Ultimate Lakewood Real Estate Investing Guide for 2024

A long-term rental plan that includes Buying an asset, Repairing, Renting, Refinancing it, and Repeating the process by spending the cash from the refinance is called BRRRR. If you desire to grow your investments, the BRRRR is a proven plan to follow. It is critical that you be able to receive a “cash-out” refinance for the plan to be successful.

When you have finished renovating the house, its market value must be more than your combined acquisition and renovation costs. The property is refinanced based on the ARV and the difference, or equity, is given to you in cash. This money is reinvested into one more property, and so on. You add appreciating assets to the portfolio and lease income to your cash flow.

If an investor owns a large collection of investment homes, it makes sense to employ a property manager and create a passive income stream. Locate the best real estate management companies in Lakewood CA by using our list.

Factors to Consider

Population Growth

The increase or decline of a region’s population is a good gauge of the region’s long-term desirability for rental property investors. If you see vibrant population increase, you can be sure that the market is drawing potential renters to the location. Relocating companies are attracted to increasing markets giving job security to families who relocate there. Increasing populations develop a reliable renter pool that can keep up with rent bumps and home purchasers who help keep your investment property values up.

Property Taxes

Real estate taxes, similarly to insurance and maintenance spendings, can vary from place to market and should be looked at cautiously when estimating potential profits. Unreasonable property taxes will negatively impact a property investor’s income. If property tax rates are excessive in a given location, you will need to look in a different location.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of how high of a rent can be demanded compared to the market worth of the property. An investor will not pay a large price for a rental home if they can only charge a limited rent not enabling them to pay the investment off in a realistic time. The lower rent you can demand the higher the p/r, with a low p/r signalling a stronger rent market.

Median Gross Rents

Median gross rents are a true yardstick of the approval of a rental market under consideration. Median rents must be growing to justify your investment. You will not be able to reach your investment predictions in a community where median gross rental rates are going down.

Median Population Age

Median population age will be close to the age of a usual worker if a city has a consistent supply of renters. If people are moving into the region, the median age will have no problem remaining at the level of the employment base. A high median age signals that the current population is retiring with no replacement by younger workers relocating there. An active investing environment can’t be supported by aged, non-working residents.

Employment Base Diversity

A diverse employment base is what an intelligent long-term investor landlord will look for. If the community’s workers, who are your tenants, are spread out across a diverse group of companies, you will not lose all of them at once (as well as your property’s value), if a major company in the area goes bankrupt.

Unemployment Rate

You will not get a stable rental cash flow in a city with high unemployment. Unemployed individuals cease being clients of yours and of other companies, which produces a domino effect throughout the community. People who continue to have jobs may discover their hours and salaries cut. This could cause delayed rent payments and lease defaults.

Income Rates

Median household and per capita income information is a valuable tool to help you pinpoint the communities where the renters you prefer are located. Your investment planning will consider rent and property appreciation, which will depend on wage augmentation in the market.

Number of New Jobs Created

An expanding job market translates into a consistent supply of renters. An economy that produces jobs also adds more stakeholders in the real estate market. This ensures that you can retain a sufficient occupancy rate and acquire additional rentals.

School Ratings

Local schools will make a significant influence on the property market in their neighborhood. Well-rated schools are a requirement of companies that are looking to relocate. Business relocation provides more tenants. New arrivals who need a residence keep property values strong. You can’t discover a dynamically soaring housing market without quality schools.

Property Appreciation Rates

Real estate appreciation rates are an essential element of your long-term investment strategy. Investing in properties that you plan to maintain without being certain that they will rise in market worth is a recipe for disaster. You do not want to spend any time examining areas that have low property appreciation rates.

A furnished property where tenants stay for less than a month is regarded as a short-term rental. Long-term rentals, like apartments, impose lower rent per night than short-term ones. These houses may involve more frequent care and sanitation.

House sellers waiting to close on a new residence, backpackers, and individuals on a business trip who are stopping over in the community for about week prefer to rent a residential unit short term. Ordinary property owners can rent their houses or condominiums on a short-term basis using websites like AirBnB and VRBO. Short-term rentals are regarded as a smart technique to jumpstart investing in real estate.

The short-term rental housing business involves interaction with occupants more regularly compared to annual rental properties. As a result, owners manage difficulties repeatedly. Consider protecting yourself and your properties by adding any of real estate law experts in Lakewood CA to your network of professionals.

