Ultimate Logan County Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. When you desire to increase your investments, the BRRRR is a good method to employ. A crucial part of this formula is to be able to take a “cash-out” refinance.

When you have finished renovating the investment property, its value should be more than your combined purchase and fix-up costs. The investment property is refinanced based on the ARV and the difference, or equity, is given to you in cash. You use that capital to purchase another investment property and the process begins anew. This program assists you to consistently add to your portfolio and your investment revenue.

If your investment property portfolio is substantial enough, you may contract out its management and generate passive income. Find Logan County property management agencies when you look through our list of professionals.

Factors to Consider

Population Growth

The expansion or downturn of a community’s population is a good benchmark of its long-term desirability for rental property investors. A booming population usually signals busy relocation which translates to additional renters. Moving companies are attracted to increasing markets providing secure jobs to people who move there. A growing population develops a certain foundation of renters who will survive rent increases, and a vibrant seller’s market if you want to liquidate your assets.

Property Taxes

Real estate taxes, upkeep, and insurance spendings are considered by long-term rental investors for forecasting expenses to predict if and how the investment will be successful. Rental assets located in high property tax cities will provide less desirable returns. High real estate tax rates may predict an unstable location where costs can continue to grow and should be thought of as a red flag.

Price to Rent Ratio

Price to rent ratio (p/r) is a market signal that tells you the amount you can anticipate to charge as rent. The rate you can collect in an area will determine the price you are able to pay depending on the time it will take to pay back those costs. The less rent you can collect the higher the p/r, with a low p/r illustrating a more profitable rent market.

Median Gross Rents

Median gross rents are a significant sign of the stability of a lease market. Search for a consistent expansion in median rents during a few years. If rents are being reduced, you can scratch that area from discussion.

Median Population Age

Median population age should be similar to the age of a typical worker if a market has a strong supply of renters. This can also show that people are relocating into the region. If you see a high median age, your stream of renters is reducing. That is an unacceptable long-term economic prospect.

Employment Base Diversity

A larger supply of enterprises in the location will expand your prospects for success. When there are only one or two dominant employers, and either of them moves or closes shop, it will make you lose tenants and your asset market values to decrease.

Unemployment Rate

High unemployment means a lower number of tenants and an unreliable housing market. Normally profitable businesses lose clients when other businesses retrench employees. Workers who continue to have workplaces may find their hours and salaries decreased. Even renters who are employed will find it difficult to pay rent on time.

Income Rates

Median household and per capita income data is a critical indicator to help you discover the cities where the tenants you are looking for are living. Rising salaries also inform you that rental payments can be hiked throughout your ownership of the property.

Number of New Jobs Created

The robust economy that you are hunting for will be producing plenty of jobs on a regular basis. A market that adds jobs also adds more stakeholders in the housing market. This reassures you that you will be able to keep a sufficient occupancy rate and purchase additional real estate.

School Ratings

The status of school districts has an undeniable impact on housing values across the city. Highly-endorsed schools are a necessity for business owners that are thinking about relocating. Moving employers bring and attract prospective renters. Property prices rise thanks to new employees who are homebuyers. You can’t discover a vibrantly growing residential real estate market without good schools.

Property Appreciation Rates

Real estate appreciation rates are an indispensable element of your long-term investment approach. Investing in properties that you intend to maintain without being sure that they will appreciate in value is a blueprint for disaster. Low or dropping property appreciation rates will eliminate a market from your list.

A short-term rental is a furnished unit where a renter resides for less than four weeks. Long-term rentals, like apartments, impose lower payment a night than short-term ones. Because of the increased number of tenants, short-term rentals entail additional regular upkeep and sanitation.

Home sellers standing by to close on a new property, vacationers, and individuals traveling on business who are staying in the area for a few days prefer renting apartments short term. House sharing platforms such as AirBnB and VRBO have encouraged numerous residential property owners to take part in the short-term rental industry. This makes short-term rentals a good way to try residential real estate investing.

Short-term rental landlords require working personally with the occupants to a larger extent than the owners of longer term rented properties. That determines that landlords deal with disputes more often. You may want to protect your legal liability by engaging one of the best Logan County investor friendly real estate lawyers.

