A community’s short-term rental income levels will promptly reveal to you if you can expect to achieve your estimated rental income figures.

Median Property Prices

Meticulously calculate the budget that you are able to pay for additional real estate. Look for communities where the budget you prefer correlates with the current median property values. You can narrow your real estate search by estimating median market worth in the area’s sub-markets.

Price Per Square Foot

Price per sq ft can be affected even by the design and floor plan of residential properties. If you are analyzing similar kinds of real estate, like condominiums or stand-alone single-family residences, the price per square foot is more reliable. It may be a fast method to analyze several sub-markets or buildings.

Short-Term Rental Occupancy Rate

The ratio of short-term rental properties that are currently occupied in an area is vital knowledge for a future rental property owner. A location that requires more rentals will have a high occupancy level. If investors in the city are having issues renting their existing properties, you will have trouble finding renters for yours.

Short-Term Rental Cash-on-Cash Return

To know whether you should put your cash in a specific investment asset or area, calculate the cash-on-cash return. You can calculate the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash investment. The result is shown as a percentage. When an investment is high-paying enough to recoup the capital spent promptly, you will get a high percentage. Loan-assisted projects will have a higher cash-on-cash return because you’re spending less of your funds.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion shows the comparability of property value to its annual income. An income-generating asset that has a high cap rate as well as charges market rents has a good market value. Low cap rates show higher-priced properties. The cap rate is computed by dividing the Net Operating Income (NOI) by the purchase price or market value. The percentage you will obtain is the investment property’s cap rate.

Local Attractions

Short-term rental units are preferred in areas where vacationers are drawn by activities and entertainment venues. When a region has places that annually produce sought-after events, like sports arenas, universities or colleges, entertainment venues, and theme parks, it can attract people from outside the area on a constant basis. At certain times of the year, areas with outside activities in mountainous areas, coastal locations, or along rivers and lakes will attract large numbers of tourists who want short-term residence.

The fix and flip approach means acquiring a house that requires repairs or restoration, generating more value by upgrading the property, and then liquidating it for a better market worth. The essentials to a lucrative investment are to pay less for the house than its full market value and to accurately compute what it will cost to make it marketable.

You also have to evaluate the real estate market where the property is positioned. You always have to check the amount of time it takes for properties to close, which is determined by the Days on Market (DOM) metric. As a “house flipper”, you’ll have to put up for sale the repaired house immediately so you can avoid upkeep spendings that will lessen your revenue.

In order that property owners who need to liquidate their property can easily discover you, showcase your availability by using our catalogue of the best real estate cash buyers in Kern County CA along with top real estate investors in Kern County CA.

Also, coordinate with Kern County bird dogs for real estate investors. Professionals found on our website will help you by quickly locating conceivably lucrative ventures prior to them being marketed.

Factors to Consider

Median Home Price

The area’s median housing value could help you determine a suitable neighborhood for flipping houses. Modest median home values are a sign that there may be a good number of residential properties that can be acquired below market worth. This is a crucial element of a profitable investment.

If regional information indicates a rapid decrease in real property market values, this can indicate the availability of potential short sale houses. You can receive notifications about these opportunities by partnering with short sale negotiation companies in Kern County CA. You will find valuable data regarding short sales in our article ⁠— What to Expect when Buying a Short Sale Home?.

Property Appreciation Rate

The shifts in real property market worth in an area are very important. You are looking for a reliable appreciation of local home values. Rapid market worth growth could reflect a market value bubble that is not sustainable. You may wind up buying high and selling low in an unstable market.

Average Renovation Costs

Look carefully at the possible rehab spendings so you’ll know whether you can reach your targets. The time it will take for acquiring permits and the municipality’s rules for a permit request will also influence your decision. If you need to show a stamped suite of plans, you’ll have to incorporate architect’s charges in your costs.

Population Growth

Population growth figures let you take a peek at housing demand in the city. If there are buyers for your repaired properties, the data will illustrate a positive population increase.

Median Population Age

The median citizens’ age will also tell you if there are potential home purchasers in the market. The median age in the market should equal the age of the usual worker. These are the individuals who are active home purchasers. The demands of retirees will probably not be included your investment project plans.

Unemployment Rate

While evaluating a location for real estate investment, keep your eyes open for low unemployment rates. An unemployment rate that is lower than the nation’s median is a good sign. If it is also less than the state average, that’s much better. Jobless individuals won’t be able to purchase your homes.

