Ultimate Lake County Real Estate Investing Guide for 2024

The abbreviation BRRRR is a description of a long-term investment strategy — Buy, Rehab, Rent, Refinance, Repeat. This is a way to expand your investment assets not just own a single income generating property. This plan depends on your capability to take money out when you refinance.

You enhance the worth of the investment property above what you spent purchasing and renovating the property. The house is refinanced using the ARV and the difference, or equity, comes to you in cash. This money is reinvested into another asset, and so on. This strategy assists you to steadily grow your portfolio and your investment revenue.

If an investor has a substantial portfolio of real properties, it is wise to hire a property manager and establish a passive income stream. Locate Lake County property management professionals when you go through our list of professionals.

Factors to Consider

Population Growth

The growth or shrinking of the population can illustrate if that market is appealing to landlords. If you find vibrant population increase, you can be sure that the region is pulling possible tenants to the location. Relocating companies are drawn to increasing areas providing secure jobs to families who relocate there. An expanding population constructs a certain base of tenants who will stay current with rent increases, and a strong property seller’s market if you decide to unload your investment properties.

Property Taxes

Real estate taxes, just like insurance and maintenance expenses, may vary from place to market and have to be looked at cautiously when predicting possible returns. Unreasonable expenditures in these areas jeopardize your investment’s returns. Communities with steep property taxes are not a dependable setting for short- and long-term investment and should be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a clue to how much rent can be demanded compared to the market worth of the asset. An investor can not pay a large amount for a house if they can only collect a modest rent not allowing them to repay the investment within a reasonable timeframe. You are trying to discover a low p/r to be confident that you can price your rents high enough to reach good profits.

Median Gross Rents

Median gross rents show whether a city’s lease market is dependable. Look for a stable rise in median rents year over year. Shrinking rental rates are a bad signal to long-term rental investors.

Median Population Age

Median population age in a good long-term investment market should mirror the normal worker’s age. If people are moving into the area, the median age will have no problem remaining in the range of the employment base. When working-age people aren’t entering the community to succeed retiring workers, the median age will go higher. This isn’t good for the future economy of that community.

Employment Base Diversity

A greater number of companies in the area will boost your prospects for success. When there are only one or two dominant employers, and either of them relocates or closes down, it will cause you to lose renters and your property market prices to decrease.

Unemployment Rate

High unemployment results in smaller amount of renters and an unreliable housing market. Historically successful businesses lose customers when other employers retrench employees. This can generate more retrenchments or reduced work hours in the city. This could increase the instances of delayed rents and defaults.

Income Rates

Median household and per capita income levels let you know if enough qualified tenants dwell in that city. Rising incomes also inform you that rents can be raised over your ownership of the property.

Number of New Jobs Created

The more jobs are consistently being created in a city, the more dependable your renter supply will be. An environment that produces jobs also adds more stakeholders in the property market. This ensures that you will be able to sustain a sufficient occupancy level and buy more assets.

School Ratings

School rankings in the area will have a large impact on the local housing market. When a company looks at a city for potential expansion, they remember that first-class education is a requirement for their employees. Good tenants are the result of a vibrant job market. Homeowners who come to the community have a positive effect on property market worth. Good schools are an essential ingredient for a strong real estate investment market.

Property Appreciation Rates

The foundation of a long-term investment approach is to keep the asset. You need to be assured that your real estate assets will appreciate in market price until you need to sell them. You do not want to allot any time examining markets showing subpar property appreciation rates.

Residential real estate where tenants stay in furnished spaces for less than a month are known as short-term rentals. Long-term rentals, such as apartments, require lower rental rates a night than short-term rentals. These apartments could demand more continual repairs and sanitation.

Home sellers standing by to close on a new home, vacationers, and business travelers who are stopping over in the community for about week like to rent a residence short term. Regular real estate owners can rent their homes on a short-term basis using platforms like AirBnB and VRBO. Short-term rentals are thought of as a good method to start investing in real estate.

The short-term property rental venture involves interaction with tenants more frequently in comparison with yearly lease properties. This determines that landlords handle disputes more often. You might want to cover your legal exposure by engaging one of the best Lake County real estate law firms.

Factors to Consider

Short-Term Rental Income

You have to calculate how much revenue has to be created to make your effort lucrative. Learning about the usual amount of rental fees in the region for short-term rentals will help you pick a good location to invest.

