Ultimate Lithonia Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. BRRRR is a method for repeated expansion. An important component of this formula is to be able to obtain a “cash-out” mortgage refinance.

When you are done with refurbishing the rental, its value must be more than your combined acquisition and rehab costs. Then you obtain a cash-out mortgage refinance loan that is calculated on the higher market value, and you take out the difference. This cash is reinvested into another property, and so on. This program assists you to repeatedly increase your portfolio and your investment revenue.

After you have created a considerable collection of income creating residential units, you may choose to hire others to handle all operations while you collect recurring net revenues. Find one of the best investment property management firms in Lithonia GA with a review of our comprehensive directory.

Factors to Consider

Population Growth

The rise or shrinking of the population can signal if that location is appealing to rental investors. If you find vibrant population growth, you can be sure that the area is attracting potential tenants to it. Relocating businesses are drawn to growing locations offering job security to households who move there. Rising populations develop a strong renter mix that can handle rent bumps and homebuyers who assist in keeping your property prices high.

Property Taxes

Property taxes, just like insurance and upkeep costs, can be different from market to place and should be considered carefully when predicting possible profits. Unreasonable spendings in these areas jeopardize your investment’s bottom line. If property taxes are excessive in a given area, you will need to look in a different location.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of how much rent can be demanded in comparison to the value of the investment property. If median home values are strong and median rents are small — a high p/r, it will take longer for an investment to recoup your costs and reach good returns. A high price-to-rent ratio shows you that you can charge lower rent in that location, a lower one tells you that you can charge more.

Median Gross Rents

Median gross rents are a critical sign of the vitality of a lease market. You want to find a location with stable median rent expansion. If rental rates are declining, you can drop that city from consideration.

Median Population Age

The median population age that you are on the hunt for in a good investment environment will be close to the age of waged adults. If people are migrating into the neighborhood, the median age will not have a problem staying at the level of the workforce. If you find a high median age, your source of renters is becoming smaller. That is a weak long-term financial prospect.

Employment Base Diversity

A diverse employment base is what a smart long-term rental property investor will hunt for. When the locality’s working individuals, who are your renters, are employed by a diversified group of businesses, you can’t lose all all tenants at the same time (and your property’s value), if a dominant enterprise in the community goes out of business.

Unemployment Rate

It’s hard to have a reliable rental market if there are many unemployed residents in it. Out-of-job residents are no longer customers of yours and of other businesses, which creates a domino effect throughout the community. Workers who still have workplaces may find their hours and incomes reduced. This could result in late rents and tenant defaults.

Income Rates

Median household and per capita income level is a useful tool to help you find the communities where the tenants you prefer are residing. Improving incomes also show you that rents can be increased throughout your ownership of the property.

Number of New Jobs Created

The reliable economy that you are searching for will generate enough jobs on a regular basis. An environment that provides jobs also adds more stakeholders in the property market. This assures you that you can retain a sufficient occupancy rate and purchase more rentals.

School Ratings

School reputation in the area will have a huge influence on the local residential market. When a company explores an area for possible relocation, they keep in mind that good education is a must-have for their workers. Moving businesses relocate and draw prospective renters. Housing market values increase with new employees who are buying houses. For long-term investing, look for highly graded schools in a prospective investment market.

Property Appreciation Rates

The essence of a long-term investment plan is to keep the investment property. You have to be confident that your assets will grow in market price until you need to liquidate them. Weak or declining property worth in a market under examination is inadmissible.

Residential real estate where renters stay in furnished accommodations for less than four weeks are known as short-term rentals. The per-night rental rates are typically higher in short-term rentals than in long-term ones. Short-term rental units may demand more frequent upkeep and sanitation.

Short-term rentals serve individuals traveling for business who are in the area for a few nights, those who are moving and need transient housing, and backpackers. House sharing platforms such as AirBnB and VRBO have enabled many residential property owners to venture in the short-term rental business. A simple technique to get started on real estate investing is to rent a condo or house you currently possess for short terms.

Short-term rental landlords require working one-on-one with the occupants to a greater extent than the owners of annually rented properties. That determines that property owners handle disagreements more frequently. You may need to protect your legal exposure by hiring one of the best Lithonia investor friendly real estate attorneys.

