Ultimate Lewiston Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. This is a way to expand your investment assets rather than purchase one investment property. A vital component of this program is to be able to receive a “cash-out” mortgage refinance.

The After Repair Value (ARV) of the property has to equal more than the complete acquisition and repair costs. Then you get a cash-out mortgage refinance loan that is computed on the superior market value, and you extract the balance. You acquire your next investment property with the cash-out sum and do it anew. You add income-producing investment assets to your balance sheet and rental income to your cash flow.

After you’ve accumulated a considerable group of income generating real estate, you can decide to allow someone else to oversee all rental business while you receive repeating net revenues. Find Lewiston investment property management firms when you go through our directory of professionals.

Factors to Consider

Population Growth

The expansion or shrinking of the population can indicate whether that location is of interest to rental investors. If you discover good population growth, you can be confident that the area is attracting potential renters to the location. The location is appealing to businesses and employees to locate, work, and create households. Increasing populations create a strong tenant reserve that can keep up with rent bumps and homebuyers who assist in keeping your property prices up.

Property Taxes

Property taxes, regular maintenance expenditures, and insurance specifically influence your revenue. Unreasonable expenses in these areas jeopardize your investment’s returns. Communities with steep property taxes aren’t considered a reliable setting for short- and long-term investment and should be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property values and median lease rates that will indicate how high of a rent the market can tolerate. The amount of rent that you can charge in an area will determine the sum you are willing to pay depending on how long it will take to repay those funds. You are trying to find a low p/r to be comfortable that you can price your rents high enough to reach acceptable returns.

Median Gross Rents

Median gross rents are an accurate yardstick of the desirability of a rental market under consideration. Look for a consistent rise in median rents year over year. If rental rates are declining, you can scratch that community from deliberation.

Median Population Age

Median population age in a reliable long-term investment environment should equal the usual worker’s age. This can also illustrate that people are relocating into the market. If you discover a high median age, your stream of tenants is becoming smaller. A thriving real estate market cannot be sustained by retired people.

Employment Base Diversity

Having a variety of employers in the region makes the economy less risky. If the community’s working individuals, who are your renters, are hired by a diverse assortment of businesses, you will not lose all of them at once (as well as your property’s market worth), if a significant company in town goes bankrupt.

Unemployment Rate

High unemployment leads to smaller amount of renters and an unstable housing market. Historically successful businesses lose clients when other companies lay off employees. This can generate more retrenchments or shrinking work hours in the market. Remaining renters might become late with their rent payments in these conditions.

Income Rates

Median household and per capita income will reflect if the tenants that you require are residing in the community. Increasing salaries also show you that rental prices can be raised throughout your ownership of the rental home.

Number of New Jobs Created

The more jobs are consistently being generated in a location, the more consistent your tenant source will be. An economy that adds jobs also increases the amount of people who participate in the housing market. Your plan of renting and acquiring additional assets requires an economy that will generate new jobs.

School Ratings

School ratings in the area will have a big impact on the local residential market. Well-graded schools are a prerequisite for business owners that are considering relocating. Good renters are a consequence of a strong job market. Recent arrivals who buy a home keep housing market worth strong. Highly-rated schools are a necessary factor for a strong real estate investment market.

Property Appreciation Rates

Property appreciation rates are an indispensable component of your long-term investment plan. You need to be confident that your assets will grow in market value until you need to dispose of them. Subpar or dropping property worth in a region under examination is unacceptable.

A short-term rental is a furnished unit where a tenant lives for less than 30 days. The per-night rental rates are typically higher in short-term rentals than in long-term rental properties. With renters fast turnaround, short-term rental units need to be maintained and sanitized on a regular basis.

Short-term rentals are mostly offered to individuals traveling on business who are in the region for several days, people who are relocating and want short-term housing, and holidaymakers. Anyone can transform their residence into a short-term rental with the services given by virtual home-sharing sites like VRBO and AirBnB. A convenient approach to get into real estate investing is to rent a residential unit you currently keep for short terms.

Destination rental unit owners require working one-on-one with the renters to a larger degree than the owners of longer term leased properties. This leads to the investor being required to frequently deal with grievances. You may need to protect your legal bases by working with one of the good Lewiston real estate lawyers.

Factors to Consider

Short-Term Rental Income

You have to decide how much rental income has to be earned to make your effort profitable. A community’s short-term rental income rates will quickly tell you when you can expect to accomplish your estimated income range.

