Ultimate Lowell Real Estate Investing Guide for 2024

The term BRRRR is an illustration of a long-term lease plan — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a method for continuous growth. It is required that you are qualified to receive a “cash-out” refinance for the strategy to be successful.

You improve the value of the investment property beyond the amount you spent acquiring and fixing the asset. Next, you take the value you created out of the investment property in a “cash-out” mortgage refinance. You employ that money to buy an additional home and the process begins again. This enables you to repeatedly add to your portfolio and your investment revenue.

When an investor owns a large number of investment homes, it seems smart to pay a property manager and designate a passive income source. Find the best property management companies in Lowell ME by browsing our list.

Factors to Consider

Population Growth

The rise or downturn of a community’s population is an accurate benchmark of the area’s long-term desirability for lease property investors. An increasing population normally signals active relocation which translates to additional renters. The city is attractive to businesses and working adults to locate, work, and grow families. An expanding population builds a reliable base of tenants who will handle rent increases, and a strong property seller’s market if you decide to unload any investment properties.

Property Taxes

Real estate taxes, similarly to insurance and maintenance costs, can be different from place to market and must be looked at carefully when assessing potential returns. Excessive property tax rates will decrease a property investor’s income. Steep property tax rates may indicate an unstable location where expenditures can continue to expand and should be thought of as a red flag.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property values and median rental rates that will signal how much rent the market can allow. If median real estate prices are steep and median rents are weak — a high p/r — it will take more time for an investment to pay for itself and achieve good returns. You will prefer to discover a lower p/r to be assured that you can price your rental rates high enough for good profits.

Median Gross Rents

Median gross rents are a critical indicator of the stability of a lease market. You need to identify a market with consistent median rent expansion. Declining rental rates are a bad signal to long-term investor landlords.

Median Population Age

Median population age in a reliable long-term investment environment should mirror the normal worker’s age. You’ll find this to be accurate in regions where people are relocating. A high median age means that the existing population is leaving the workplace with no replacement by younger workers relocating in. This isn’t good for the forthcoming economy of that city.

Employment Base Diversity

A diverse employment base is what an intelligent long-term rental property investor will search for. If there are only one or two dominant hiring companies, and either of such relocates or closes shop, it can lead you to lose tenants and your real estate market prices to plunge.

Unemployment Rate

It’s hard to have a steady rental market if there are many unemployed residents in it. Otherwise profitable companies lose customers when other companies lay off workers. People who still keep their jobs may discover their hours and salaries reduced. Even people who are employed may find it challenging to keep up with their rent.

Income Rates

Median household and per capita income will let you know if the renters that you require are living in the community. Your investment planning will take into consideration rental rate and property appreciation, which will depend on wage growth in the market.

Number of New Jobs Created

The more jobs are continually being produced in a location, the more consistent your tenant inflow will be. A market that provides jobs also increases the amount of participants in the housing market. This allows you to purchase more rental real estate and fill existing unoccupied properties.

School Ratings

Community schools can have a huge impact on the housing market in their city. Highly-accredited schools are a prerequisite for companies that are considering relocating. Business relocation produces more renters. Homeowners who move to the region have a positive influence on real estate values. You can’t discover a vibrantly growing residential real estate market without good schools.

Property Appreciation Rates

Strong real estate appreciation rates are a necessity for a profitable long-term investment. You need to ensure that the odds of your asset increasing in price in that area are likely. Low or declining property appreciation rates will eliminate a city from being considered.

A short-term rental is a furnished residence where a tenant stays for shorter than a month. Short-term rental landlords charge a higher rent each night than in long-term rental business. With renters moving from one place to the next, short-term rental units need to be repaired and sanitized on a continual basis.

House sellers waiting to relocate into a new residence, tourists, and individuals traveling on business who are stopping over in the location for a few days prefer to rent apartments short term. Ordinary real estate owners can rent their houses or condominiums on a short-term basis with platforms such as AirBnB and VRBO. This makes short-term rental strategy a feasible way to endeavor residential real estate investing.

Short-term rental units involve interacting with tenants more often than long-term rental units. That determines that property owners deal with disputes more often. Think about covering yourself and your portfolio by adding one of real estate law experts in Lowell ME to your network of professionals.

Factors to Consider

Short-Term Rental Income

You have to decide how much income has to be produced to make your effort successful. A community’s short-term rental income rates will quickly reveal to you when you can look forward to accomplish your projected rental income figures.