Factors to Consider

Short-Term Rental Income

First, figure out how much rental revenue you should have to achieve your anticipated return. A region’s short-term rental income levels will promptly reveal to you when you can predict to reach your projected rental income levels.

Median Property Prices

You also have to decide how much you can allow to invest. Look for areas where the budget you need corresponds with the current median property values. You can narrow your real estate hunt by looking at median values in the city’s sub-markets.

Price Per Square Foot

Price per sq ft can be influenced even by the style and layout of residential units. If you are looking at similar kinds of property, like condos or detached single-family residences, the price per square foot is more consistent. Price per sq ft can be a quick method to analyze different communities or homes.

Short-Term Rental Occupancy Rate

The percentage of short-term rental units that are presently tenanted in a community is vital data for a landlord. When the majority of the rental properties have tenants, that city needs new rental space. If investors in the community are having problems filling their existing units, you will have difficulty filling yours.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return can inform you if the venture is a good use of your own funds. You can calculate the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by the cash you are putting in. The result is shown as a percentage. High cash-on-cash return indicates that you will regain your investment faster and the investment will be more profitable. If you take a loan for part of the investment budget and put in less of your own capital, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) levels are largely employed by real property investors to calculate the value of rental properties. High cap rates indicate that investment properties are available in that community for decent prices. If cap rates are low, you can expect to spend more for real estate in that location. You can get the cap rate for possible investment property by dividing the Net Operating Income (NOI) by the Fair Market Value or listing price of the investment property. The answer is the yearly return in a percentage.

Local Attractions

Short-term rental apartments are popular in locations where sightseers are drawn by events and entertainment sites. When a location has sites that annually produce must-see events, such as sports stadiums, universities or colleges, entertainment halls, and adventure parks, it can draw visitors from out of town on a constant basis. At certain seasons, areas with outdoor activities in the mountains, oceanside locations, or alongside rivers and lakes will bring in crowds of people who want short-term housing.

The fix and flip approach entails purchasing a house that needs improvements or restoration, putting added value by enhancing the property, and then selling it for a higher market worth. Your evaluation of improvement costs has to be accurate, and you should be able to buy the property below market value.

It is important for you to figure out what houses are going for in the city. Locate an area with a low average Days On Market (DOM) metric. Liquidating the house fast will help keep your expenses low and ensure your profitability.

Assist compelled real property owners in discovering your company by featuring it in our catalogue of the best Lithonia cash house buyers and top Lithonia real estate investors.

Additionally, coordinate with Lithonia real estate bird dogs. Specialists located here will help you by immediately discovering potentially lucrative projects ahead of the projects being listed.

Factors to Consider

Median Home Price

Median property price data is a critical tool for evaluating a potential investment region. You are on the lookout for median prices that are modest enough to show investment possibilities in the market. This is a vital ingredient of a lucrative rehab and resale project.

If your investigation shows a fast drop in home market worth, it might be a heads up that you’ll find real estate that fits the short sale requirements. You’ll learn about potential investments when you team up with Lithonia short sale specialists. Discover how this works by studying our guide ⁠— What Are the Steps to Buying a Short Sale Home?.

Property Appreciation Rate

The movements in property values in an area are critical. You are searching for a steady growth of the city’s home prices. Housing values in the area should be going up steadily, not quickly. When you’re acquiring and liquidating rapidly, an uncertain environment can harm you.

Average Renovation Costs

You’ll need to research building costs in any prospective investment area. The way that the local government goes about approving your plans will affect your venture too. You need to understand if you will be required to use other contractors, like architects or engineers, so you can get ready for those expenses.

Population Growth

Population information will inform you if there is an expanding necessity for houses that you can supply. When there are purchasers for your repaired real estate, the statistics will indicate a positive population increase.

Median Population Age

The median population age is a direct sign of the supply of ideal homebuyers. The median age should not be lower or more than that of the usual worker. A high number of such people reflects a significant source of homebuyers. The requirements of retired people will probably not fit into your investment project plans.

Unemployment Rate

You need to see a low unemployment level in your considered community. It should always be less than the country’s average. A very friendly investment area will have an unemployment rate less than the state’s average. To be able to acquire your repaired property, your potential clients have to have a job, and their customers as well.

