Ultimate Lexington Real Estate Investing Guide for 2024

The term BRRRR is an illustration of a long-term investment strategy — Buy, Rehab, Rent, Refinance, Repeat. When you plan to grow your investments, the BRRRR is a proven method to follow. This strategy depends on your ability to take money out when you refinance.

The After Repair Value (ARV) of the investment property needs to total more than the complete acquisition and refurbishment expenses. Then you remove the equity you created from the investment property in a “cash-out” mortgage refinance. You purchase your next property with the cash-out amount and start anew. You add improving assets to the balance sheet and lease revenue to your cash flow.

If your investment real estate portfolio is substantial enough, you might delegate its oversight and collect passive cash flow. Discover one of property management agencies in Lexington GA with a review of our exhaustive list.

Factors to Consider

Population Growth

The growth or fall of a market’s population is an accurate barometer of the region’s long-term appeal for rental investors. If the population increase in a city is strong, then additional renters are assuredly coming into the community. Relocating employers are drawn to increasing markets offering job security to households who move there. This means stable renters, more rental income, and more possible buyers when you want to sell the property.

Property Taxes

Property taxes, regular upkeep spendings, and insurance specifically affect your revenue. Investment property located in excessive property tax locations will have lower returns. If property taxes are excessive in a particular community, you will prefer to look elsewhere.

Price to Rent Ratio

Price to rent ratio (p/r) is a market signal that shows you the amount you can predict to collect as rent. If median home values are strong and median rents are small — a high p/r, it will take more time for an investment to repay your costs and achieve profitability. The lower rent you can charge the higher the price-to-rent ratio, with a low p/r illustrating a stronger rent market.

Median Gross Rents

Median gross rents let you see whether a city’s rental market is robust. Look for a repeating increase in median rents during a few years. If rents are declining, you can drop that area from consideration.

Median Population Age

Median population age in a strong long-term investment market must show the usual worker’s age. This can also illustrate that people are relocating into the community. If you discover a high median age, your source of tenants is becoming smaller. This isn’t promising for the impending economy of that community.

Employment Base Diversity

A diversified supply of companies in the market will expand your chances of strong returns. If the city’s workpeople, who are your renters, are hired by a varied number of businesses, you can’t lose all all tenants at once (together with your property’s market worth), if a significant enterprise in town goes bankrupt.

Unemployment Rate

You will not reap the benefits of a steady rental income stream in a locality with high unemployment. Out-of-work people stop being customers of yours and of related businesses, which causes a domino effect throughout the region. People who continue to keep their jobs can find their hours and wages cut. Even renters who are employed will find it hard to pay rent on time.

Income Rates

Median household and per capita income will illustrate if the renters that you prefer are living in the community. Historical income figures will illustrate to you if income increases will permit you to mark up rental fees to achieve your investment return estimates.

Number of New Jobs Created

A growing job market equates to a regular source of tenants. More jobs mean a higher number of tenants. Your objective of renting and acquiring more rentals requires an economy that will produce enough jobs.

School Ratings

School ratings in the community will have a significant effect on the local housing market. Highly-accredited schools are a prerequisite for companies that are looking to relocate. Good renters are a by-product of a robust job market. Property prices gain thanks to additional workers who are purchasing properties. For long-term investing, look for highly graded schools in a potential investment market.

Property Appreciation Rates

Property appreciation rates are an indispensable element of your long-term investment approach. Investing in assets that you aim to hold without being sure that they will appreciate in value is a formula for disaster. Small or declining property appreciation rates should eliminate a city from the selection.

A furnished home where clients reside for less than 30 days is referred to as a short-term rental. Short-term rental owners charge a higher rent a night than in long-term rental properties. Short-term rental properties might necessitate more periodic care and sanitation.

House sellers standing by to move into a new property, backpackers, and corporate travelers who are staying in the location for about week enjoy renting a residence short term. House sharing websites such as AirBnB and VRBO have encouraged countless real estate owners to take part in the short-term rental business. A convenient approach to enter real estate investing is to rent a residential unit you currently possess for short terms.

Short-term rental units involve dealing with renters more repeatedly than long-term ones. This results in the owner having to frequently deal with grievances. Consider managing your liability with the support of any of the best real estate lawyers in Lexington GA.