Median Property Prices

You also have to determine the budget you can spare to invest. The median values of property will show you if you can afford to participate in that community. You can also employ median values in particular areas within the market to choose cities for investment.

Price Per Square Foot

Price per sq ft may be confusing when you are comparing different buildings. If you are examining similar kinds of property, like condominiums or detached single-family homes, the price per square foot is more reliable. You can use the price per sq ft data to see a good overall picture of property values.

Short-Term Rental Occupancy Rate

The necessity for additional rental units in a city may be verified by examining the short-term rental occupancy level. A community that needs additional rental properties will have a high occupancy rate. When the rental occupancy rates are low, there is not enough demand in the market and you must explore somewhere else.

Short-Term Rental Cash-on-Cash Return

To determine whether it’s a good idea to invest your money in a specific rental unit or area, look at the cash-on-cash return. Take your expected Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The result comes as a percentage. If an investment is lucrative enough to reclaim the amount invested quickly, you will have a high percentage. If you get financing for a portion of the investment and use less of your own money, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Another measurement shows the market value of a property as a cash flow asset — average short-term rental capitalization (cap) rate. High cap rates indicate that properties are available in that community for reasonable prices. When properties in a location have low cap rates, they typically will cost more. You can get the cap rate for potential investment property by dividing the Net Operating Income (NOI) by the Fair Market Value or purchase price of the investment property. The percentage you will receive is the investment property’s cap rate.

Local Attractions

Short-term renters are commonly individuals who come to a city to enjoy a recurring significant activity or visit unique locations. This includes top sporting events, kiddie sports activities, schools and universities, large auditoriums and arenas, carnivals, and amusement parks. Popular vacation sites are found in mountain and coastal points, alongside lakes, and national or state parks.

To fix and flip a house, you should get it for lower than market worth, handle any necessary repairs and updates, then dispose of it for higher market price. To keep the business profitable, the flipper needs to pay less than the market worth for the house and know the amount it will take to renovate the home.

Examine the values so that you understand the exact After Repair Value (ARV). You always have to investigate the amount of time it takes for homes to close, which is determined by the Days on Market (DOM) indicator. To profitably “flip” real estate, you must liquidate the renovated home before you have to come up with cash maintaining it.

Help determined real estate owners in discovering your company by placing your services in our catalogue of Lowell real estate cash buyers and Lowell property investment firms.

In addition, search for the best real estate bird dogs in Lowell ME. Professionals in our catalogue focus on acquiring distressed property investments while they’re still under the radar.

Factors to Consider

Median Home Price

The region’s median home value should help you locate a suitable city for flipping houses. Modest median home values are an indicator that there is a steady supply of real estate that can be acquired below market value. You need cheaper properties for a lucrative fix and flip.

If you see a fast decrease in real estate values, this could indicate that there are conceivably properties in the city that qualify for a short sale. You’ll find out about potential investments when you join up with Lowell short sale processors. Discover how this works by reading our guide ⁠— What Are the Steps to Buying a Short Sale Home?.

Property Appreciation Rate

Are property market values in the city on the way up, or on the way down? You’re looking for a reliable increase of the area’s housing values. Rapid property value surges could reflect a market value bubble that is not reliable. Buying at an inconvenient point in an unreliable market condition can be devastating.

Average Renovation Costs

Look carefully at the possible renovation spendings so you will be aware if you can reach your predictions. Other spendings, such as certifications, can inflate your budget, and time which may also develop into an added overhead. You have to understand if you will have to use other professionals, like architects or engineers, so you can be ready for those costs.

Population Growth

Population growth is a solid gauge of the strength or weakness of the area’s housing market. When there are buyers for your renovated homes, the data will illustrate a positive population increase.

Median Population Age

The median residents’ age is a variable that you may not have included in your investment study. The median age should not be less or higher than the age of the usual worker. Workers can be the individuals who are probable homebuyers. The goals of retirees will most likely not fit into your investment project strategy.

Unemployment Rate

When you see a region demonstrating a low unemployment rate, it’s a solid indication of lucrative investment opportunities. The unemployment rate in a prospective investment area needs to be less than the nation’s average. A really good investment area will have an unemployment rate lower than the state’s average. If you don’t have a vibrant employment base, a market won’t be able to supply you with qualified home purchasers.

