Ultimate Lakewood Real Estate Investing Guide for 2024

BRRRR means “Buy, Rehab, Rent, Refinance, Repeat”. BRRRR is a plan for continuous growth. This method depends on your ability to withdraw cash out when you refinance.

When you are done with renovating the house, the market value has to be higher than your complete acquisition and fix-up expenses. The home is refinanced based on the ARV and the balance, or equity, is given to you in cash. This money is put into the next investment property, and so on. You purchase more and more houses or condos and constantly grow your lease revenues.

After you’ve created a large portfolio of income generating real estate, you can prefer to find others to manage your rental business while you enjoy repeating income. Find one of property management agencies in Lakewood CO with a review of our comprehensive directory.

Factors to Consider

Population Growth

The increase or decline of an area’s population is an accurate benchmark of the area’s long-term appeal for rental property investors. A booming population typically illustrates active relocation which equals new tenants. The region is appealing to employers and employees to move, find a job, and grow families. Increasing populations develop a dependable renter pool that can keep up with rent raises and home purchasers who assist in keeping your investment property values up.

Property Taxes

Real estate taxes, similarly to insurance and maintenance spendings, may be different from market to place and must be reviewed carefully when predicting potential profits. Excessive spendings in these categories jeopardize your investment’s bottom line. If property taxes are too high in a particular community, you probably need to look in a different location.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property values and median rental rates that will indicate how high of a rent the market can tolerate. An investor can not pay a large amount for a property if they can only charge a limited rent not allowing them to repay the investment within a suitable time. The lower rent you can collect the higher the price-to-rent ratio, with a low p/r showing a stronger rent market.

Median Gross Rents

Median gross rents are a critical illustration of the vitality of a lease market. Hunt for a repeating increase in median rents over time. You will not be able to achieve your investment targets in an area where median gross rents are shrinking.

Median Population Age

Median population age will be close to the age of a usual worker if an area has a strong source of renters. If people are moving into the region, the median age will have no problem remaining in the range of the labor force. A high median age means that the current population is retiring without being replaced by younger people moving there. That is a poor long-term financial picture.

Employment Base Diversity

A greater supply of employers in the region will expand your prospects for better income. If your renters are employed by only several major enterprises, even a minor interruption in their operations might cost you a lot of tenants and increase your liability tremendously.

Unemployment Rate

High unemployment means fewer renters and an uncertain housing market. Historically strong businesses lose customers when other companies lay off employees. The remaining people might see their own incomes marked down. Even renters who have jobs will find it challenging to pay rent on time.

Income Rates

Median household and per capita income will illustrate if the renters that you prefer are residing in the location. Rising wages also tell you that rental rates can be hiked throughout your ownership of the investment property.

Number of New Jobs Created

A growing job market produces a consistent stream of renters. A market that creates jobs also increases the amount of stakeholders in the housing market. This allows you to purchase additional rental properties and replenish existing empty units.

School Ratings

Local schools can cause a strong impact on the housing market in their neighborhood. When a business looks at a community for possible expansion, they keep in mind that first-class education is a requirement for their workforce. Good renters are a by-product of a steady job market. New arrivals who need a residence keep home market worth high. You can’t find a dynamically growing housing market without reputable schools.

Property Appreciation Rates

High property appreciation rates are a requirement for a viable long-term investment. You want to make sure that the chances of your investment going up in value in that community are likely. Low or shrinking property appreciation rates will eliminate a market from consideration.

Residential real estate where tenants reside in furnished accommodations for less than four weeks are known as short-term rentals. Short-term rental owners charge more rent a night than in long-term rental business. With tenants not staying long, short-term rental units need to be maintained and sanitized on a regular basis.

Short-term rentals serve individuals traveling on business who are in the city for several days, those who are relocating and want transient housing, and holidaymakers. Anyone can transform their residence into a short-term rental unit with the tools provided by online home-sharing sites like VRBO and AirBnB. Short-term rentals are thought of as a smart method to begin investing in real estate.

The short-term property rental venture involves interaction with tenants more regularly in comparison with yearly lease units. This results in the landlord having to constantly handle grievances. Give some thought to handling your liability with the help of one of the top real estate lawyers in Lakewood CO.

Factors to Consider

Short-Term Rental Income

Initially, find out how much rental revenue you must have to achieve your expected return. A location’s short-term rental income rates will promptly reveal to you when you can expect to reach your projected rental income levels.