Factors to Consider

Short-Term Rental Income

Initially, determine the amount of rental revenue you must have to reach your desired return. A city’s short-term rental income levels will promptly tell you if you can predict to reach your estimated income levels.

Median Property Prices

When acquiring real estate for short-term rentals, you need to determine the budget you can spend. To check whether a market has opportunities for investment, check the median property prices. You can tailor your property search by estimating median market worth in the community’s sub-markets.

Price Per Square Foot

Price per sq ft could be misleading when you are comparing different properties. If you are looking at similar kinds of property, like condos or individual single-family residences, the price per square foot is more consistent. If you remember this, the price per sq ft can provide you a basic estimation of local prices.

Short-Term Rental Occupancy Rate

The demand for new rental units in an area can be seen by evaluating the short-term rental occupancy level. A market that requires new rentals will have a high occupancy level. When the rental occupancy levels are low, there isn’t much demand in the market and you should look elsewhere.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to assess the value of an investment. You can determine the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by the cash you are putting in. The return comes as a percentage. When a project is profitable enough to recoup the capital spent quickly, you’ll have a high percentage. Financed investments can reach higher cash-on-cash returns because you’re utilizing less of your own money.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion compares rental property value to its per-annum revenue. An investment property that has a high cap rate as well as charges average market rental prices has a strong market value. If cap rates are low, you can assume to pay more cash for rental units in that city. Divide your projected Net Operating Income (NOI) by the investment property’s market worth or asking price. This gives you a ratio that is the yearly return, or cap rate.

Local Attractions

Short-term rental units are popular in regions where sightseers are attracted by activities and entertainment venues. People visit specific regions to watch academic and sporting events at colleges and universities, see competitions, cheer for their kids as they compete in kiddie sports, party at annual festivals, and stop by theme parks. Notable vacation attractions are located in mountainous and beach areas, along waterways, and national or state parks.

When a real estate investor acquires a house below market worth, renovates it and makes it more valuable, and then sells it for a profit, they are called a fix and flip investor. To get profit, the investor must pay below market value for the property and compute the amount it will cost to repair the home.

Assess the values so that you understand the accurate After Repair Value (ARV). You always have to analyze how long it takes for homes to close, which is determined by the Days on Market (DOM) data. As a ”rehabber”, you’ll want to sell the repaired home right away so you can stay away from maintenance expenses that will lessen your revenue.

To help motivated residence sellers locate you, place your company in our directories of all cash home buyers in Logan County KY and property investors in Logan County KY.

In addition, coordinate with Logan County bird dogs for real estate investors. Specialists discovered on our website will assist you by rapidly finding conceivably profitable projects prior to the projects being sold.

Factors to Consider

Median Home Price

Median home value data is a critical benchmark for estimating a future investment location. When prices are high, there might not be a stable reserve of fixer-upper houses in the location. This is a fundamental feature of a fix and flip market.

If you notice a sudden decrease in property market values, this might indicate that there are conceivably homes in the location that will work for a short sale. You’ll learn about potential opportunities when you team up with Logan County short sale facilitators. Learn more concerning this sort of investment by studying our guide What Is the Process for Buying a Short Sale Home?.

Property Appreciation Rate

Dynamics means the direction that median home values are taking. You have to have a city where home prices are constantly and consistently going up. Unpredictable value changes are not good, even if it’s a remarkable and sudden surge. Purchasing at the wrong period in an unsteady environment can be devastating.

Average Renovation Costs

You’ll want to estimate building costs in any prospective investment area. Other expenses, like authorizations, can shoot up your budget, and time which may also turn into an added overhead. To make an on-target budget, you will have to find out if your construction plans will have to use an architect or engineer.

Population Growth

Population data will tell you whether there is an increasing need for housing that you can provide. When the number of citizens isn’t going up, there is not going to be an ample source of homebuyers for your properties.

Median Population Age

The median residents’ age is a factor that you might not have thought about. It should not be lower or more than that of the average worker. A high number of such citizens shows a stable source of home purchasers. Aging people are preparing to downsize, or move into age-restricted or retiree communities.

Unemployment Rate

You want to see a low unemployment rate in your prospective city. The unemployment rate in a potential investment area needs to be less than the country’s average. When it’s also less than the state average, that is much more preferable. If you don’t have a robust employment base, an area cannot provide you with qualified home purchasers.

