Ultimate Lowell Real Estate Investing Guide for 2024

BRRRR means “Buy, Rehab, Rent, Refinance, Repeat”. This is a strategy to grow your investment portfolio rather than buy one rental home. An important component of this strategy is to be able to get a “cash-out” refinance.

You enhance the worth of the investment property above what you spent purchasing and renovating the property. Then you borrow a cash-out refinance loan that is computed on the larger property worth, and you extract the difference. You buy your next asset with the cash-out amount and start anew. You buy more and more rental homes and continually expand your rental income.

Once you have built a considerable portfolio of income generating properties, you can decide to hire others to oversee your operations while you enjoy repeating net revenues. Discover one of real property management professionals in Lowell MA with a review of our exhaustive list.

Factors to Consider

Population Growth

The growth or decline of the population can indicate whether that location is appealing to landlords. If the population growth in a community is high, then additional renters are definitely moving into the community. Businesses consider it as an attractive area to relocate their enterprise, and for employees to relocate their families. Growing populations create a reliable renter pool that can handle rent growth and homebuyers who help keep your property values up.

Property Taxes

Property taxes, maintenance, and insurance spendings are investigated by long-term rental investors for computing expenses to assess if and how the project will work out. Investment property situated in excessive property tax areas will have weaker profits. Locations with excessive property tax rates are not a stable environment for short- and long-term investment and must be bypassed.

Price to Rent Ratio

Price to rent ratio (p/r) is a market indicator that informs you the amount you can anticipate to collect for rent. The price you can charge in a market will determine the price you are able to pay determined by the time it will take to pay back those funds. You are trying to find a lower p/r to be comfortable that you can establish your rents high enough for good returns.

Median Gross Rents

Median gross rents are a true barometer of the approval of a rental market under examination. You need to discover a community with consistent median rent expansion. If rental rates are shrinking, you can drop that city from discussion.

Median Population Age

The median citizens’ age that you are on the lookout for in a reliable investment environment will be near the age of salaried individuals. This can also show that people are moving into the area. If you see a high median age, your source of tenants is reducing. This is not promising for the future financial market of that region.

Employment Base Diversity

Accommodating multiple employers in the location makes the economy not as volatile. If the region’s workpeople, who are your renters, are spread out across a diverse group of employers, you cannot lose all of them at the same time (together with your property’s value), if a significant employer in the community goes bankrupt.

Unemployment Rate

High unemployment results in a lower number of renters and an unsafe housing market. The unemployed cannot pay for goods or services. This can result in a large number of layoffs or shorter work hours in the market. Even tenants who are employed may find it a burden to stay current with their rent.

Income Rates

Median household and per capita income will show you if the renters that you prefer are residing in the region. Rising salaries also inform you that rental payments can be adjusted over the life of the property.

Number of New Jobs Created

The active economy that you are hunting for will create a large amount of jobs on a constant basis. Additional jobs mean more renters. This allows you to purchase more rental properties and backfill current unoccupied units.

School Ratings

Community schools will have a huge effect on the property market in their neighborhood. When a business owner explores a city for potential relocation, they remember that first-class education is a must for their workers. Relocating businesses relocate and attract prospective renters. New arrivals who buy a house keep property values high. For long-term investing, look for highly accredited schools in a prospective investment market.

Property Appreciation Rates

Strong property appreciation rates are a requirement for a lucrative long-term investment. You have to be certain that your assets will appreciate in market price until you want to liquidate them. Subpar or decreasing property worth in a region under review is inadmissible.

A furnished property where renters reside for shorter than 30 days is considered a short-term rental. The per-night rental rates are typically higher in short-term rentals than in long-term units. With renters not staying long, short-term rental units need to be maintained and cleaned on a constant basis.

Typical short-term renters are people on vacation, home sellers who are buying another house, and people on a business trip who want something better than hotel accommodation. Ordinary real estate owners can rent their houses or condominiums on a short-term basis through platforms like AirBnB and VRBO. A convenient way to get into real estate investing is to rent a residential property you already own for short terms.

Short-term rental properties require engaging with occupants more frequently than long-term rental units. That leads to the owner having to regularly handle grievances. Think about covering yourself and your properties by joining one of real estate law offices in Lowell MA to your team of professionals.

