Ultimate Leelanau County Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. This is a way to increase your investment portfolio not just acquire one income generating property. An important part of this strategy is to be able to obtain a “cash-out” mortgage refinance.

When you are done with improving the asset, its market value has to be higher than your complete purchase and fix-up expenses. The asset is refinanced based on the ARV and the balance, or equity, is given to you in cash. This cash is put into the next property, and so on. This plan allows you to repeatedly expand your portfolio and your investment income.

If your investment real estate portfolio is substantial enough, you may contract out its oversight and enjoy passive income. Discover one of the best investment property management firms in Leelanau County MI with a review of our complete list.

Factors to Consider

Population Growth

The growth or downturn of an area’s population is an accurate barometer of the community’s long-term desirability for rental investors. A booming population normally indicates vibrant relocation which equals additional tenants. Employers consider this market as promising place to situate their enterprise, and for workers to relocate their households. An expanding population builds a stable base of tenants who can survive rent increases, and an active property seller’s market if you want to sell any properties.

Property Taxes

Property taxes, maintenance, and insurance costs are investigated by long-term lease investors for calculating costs to estimate if and how the project will work out. High payments in these categories threaten your investment’s profitability. If property taxes are too high in a particular community, you will prefer to look in a different location.

Price to Rent Ratio

Price to rent ratio (p/r) is a market signal that informs you how much you can expect to demand as rent. An investor can not pay a large sum for a rental home if they can only charge a small rent not letting them to pay the investment off within a appropriate time. You want to see a low p/r to be confident that you can set your rents high enough to reach acceptable returns.

Median Gross Rents

Median gross rents are a clear indicator of the vitality of a rental market. You need to discover a site with repeating median rent growth. Declining rental rates are an alert to long-term investor landlords.

Median Population Age

The median residents’ age that you are on the hunt for in a robust investment market will be near the age of waged adults. You’ll discover this to be factual in cities where people are migrating. If working-age people aren’t entering the city to succeed retiring workers, the median age will go up. A vibrant real estate market can’t be bolstered by retired individuals.

Employment Base Diversity

A diverse employment base is what a smart long-term rental property investor will hunt for. When there are only one or two major hiring companies, and either of such relocates or goes out of business, it can cause you to lose renters and your property market values to decrease.

Unemployment Rate

You can’t get a steady rental cash flow in a locality with high unemployment. Historically strong businesses lose clients when other employers lay off workers. This can result in increased retrenchments or fewer work hours in the area. Even people who have jobs may find it difficult to stay current with their rent.

Income Rates

Median household and per capita income will let you know if the tenants that you require are living in the community. Increasing incomes also show you that rental fees can be adjusted over your ownership of the asset.

Number of New Jobs Created

The robust economy that you are looking for will generate plenty of jobs on a constant basis. The individuals who take the new jobs will require a residence. This guarantees that you can keep a sufficient occupancy level and buy more properties.

School Ratings

Community schools will cause a huge effect on the real estate market in their city. Well-rated schools are a prerequisite for companies that are thinking about relocating. Dependable tenants are a by-product of a robust job market. Real estate prices gain with new employees who are homebuyers. You will not run into a dynamically soaring housing market without quality schools.

Property Appreciation Rates

Real estate appreciation rates are an integral part of your long-term investment scheme. You need to be positive that your assets will increase in market price until you decide to sell them. You don’t want to take any time inspecting locations showing weak property appreciation rates.

A short-term rental is a furnished residence where a renter resides for less than a month. Short-term rental owners charge a higher rate a night than in long-term rental properties. With renters moving from one place to the next, short-term rental units have to be repaired and cleaned on a constant basis.

Typical short-term tenants are people taking a vacation, home sellers who are waiting to close on their replacement home, and people traveling for business who need a more homey place than hotel accommodation. House sharing portals like AirBnB and VRBO have enabled many homeowners to get in on the short-term rental business. Short-term rentals are deemed as an effective way to begin investing in real estate.

The short-term property rental business requires dealing with tenants more often compared to annual lease properties. As a result, investors deal with problems repeatedly. Consider protecting yourself and your properties by adding one of investor friendly real estate attorneys in Leelanau County MI to your network of professionals.

Factors to Consider

Short-Term Rental Income

You must define the amount of rental income you’re aiming for according to your investment calculations. A region’s short-term rental income levels will quickly reveal to you when you can expect to achieve your projected rental income levels.