Factors to Consider

Short-Term Rental Income

Initially, calculate how much rental revenue you should earn to achieve your desired profits. A quick look at a market’s current average short-term rental prices will show you if that is the right location for your plan.

Median Property Prices

When buying investment housing for short-term rentals, you have to know the budget you can pay. The median market worth of property will show you if you can manage to participate in that area. You can also utilize median prices in particular areas within the market to pick cities for investment.

Price Per Square Foot

Price per sq ft can be impacted even by the design and floor plan of residential units. When the designs of available properties are very different, the price per square foot might not help you get a definitive comparison. Price per sq ft may be a fast method to gauge several communities or buildings.

Short-Term Rental Occupancy Rate

A closer look at the area’s short-term rental occupancy rate will inform you whether there is an opportunity in the site for more short-term rentals. If most of the rental properties have renters, that city needs more rentals. When the rental occupancy indicators are low, there is not enough demand in the market and you need to search in another location.

Short-Term Rental Cash-on-Cash Return

To determine whether it’s a good idea to put your cash in a particular rental unit or community, calculate the cash-on-cash return. Take your projected Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The resulting percentage is your cash-on-cash return. High cash-on-cash return shows that you will recoup your capital quicker and the purchase will earn more profit. When you get financing for part of the investment amount and spend less of your own cash, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) levels are commonly employed by real property investors to estimate the market value of rental units. Typically, the less money an investment asset costs (or is worth), the higher the cap rate will be. Low cap rates reflect higher-priced investment properties. Divide your projected Net Operating Income (NOI) by the investment property’s value or listing price. The result is the annual return in a percentage.

Local Attractions

Big public events and entertainment attractions will entice tourists who want short-term housing. Tourists visit specific areas to attend academic and athletic activities at colleges and universities, be entertained by professional sports, support their kids as they compete in kiddie sports, have the time of their lives at annual carnivals, and stop by theme parks. Must-see vacation sites are situated in mountain and coastal points, near lakes, and national or state nature reserves.

To fix and flip real estate, you have to buy it for below market worth, handle any necessary repairs and updates, then sell it for full market value. Your calculation of repair costs must be correct, and you should be capable of acquiring the home for less than market value.

You also need to know the housing market where the home is situated. Locate an area that has a low average Days On Market (DOM) metric. To effectively “flip” real estate, you need to sell the rehabbed house before you have to come up with capital to maintain it.

Help motivated real property owners in finding your firm by listing your services in our directory of Lakewood companies that buy homes for cash and the best Lakewood real estate investment companies.

Also, search for bird dogs for real estate investors in Lakewood CA. These professionals concentrate on quickly uncovering profitable investment ventures before they are listed on the market.

Factors to Consider

Median Home Price

When you search for a promising region for property flipping, look at the median house price in the city. When values are high, there might not be a good amount of fixer-upper houses in the area. You must have cheaper properties for a profitable deal.

If your research shows a rapid drop in real estate values, it might be a heads up that you will find real estate that fits the short sale requirements. You will receive notifications concerning these opportunities by partnering with short sale negotiators in Lakewood CA. Find out how this works by reviewing our article ⁠— How Does Buying a Short Sale Home Work?.

Property Appreciation Rate

Are property prices in the city moving up, or on the way down? You are searching for a constant increase of local property values. Real estate purchase prices in the market should be going up constantly, not abruptly. Purchasing at an inopportune moment in an unsteady market condition can be disastrous.

Average Renovation Costs

Look carefully at the potential repair spendings so you will understand if you can reach your targets. The time it requires for getting permits and the local government’s rules for a permit request will also affect your decision. To make an accurate financial strategy, you’ll have to know whether your construction plans will have to involve an architect or engineer.

Population Growth

Population increase figures allow you to take a peek at housing need in the region. If the population is not going up, there isn’t going to be an adequate supply of purchasers for your fixed homes.

Median Population Age

The median residents’ age can also tell you if there are enough home purchasers in the area. It mustn’t be lower or higher than that of the usual worker. A high number of such citizens indicates a substantial supply of home purchasers. Aging individuals are preparing to downsize, or move into senior-citizen or retiree communities.

Unemployment Rate

If you see a city that has a low unemployment rate, it is a solid sign of good investment opportunities. It should certainly be less than the country’s average. If it is also lower than the state average, it’s much more desirable. Unemployed individuals can’t buy your houses.