Factors to Consider

Short-Term Rental Income

You must calculate how much rental income has to be earned to make your investment successful. Knowing the standard amount of rent being charged in the community for short-term rentals will help you choose a preferable market to invest.

Median Property Prices

When acquiring real estate for short-term rentals, you must determine the budget you can pay. To check whether a city has possibilities for investment, check the median property prices. You can adjust your community search by looking at the median values in particular sub-markets.

Price Per Square Foot

Price per square foot gives a broad picture of values when analyzing comparable real estate. A house with open entryways and vaulted ceilings can’t be compared with a traditional-style residential unit with bigger floor space. If you take note of this, the price per sq ft can provide you a general idea of local prices.

Short-Term Rental Occupancy Rate

The number of short-term rental units that are presently tenanted in a location is vital information for an investor. A market that requires more rental properties will have a high occupancy level. Low occupancy rates signify that there are already enough short-term rental properties in that community.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return will inform you if the purchase is a practical use of your money. Divide the Net Operating Income (NOI) by the amount of cash put in. The answer is shown as a percentage. High cash-on-cash return indicates that you will regain your funds quicker and the investment will earn more profit. If you take a loan for part of the investment budget and spend less of your cash, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion compares rental property worth to its annual return. High cap rates mean that rental units are available in that region for decent prices. Low cap rates signify more expensive real estate. The cap rate is calculated by dividing the Net Operating Income (NOI) by the asking price or market value. The result is the annual return in a percentage.

Local Attractions

Short-term rental apartments are preferred in regions where tourists are drawn by events and entertainment venues. People go to specific locations to enjoy academic and sporting events at colleges and universities, see competitions, support their children as they participate in fun events, party at annual fairs, and go to theme parks. Outdoor scenic spots like mountainous areas, lakes, beaches, and state and national nature reserves will also invite prospective tenants.

When a real estate investor acquires a property under market value, repairs it and makes it more attractive and pricier, and then resells the property for a return, they are referred to as a fix and flip investor. The keys to a profitable investment are to pay less for the house than its existing worth and to precisely calculate the budget needed to make it saleable.

Examine the prices so that you understand the actual After Repair Value (ARV). Select a community with a low average Days On Market (DOM) metric. As a ”rehabber”, you will need to put up for sale the renovated property without delay in order to stay away from maintenance expenses that will lessen your revenue.

In order that home sellers who have to get cash for their property can conveniently find you, promote your availability by using our catalogue of the best property cash buyers in Lowell MA along with top real estate investment firms in Lowell MA.

Additionally, hunt for real estate bird dogs in Lowell MA. Experts listed on our website will assist you by immediately discovering potentially profitable deals prior to the opportunities being listed.

Factors to Consider

Median Home Price

The location’s median home value should help you locate a desirable community for flipping houses. Low median home values are an indication that there must be a steady supply of real estate that can be acquired below market worth. This is a fundamental ingredient of a fix and flip market.

If you detect a sharp decrease in home values, this may mean that there are conceivably homes in the market that qualify for a short sale. You’ll learn about potential opportunities when you team up with Lowell short sale facilitators. Uncover more about this kind of investment detailed in our guide How to Buy a Short Sale Home.

Property Appreciation Rate

The changes in real estate prices in a region are very important. You’re searching for a steady appreciation of the area’s property prices. Unreliable price changes are not good, even if it’s a remarkable and unexpected growth. You may end up purchasing high and selling low in an unreliable market.

Average Renovation Costs

You’ll have to evaluate building expenses in any future investment community. Other costs, like authorizations, could shoot up expenditure, and time which may also develop into an added overhead. To create an accurate financial strategy, you’ll want to know whether your plans will have to use an architect or engineer.

Population Growth

Population increase metrics let you take a look at housing need in the community. When there are purchasers for your repaired homes, it will demonstrate a robust population growth.

Median Population Age

The median citizens’ age will also show you if there are qualified homebuyers in the city. It should not be less or more than that of the average worker. Individuals in the regional workforce are the most steady house buyers. Individuals who are preparing to exit the workforce or are retired have very restrictive residency requirements.

Unemployment Rate

You want to have a low unemployment rate in your target community. It must certainly be less than the nation’s average. When the area’s unemployment rate is less than the state average, that’s a sign of a preferable economy. Jobless individuals cannot acquire your property.