Median Property Prices

When purchasing property for short-term rentals, you should determine the amount you can afford. Scout for communities where the purchase price you need correlates with the current median property prices. You can tailor your market survey by analyzing the median price in particular neighborhoods.

Price Per Square Foot

Price per sq ft provides a basic picture of property values when considering similar units. When the designs of prospective homes are very contrasting, the price per square foot may not help you get a correct comparison. Price per sq ft can be a fast way to compare multiple communities or residential units.

Short-Term Rental Occupancy Rate

The necessity for additional rental properties in an area can be checked by studying the short-term rental occupancy rate. A location that demands additional rental housing will have a high occupancy rate. Weak occupancy rates reflect that there are already too many short-term rentals in that location.

Short-Term Rental Cash-on-Cash Return

To know whether you should put your capital in a particular property or location, evaluate the cash-on-cash return. Divide the Net Operating Income (NOI) by the total amount of cash invested. The answer is a percentage. High cash-on-cash return means that you will recoup your capital more quickly and the investment will be more profitable. Lender-funded investments will reach better cash-on-cash returns as you are utilizing less of your own capital.

Average Short-Term Rental Capitalization (Cap) Rates

This benchmark compares rental property value to its annual income. High cap rates show that investment properties are accessible in that region for reasonable prices. Low cap rates reflect higher-priced real estate. Divide your estimated Net Operating Income (NOI) by the property’s market worth or asking price. The answer is the yearly return in a percentage.

Local Attractions

Big public events and entertainment attractions will entice visitors who need short-term housing. Vacationers come to specific locations to attend academic and sporting events at colleges and universities, be entertained by professional sports, cheer for their kids as they compete in fun events, party at annual fairs, and go to theme parks. Outdoor scenic attractions such as mountainous areas, waterways, beaches, and state and national nature reserves will also invite potential tenants.

The fix and flip approach means purchasing a house that requires improvements or restoration, generating more value by enhancing the property, and then reselling it for its full market worth. The keys to a profitable fix and flip are to pay less for the house than its full market value and to precisely analyze the amount needed to make it sellable.

Explore the prices so that you are aware of the exact After Repair Value (ARV). You always have to investigate how long it takes for homes to sell, which is determined by the Days on Market (DOM) information. To successfully “flip” a property, you must liquidate the rehabbed house before you are required to spend a budget to maintain it.

To help motivated home sellers discover you, place your business in our catalogues of cash home buyers in Lake County IL and real estate investment companies in Lake County IL.

In addition, search for bird dogs for real estate investors in Lake County IL. These professionals specialize in quickly locating profitable investment prospects before they come on the open market.

Factors to Consider

Median Home Price

Median home value data is a vital tool for estimating a potential investment location. Modest median home values are an indication that there is an inventory of residential properties that can be purchased for less than market worth. You want cheaper homes for a successful fix and flip.

When you see a sudden decrease in property market values, this could mean that there are possibly houses in the city that will work for a short sale. You will find out about possible investments when you team up with Lake County short sale negotiators. Learn more concerning this type of investment by studying our guide How to Buy Short Sale Property.

Property Appreciation Rate

The shifts in property market worth in a community are vital. Steady upward movement in median values reveals a robust investment environment. Home prices in the community should be going up constantly, not quickly. When you’re acquiring and selling quickly, an erratic market can hurt your venture.

Average Renovation Costs

A comprehensive study of the community’s building expenses will make a substantial influence on your area selection. Other costs, such as authorizations, could increase expenditure, and time which may also develop into additional disbursement. You want to be aware whether you will be required to hire other specialists, like architects or engineers, so you can get prepared for those costs.

Population Growth

Population information will tell you whether there is a growing need for homes that you can sell. When the population isn’t expanding, there is not going to be a good pool of homebuyers for your real estate.

Median Population Age

The median citizens’ age is a factor that you might not have considered. When the median age is the same as that of the regular worker, it’s a positive sign. People in the regional workforce are the most dependable house buyers. The demands of retirees will most likely not suit your investment venture plans.

Unemployment Rate

When you stumble upon a city that has a low unemployment rate, it is a good indication of profitable investment prospects. An unemployment rate that is lower than the national median is a good sign. If the region’s unemployment rate is lower than the state average, that’s an indication of a preferable investing environment. Unemployed people cannot acquire your property.