Median Property Prices

When acquiring property for short-term rentals, you must know the amount you can afford. To check if a region has opportunities for investment, investigate the median property prices. You can fine-tune your area search by studying the median market worth in particular sections of the community.

Price Per Square Foot

Price per sq ft can be impacted even by the look and floor plan of residential units. A home with open entryways and high ceilings can’t be compared with a traditional-style residential unit with larger floor space. If you keep this in mind, the price per square foot can provide you a broad idea of real estate prices.

Short-Term Rental Occupancy Rate

The need for additional rentals in a market may be determined by studying the short-term rental occupancy rate. A high occupancy rate means that an extra source of short-term rental space is needed. Low occupancy rates reflect that there are more than too many short-term rentals in that community.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return will show you if the venture is a prudent use of your cash. You can compute the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by your cash being invested. The answer is shown as a percentage. The higher it is, the quicker your invested cash will be returned and you will begin gaining profits. Mortgage-based purchases will yield better cash-on-cash returns as you are utilizing less of your own resources.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) levels are largely employed by real estate investors to calculate the worth of rentals. An investment property that has a high cap rate and charges typical market rental prices has a good value. Low cap rates signify higher-priced real estate. The cap rate is calculated by dividing the Net Operating Income (NOI) by the price or market worth. The result is the per-annum return in a percentage.

Local Attractions

Short-term tenants are often travellers who come to a location to attend a yearly important event or visit tourist destinations. Tourists go to specific regions to attend academic and athletic activities at colleges and universities, see competitions, cheer for their kids as they compete in kiddie sports, party at annual festivals, and go to theme parks. At particular occasions, regions with outdoor activities in mountainous areas, at beach locations, or alongside rivers and lakes will draw crowds of people who want short-term residence.

When an investor purchases a property below market value, rehabs it so that it becomes more attractive and pricier, and then liquidates the property for a return, they are referred to as a fix and flip investor. The keys to a lucrative investment are to pay less for the home than its as-is value and to precisely compute the amount needed to make it marketable.

You also want to know the housing market where the house is positioned. The average number of Days On Market (DOM) for houses listed in the region is important. As a “house flipper”, you will need to sell the fixed-up real estate immediately so you can eliminate carrying ongoing costs that will lower your profits.

To help distressed property sellers find you, list your company in our directories of cash real estate buyers in Lakewood CO and real estate investment firms in Lakewood CO.

Also, look for top real estate bird dogs in Lakewood CO. Professionals found on our website will assist you by rapidly discovering conceivably successful ventures ahead of the projects being sold.

Factors to Consider

Median Home Price

The region’s median housing price could help you locate a good community for flipping houses. You are hunting for median prices that are low enough to reveal investment possibilities in the city. You need lower-priced homes for a successful deal.

If your research indicates a sharp weakening in real estate market worth, it may be a sign that you’ll discover real estate that fits the short sale criteria. Investors who team with short sale facilitators in Lakewood CO get regular notices concerning potential investment real estate. Learn how this is done by reviewing our guide ⁠— How Do You Buy a House in a Short Sale?.

Property Appreciation Rate

The shifts in real estate values in a location are crucial. You need a market where real estate values are steadily and continuously ascending. Real estate market values in the city need to be increasing regularly, not rapidly. When you are buying and liquidating rapidly, an erratic market can harm you.

Average Renovation Costs

A thorough analysis of the market’s construction expenses will make a substantial difference in your location choice. The way that the local government processes your application will affect your project too. You want to be aware whether you will be required to hire other experts, like architects or engineers, so you can get prepared for those expenses.

Population Growth

Population growth is a good indicator of the reliability or weakness of the city’s housing market. Flat or negative population growth is a sign of a poor environment with not enough buyers to justify your effort.

Median Population Age

The median population age can also tell you if there are enough home purchasers in the location. It better not be lower or more than the age of the regular worker. Individuals in the area’s workforce are the most stable home purchasers. Older people are preparing to downsize, or relocate into age-restricted or assisted living communities.

Unemployment Rate

When researching a market for real estate investment, look for low unemployment rates. An unemployment rate that is less than the national average is good. When the region’s unemployment rate is less than the state average, that’s a sign of a preferable financial market. Jobless individuals cannot buy your houses.