Income Rates

Median household and per capita income are a reliable sign of the stability of the real estate conditions in the region. The majority of people who purchase residential real estate have to have a mortgage loan. Their income will determine how much they can borrow and whether they can buy a house. The median income indicators will show you if the location is appropriate for your investment project. Scout for cities where salaries are increasing. To stay even with inflation and increasing building and material expenses, you should be able to regularly mark up your prices.

Number of New Jobs Created

Finding out how many jobs are generated per annum in the region can add to your confidence in a region’s economy. Residential units are more effortlessly liquidated in a city with a dynamic job environment. Experienced trained employees looking into buying a home and deciding to settle opt for moving to places where they will not be unemployed.

Hard Money Loan Rates

Investors who work with upgraded houses frequently employ hard money financing instead of traditional funding. Hard money financing products allow these investors to pull the trigger on hot investment ventures immediately. Locate the best hard money lenders in Lithonia GA so you may compare their fees.

People who aren’t experienced in regard to hard money lenders can learn what they need to understand with our resource for newbie investors — What Is Hard Money Lending?.

Wholesaling is a real estate investment approach that entails locating residential properties that are desirable to investors and signing a sale and purchase agreement. When an investor who approves of the property is spotted, the sale and purchase agreement is sold to the buyer for a fee. The seller sells the property under contract to the investor not the wholesaler. You’re selling the rights to the contract, not the property itself.

This business involves using a title firm that’s knowledgeable about the wholesale purchase and sale agreement assignment procedure and is able and willing to manage double close deals. Find title companies that specialize in real estate property investments in Lithonia GA on our list.

Our complete guide to wholesaling can be read here: Property Wholesaling Explained. When you choose wholesaling, add your investment venture in our directory of the best wholesale property investors in Lithonia GA. This will let your future investor clients locate and reach you.

Factors to Consider

Median Home Prices

Median home prices are key to spotting places where residential properties are being sold in your investors’ price level. A place that has a sufficient supply of the marked-down residential properties that your investors need will have a below-than-average median home price.

Accelerated deterioration in property market values might result in a supply of properties with no equity that appeal to short sale flippers. Wholesaling short sales repeatedly brings a number of uncommon advantages. Nonetheless, there may be liabilities as well. Gather more data on how to wholesale a short sale property with our extensive explanation. When you determine to give it a go, make certain you have one of short sale attorneys in Lithonia GA and mortgage foreclosure attorneys in Lithonia GA to confer with.

Property Appreciation Rate

Median home price dynamics are also vital. Many real estate investors, including buy and hold and long-term rental landlords, specifically need to see that home prices in the market are going up consistently. A weakening median home value will illustrate a poor rental and housing market and will disappoint all kinds of investors.

Population Growth

Population growth figures are an indicator that investors will analyze in greater detail. When the population is growing, new residential units are required. There are many people who lease and more than enough clients who buy houses. When an area is losing people, it doesn’t require more residential units and real estate investors will not invest there.

Median Population Age

A dynamic housing market requires people who are initially renting, then shifting into homeownership, and then buying up in the residential market. In order for this to be possible, there needs to be a reliable workforce of potential tenants and homeowners. An area with these attributes will have a median population age that mirrors the employed resident’s age.

Income Rates

The median household and per capita income in a stable real estate investment market should be growing. Increases in rent and listing prices will be backed up by growing income in the area. Successful investors stay out of cities with poor population salary growth indicators.

Unemployment Rate

Real estate investors whom you approach to buy your sale contracts will regard unemployment rates to be a crucial bit of insight. Renters in high unemployment regions have a difficult time staying current with rent and some of them will miss payments altogether. This impacts long-term real estate investors who plan to lease their investment property. Renters can’t transition up to property ownership and existing owners cannot liquidate their property and move up to a bigger house. Short-term investors will not take a chance on getting stuck with a house they cannot resell immediately.

Number of New Jobs Created

The number of jobs appearing yearly is an essential element of the residential real estate picture. More jobs produced mean a high number of workers who require properties to lease and buy. This is advantageous for both short-term and long-term real estate investors whom you count on to acquire your contracted properties.

Average Renovation Costs

Rehab spendings will be critical to most property investors, as they typically acquire low-cost distressed homes to rehab. Short-term investors, like home flippers, won’t make a profit when the acquisition cost and the renovation costs equal to a higher amount than the After Repair Value (ARV) of the house. The less you can spend to update a home, the more attractive the location is for your potential contract clients.