Income Rates

The population’s income figures can tell you if the local financial environment is strong. The majority of individuals who buy residential real estate need a mortgage loan. To be eligible for a mortgage loan, a borrower shouldn’t spend for monthly repayments a larger amount than a specific percentage of their income. The median income numbers will show you if the community is appropriate for your investment endeavours. You also need to have wages that are increasing continually. When you need to augment the price of your homes, you need to be positive that your homebuyers’ salaries are also increasing.

Number of New Jobs Created

The number of jobs appearing per year is vital insight as you contemplate on investing in a specific region. A higher number of residents acquire homes if their city’s financial market is adding new jobs. Qualified skilled employees looking into buying a house and settling opt for moving to cities where they won’t be out of work.

Hard Money Loan Rates

People who acquire, rehab, and resell investment homes opt to engage hard money and not conventional real estate funding. Doing this allows them negotiate desirable projects without hindrance. Research Lake County real estate hard money lenders and analyze financiers’ costs.

People who are not well-versed regarding hard money lenders can discover what they need to learn with our guide for those who are only starting — What Is a Hard Money Lender in Real Estate?.

In real estate wholesaling, you search for a house that real estate investors would think is a lucrative investment opportunity and enter into a contract to buy it. When an investor who approves of the residential property is spotted, the contract is assigned to the buyer for a fee. The property is sold to the investor, not the wholesaler. The real estate wholesaler doesn’t liquidate the residential property — they sell the contract to purchase one.

The wholesaling mode of investing includes the employment of a title insurance firm that grasps wholesale deals and is knowledgeable about and active in double close purchases. Find title companies that specialize in real estate property investments in Lake County IL that we selected for you.

Our extensive guide to wholesaling can be found here: A-to-Z Guide to Property Wholesaling. As you go about your wholesaling business, put your firm in HouseCashin’s list of Lake County top real estate wholesalers. This will let your potential investor customers locate and reach you.

Factors to Consider

Median Home Prices

Median home values in the area will tell you if your required purchase price level is achievable in that location. Below average median prices are a good indicator that there are enough houses that can be acquired for less than market worth, which investors prefer to have.

A fast downturn in property prices may be followed by a considerable selection of ’upside-down’ residential units that short sale investors hunt for. This investment strategy often delivers multiple different benefits. But it also produces a legal liability. Obtain more information on how to wholesale a short sale home with our exhaustive explanation. Once you are prepared to start wholesaling, look through Lake County top short sale law firms as well as Lake County top-rated real estate foreclosure attorneys directories to locate the right advisor.

Property Appreciation Rate

Property appreciation rate boosts the median price data. Real estate investors who need to liquidate their properties in the future, such as long-term rental investors, require a location where residential property purchase prices are growing. A declining median home value will illustrate a weak leasing and home-buying market and will turn off all types of real estate investors.

Population Growth

Population growth information is crucial for your intended contract assignment purchasers. A growing population will require additional residential units. This involves both leased and resale real estate. If a community is shrinking in population, it does not need more housing and real estate investors will not look there.

Median Population Age

A dynamic housing market needs people who start off leasing, then transitioning into homeownership, and then moving up in the residential market. This needs a robust, stable workforce of people who are confident enough to move up in the real estate market. An area with these features will show a median population age that is equivalent to the working citizens’ age.

Income Rates

The median household and per capita income demonstrate constant growth continuously in markets that are ripe for real estate investment. Income improvement demonstrates a location that can manage rental rate and housing purchase price increases. Real estate investors need this if they are to achieve their anticipated profits.

Unemployment Rate

The community’s unemployment numbers are a key consideration for any future contract buyer. Tenants in high unemployment regions have a tough time staying current with rent and some of them will stop making payments entirely. Long-term real estate investors who rely on stable lease income will lose revenue in these communities. Investors can’t depend on tenants moving up into their properties if unemployment rates are high. This can prove to be challenging to reach fix and flip investors to buy your contracts.

Number of New Jobs Created

Understanding how soon fresh employment opportunities are generated in the area can help you see if the home is positioned in a dynamic housing market. Fresh jobs created result in a high number of employees who look for homes to lease and purchase. No matter if your purchaser supply consists of long-term or short-term investors, they will be attracted to a location with regular job opening production.

Average Renovation Costs

An important consideration for your client real estate investors, particularly house flippers, are rehabilitation costs in the location. Short-term investors, like fix and flippers, don’t make money when the price and the renovation costs amount to a larger sum than the After Repair Value (ARV) of the house. Lower average restoration expenses make a location more desirable for your priority customers — flippers and other real estate investors.