Median Property Prices

You also must decide how much you can bear to invest. Look for locations where the purchase price you prefer is appropriate for the existing median property prices. You can calibrate your real estate search by examining median values in the region’s sub-markets.

Price Per Square Foot

Price per sq ft can be affected even by the design and layout of residential units. When the designs of available properties are very different, the price per square foot might not help you get a valid comparison. If you take this into consideration, the price per sq ft may give you a basic view of real estate prices.

Short-Term Rental Occupancy Rate

The need for additional rental units in a location may be verified by studying the short-term rental occupancy rate. When the majority of the rental properties are filled, that community needs more rental space. If property owners in the city are having problems filling their existing properties, you will have difficulty filling yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to estimate the profitability of an investment venture. Divide the Net Operating Income (NOI) by the amount of cash invested. The percentage you get is your cash-on-cash return. The higher it is, the quicker your investment funds will be repaid and you’ll begin realizing profits. Loan-assisted projects will have a higher cash-on-cash return because you’re using less of your money.

Average Short-Term Rental Capitalization (Cap) Rates

One metric conveys the value of an investment property as a return-yielding asset — average short-term rental capitalization (cap) rate. An investment property that has a high cap rate as well as charges typical market rents has a high value. Low cap rates show more expensive real estate. Divide your estimated Net Operating Income (NOI) by the property’s value or purchase price. The percentage you will receive is the property’s cap rate.

Local Attractions

Major festivals and entertainment attractions will draw vacationers who want short-term housing. This includes major sporting tournaments, kiddie sports activities, colleges and universities, huge concert halls and arenas, carnivals, and amusement parks. Outdoor tourist sites such as mountains, rivers, coastal areas, and state and national parks will also draw future tenants.

The fix and flip strategy means purchasing a property that needs repairs or rebuilding, creating added value by enhancing the building, and then liquidating it for its full market value. To be successful, the property rehabber has to pay lower than the market worth for the property and calculate the amount it will cost to fix it.

It’s vital for you to be aware of the rates homes are selling for in the area. The average number of Days On Market (DOM) for homes sold in the city is critical. Selling the property quickly will keep your expenses low and guarantee your revenue.

To help motivated residence sellers find you, list your firm in our catalogues of companies that buy houses for cash in Leelanau County MI and real estate investing companies in Leelanau County MI.

Additionally, look for top bird dogs for real estate investors in Leelanau County MI. Specialists in our directory concentrate on acquiring desirable investments while they’re still unlisted.

Factors to Consider

Median Home Price

Median property value data is a vital tool for evaluating a prospective investment area. Lower median home values are a hint that there is a steady supply of houses that can be acquired below market value. This is a primary component of a fix and flip market.

When area data shows a quick decrease in real property market values, this can indicate the accessibility of possible short sale properties. You will hear about potential opportunities when you join up with Leelanau County short sale specialists. Find out how this is done by reading our guide ⁠— How Can I Buy a Short Sale House?.

Property Appreciation Rate

Are property prices in the area moving up, or moving down? You are looking for a stable increase of the area’s home market rates. Speedy property value growth could show a market value bubble that is not practical. Acquiring at an inconvenient point in an unreliable environment can be devastating.

Average Renovation Costs

A thorough analysis of the area’s building expenses will make a substantial influence on your location selection. Other expenses, like clearances, could inflate your budget, and time which may also turn into an added overhead. If you are required to have a stamped suite of plans, you’ll have to incorporate architect’s fees in your costs.

Population Growth

Population increase metrics allow you to take a peek at housing need in the market. If there are purchasers for your repaired homes, it will illustrate a strong population increase.

Median Population Age

The median residents’ age will additionally show you if there are qualified homebuyers in the location. The median age in the community must equal the age of the typical worker. These are the individuals who are active homebuyers. Older people are preparing to downsize, or move into age-restricted or retiree neighborhoods.

Unemployment Rate

When researching a region for investment, search for low unemployment rates. It must certainly be lower than the national average. When the community’s unemployment rate is less than the state average, that is a sign of a good financial market. Without a dynamic employment environment, an area won’t be able to provide you with abundant homebuyers.