Income Rates

Median household and per capita income numbers show you whether you will get qualified home buyers in that community for your homes. Most individuals who buy residential real estate need a mortgage loan. The borrower’s income will determine how much they can borrow and whether they can purchase a home. You can figure out based on the location’s median income if many people in the community can manage to buy your real estate. Look for areas where salaries are going up. To keep pace with inflation and soaring building and supply costs, you have to be able to periodically mark up your rates.

Number of New Jobs Created

The number of employment positions created on a steady basis reflects whether income and population increase are feasible. Homes are more easily sold in a city that has a robust job market. New jobs also lure people migrating to the area from another district, which also revitalizes the local market.

Hard Money Loan Rates

Fix-and-flip real estate investors frequently borrow hard money loans in place of typical loans. This lets investors to quickly purchase distressed assets. Review top-rated Lowell hard money lenders and analyze financiers’ fees.

Those who aren’t experienced concerning hard money financing can discover what they should know with our guide for those who are only starting — What Is Hard Money in Real Estate?.

As a real estate wholesaler, you enter a purchase contract to buy a home that other real estate investors will need. When an investor who needs the residential property is found, the sale and purchase agreement is assigned to the buyer for a fee. The contracted property is sold to the investor, not the real estate wholesaler. The wholesaler doesn’t liquidate the residential property — they sell the rights to purchase one.

This business includes using a title company that’s experienced in the wholesale contract assignment operation and is able and predisposed to handle double close purchases. Look for title companies for wholesaling in Lowell MA in HouseCashin’s list.

Learn more about the way to wholesale property from our complete guide — Real Estate Wholesaling 101. When you select wholesaling, include your investment business on our list of the best investment property wholesalers in Lowell MA. That will allow any desirable partners to discover you and get in touch.

Factors to Consider

Median Home Prices

Median home prices in the city being considered will roughly tell you if your real estate investors’ required properties are located there. As real estate investors need investment properties that are available below market price, you will have to find reduced median prices as an indirect hint on the possible availability of homes that you may purchase for below market worth.

A rapid depreciation in the value of property might generate the sudden availability of houses with more debt than value that are hunted by wholesalers. Short sale wholesalers often reap benefits using this opportunity. Nevertheless, it also presents a legal risk. Obtain additional data on how to wholesale a short sale property in our comprehensive guide. When you’ve chosen to attempt wholesaling these properties, make sure to engage someone on the directory of the best short sale law firms in Lowell MA and the best real estate foreclosure attorneys in Lowell MA to assist you.

Property Appreciation Rate

Median home price trends are also vital. Some investors, like buy and hold and long-term rental investors, particularly need to find that residential property values in the community are increasing consistently. Both long- and short-term real estate investors will avoid a location where housing values are dropping.

Population Growth

Population growth data is crucial for your potential purchase contract buyers. If the community is expanding, new residential units are required. They understand that this will involve both leasing and owner-occupied housing. A place that has a declining population will not draw the investors you require to buy your purchase contracts.

Median Population Age

A good housing market for investors is active in all areas, including tenants, who turn into homeowners, who transition into larger homes. A city with a huge workforce has a consistent pool of renters and purchasers. That is why the market’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 good real estate investment market need to be improving. Income hike shows a location that can keep up with rental rate and housing price surge. Successful investors avoid areas with weak population wage growth numbers.

Unemployment Rate

Real estate investors whom you approach to close your sale contracts will deem unemployment numbers to be a crucial piece of information. High unemployment rate triggers more renters to make late rent payments or default altogether. This impacts long-term investors who need to lease their investment property. High unemployment creates concerns that will prevent people from buying a property. This makes it hard to reach fix and flip real estate investors to take on your buying contracts.

Number of New Jobs Created

The amount of additional jobs being produced in the city completes an investor’s study of a future investment location. More jobs appearing lead to a high number of employees who require places to lease and purchase. No matter if your buyer supply is comprised of long-term or short-term investors, they will be drawn to a region with consistent job opening production.

Average Renovation Costs

Renovation costs have a large effect on a real estate investor’s returns. When a short-term investor fixes and flips a building, they want to be able to liquidate it for more money than the combined expense for the acquisition and the upgrades. Below average repair expenses make a location more attractive for your priority customers — flippers and other real estate investors.