Income Rates

Median household and per capita income are a solid indicator of the scalability of the home-buying conditions in the city. When families purchase a property, they typically need to borrow money for the purchase. To get a home loan, a borrower cannot be spending for monthly repayments more than a specific percentage of their wage. Median income will help you analyze whether the typical home purchaser can afford the homes you intend to market. In particular, income growth is important if you want to scale your investment business. Construction expenses and home purchase prices increase periodically, and you need to be sure that your potential homebuyers’ income will also climb up.

Number of New Jobs Created

The number of jobs generated per annum is valuable information as you contemplate on investing in a specific location. An increasing job market means that a higher number of people are receptive to investing in a house there. Competent skilled employees looking into buying a home and settling choose moving to places where they won’t be out of work.

Hard Money Loan Rates

Short-term investors often utilize hard money loans in place of typical loans. This strategy enables investors make profitable deals without hindrance. Review top-rated Kern County hard money lenders and study lenders’ fees.

People who aren’t knowledgeable regarding hard money financing can discover what they should learn with our guide for newbie investors — What Is a Hard Money Lender in Real Estate?.

As a real estate wholesaler, you sign a purchase contract to buy a residential property that other real estate investors might want. When an investor who wants the property is found, the purchase contract is sold to them for a fee. The property under contract is sold to the investor, not the real estate wholesaler. You are selling the rights to buy the property, not the property itself.

This method involves utilizing a title firm that is familiar with the wholesale contract assignment operation and is able and willing to coordinate double close purchases. Discover Kern County title services for real estate investors by using our directory.

Learn more about this strategy from our definitive guide — Real Estate Wholesaling Explained for Beginners. While you go about your wholesaling venture, place your firm in HouseCashin’s list of Kern County top house wholesalers. That way your possible audience will know about your offering and reach out to you.

Factors to Consider

Median Home Prices

Median home values in the area under consideration will immediately tell you if your investors’ required investment opportunities are situated there. A place that has a substantial source of the below-market-value properties that your clients require will display a lower median home purchase price.

Rapid weakening in real estate prices might lead to a number of houses with no equity that appeal to short sale flippers. Wholesaling short sale properties regularly carries a collection of uncommon advantages. But it also produces a legal risk. Find out about this from our guide Can I Wholesale a Short Sale Home?. Once you determine to give it a try, make certain you employ one of short sale law firms in Kern County CA and mortgage foreclosure lawyers in Kern County CA to confer with.

Property Appreciation Rate

Median home market value movements clearly illustrate the home value in the market. Many real estate investors, such as buy and hold and long-term rental landlords, specifically need to see that residential property values in the community are expanding steadily. Both long- and short-term investors will avoid a city where housing prices are going down.

Population Growth

Population growth statistics are a contributing factor that your prospective real estate investors will be aware of. An increasing population will require more residential units. There are a lot of individuals who rent and plenty of clients who buy houses. When a city is losing people, it doesn’t require additional housing and investors will not look there.

Median Population Age

Investors need to be a part of a thriving housing market where there is a sufficient pool of renters, first-time homebuyers, and upwardly mobile locals moving to bigger residences. This takes a robust, reliable labor force of residents who feel optimistic enough to go up in the residential market. When the median population age mirrors the age of employed citizens, it shows a strong real estate market.

Income Rates

The median household and per capita income in a stable real estate investment market have to be on the upswing. Increases in rent and asking prices will be aided by rising wages in the area. Real estate investors want this if they are to reach their projected profits.

Unemployment Rate

The location’s unemployment rates will be a vital point to consider for any targeted contract buyer. High unemployment rate causes more renters to delay rental payments or default entirely. Long-term real estate investors who rely on consistent lease payments will suffer in these markets. High unemployment creates unease that will prevent people from buying a home. This is a challenge for short-term investors purchasing wholesalers’ agreements to rehab and flip a home.

Number of New Jobs Created

The frequency of more jobs being produced in the local economy completes a real estate investor’s review of a future investment site. More jobs produced lead to a high number of workers who require properties to rent and purchase. This is good for both short-term and long-term real estate investors whom you depend on to acquire your wholesale real estate.

Average Renovation Costs

Rehabilitation spendings will be essential to most property investors, as they usually buy bargain rundown homes to repair. The price, plus the expenses for improvement, should total to lower than the After Repair Value (ARV) of the property to allow for profitability. The less you can spend to update a home, the better the location is for your prospective purchase agreement buyers.