Income Rates

Median household and per capita income are a reliable indicator of the robustness of the housing environment in the community. When families buy a property, they usually need to take a mortgage for the purchase. Homebuyers’ eligibility to get issued financing rests on the level of their salaries. Median income can let you analyze if the regular homebuyer can buy the property you intend to flip. Look for communities where the income is increasing. Building costs and home prices increase periodically, and you need to be certain that your target clients’ salaries will also improve.

Number of New Jobs Created

The number of jobs appearing per year is useful insight as you think about investing in a particular city. A larger number of people purchase houses if the region’s financial market is creating jobs. With additional jobs created, new potential home purchasers also come to the region from other cities.

Hard Money Loan Rates

Short-term investors often borrow hard money loans instead of traditional loans. This allows them to quickly buy desirable properties. Research Lowell hard money lending companies and look at lenders’ fees.

Anyone who needs to know about hard money loans can learn what they are and how to use them by reading our resource for newbies titled How Does Hard Money Work?.

In real estate wholesaling, you locate a house that investors may consider a profitable investment opportunity and enter into a purchase contract to buy the property. However you do not buy the home: after you control the property, you get another person to take your place for a price. The investor then settles the transaction. The real estate wholesaler does not sell the property under contract itself — they simply sell the purchase contract.

Wholesaling hinges on the involvement of a title insurance company that’s experienced with assignment of purchase contracts and understands how to deal with a double closing. Look for title companies for wholesaling in Lowell ME that we collected for you.

To understand how wholesaling works, look through our informative guide How Does Real Estate Wholesaling Work?. When pursuing this investment tactic, include your firm in our list of the best property wholesalers in Lowell ME. That way your prospective customers will see your location and contact you.

Factors to Consider

Median Home Prices

Median home prices are essential to spotting markets where residential properties are selling in your investors’ price range. A city that has a sufficient supply of the below-market-value properties that your clients require will display a below-than-average median home price.

A fast decrease in the price of property might cause the abrupt availability of properties with negative equity that are wanted by wholesalers. Short sale wholesalers often gain perks using this strategy. Nonetheless, be cognizant of the legal liability. Find out more concerning wholesaling short sales from our exhaustive explanation. If you choose to give it a go, make certain you employ one of short sale real estate attorneys in Lowell ME and mortgage foreclosure lawyers in Lowell ME to confer with.

Property Appreciation Rate

Property appreciation rate boosts the median price stats. Investors who want to liquidate their properties in the future, like long-term rental landlords, need a location where residential property purchase prices are growing. Dropping prices show an equally weak rental and home-selling market and will chase away investors.

Population Growth

Population growth statistics are an important indicator that your potential investors will be aware of. If the population is multiplying, new residential units are needed. This combines both leased and resale real estate. If a population is not multiplying, it does not require more houses and investors will search in other locations.

Median Population Age

A vibrant housing market prefers residents who are initially leasing, then transitioning into homeownership, and then moving up in the residential market. A place that has a large employment market has a consistent supply of renters and purchasers. When the median population age matches the age of employed citizens, it signals a vibrant property market.

Income Rates

The median household and per capita income demonstrate consistent increases historically in communities that are favorable for real estate investment. When renters’ and homebuyers’ salaries are getting bigger, they can manage soaring lease rates and home purchase costs. That will be important to the investors you are looking to reach.

Unemployment Rate

Real estate investors will pay a lot of attention to the location’s unemployment rate. Overdue rent payments and default rates are higher in communities with high unemployment. Long-term investors who count on reliable rental income will lose money in these communities. High unemployment builds uncertainty that will prevent interested investors from purchasing a home. This is a problem for short-term investors buying wholesalers’ agreements to repair and flip a house.

Number of New Jobs Created

Understanding how frequently fresh jobs are generated in the market can help you determine if the property is situated in a strong housing market. Job production means a higher number of employees who require a place to live. Long-term investors, such as landlords, and short-term investors that include rehabbers, are gravitating to places with impressive job creation rates.

Average Renovation Costs

Rehab spendings will be crucial to many real estate investors, as they normally purchase inexpensive distressed homes to repair. The cost of acquisition, plus the expenses for improvement, must be lower than the After Repair Value (ARV) of the house to create profit. Look for lower average renovation costs.