Income Rates

The population’s income statistics show you if the local economy is stable. Most families have to get a loan to buy 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. You can figure out based on the location’s median income whether many people in the community can manage to purchase your homes. You also need to see salaries that are growing continually. To keep pace with inflation and rising construction and supply costs, you should be able to regularly adjust your prices.

Number of New Jobs Created

The number of jobs generated per year is important insight as you reflect on investing in a specific city. Residential units are more easily liquidated in a region that has a dynamic job environment. New jobs also attract workers relocating to the city from other places, which also reinforces the local market.

Hard Money Loan Rates

Real estate investors who work with renovated properties frequently use hard money financing in place of traditional funding. This plan lets them make lucrative deals without hindrance. Look up top Logan County hard money lenders for real estate investors and look at financiers’ charges.

In case you are unfamiliar with this funding product, understand more by studying our informative blog post — What Are Hard Money Loans?.

Wholesaling is a real estate investment plan that involves scouting out properties that are attractive to real estate investors and putting them under a purchase contract. An investor then ”purchases” the purchase contract from you. The real buyer then completes the transaction. You’re selling the rights to buy the property, not the home itself.

Wholesaling depends on the participation of a title insurance company that is experienced with assigned contracts and knows how to work with a double closing. Look for title companies that work with wholesalers in Logan County KY in HouseCashin’s list.

Our extensive guide to wholesaling can be viewed here: Property Wholesaling Explained. As you conduct your wholesaling venture, put your company in HouseCashin’s list of Logan County top investment property wholesalers. That way your desirable clientele will know about your offering and contact you.

Factors to Consider

Median Home Prices

Median home prices in the area will inform you if your ideal price point is achievable in that city. A market that has a substantial supply of the reduced-value residential properties that your investors want will show a below-than-average median home price.

Accelerated worsening in real estate values could result in a number of homes with no equity that appeal to short sale investors. This investment plan regularly brings numerous different advantages. But it also presents a legal liability. Find out about this from our extensive explanation How Can You Wholesale a Short Sale Property?. When you determine to give it a try, make sure you have one of short sale real estate attorneys in Logan County KY and foreclosure lawyers in Logan County KY to work with.

Property Appreciation Rate

Median home value changes clearly illustrate the housing value in the market. Real estate investors who intend to sit on investment assets will have to discover that housing purchase prices are constantly increasing. Dropping purchase prices illustrate an unequivocally weak leasing and housing market and will scare away investors.

Population Growth

Population growth data is essential for your intended contract purchasers. When they realize the community is multiplying, they will presume that new housing units are a necessity. This involves both rental and resale real estate. If a city is declining in population, it does not necessitate additional residential units and real estate investors will not look there.

Median Population Age

A dynamic housing market prefers residents who start off leasing, then shifting into homebuyers, and then moving up in the housing market. For this to be possible, there has to be a reliable workforce of potential tenants and homebuyers. That’s why the region’s median age needs to be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income in a robust real estate investment market need to be going up. When tenants’ and home purchasers’ incomes are growing, they can keep up with soaring rental rates and real estate purchase costs. Real estate investors want this if they are to reach their projected returns.

Unemployment Rate

Investors whom you approach to take on your contracts will regard unemployment rates to be an essential piece of insight. Renters in high unemployment cities have a hard time making timely rent payments and a lot of them will skip rent payments completely. Long-term investors who rely on reliable rental income will lose money in these cities. Tenants can’t transition up to property ownership and existing homeowners can’t sell their property and move up to a more expensive house. This is a concern for short-term investors purchasing wholesalers’ contracts to rehab and flip a property.

Number of New Jobs Created

Knowing how frequently fresh job openings are created in the region can help you find out if the house is positioned in a strong housing market. Job formation means additional workers who require housing. Whether your client base is made up of long-term or short-term investors, they will be attracted to an area with consistent job opening generation.

Average Renovation Costs

An imperative consideration for your client real estate investors, specifically fix and flippers, are rehabilitation costs in the region. The purchase price, plus the costs of rehabbing, should be lower than the After Repair Value (ARV) of the real estate to ensure profitability. Give priority status to lower average renovation costs.

Acquiring mortgage notes (loans) pays off when the note can be bought for less than the face value. The debtor makes subsequent payments to the mortgage note investor who is now their new lender.