Note investing includes buying a loan (mortgage note) from a mortgage holder for less than the balance owed. This way, you become the lender to the original lender’s client.

Loans that are being repaid on time are called performing notes. Performing notes give stable income for you. Some note investors look for non-performing loans because if the mortgage note investor cannot successfully rework the mortgage, they can always obtain the property at foreclosure for a low amount.

Someday, you could accrue a group of mortgage note investments and be unable to handle the portfolio without assistance. When this occurs, you could select from the best mortgage servicers in Kern County CA which will make you a passive investor.

Should you determine to pursue this strategy, add your venture to our list of real estate note buying companies in Kern County CA. When you do this, you will be seen by the lenders who publicize desirable investment notes for procurement by investors like you.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a signal that the community has opportunities for performing note investors. High rates might signal investment possibilities for non-performing loan note investors, however they need to be cautious. The neighborhood needs to be active enough so that investors can complete foreclosure and liquidate collateral properties if called for.

Foreclosure Laws

Professional mortgage note investors are fully aware of their state’s regulations regarding foreclosure. Are you faced with a mortgage or a Deed of Trust? Lenders might have to obtain the court’s permission to foreclose on a house. You only need to file a public notice and start foreclosure steps if you’re using a Deed of Trust.

Mortgage Interest Rates

Mortgage note investors inherit the interest rate of the loan notes that they acquire. That rate will significantly influence your investment returns. No matter the type of investor you are, the loan note’s interest rate will be significant for your calculations.

Conventional interest rates can differ by as much as a quarter of a percent across the US. Private loan rates can be moderately higher than traditional interest rates considering the larger risk accepted by private mortgage lenders.

A note buyer needs to know the private and traditional mortgage loan rates in their communities at any given time.

Demographics

If note investors are deciding on where to purchase notes, they’ll examine the demographic data from considered markets. The location’s population increase, unemployment rate, employment market increase, wage levels, and even its median age contain important facts for investors.
Performing note investors look for homeowners who will pay without delay, developing a consistent revenue flow of mortgage payments.

Note buyers who seek non-performing mortgage notes can also make use of dynamic markets. If non-performing note investors need to foreclose, they will require a strong real estate market to sell the collateral property.

Property Values

As a mortgage note buyer, you will search for borrowers having a cushion of equity. When the value isn’t higher than the loan balance, and the mortgage lender decides to start foreclosure, the home might not realize enough to repay the lender. Rising property values help raise the equity in the property as the borrower lessens the amount owed.

Property Taxes

Typically, mortgage lenders collect the house tax payments from the customer every month. The lender pays the taxes to the Government to make sure they are submitted on time. If mortgage loan payments are not being made, the lender will have to choose between paying the taxes themselves, or the taxes become past due. When taxes are delinquent, the government’s lien supersedes all other liens to the front of the line and is taken care of first.

If a region has a history of growing tax rates, the combined home payments in that market are regularly expanding. Past due homeowners might not be able to keep paying rising payments and could interrupt paying altogether.

Real Estate Market Strength

A city with growing property values offers excellent potential for any note investor. It is important to know that if you have to foreclose on a property, you will not have difficulty receiving an acceptable price for it.

Mortgage note investors also have an opportunity to make mortgage notes directly to borrowers in stable real estate markets. It is another phase of a note buyer’s career.

Some real estate investment organizations are formed as a trust called Real Estate Investment Trusts or REITs. REITs were developed to permit average people to buy into properties. Shares in REITs are economical for most investors.

Shareholders’ investment in a REIT falls under passive investment. The exposure that the investors are accepting is spread within a collection of investment properties. Investors are able to unload their REIT shares whenever they wish. However, REIT investors don’t have the ability to pick individual investment properties or locations. Their investment is limited to the real estate properties selected by the REIT.

A Real Estate Investment Fund is a mutual fund that owns stocks of real estate businesses. The investment properties are not owned by the fund — they’re possessed by the firms the fund invests in. Investment funds are considered an inexpensive method to incorporate real estate in your appropriation of assets without avoidable exposure. Whereas REITs are required to distribute dividends to its members, funds do not. The value of a fund to someone is the projected growth of the price of the fund’s shares.

You may select a fund that specializes in a predetermined kind of real estate you are expert in, but you don’t get to pick the geographical area of every real estate investment. As passive investors, fund shareholders are glad to allow the management team of the fund handle all investment determinations.