Note investing professionals purchase debt from mortgage lenders if the investor can get the loan below the outstanding debt amount. The borrower makes future payments to the note investor who is now their current mortgage lender.

Performing loans mean loans where the borrower is always current on their mortgage payments. Performing loans give you monthly passive income. Note investors also buy non-performing mortgages that they either restructure to help the client or foreclose on to acquire the property below actual worth.

Ultimately, you may grow a selection of mortgage note investments and lack the ability to oversee them by yourself. If this develops, you might choose from the best third party mortgage servicers in Lowell ME which will make you a passive investor.

Should you decide to adopt this plan, affix your project to our directory of promissory note buyers in Lowell ME. Joining will help you become more visible to lenders providing profitable opportunities to note investors like yourself.

Factors to Consider

Foreclosure Rates

Low foreclosure rates are an indication that the market has opportunities for performing note investors. High rates might signal investment possibilities for non-performing loan note investors, however they should be careful. However, foreclosure rates that are high often signal an anemic real estate market where selling a foreclosed unit might be a problem.

Foreclosure Laws

Experienced mortgage note investors are thoroughly aware of their state’s laws regarding foreclosure. Are you dealing with a Deed of Trust or a mortgage? With a mortgage, a court has to allow a foreclosure. A Deed of Trust authorizes the lender to file a public notice and start foreclosure.

Mortgage Interest Rates

The interest rate is memorialized in the mortgage notes that are acquired by note buyers. This is a major component in the returns that lenders reach. Regardless of the type of investor you are, the loan note’s interest rate will be significant for your calculations.

Conventional lenders charge dissimilar mortgage interest rates in different parts of the United States. Private loan rates can be slightly more than traditional mortgage rates due to the greater risk taken by private lenders.

Mortgage note investors should always know the up-to-date local interest rates, private and traditional, in potential note investment markets.

Demographics

When note investors are choosing where to purchase mortgage notes, they review the demographic data from likely markets. The market’s population increase, unemployment rate, job market increase, wage standards, and even its median age provide important facts for mortgage note investors.
A youthful expanding region with a vibrant employment base can contribute a consistent income flow for long-term note investors looking for performing notes.

Non-performing note investors are reviewing comparable indicators for other reasons. When foreclosure is required, the foreclosed collateral property is more conveniently unloaded in a good real estate market.

Property Values

Lenders want to see as much equity in the collateral property as possible. When the property value is not significantly higher than the loan amount, and the mortgage lender decides to foreclose, the home might not realize enough to payoff the loan. The combination of mortgage loan payments that lessen the loan balance and annual property market worth growth increases home equity.

Property Taxes

Typically, lenders accept the house tax payments from the customer each month. So the lender makes sure that the property taxes are paid when due. If the homeowner stops paying, unless the note holder pays the taxes, they won’t be paid on time. Tax liens leapfrog over all other liens.

If an area has a record of rising property tax rates, the total house payments in that city are constantly expanding. Delinquent customers might not be able to maintain increasing mortgage loan payments and might interrupt paying altogether.

Real Estate Market Strength

A place with growing property values promises good potential for any mortgage note investor. Since foreclosure is a necessary component of mortgage note investment strategy, increasing real estate values are important to locating a good investment market.

A growing market can also be a profitable area for initiating mortgage notes. For veteran investors, this is a profitable part of their business strategy.

Many real estate investment businesses are conceived as trusts termed Real Estate Investment Trusts or REITs. Before REITs were invented, real estate investing was too expensive for most people. Many investors these days are capable of investing in a REIT.

Shareholders in these trusts are completely passive investors. Investment liability is spread throughout a group of investment properties. Investors are able to liquidate their REIT shares whenever they choose. However, REIT investors don’t have the ability to select specific properties or markets. The properties that the REIT picks to buy are the ones your funds are used to buy.

Mutual funds holding shares of real estate firms are referred to as real estate investment funds. The investment properties aren’t possessed by the fund — they’re possessed by the businesses the fund invests in. This is an additional method for passive investors to spread their investments with real estate avoiding the high entry-level cost or liability. Where REITs have to disburse dividends to its shareholders, funds do not. The profit to investors is created by growth in the worth of the stock.

You can locate a fund that specializes in a distinct category of real estate firm, like residential, but you cannot choose the fund’s investment properties or locations. As passive investors, fund shareholders are satisfied to let the directors of the fund determine all investment decisions.