Factors to Consider

Short-Term Rental Income

First, find out how much rental revenue you should have to meet your projected profits. A region’s short-term rental income levels will quickly reveal to you if you can predict to achieve your projected rental income range.

Median Property Prices

When buying property for short-term rentals, you should calculate how much you can spend. The median market worth of property will tell you if you can afford to be in that market. You can also make use of median prices in targeted neighborhoods within the market to select communities for investing.

Price Per Square Foot

Price per square foot could be inaccurate when you are comparing different units. A building with open foyers and vaulted ceilings cannot be contrasted with a traditional-style property with bigger floor space. You can use this criterion to see a good general picture of housing values.

Short-Term Rental Occupancy Rate

A peek into the city’s short-term rental occupancy rate will tell you if there is demand in the market for more short-term rentals. A high occupancy rate signifies that an extra source of short-term rental space is wanted. When the rental occupancy indicators are low, there isn’t enough need in the market and you should explore in a different place.

Short-Term Rental Cash-on-Cash Return

To know whether you should invest your money in a particular property or city, look at the cash-on-cash return. You can calculate the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by your cash investment. The resulting percentage is your cash-on-cash return. The higher the percentage, the quicker your investment will be recouped and you’ll begin realizing profits. Financed projects will have a stronger cash-on-cash return because you will be spending less of your money.

Average Short-Term Rental Capitalization (Cap) Rates

Another measurement illustrates the market value of an investment property as a revenue-producing asset — average short-term rental capitalization (cap) rate. Usually, the less a unit will cost (or is worth), the higher the cap rate will be. If investment properties in a location have low cap rates, they typically will cost too much. Divide your projected Net Operating Income (NOI) by the investment property’s market value or listing price. The percentage you receive is the investment property’s cap rate.

Local Attractions

Short-term rental units are popular in places where visitors are attracted by events and entertainment sites. Tourists come to specific areas to watch academic and sporting events at colleges and universities, be entertained by competitions, cheer for their kids as they participate in kiddie sports, party at annual festivals, and go to theme parks. At specific periods, locations with outside activities in mountainous areas, seaside locations, or near rivers and lakes will attract a throng of people who want short-term housing.

When a real estate investor acquires a house under market value, renovates it so that it becomes more valuable, and then resells the home for a return, they are known as a fix and flip investor. To get profit, the investor has to pay below market price for the property and compute the amount it will cost to rehab it.

Investigate the values so that you know the actual After Repair Value (ARV). Select a market with a low average Days On Market (DOM) indicator. As a “house flipper”, you’ll want to put up for sale the renovated real estate without delay so you can eliminate carrying ongoing costs that will diminish your profits.

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Factors to Consider

Median Home Price

When you look for a lucrative area for property flipping, examine the median housing price in the neighborhood. Low median home prices are an indication that there must be a good number of houses that can be purchased for less than market value. This is a basic ingredient of a fix and flip market.

When you see a sharp weakening in real estate values, this might indicate that there are possibly properties in the area that qualify for a short sale. You can receive notifications about these possibilities by partnering with short sale processing companies in Lexington GA. You will uncover valuable information concerning short sales in our extensive blog post ⁠— What to Expect when Buying a Short Sale Home?.

Property Appreciation Rate

Are real estate market values in the city going up, or on the way down? Fixed surge in median prices shows a strong investment environment. Property values in the city should be going up constantly, not rapidly. When you’re acquiring and selling rapidly, an erratic market can harm your efforts.

Average Renovation Costs

A comprehensive study of the market’s building expenses will make a significant influence on your location selection. Other costs, like permits, could increase expenditure, and time which may also turn into an added overhead. If you need to have a stamped set of plans, you will need to include architect’s charges in your expenses.

Population Growth

Population increase is a strong gauge of the reliability or weakness of the community’s housing market. If the population is not increasing, there isn’t going to be an ample source of homebuyers for your houses.

Median Population Age

The median citizens’ age can also tell you if there are potential homebuyers in the location. When the median age is equal to that of the average worker, it’s a good sign. Individuals in the regional workforce are the most stable home buyers. The goals of retired people will most likely not suit your investment venture plans.

Unemployment Rate

You need to see a low unemployment level in your considered location. The unemployment rate in a prospective investment location needs to be less than the US average. If it is also lower than the state average, that is much more preferable. Jobless individuals cannot acquire your property.