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

Performing loans are mortgage loans where the homeowner is always current on their mortgage payments. Performing loans earn you monthly passive income. Some mortgage note investors like non-performing notes because when the note investor cannot successfully restructure the loan, they can always take the collateral at foreclosure for a low amount.

Eventually, you might have many mortgage notes and need additional time to service them without help. If this occurs, you could choose from the best third party mortgage servicers in Lake County IL which will designate you as a passive investor.

If you determine that this strategy is perfect for you, insert your firm in our list of Lake County top real estate note buyers. This will make you more visible to lenders providing desirable possibilities to note buyers like you.

Factors to consider

Foreclosure Rates

Performing loan investors are on lookout for regions that have low foreclosure rates. If the foreclosure rates are high, the community might nevertheless be profitable for non-performing note buyers. If high foreclosure rates have caused a slow real estate market, it may be tough to liquidate the property after you seize it through foreclosure.

Foreclosure Laws

Note investors are required to understand the state’s regulations concerning foreclosure before buying notes. Are you working with a mortgage or a Deed of Trust? A mortgage requires that the lender goes to court for approval to start foreclosure. A Deed of Trust enables the lender to file a notice and continue to foreclosure.

Mortgage Interest Rates

Note investors acquire the interest rate of the loan notes that they buy. This is a big factor in the profits that lenders achieve. Regardless of the type of mortgage note investor you are, the mortgage loan note’s interest rate will be crucial for your calculations.

Traditional interest rates can differ by as much as a 0.25% across the country. Mortgage loans supplied by private lenders are priced differently and can be more expensive than traditional mortgage loans.

Profitable note investors regularly search the mortgage interest rates in their area offered by private and traditional mortgage lenders.

Demographics

A lucrative note investment plan incorporates an examination of the area by utilizing demographic information. Mortgage note investors can discover a great deal by studying the size of the population, how many residents are working, how much they earn, and how old the residents are.
Performing note buyers want clients who will pay without delay, creating a consistent income source of loan payments.

Non-performing note buyers are reviewing similar indicators for other reasons. If foreclosure is necessary, the foreclosed collateral property is more conveniently sold in a good property market.

Property Values

As a mortgage note buyer, you will try to find deals with a comfortable amount of equity. This improves the likelihood that a possible foreclosure liquidation will repay the amount owed. As mortgage loan payments reduce the balance owed, and the market value of the property increases, the homeowner’s equity grows.

Property Taxes

Payments for house taxes are typically given to the mortgage lender along with the mortgage loan payment. The mortgage lender passes on the payments to the Government to make certain they are paid on time. If mortgage loan payments aren’t current, the mortgage lender will have to choose between paying the property taxes themselves, or the property taxes become delinquent. Tax liens go ahead of all other liens.

If an area has a record of rising tax rates, the combined house payments in that community are consistently increasing. Overdue homeowners might not have the ability to keep paying growing loan payments and might interrupt paying altogether.

Real Estate Market Strength

Both performing and non-performing note buyers can be profitable in a good real estate environment. The investors can be confident that, when required, a foreclosed property can be sold at a price that makes a profit.

A vibrant market can also be a profitable community for creating mortgage notes. This is a desirable source of income for successful investors.

Some real estate investment businesses are built as a trust termed Real Estate Investment Trusts or REITs. Before REITs existed, investing in properties was too costly for most citizens. The typical person is able to come up with the money to invest in a REIT.

Shareholders’ involvement in a REIT falls under passive investment. REITs manage investors’ exposure with a diversified selection of assets. Shareholders have the ability to sell their shares at any time. Investors in a REIT aren’t allowed to recommend or submit assets for investment. Their investment is confined to the properties chosen by their REIT.

Mutual funds owning shares of real estate firms are termed real estate investment funds. The fund does not hold real estate — it owns shares in real estate businesses. These funds make it possible for a wider variety of investors to invest in real estate. Fund shareholders may not receive typical disbursements like REIT participants do. The benefit to investors is created by growth in the worth of the stock.

You can select a fund that focuses on a selected type of real estate you are knowledgeable about, but you do not get to determine the location of every real estate investment. As passive investors, fund shareholders are glad to let the directors of the fund handle all investment decisions.