Income Rates

The population’s wage levels show you if the location’s financial market is strong. Most home purchasers normally take a mortgage to purchase a home. Their income will determine the amount they can borrow and if they can purchase a house. You can see from the area’s median income whether a good supply of people in the location can manage to buy your homes. In particular, income growth is crucial if you are looking to grow your business. To keep up with inflation and rising building and material costs, you have to be able to periodically mark up your rates.

Number of New Jobs Created

The number of jobs created yearly is useful information as you reflect on investing in a target city. A higher number of citizens acquire houses when the local economy is adding new jobs. Experienced trained workers taking into consideration purchasing a house and deciding to settle choose moving to locations where they won’t be jobless.

Hard Money Loan Rates

People who buy, renovate, and sell investment real estate opt to employ hard money instead of regular real estate financing. This lets investors to quickly purchase undervalued assets. Discover hard money lenders in Leelanau County MI and contrast their rates.

Investors who aren’t well-versed regarding hard money financing can uncover what they should understand with our guide for those who are only starting — How Do Hard Money Loans Work?.

As a real estate wholesaler, you sign a purchase contract to purchase a home that some other investors might be interested in. When a real estate investor who wants the residential property is found, the purchase contract is sold to the buyer for a fee. The seller sells the property to the real estate investor not the real estate wholesaler. The wholesaler does not liquidate the residential property — they sell the rights to buy one.

The wholesaling method of investing includes the use of a title firm that understands wholesale transactions and is knowledgeable about and involved in double close deals. Hunt for title companies that work with wholesalers in Leelanau County MI that we collected for you.

Our comprehensive guide to wholesaling can be read here: Property Wholesaling Explained. While you conduct your wholesaling business, insert your name in HouseCashin’s list of Leelanau County top wholesale real estate investors. This will allow any likely partners to locate you and initiate a contact.

Factors to Consider

Median Home Prices

Median home values in the area will inform you if your designated price level is viable in that market. As real estate investors need investment properties that are on sale for less than market price, you will need to take note of lower median purchase prices as an indirect hint on the potential availability of homes that you could acquire for below market value.

A rapid decrease in the value of property could cause the sudden availability of properties with more debt than value that are hunted by wholesalers. Short sale wholesalers often receive perks from this opportunity. But it also presents a legal risk. Learn about this from our detailed article Can I Wholesale a Short Sale Home?. Once you determine to give it a try, make certain you have one of short sale law firms in Leelanau County MI and real estate foreclosure attorneys in Leelanau County MI to work with.

Property Appreciation Rate

Median home purchase price trends are also critical. Real estate investors who need to resell their investment properties in the future, like long-term rental investors, require a market where residential property values are growing. Shrinking prices show an equivalently weak leasing and home-selling market and will scare away real estate investors.

Population Growth

Population growth data is an indicator that real estate investors will consider in greater detail. When the population is expanding, additional housing is required. This includes both leased and resale properties. If a region is shrinking in population, it does not need more residential units and investors will not look there.

Median Population Age

Investors need to see a thriving property market where there is a good pool of tenants, newbie homebuyers, and upwardly mobile citizens buying better houses. A community with a huge employment market has a steady source of tenants and buyers. A place with these attributes will have a median population age that is equivalent to the wage-earning resident’s age.

Income Rates

The median household and per capita income in a good real estate investment market have to be growing. Income hike proves a community that can manage lease rate and home purchase price raises. Property investors avoid markets with poor population wage growth numbers.

Unemployment Rate

Real estate investors whom you offer to close your sale contracts will deem unemployment stats to be a key piece of knowledge. High unemployment rate triggers many renters to make late rent payments or default altogether. Long-term real estate investors who depend on uninterrupted lease income will lose revenue in these communities. High unemployment builds poverty that will keep interested investors from purchasing a house. This makes it hard to reach fix and flip investors to buy your contracts.

Number of New Jobs Created

The amount of jobs appearing yearly is a crucial component of the housing framework. More jobs created attract a large number of employees who need properties to rent and buy. Employment generation is good for both short-term and long-term real estate investors whom you count on to buy your contracted properties.

Average Renovation Costs

Rehab costs have a major impact on a rehabber’s returns. When a short-term investor renovates a home, they want to be prepared to sell it for more than the entire expense for the purchase and the upgrades. The cheaper it is to fix up a unit, the more lucrative the market is for your prospective purchase agreement clients.