Income Rates

Median household and per capita income amounts advise you whether you can obtain qualified home buyers in that community for your residential properties. Most people normally take a mortgage to purchase a house. To have a bank approve them for a home loan, a home buyer cannot be spending for housing more than a certain percentage of their income. Median income will help you determine if the standard homebuyer can afford the homes you are going to list. You also prefer to have incomes that are increasing continually. Building spendings and home prices rise periodically, and you want to be sure that your target purchasers’ wages will also improve.

Number of New Jobs Created

The number of jobs created on a consistent basis tells if salary and population growth are feasible. A higher number of citizens buy homes if the region’s financial market is generating jobs. Additional jobs also lure workers relocating to the area from other districts, which further revitalizes the local market.

Hard Money Loan Rates

Fix-and-flip property investors frequently utilize hard money loans rather than conventional financing. Hard money funds allow these purchasers to move forward on hot investment projects without delay. Find the best private money lenders in Lexington GA so you can review their fees.

Those who are not knowledgeable regarding hard money loans can uncover what they should know with our guide for newbies — How Hard Money Loans Work.

As a real estate wholesaler, you enter a purchase contract to purchase a property that other investors will need. When an investor who approves of the property is spotted, the contract is sold to them for a fee. The real buyer then completes the purchase. The real estate wholesaler does not sell the property under contract itself — they just sell the purchase and sale agreement.

This method requires using a title company that is knowledgeable about the wholesale contract assignment operation and is able and inclined to handle double close deals. Search for title services for wholesale investors in Lexington GA that we collected for you.

Our in-depth guide to wholesaling can be read here: A-to-Z Guide to Property Wholesaling. As you conduct your wholesaling business, place your company in HouseCashin’s list of Lexington top house wholesalers. That way your prospective customers will see your offering and reach out to you.

Factors to Consider

Median Home Prices

Median home prices in the market being assessed will roughly tell you whether your real estate investors’ required investment opportunities are situated there. Lower median values are a solid indication that there are plenty of residential properties that can be purchased below market price, which investors have to have.

A fast decrease in the market value of real estate might generate the accelerated availability of houses with negative equity that are desired by wholesalers. Wholesaling short sales regularly carries a list of different advantages. However, it also raises a legal risk. Learn details about wholesaling short sales from our extensive article. When you’re prepared to begin wholesaling, look through Lexington top short sale real estate attorneys as well as Lexington top-rated real estate foreclosure attorneys directories to locate the right advisor.

Property Appreciation Rate

Median home value dynamics are also important. Real estate investors who want to hold investment assets will need to see that home market values are constantly increasing. Both long- and short-term investors will stay away from a region where housing market values are decreasing.

Population Growth

Population growth data is an indicator that real estate investors will look at thoroughly. An expanding population will have to have more residential units. There are a lot of individuals who rent and additional customers who purchase real estate. An area with a shrinking population does not draw the investors you want to purchase your contracts.

Median Population Age

A dynamic housing market requires people who are initially renting, then transitioning into homeownership, and then moving up in the residential market. This requires a robust, stable labor force of residents who feel optimistic to shift up in the residential market. An area with these features will have a median population age that is the same as the employed resident’s age.

Income Rates

The median household and per capita income in a reliable real estate investment market should be on the upswing. Increases in rent and sale prices must be backed up by improving wages in the region. Investors want this if they are to achieve their expected returns.

Unemployment Rate

Investors whom you offer to take on your sale contracts will regard unemployment rates to be a key piece of knowledge. Renters in high unemployment areas have a hard time paying rent on schedule and some of them will skip rent payments entirely. Long-term real estate investors who rely on reliable rental payments will suffer in these places. Real estate investors cannot depend on tenants moving up into their properties if unemployment rates are high. This is a challenge for short-term investors buying wholesalers’ agreements to rehab and flip a house.

Number of New Jobs Created

Learning how frequently new job openings are produced in the community can help you determine if the property is located in a stable housing market. Fresh jobs appearing attract a high number of workers who look for properties to lease and purchase. Long-term real estate investors, like landlords, and short-term investors that include rehabbers, are gravitating to regions with good job appearance rates.

Average Renovation Costs

Updating expenses have a large impact on an investor’s returns. When a short-term investor repairs a house, they want to be able to sell it for a higher price than the combined sum they spent for the purchase and the renovations. Give preference to lower average renovation costs.