Income Rates

Median household and per capita income levels advise you whether you will obtain enough purchasers in that city for your houses. When people buy a home, they usually need to get a loan for the home purchase. To obtain approval for a mortgage loan, a borrower cannot spend for a house payment greater than a particular percentage of their income. You can determine based on the location’s median income whether many individuals in the community can manage to purchase your homes. Particularly, income increase is crucial if you need to grow your investment business. To keep up with inflation and soaring building and supply expenses, you need to be able to periodically raise your purchase prices.

Number of New Jobs Created

The number of jobs created on a regular basis shows if wage and population growth are feasible. A higher number of residents buy homes if their region’s financial market is adding new jobs. New jobs also lure people moving to the location from elsewhere, which further strengthens the local market.

Hard Money Loan Rates

Real estate investors who flip renovated houses frequently utilize hard money financing rather than regular mortgage. Doing this enables investors negotiate profitable projects without delay. Review top-rated Lakewood hard money lenders and contrast lenders’ charges.

If you are unfamiliar with this loan vehicle, understand more by using our guide — What Is Hard Money?.

As a real estate wholesaler, you enter a purchase contract to purchase a property that other investors will be interested in. However you do not close on the house: once you control the property, you allow someone else to take your place for a fee. The contracted property is bought by the investor, not the real estate wholesaler. The wholesaler does not sell the property itself — they only sell the purchase and sale agreement.

This business involves utilizing a title company that is knowledgeable about the wholesale contract assignment operation and is able and inclined to manage double close transactions. Look for title companies that work with wholesalers in Lakewood CA in our directory.

Our complete guide to wholesaling can be found here: A-to-Z Guide to Property Wholesaling. As you select wholesaling, include your investment venture on our list of the best wholesale property investors in Lakewood CA. This will let your future investor clients find and call you.

Factors to Consider

Median Home Prices

Median home values are essential to spotting places where properties are being sold in your investors’ price range. A place that has a substantial pool of the marked-down residential properties that your investors need will have a low median home price.

Accelerated worsening in real estate market worth may result in a lot of real estate with no equity that appeal to short sale property buyers. Wholesaling short sale homes repeatedly carries a list of unique benefits. But it also creates a legal risk. Find out about this from our in-depth blog post How Can You Wholesale a Short Sale Property?. Once you’ve chosen to attempt wholesaling short sales, be certain to hire someone on the directory of the best short sale real estate attorneys in Lakewood CA and the best property foreclosure attorneys in Lakewood CA to advise you.

Property Appreciation Rate

Median home market value changes clearly illustrate the home value in the market. Many real estate investors, like buy and hold and long-term rental investors, particularly need to know that home values in the area are going up steadily. A declining median home price will illustrate a vulnerable leasing and home-buying market and will exclude all types of real estate investors.

Population Growth

Population growth data is something that investors will analyze carefully. If they see that the community is growing, they will decide that additional residential units are required. This involves both leased and ‘for sale’ real estate. A place with a declining population does not interest the investors you need to buy your purchase contracts.

Median Population Age

A vibrant housing market needs people who start off leasing, then shifting into homebuyers, and then moving up in the housing market. A community with a big workforce has a strong source of tenants and purchasers. That’s why the location’s median age needs to be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income should be on the upswing in a strong real estate market that investors want to operate in. When tenants’ and homeowners’ incomes are increasing, they can keep up with rising rental rates and home purchase prices. That will be important to the property investors you want to work with.

Unemployment Rate

Investors whom you contact to take on your sale contracts will deem unemployment figures to be a crucial piece of information. Tenants in high unemployment places have a tough time paying rent on schedule and many will skip payments entirely. Long-term real estate investors who depend on uninterrupted rental payments will lose money in these locations. Renters can’t transition up to ownership and current owners cannot liquidate their property and go up to a bigger house. This is a concern for short-term investors purchasing wholesalers’ agreements to renovate and flip a house.

Number of New Jobs Created

Understanding how often new job openings are generated in the community can help you see if the real estate is located in a robust housing market. People settle in a city that has more job openings and they require housing. Long-term real estate investors, like landlords, and short-term investors that include flippers, are gravitating to markets with impressive job appearance rates.