When a loan is being paid as agreed, it is thought of as a performing loan. Performing notes provide repeating income for you. Non-performing loans can be restructured or you could buy the property for less than face value by completing a foreclosure procedure.

One day, you might have a lot of mortgage notes and require additional time to handle them on your own. At that point, you might need to use our directory of Logan County top note servicing companies and reclassify your notes as passive investments.

If you choose to adopt this method, append your venture to our directory of companies that buy mortgage notes in Logan County KY. Appearing on our list sets you in front of lenders who make lucrative investment opportunities available to note buyers such as yourself.

Factors to consider

Foreclosure Rates

Performing note buyers are on lookout for markets that have low foreclosure rates. If the foreclosure rates are high, the community might nevertheless be good for non-performing note investors. The neighborhood should be active enough so that note investors can foreclose and resell collateral properties if called for.

Foreclosure Laws

Mortgage note investors are expected to know the state’s laws concerning foreclosure before pursuing this strategy. Some states utilize mortgage paperwork and some use Deeds of Trust. When using a mortgage, a court will have to approve a foreclosure. Investors do not have to have the court’s agreement with a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage loan notes have a negotiated interest rate. This is a major determinant in the profits that you earn. Interest rates influence the plans of both sorts of mortgage note investors.

Traditional lenders charge different mortgage loan interest rates in different parts of the country. The stronger risk accepted by private lenders is accounted for in bigger mortgage loan interest rates for their mortgage loans compared to traditional loans.

A mortgage note buyer should be aware of the private and traditional mortgage loan rates in their markets all the time.

Demographics

A successful mortgage note investment strategy incorporates an examination of the region by using demographic data. It’s essential to determine if a sufficient number of people in the region will continue to have good paying jobs and incomes in the future.
Mortgage note investors who invest in performing mortgage notes look for areas where a large number of younger residents maintain higher-income jobs.

Note investors who look for non-performing notes can also make use of growing markets. If non-performing investors want to foreclose, they will require a thriving real estate market to unload the REO property.

Property Values

The greater the equity that a homeowner has in their property, the more advantageous it is for their mortgage note owner. If the investor has to foreclose on a mortgage loan with lacking equity, the foreclosure sale might not even cover the balance invested in the note. The combined effect of mortgage loan payments that lessen the loan balance and annual property market worth growth expands home equity.

Property Taxes

Typically, mortgage lenders collect the property taxes from the borrower every month. The mortgage lender passes on the taxes to the Government to make sure they are paid promptly. If the homebuyer stops performing, unless the lender remits the taxes, they won’t be paid on time. If a tax lien is filed, it takes first position over the mortgage lender’s note.

Because property tax escrows are combined with the mortgage payment, increasing taxes mean larger house payments. Past due borrowers might not be able to keep up with growing mortgage loan payments and could cease paying altogether.

Real Estate Market Strength

Both performing and non-performing mortgage note buyers can be profitable in a growing real estate market. Because foreclosure is a necessary component of note investment strategy, increasing real estate values are important to finding a desirable investment market.

A vibrant market can also be a potential environment for originating mortgage notes. It is an additional stage of a mortgage note buyer’s career.

A REIT, or Real Estate Investment Trust, is a company that makes investments in income-generating assets. This was originally conceived as a method to permit the typical person to invest in real property. The typical person can afford to invest in a REIT.

Shareholders’ investment in a REIT is considered passive investing. Investment liability is diversified throughout a portfolio of real estate. Investors can sell their REIT shares whenever they wish. Participants in a REIT are not allowed to recommend or choose properties for investment. You are restricted to the REIT’s collection of assets for investment.

A Real Estate Investment Fund is a mutual fund that possesses stocks of real estate firms. The investment real estate properties are not held by the fund — they’re possessed by the firms the fund invests in. Investment funds are considered an affordable way to incorporate real estate properties in your appropriation of assets without unnecessary exposure. Where REITs are meant to disburse dividends to its participants, funds don’t. Like any stock, investment funds’ values rise and decrease with their share market value.

You can select a fund that focuses on specific segments of the real estate industry but not specific areas for each property investment. Your choice as an investor is to select a fund that you rely on to supervise your real estate investments.