Median Property Prices

Meticulously calculate the budget that you can spend on new investment assets. To check if a city has possibilities for investment, look at the median property prices. You can narrow your property hunt by looking at median market worth in the community’s sub-markets.

Price Per Square Foot

Price per sq ft gives a general idea of property values when estimating comparable properties. A building with open foyers and vaulted ceilings cannot be compared with a traditional-style property with more floor space. You can use this information to get a good general idea of home values.

Short-Term Rental Occupancy Rate

The percentage of short-term rentals that are currently occupied in a city is important information for an investor. A high occupancy rate shows that a fresh supply of short-term rental space is needed. If the rental occupancy levels are low, there is not much space in the market and you need to look elsewhere.

Short-Term Rental Cash-on-Cash Return

To find out whether you should put your capital in a specific investment asset or market, look at the cash-on-cash return. You can determine the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by your cash being invested. The answer will be a percentage. High cash-on-cash return indicates that you will recoup your funds faster and the investment will be more profitable. Funded ventures will have a higher cash-on-cash return because you are investing less of your cash.

Average Short-Term Rental Capitalization (Cap) Rates

This benchmark compares rental property worth to its yearly revenue. High cap rates mean that investment properties are accessible in that community for reasonable prices. Low cap rates show more expensive properties. Divide your projected Net Operating Income (NOI) by the property’s market worth or listing price. This shows you a percentage that is the year-over-year return, or cap rate.

Local Attractions

Short-term rental apartments are popular in communities where vacationers are attracted by activities and entertainment spots. If an area has sites that annually hold interesting events, like sports coliseums, universities or colleges, entertainment centers, and amusement parks, it can invite visitors from other areas on a regular basis. At specific occasions, areas with outside activities in the mountains, coastal locations, or alongside rivers and lakes will attract lots of visitors who require short-term residence.

The fix and flip approach involves buying a home that requires improvements or rebuilding, generating additional value by upgrading the building, and then liquidating it for its full market price. Your estimate of repair expenses must be on target, and you have to be able to buy the home for less than market price.

It’s a must for you to know the rates homes are going for in the community. You always want to check how long it takes for listings to sell, which is shown by the Days on Market (DOM) metric. As a “house flipper”, you’ll want to sell the improved house immediately so you can avoid upkeep spendings that will lower your profits.

Assist motivated real estate owners in finding your company by placing it in our catalogue of the best Lewiston cash house buyers and top Lewiston property investment companies.

Additionally, search for the best real estate bird dogs in Lewiston ME. Professionals listed on our website will help you by immediately discovering possibly profitable ventures prior to them being listed.

Factors to Consider

Median Home Price

Median property price data is a vital benchmark for evaluating a prospective investment area. You are hunting for median prices that are low enough to show investment possibilities in the community. This is a key element of a lucrative rehab and resale project.

When your investigation entails a quick decrease in real property market worth, it may be a signal that you will discover real property that fits the short sale requirements. Investors who team with short sale negotiators in Lewiston ME receive continual notifications regarding potential investment real estate. Discover more concerning this sort of investment by reading our guide What Is the Process for Buying a Short Sale Home?.

Property Appreciation Rate

Are home values in the community on the way up, or on the way down? You are eyeing for a constant growth of the area’s property prices. Unsteady market worth changes aren’t desirable, even if it’s a substantial and sudden growth. Acquiring at an inappropriate point in an unstable market condition can be problematic.

Average Renovation Costs

Look carefully at the potential rehab spendings so you’ll be aware whether you can reach your predictions. The time it will take for acquiring permits and the local government’s requirements for a permit request will also affect your plans. You need to know if you will be required to employ other contractors, such as architects or engineers, so you can be prepared for those spendings.

Population Growth

Population growth is a solid gauge of the potential or weakness of the region’s housing market. When the population isn’t going up, there is not going to be an ample supply of purchasers for your fixed homes.

Median Population Age

The median citizens’ age can additionally show you if there are adequate homebuyers in the market. The median age in the city should be the age of the regular worker. Individuals in the area’s workforce are the most steady home purchasers. The goals of retired people will probably not suit your investment project strategy.

Unemployment Rate

You aim to have a low unemployment level in your considered location. It must certainly be less than the national average. When it is also lower than the state average, that is even better. Jobless individuals can’t buy your houses.