Average Renovation Costs

Rehab costs will matter to most property investors, as they typically buy bargain neglected houses to repair. When a short-term investor fixes and flips a building, they need to be able to unload it for more money than the entire sum they spent for the acquisition and the improvements. Lower average remodeling costs make a community more attractive for your priority buyers — rehabbers and landlords.

Purchasing mortgage notes (loans) is successful when the mortgage loan can be acquired for a lower amount than the remaining balance. When this occurs, the note investor becomes the client’s lender.

When a mortgage loan is being repaid on time, it’s thought of as a performing note. Performing loans bring consistent cash flow for investors. Some mortgage investors buy non-performing loans because when the mortgage investor can’t satisfactorily restructure the mortgage, they can always acquire the property at foreclosure for a low price.

At some point, you may build a mortgage note portfolio and notice you are lacking time to handle it by yourself. When this happens, you could pick from the best mortgage loan servicing companies in Lakewood CA which will make you a passive investor.

Should you choose to employ this method, add your venture to our directory of real estate note buying companies in Lakewood CA. Joining will help you become more visible to lenders offering lucrative possibilities to note investors like you.

Factors to Consider

Foreclosure Rates

Mortgage note investors looking for stable-performing mortgage loans to buy will prefer to see low foreclosure rates in the region. Non-performing loan investors can carefully make use of locations with high foreclosure rates as well. If high foreclosure rates have caused an underperforming real estate market, it may be tough to resell the property after you seize it through foreclosure.

Foreclosure Laws

It is important for note investors to study the foreclosure laws in their state. Many states utilize mortgage paperwork and some use Deeds of Trust. A mortgage requires that you go to court for authority to foreclose. A Deed of Trust allows the lender to file a notice and continue to foreclosure.

Mortgage Interest Rates

Purchased mortgage notes contain an agreed interest rate. Your mortgage note investment return will be affected by the interest rate. Mortgage interest rates are critical to both performing and non-performing mortgage note buyers.

The mortgage rates quoted by conventional mortgage firms are not equal everywhere. The higher risk taken by private lenders is shown in bigger loan interest rates for their loans in comparison with conventional loans.

A note buyer should know the private as well as conventional mortgage loan rates in their communities all the time.

Demographics

A region’s demographics data assist note investors to streamline their work and effectively use their assets. Note investors can discover a great deal by reviewing the size of the populace, how many people are employed, how much they make, and how old the citizens are.
Mortgage note investors who like performing notes hunt for markets where a lot of younger individuals hold good-paying jobs.

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

Property Values

The greater the equity that a homeowner has in their property, the better it is for you as the mortgage note owner. When you have to foreclose on a mortgage loan with little equity, the sale may not even pay back the amount invested in the note. Appreciating property values help raise the equity in the home as the homeowner lessens the balance.

Property Taxes

Most often, lenders receive the property taxes from the homeowner each month. So the lender makes sure that the real estate taxes are paid when due. The mortgage lender will have to make up the difference if the payments cease or the lender risks tax liens on the property. Property tax liens leapfrog over any other liens.

If property taxes keep growing, the borrowers’ mortgage payments also keep growing. Past due borrowers may not be able to keep paying increasing loan payments and might interrupt paying altogether.

Real Estate Market Strength

A strong real estate market showing good value growth is good for all types of mortgage note investors. It is important to understand that if you need to foreclose on a property, you won’t have difficulty receiving an acceptable price for the property.

A strong market may also be a potential place for making mortgage notes. This is a desirable source of revenue for successful investors.

A trust that owns income-generating real estate and that sells shares to people is a REIT — Real Estate Investment Trust. This was first conceived as a method to enable the typical person to invest in real estate. Many investors at present are able to invest in a REIT.

Shareholders in such organizations are completely passive investors. The exposure that the investors are assuming is spread within a collection of investment properties. Shareholders have the capability to liquidate their shares at any moment. However, REIT investors do not have the option to select particular properties or locations. The land and buildings that the REIT selects to acquire are the ones in which you invest.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate firms. Any actual real estate is held by the real estate companies, not the fund. This is an additional way for passive investors to spread their investments with real estate without the high initial investment or risks. Fund participants might not receive usual disbursements like REIT shareholders do. As with any stock, investment funds’ values increase and drop with their share value.

You may pick a fund that focuses on specific segments of the real estate industry but not particular areas for each real estate property investment. Your decision as an investor is to select a fund that you believe in to manage your real estate investments.