Acquiring mortgage notes (loans) is successful when the mortgage note can be obtained for a lower amount than the face value. When this occurs, the investor becomes the client’s mortgage lender.

Performing loans are mortgage loans where the debtor is always on time with their mortgage payments. Performing loans provide consistent income for you. Investors also invest in non-performing mortgages that they either modify to assist the borrower or foreclose on to obtain the property below actual worth.

Eventually, you could have a large number of mortgage notes and need additional time to manage them without help. In this case, you can opt to hire one of loan servicing companies in Lowell MA that would basically turn your investment into passive income.

If you choose to use this strategy, add your business to our directory of companies that buy mortgage notes in Lowell MA. Joining will make you more visible to lenders providing profitable possibilities to note investors like yourself.

Factors to Consider

Foreclosure Rates

Low foreclosure rates are a sign that the area has investment possibilities for performing note investors. If the foreclosures are frequent, the community may nonetheless be profitable for non-performing note buyers. If high foreclosure rates have caused a weak real estate environment, it might be tough to liquidate the collateral property if you seize it through foreclosure.

Foreclosure Laws

It’s important for mortgage note investors to study the foreclosure regulations in their state. Some states use mortgage paperwork and some use Deeds of Trust. You might need to obtain the court’s approval to foreclose on real estate. Investors don’t have to have the judge’s permission with a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage loan notes come with an agreed interest rate. This is a major component in the investment returns that lenders reach. Interest rates affect the strategy of both kinds of mortgage note investors.

Traditional interest rates may differ by up to a quarter of a percent throughout the United States. Loans supplied by private lenders are priced differently and may be higher than conventional mortgages.

Experienced note investors routinely search the mortgage interest rates in their area offered by private and traditional lenders.

Demographics

If mortgage note buyers are choosing where to invest, they’ll consider the demographic dynamics from likely markets. It is essential to find out whether enough residents in the neighborhood will continue to have good jobs and incomes in the future.
Mortgage note investors who prefer performing mortgage notes select places where a lot of younger people maintain good-paying jobs.

Note investors who purchase non-performing notes can also make use of stable markets. If these note buyers need to foreclose, they will need a vibrant real estate market in order to unload the repossessed property.

Property Values

The greater the equity that a homeowner has in their property, the better it is for the mortgage lender. When the lender has to foreclose on a mortgage loan with little equity, the foreclosure auction may not even pay back the amount invested in the note. The combination of loan payments that reduce the loan balance and yearly property value appreciation increases home equity.

Property Taxes

Escrows for real estate taxes are most often given to the lender simultaneously with the mortgage loan payment. The lender pays the taxes to the Government to make certain they are submitted promptly. If the homeowner stops paying, unless the mortgage lender takes care of the taxes, they won’t be paid on time. If a tax lien is put in place, the lien takes precedence over the lender’s loan.

If property taxes keep rising, the homeowner’s loan payments also keep growing. Borrowers who are having trouble handling their loan payments might drop farther behind and sooner or later default.

Real Estate Market Strength

Both performing and non-performing note investors can do business in an expanding real estate environment. It’s good to know that if you are required to foreclose on a property, you will not have trouble getting an acceptable price for it.

Mortgage note investors also have a chance to generate mortgage notes directly to borrowers in sound real estate markets. This is a desirable source of income for experienced investors.

Many real estate investment businesses are structured as trusts called Real Estate Investment Trusts or REITs. REITs were invented to enable average people to invest in real estate. Many people these days are able to invest in a REIT.

Participants in such organizations are completely passive investors. Investment risk is diversified throughout a package of real estate. Shareholders have the ability to sell their shares at any time. Shareholders in a REIT aren’t able to propose or submit properties for investment. The land and buildings that the REIT decides to buy are the ones your capital is used to purchase.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate companies. Any actual real estate property is possessed by the real estate businesses, not the fund. This is another way for passive investors to allocate their portfolio with real estate avoiding the high entry-level expense or exposure. Fund participants may not receive ordinary disbursements the way that REIT members do. The benefit to the investor is produced by increase in the value of the stock.

Investors are able to select a fund that concentrates on particular categories of the real estate business but not particular locations for individual real estate property investment. As passive investors, fund participants are content to allow the administration of the fund determine all investment decisions.