Income Rates

Median household and per capita income are a great indicator of the robustness of the real estate conditions in the region. Most people who buy a home need a mortgage loan. To be issued a home loan, a person cannot be spending for housing a larger amount than a certain percentage of their salary. You can determine based on the area’s median income if a good supply of individuals in the region can manage to buy your properties. You also want to see incomes that are improving continually. Construction expenses and home prices increase periodically, and you want to be sure that your potential homebuyers’ wages will also climb up.

Number of New Jobs Created

The number of jobs created each year is useful information as you contemplate on investing in a target region. A higher number of people purchase houses if their community’s financial market is creating jobs. Experienced skilled workers taking into consideration purchasing a property and settling prefer migrating to areas where they will not be unemployed.

Hard Money Loan Rates

Investors who acquire, fix, and resell investment real estate like to engage hard money instead of conventional real estate funding. Doing this enables investors complete profitable deals without holdups. Locate private money lenders for real estate in Lewiston ME and compare their interest rates.

Anyone who needs to know about hard money funding options can find what they are as well as how to use them by studying our article titled How Hard Money Lending Works.

Wholesaling is a real estate investment approach that entails scouting out residential properties that are attractive to investors and signing a sale and purchase agreement. However you don’t close on the house: after you have the property under contract, you allow a real estate investor to take your place for a fee. The owner sells the home to the investor instead of the real estate wholesaler. The wholesaler doesn’t sell the residential property itself — they just sell the purchase agreement.

Wholesaling relies on the participation of a title insurance firm that’s experienced with assignment of real estate sale agreements and comprehends how to deal with a double closing. Discover title companies for real estate investors in Lewiston ME on our website.

Learn more about how wholesaling works from our comprehensive guide — Real Estate Wholesaling Explained for Beginners. When following this investment strategy, include your firm in our list of the best house wholesalers in Lewiston ME. This will let your potential investor clients find and reach you.

Factors to Consider

Median Home Prices

Median home values in the city being considered will quickly notify you whether your real estate investors’ target investment opportunities are situated there. An area that has a sufficient supply of the below-market-value residential properties that your clients require will have a below-than-average median home purchase price.

Accelerated weakening in property market worth might result in a supply of homes with no equity that appeal to short sale property buyers. This investment strategy frequently delivers multiple uncommon advantages. Nonetheless, there could be liabilities as well. Find out about this from our extensive explanation How Can You Wholesale a Short Sale Property?. Once you’re keen to start wholesaling, search through Lewiston top short sale attorneys as well as Lewiston top-rated foreclosure lawyers directories to find the best counselor.

Property Appreciation Rate

Property appreciation rate completes the median price stats. Investors who plan to hold investment properties will want to see that residential property values are constantly increasing. A weakening median home value will illustrate a vulnerable leasing and housing market and will disappoint all kinds of investors.

Population Growth

Population growth information is critical for your prospective purchase contract buyers. When the community is multiplying, new housing is needed. There are more individuals who lease and more than enough customers who buy real estate. If a community isn’t expanding, it does not require new housing and real estate investors will invest in other locations.

Median Population Age

Investors want to see a strong housing market where there is a considerable supply of tenants, newbie homeowners, and upwardly mobile locals buying bigger residences. This takes a vibrant, constant employee pool of individuals who are confident enough to step up in the residential market. A place with these attributes will show a median population age that mirrors the wage-earning resident’s age.

Income Rates

The median household and per capita income should be rising in a promising residential market that real estate investors want to work in. When renters’ and home purchasers’ incomes are getting bigger, they can absorb soaring lease rates and residential property purchase prices. That will be critical to the investors you need to attract.

Unemployment Rate

Investors whom you contact to buy your sale contracts will regard unemployment statistics to be a key piece of insight. Tenants in high unemployment areas have a tough time staying current with rent and a lot of them will stop making rent payments completely. Long-term investors will not acquire a house in a market like that. High unemployment builds unease that will prevent interested investors from purchasing a house. This is a concern for short-term investors buying wholesalers’ agreements to repair and flip a property.

Number of New Jobs Created

Learning how often additional employment opportunities are generated in the market can help you see if the real estate is located in a reliable housing market. Additional jobs created lead to a high number of workers who require spaces to lease and buy. No matter if your buyer pool is comprised of long-term or short-term investors, they will be drawn to a city with consistent job opening production.

Average Renovation Costs

Renovation spendings will be essential to most real estate investors, as they typically buy cheap neglected properties to renovate. When a short-term investor improves a property, they want to be able to sell it for more money than the whole cost of the acquisition and the improvements. Below average renovation spendings make a region more profitable for your top clients — flippers and other real estate investors.