Mortgage note investment professionals buy a loan from mortgage lenders if they can buy the loan for a lower price than the balance owed. This way, the purchaser becomes the mortgage lender to the original lender’s debtor.

When a loan is being paid as agreed, it is considered a performing loan. Performing loans are a consistent generator of passive income. Non-performing loans can be re-negotiated or you may pick up the property at a discount through a foreclosure process.

Eventually, you could have a lot of mortgage notes and require more time to handle them without help. In this event, you could enlist one of loan servicing companies in Leelanau County MI that will essentially convert your investment into passive cash flow.

Should you decide that this plan is ideal for you, insert your name in our directory of Leelanau County top promissory note buyers. Appearing on our list puts you in front of lenders who make profitable investment possibilities available to note investors such as yourself.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a signal that the area has investment possibilities for performing note purchasers. Non-performing mortgage note investors can carefully take advantage of locations that have high foreclosure rates as well. The locale needs to be active enough so that investors can foreclose and unload collateral properties if needed.

Foreclosure Laws

It’s imperative for note investors to understand the foreclosure regulations in their state. They’ll know if their state uses mortgages or Deeds of Trust. While using a mortgage, a court has to allow a foreclosure. Investors do not need the court’s agreement with a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage loan notes come with an agreed interest rate. Your mortgage note investment return will be affected by the interest rate. Interest rates influence the strategy of both kinds of note investors.

The mortgage loan rates quoted by conventional lenders are not identical everywhere. Loans supplied by private lenders are priced differently and can be higher than traditional mortgages.

Mortgage note investors ought to always be aware of the current market interest rates, private and conventional, in potential mortgage note investment markets.

Demographics

An efficient note investment strategy includes a review of the region by utilizing demographic information. Investors can learn a great deal by looking at the extent of the population, how many residents are working, the amount they make, and how old the citizens are.
Mortgage note investors who invest in performing notes hunt for markets where a lot of younger individuals have higher-income jobs.

Note investors who purchase non-performing notes can also take advantage of dynamic markets. A vibrant regional economy is needed if investors are to find homebuyers for collateral properties on which they have foreclosed.

Property Values

The greater the equity that a borrower has in their home, the better it is for the mortgage loan holder. If the lender has to foreclose on a loan without much equity, the foreclosure auction may not even cover the balance owed. As loan payments reduce the balance owed, and the value of the property increases, the borrower’s equity goes up too.

Property Taxes

Most often, mortgage lenders receive the house tax payments from the homebuyer each month. The lender pays the payments to the Government to make sure they are submitted promptly. If loan payments aren’t being made, the lender will have to choose between paying the taxes themselves, or the taxes become delinquent. If taxes are past due, the government’s lien supersedes all other liens to the front of the line and is taken care of first.

If an area has a record of increasing tax rates, the combined home payments in that market are steadily expanding. Overdue customers might not have the ability to keep paying rising loan payments and could cease paying altogether.

Real Estate Market Strength

A community with growing property values offers good opportunities for any note investor. It is crucial to understand that if you need to foreclose on a property, you won’t have difficulty receiving a good price for the property.

Mortgage note investors also have an opportunity to make mortgage notes directly to homebuyers in sound real estate areas. This is a good source of revenue for accomplished investors.

A REIT, or Real Estate Investment Trust, is a business that makes investments in income-producing properties. Before REITs appeared, real estate investing used to be too pricey for the majority of people. The typical person is able to come up with the money to invest in a REIT.

Participants in such organizations are completely passive investors. The risk that the investors are taking is distributed within a collection of investment properties. Participants have the option to sell their shares at any time. But REIT investors do not have the option to select specific real estate properties or markets. The properties that the REIT decides to purchase are the assets your funds are used to buy.

Real estate investment funds are basically mutual funds that specialize in real estate companies, including REITs. The investment properties aren’t possessed by the fund — they are possessed by the businesses in which the fund invests. These funds make it possible for a wider variety of investors to invest in real estate. Funds aren’t required to pay dividends like a REIT. The value of a fund to an investor is the projected appreciation of the price of its shares.

You can select a fund that focuses on particular segments of the real estate business but not specific markets for individual real estate investment. As passive investors, fund shareholders are happy to let the administration of the fund handle all investment decisions.