Note investing includes buying a loan (mortgage note) from a lender for less than the balance owed. By doing this, you become the lender to the first lender’s borrower.

When a mortgage loan is being repaid on time, it’s considered a performing note. These notes are a repeating provider of passive income. Investors also purchase non-performing mortgage notes that they either re-negotiate to assist the client or foreclose on to get the collateral below actual worth.

Eventually, you could have many mortgage notes and necessitate additional time to oversee them by yourself. At that stage, you may need to utilize our directory of Lexington top home loan servicers and reassign your notes as passive investments.

When you want to adopt this investment plan, you should include your project in our directory of the best promissory note buyers in Lexington GA. Being on our list places you in front of lenders who make lucrative investment opportunities available to note buyers such as you.

Factors to Consider

Foreclosure Rates

Note investors searching for current loans to purchase will prefer to see low foreclosure rates in the area. High rates might signal investment possibilities for non-performing mortgage note investors, however they have to be cautious. If high foreclosure rates are causing a weak real estate market, it may be challenging to resell the collateral property if you foreclose on it.

Foreclosure Laws

Professional mortgage note investors are fully well-versed in their state’s laws regarding foreclosure. Are you dealing with a mortgage or a Deed of Trust? A mortgage dictates that the lender goes to court for approval to foreclose. Lenders do not have to have the judge’s agreement with a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage loan notes come with an agreed interest rate. Your mortgage note investment return will be impacted by the interest rate. Interest rates are important to both performing and non-performing note buyers.

The mortgage loan rates charged by conventional lending companies aren’t equal everywhere. Loans provided by private lenders are priced differently and can be higher than traditional mortgage loans.

A mortgage note buyer ought to know the private and conventional mortgage loan rates in their areas all the time.

Demographics

A market’s demographics trends help note investors to focus their efforts and effectively distribute their resources. Investors can interpret a lot by looking at the extent of the population, how many citizens are employed, how much they make, and how old the citizens are.
A youthful expanding community with a strong employment base can provide a reliable revenue stream for long-term mortgage note investors hunting for performing notes.

Non-performing note buyers are reviewing related elements for different reasons. If foreclosure is necessary, the foreclosed house is more easily liquidated in a growing market.

Property Values

The greater the equity that a homeowner has in their property, the more advantageous it is for you as the mortgage note owner. If the value isn’t significantly higher than the loan amount, and the lender needs to foreclose, the collateral might not realize enough to payoff the loan. Rising property values help increase the equity in the home as the homeowner lessens the amount owed.

Property Taxes

Payments for real estate taxes are most often sent to the lender simultaneously with the loan payment. The mortgage lender passes on the payments to the Government to make sure they are paid without delay. If the homebuyer stops paying, unless the lender takes care of the property taxes, they won’t be paid on time. If taxes are delinquent, the government’s lien supersedes any other liens to the head of the line and is paid first.

If a municipality has a history of rising tax rates, the total house payments in that region are constantly expanding. This makes it complicated for financially strapped borrowers to make their payments, and the mortgage loan could become delinquent.

Real Estate Market Strength

Both performing and non-performing mortgage note investors can be profitable in a good real estate market. The investors can be assured that, when required, a foreclosed collateral can be liquidated for an amount that is profitable.

Note investors also have a chance to create mortgage loans directly to homebuyers in stable real estate areas. This is a desirable source of revenue for experienced investors.

A trust operating income-generating properties and that offers shares to the public is a REIT — Real Estate Investment Trust. This was initially conceived as a method to permit the regular person to invest in real property. Most people today are able to invest in a REIT.

Investing in a REIT is considered passive investing. REITs manage investors’ exposure with a diversified collection of real estate. Shareholders have the capability to liquidate their shares at any moment. Members in a REIT are not able to propose or pick real estate properties for investment. You are confined to the REIT’s collection of properties for investment.

Mutual funds that contain shares of real estate companies are termed real estate investment funds. Any actual real estate property is owned by the real estate companies rather than the fund. This is an additional method for passive investors to spread their portfolio with real estate without the high startup cost or risks. Fund participants may not get typical distributions like REIT participants do. The return to investors is generated by appreciation in the worth of the stock.

You can select a fund that specializes in a selected type of real estate you’re knowledgeable about, but you do not get to determine the market of each real estate investment. As passive investors, fund members are content to permit the directors of the fund handle all investment decisions.