Income Rates

Median household and per capita income are a solid sign of the scalability of the home-buying environment in the area. When people purchase a home, they normally have to get a loan for the home purchase. Home purchasers’ eligibility to be provided financing depends on the level of their salaries. Median income will help you determine whether the regular home purchaser can afford the houses you are going to put up for sale. You also want to have incomes that are improving consistently. Construction spendings and housing purchase prices go up over time, and you need to be certain that your target customers’ salaries will also climb up.

Number of New Jobs Created

The number of jobs created on a continual basis reflects whether income and population growth are sustainable. Homes are more quickly liquidated in a market with a dynamic job environment. With a higher number of jobs appearing, more prospective home purchasers also migrate to the city from other districts.

Hard Money Loan Rates

Fix-and-flip investors regularly borrow hard money loans in place of conventional financing. This allows investors to rapidly purchase distressed real estate. Review top-rated Lakewood hard money lenders and compare lenders’ charges.

In case you are unfamiliar with this loan product, understand more by studying our guide — What Is a Hard Money Loan in Real Estate?.

In real estate wholesaling, you find a residential property that real estate investors would consider a good opportunity and sign a purchase contract to buy it. But you do not buy the house: once you control the property, you get an investor to become the buyer for a price. The property under contract is sold to the investor, not the wholesaler. The real estate wholesaler doesn’t sell the property under contract itself — they just sell the purchase contract.

This method includes using a title company that is knowledgeable about the wholesale contract assignment procedure and is capable and predisposed to coordinate double close deals. Locate Lakewood title companies for wholesaling real estate by reviewing our list.

To understand how wholesaling works, study our informative article How Does Real Estate Wholesaling Work?. When you go with wholesaling, include your investment venture on our list of the best wholesale property investors in Lakewood CO. That will help any desirable clients to see you and reach out.

Factors to Consider

Median Home Prices

Median home prices in the region will inform you if your designated price point is achievable in that market. A community that has a substantial supply of the below-market-value properties that your clients want will have a lower median home purchase price.

A fast decrease in the market value of property could cause the abrupt appearance of homes with owners owing more than market worth that are hunted by wholesalers. Wholesaling short sale homes frequently delivers a list of uncommon benefits. However, there may be risks as well. Find out details regarding wholesaling short sales from our comprehensive guide. When you are keen to start wholesaling, look through Lakewood top short sale attorneys as well as Lakewood top-rated foreclosure law firms directories to find the right advisor.

Property Appreciation Rate

Median home price movements clearly illustrate the home value in the market. Investors who plan to maintain real estate investment properties will want to know that home values are steadily increasing. Decreasing values indicate an unequivocally poor rental and home-selling market and will scare away real estate investors.

Population Growth

Population growth statistics are an indicator that real estate investors will look at thoroughly. A growing population will need new housing. Real estate investors understand that this will involve both leasing and purchased residential housing. A location that has a declining community does not draw the real estate investors you want to buy your purchase contracts.

Median Population Age

A dynamic housing market requires people who are initially renting, then moving into homeownership, and then moving up in the residential market. In order for this to be possible, there needs to be a reliable workforce of prospective tenants and homebuyers. That’s why the community’s median age should be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income in a reliable real estate investment market need to be increasing. If tenants’ and home purchasers’ salaries are going up, they can contend with surging rental rates and residential property purchase prices. That will be crucial to the real estate investors you want to attract.

Unemployment Rate

Investors whom you offer to purchase your contracts will deem unemployment rates to be an essential piece of insight. High unemployment rate triggers a lot of tenants to delay rental payments or miss payments entirely. This hurts long-term investors who want to lease their residential property. Investors cannot count on tenants moving up into their houses when unemployment rates are high. This is a concern for short-term investors buying wholesalers’ contracts to repair and flip a house.

Number of New Jobs Created

The frequency of more jobs being created in the region completes an investor’s study of a prospective investment location. New jobs generated mean a large number of workers who need properties to rent and buy. Employment generation is beneficial for both short-term and long-term real estate investors whom you count on to take on your sale contracts.

Average Renovation Costs

Renovation expenses will be important to many property investors, as they typically buy inexpensive distressed homes to fix. Short-term investors, like home flippers, can’t make money when the price and the renovation costs equal to a higher amount than the After Repair Value (ARV) of the property. Seek lower average renovation costs.