Investing in mortgage notes (loans) pays off when the loan can be acquired for a lower amount than the remaining balance. The debtor makes remaining payments to the mortgage note investor who has become their new lender.

Performing loans are loans where the borrower is always on time with their mortgage payments. They earn you long-term passive income. Non-performing mortgage notes can be rewritten or you can pick up the property for less than face value via foreclosure.

Eventually, you might have a large number of mortgage notes and have a hard time finding more time to oversee them on your own. In this event, you can employ one of loan portfolio servicing companies in Lithonia GA that will basically convert your investment into passive cash flow.

If you conclude that this strategy is perfect for you, insert your name in our list of Lithonia top real estate note buyers. Being on our list sets you in front of lenders who make profitable investment possibilities available to note investors such as yourself.

Factors to Consider

Foreclosure Rates

Note investors hunting for stable-performing mortgage loans to buy will hope to see low foreclosure rates in the community. Non-performing mortgage note investors can cautiously make use of places with high foreclosure rates as well. The locale ought to be active enough so that note investors can foreclose and resell properties if necessary.

Foreclosure Laws

It’s important for note investors to understand the foreclosure regulations in their state. They’ll know if the law dictates mortgage documents or Deeds of Trust. A mortgage requires that you go to court for authority to start foreclosure. Lenders don’t have to have the judge’s approval with a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage notes have a negotiated interest rate. That interest rate will significantly influence your profitability. Mortgage interest rates are critical to both performing and non-performing note buyers.

The mortgage rates quoted by conventional mortgage lenders aren’t identical everywhere. Private loan rates can be slightly higher than traditional interest rates because of the greater risk taken by private lenders.

A note buyer needs to be aware of the private and conventional mortgage loan rates in their markets at any given time.

Demographics

When note investors are choosing where to purchase mortgage notes, they’ll look closely at the demographic data from considered markets. It is critical to find out whether a suitable number of residents in the region will continue to have stable employment and wages in the future.
A youthful expanding market with a strong employment base can generate a stable revenue flow for long-term investors looking for performing mortgage notes.

The same area may also be beneficial for non-performing mortgage note investors and their end-game strategy. If these note investors want to foreclose, they will have to have a vibrant real estate market to sell the REO property.

Property Values

As a mortgage note investor, you should look for borrowers having a cushion of equity. This increases the likelihood that a potential foreclosure auction will repay the amount owed. As loan payments decrease the amount owed, and the value of the property increases, the borrower’s equity goes up too.

Property Taxes

Escrows for real estate taxes are most often sent to the mortgage lender along with the loan payment. This way, the mortgage lender makes certain that the real estate taxes are submitted when due. The lender will have to take over if the mortgage payments stop or they risk tax liens on the property. Property tax liens take priority over any other liens.

If property taxes keep rising, the borrowers’ loan payments also keep growing. Delinquent customers might not have the ability to keep up with increasing mortgage loan payments and could interrupt making payments altogether.

Real Estate Market Strength

A region with increasing property values has good opportunities for any mortgage note buyer. As foreclosure is an essential component of note investment strategy, increasing real estate values are critical to discovering a strong investment market.

Note investors also have an opportunity to originate mortgage notes directly to homebuyers in sound real estate communities. It’s another stage of a note investor’s career.

A trust buying income-generating real estate properties and that offers shares to people is a REIT — Real Estate Investment Trust. Before REITs were created, investing in properties used to be too pricey for the majority of people. REIT shares are not too costly for the majority of people.

Shareholders’ investment in a REIT falls under passive investment. The risk that the investors are taking is spread among a group of investment real properties. Shareholders have the right to liquidate their shares at any moment. Something you can’t do with REIT shares is to choose the investment assets. The land and buildings that the REIT decides to purchase are the properties your funds are used to buy.

Real estate investment funds are in essence mutual funds that concentrate on real estate companies, including REITs. The fund does not hold properties — it owns interest in real estate companies. This is an additional method for passive investors to spread their investments with real estate avoiding the high startup investment or liability. Real estate investment funds are not required to distribute dividends like a REIT. The benefit to the investor is produced by appreciation in the value of the stock.

You may choose a fund that specializes in a predetermined type of real estate you are familiar with, but you don’t get to determine the market of every real estate investment. Your choice as an investor is to pick a fund that you trust to oversee your real estate investments.