Acquiring mortgage notes (loans) pays off when the mortgage note can be obtained for less than the remaining balance. The borrower makes remaining mortgage payments to the note investor who is now their current lender.

When a mortgage loan is being repaid on time, it’s thought of as a performing loan. They give you long-term passive income. Non-performing notes can be rewritten or you may buy the collateral for less than face value via foreclosure.

Ultimately, you might accrue a number of mortgage note investments and not have the time to oversee them alone. In this event, you can opt to enlist one of loan servicers in Lewiston ME that will essentially turn your investment into passive cash flow.

Should you decide that this plan is a good fit for you, insert your name in our directory of Lewiston top mortgage note buying companies. Being on our list sets you in front of lenders who make profitable investment opportunities accessible to note investors such as you.

Factors to Consider

Foreclosure Rates

Low foreclosure rates are a sign that the area has opportunities for performing note buyers. If the foreclosures happen too often, the region might nevertheless be profitable for non-performing note buyers. However, foreclosure rates that are high sometimes indicate a slow real estate market where getting rid of a foreclosed home will likely be hard.

Foreclosure Laws

Investors need to know their state’s laws regarding foreclosure prior to pursuing this strategy. Many states utilize mortgage documents and some utilize Deeds of Trust. Lenders might need to obtain the court’s approval to foreclose on real estate. You merely need to file a public notice and initiate foreclosure process if you’re using a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage notes have a negotiated interest rate. That mortgage interest rate will unquestionably impact your profitability. Regardless of the type of mortgage note investor you are, the note’s interest rate will be critical to your predictions.

Conventional interest rates can be different by up to a quarter of a percent throughout the US. Private loan rates can be a little more than conventional loan rates due to the higher risk dealt with by private lenders.

Mortgage note investors ought to consistently know the present market mortgage interest rates, private and conventional, in potential investment markets.

Demographics

A lucrative note investment strategy incorporates an assessment of the region by using demographic information. The city’s population growth, employment rate, job market growth, wage levels, and even its median age contain usable information for mortgage note investors.
A youthful growing community with a strong employment base can provide a stable revenue flow for long-term investors searching for performing notes.

The same region may also be appropriate for non-performing note investors and their exit plan. When foreclosure is necessary, the foreclosed house is more easily unloaded in a growing market.

Property Values

Lenders want to see as much equity in the collateral property as possible. If the investor has to foreclose on a loan with little equity, the sale might not even pay back the balance invested in the note. Rising property values help increase the equity in the collateral as the borrower lessens the balance.

Property Taxes

Most homeowners pay real estate taxes to mortgage lenders in monthly portions along with their mortgage loan payments. So the mortgage lender makes certain that the property taxes are submitted when payable. If the homebuyer stops performing, unless the mortgage lender takes care of the taxes, they will not be paid on time. If a tax lien is filed, the lien takes precedence over the mortgage lender’s note.

If property taxes keep going up, the client’s house payments also keep going up. Homeowners who have trouble affording their mortgage payments could drop farther behind and eventually default.

Real Estate Market Strength

Both performing and non-performing note investors can do business in an expanding real estate market. As foreclosure is a crucial element of note investment planning, appreciating real estate values are critical to finding a good investment market.

A strong market might also be a good place for originating mortgage notes. It’s an added stage of a note investor’s career.

A REIT, or Real Estate Investment Trust, means a firm that invests in income-producing assets. REITs are invented to permit everyday people to invest in real estate. The average investor can afford to invest in a REIT.

Shareholders’ involvement in a REIT classifies as passive investment. REITs manage investors’ exposure with a varied selection of real estate. Investors can sell their REIT shares whenever they wish. One thing you cannot do with REIT shares is to choose the investment real estate properties. You are restricted to the REIT’s portfolio of assets for investment.

Real estate investment funds are essentially mutual funds focusing on real estate companies, including REITs. The fund does not own properties — it holds interest in real estate companies. This is an additional way for passive investors to diversify their portfolio with real estate avoiding the high initial expense or liability. Fund shareholders might not get regular disbursements like REIT participants do. As with any stock, investment funds’ values rise and fall with their share value.

You can select a fund that focuses on a particular type of real estate firm, like commercial, but you cannot propose the fund’s investment assets or markets. Your choice as an investor is to choose a fund that you rely on to handle your real estate investments.