Mortgage note investment professionals obtain a loan from lenders when they can purchase the note for a lower price than the balance owed. By doing this, the investor becomes the mortgage lender to the initial lender’s borrower.

Loans that are being repaid on time are considered performing loans. Performing loans earn you stable passive income. Non-performing notes can be rewritten or you can buy the property for less than face value via a foreclosure procedure.

One day, you may accrue a group of mortgage note investments and be unable to service them alone. If this happens, you could pick from the best home loan servicers in Lakewood CO which will designate you as a passive investor.

Should you choose to follow this investment model, you should place your venture in our directory of the best mortgage note buyers in Lakewood CO. Being on our list sets you in front of lenders who make lucrative investment possibilities available to note buyers such as you.

Factors to Consider

Foreclosure Rates

Performing note investors try to find regions with low foreclosure rates. If the foreclosure rates are high, the location could still be desirable for non-performing note buyers. The locale needs to be robust enough so that note investors can foreclose and liquidate properties if necessary.

Foreclosure Laws

It is necessary for note investors to understand the foreclosure laws in their state. Some states utilize mortgage paperwork and others utilize Deeds of Trust. You may have to receive the court’s okay to foreclose on a mortgage note’s collateral. A Deed of Trust enables the lender to file a notice and continue to foreclosure.

Mortgage Interest Rates

Purchased mortgage loan notes have a negotiated interest rate. Your mortgage note investment return will be influenced by the interest rate. Interest rates influence the plans of both sorts of note investors.

Conventional interest rates may vary by as much as a quarter of a percent throughout the US. The stronger risk assumed by private lenders is shown in higher loan interest rates for their loans compared to traditional mortgage loans.

Successful note investors continuously check the interest rates in their community set by private and traditional mortgage firms.

Demographics

A market’s demographics data help note investors to focus their efforts and effectively distribute their assets. The region’s population growth, unemployment rate, job market increase, wage standards, and even its median age hold valuable information for note buyers.
Note investors who invest in performing notes select areas where a lot of younger people have higher-income jobs.

Mortgage note investors who buy non-performing notes can also make use of growing markets. A strong regional economy is required if investors are to find homebuyers for properties they’ve foreclosed on.

Property Values

As a mortgage note buyer, you must search for borrowers that have a comfortable amount of equity. When you have to foreclose on a mortgage loan with lacking equity, the sale might not even repay the amount invested in the note. The combination of mortgage loan payments that lower the mortgage loan balance and annual property market worth growth raises home equity.

Property Taxes

Payments for real estate taxes are most often given to the mortgage lender simultaneously with the mortgage loan payment. That way, the mortgage lender makes certain that the taxes are paid when payable. If mortgage loan payments aren’t current, the lender will have to choose between paying the property taxes themselves, or the property taxes become delinquent. If a tax lien is put in place, it takes a primary position over the your note.

If a community has a history of growing tax rates, the combined house payments in that municipality are consistently increasing. Homeowners who have difficulty handling their mortgage payments might fall farther behind and sooner or later default.

Real Estate Market Strength

A vibrant real estate market having regular value appreciation is good for all categories of mortgage note buyers. The investors can be confident that, if required, a repossessed property can be unloaded at a price that makes a profit.

Vibrant markets often generate opportunities for private investors to make the first mortgage loan themselves. It is a supplementary stage of a mortgage note investor’s career.

A REIT, or Real Estate Investment Trust, means a company that invests in income-producing real estate. This was originally done as a way to empower the regular investor to invest in real property. Most investors at present are capable of investing in a REIT.

Investing in a REIT is termed passive investing. Investment liability is diversified throughout a package of real estate. Investors can unload their REIT shares whenever they want. Something you can’t do with REIT shares is to select the investment real estate properties. The properties that the REIT chooses to acquire are the ones your money is used for.

Real estate investment funds are in essence mutual funds that concentrate on real estate firms, such as REITs. Any actual property is owned by the real estate companies, not the fund. These funds make it easier for more investors to invest in real estate. Fund participants might not receive regular distributions the way that REIT members do. As with any stock, investment funds’ values rise and go down with their share price.

You can locate a real estate fund that focuses on a distinct kind of real estate company, such as multifamily, but you can’t suggest the fund’s investment real estate properties or locations. You have to count on the fund’s managers to determine which markets and assets are picked for investment.