Ultimate Lucas Real Estate Investing Guide for 2024

The abbreviation BRRRR is a description of a long-term rental plan — Buy, Rehab, Rent, Refinance, Repeat. When you want to increase your investments, the BRRRR is a proven plan to follow. A crucial part of this program is to be able to receive a “cash-out” mortgage refinance.

You add to the worth of the investment asset above what you spent buying and fixing it. Next, you take the value you produced from the asset in a “cash-out” refinance. You buy your next investment property with the cash-out funds and do it anew. This strategy enables you to consistently grow your assets and your investment income.

After you’ve created a considerable portfolio of income generating real estate, you may decide to allow others to oversee your rental business while you enjoy repeating income. Find top property management companies in Lucas KS by using our directory.

Factors to Consider

Population Growth

The increase or shrinking of the population can tell you if that community is of interest to landlords. A growing population typically illustrates active relocation which means additional renters. Relocating companies are drawn to rising locations providing job security to families who move there. Growing populations create a dependable tenant reserve that can afford rent increases and home purchasers who help keep your asset prices up.

Property Taxes

Real estate taxes, upkeep, and insurance expenses are examined by long-term rental investors for forecasting expenses to estimate if and how the investment will work out. Rental homes located in high property tax markets will have smaller returns. Markets with excessive property taxes aren’t considered a dependable environment for short- and long-term investment and should be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a clue to how much rent can be collected compared to the acquisition price of the property. If median home prices are steep and median rents are weak — a high p/r — it will take more time for an investment to repay your costs and attain good returns. A high price-to-rent ratio tells you that you can collect lower rent in that region, a small one tells you that you can charge more.

Median Gross Rents

Median gross rents signal whether a community’s rental market is robust. Search for a repeating expansion in median rents year over year. If rental rates are going down, you can scratch that region from discussion.

Median Population Age

Median population age should be close to the age of a typical worker if a location has a strong source of renters. This could also show that people are migrating into the region. A high median age means that the existing population is aging out with no replacement by younger workers moving in. This isn’t promising for the future financial market of that area.

Employment Base Diversity

Having various employers in the region makes the economy not as unpredictable. If the city’s workpeople, who are your renters, are employed by a diversified assortment of companies, you will not lose all of them at the same time (and your property’s value), if a significant company in the city goes bankrupt.

Unemployment Rate

High unemployment leads to a lower number of renters and an uncertain housing market. Otherwise strong companies lose clients when other employers lay off employees. Individuals who still keep their workplaces may find their hours and wages cut. Remaining tenants may delay their rent in these circumstances.

Income Rates

Median household and per capita income stats show you if enough suitable renters dwell in that location. Your investment calculations will take into consideration rental rate and asset appreciation, which will be based on wage growth in the market.

Number of New Jobs Created

An increasing job market equals a consistent stream of tenants. A larger amount of jobs mean new tenants. Your plan of renting and acquiring additional real estate requires an economy that can produce more jobs.

School Ratings

School reputation in the city will have a significant influence on the local residential market. Business owners that are thinking about relocating prefer superior schools for their employees. Dependable tenants are a consequence of a steady job market. Real estate market values increase with additional workers who are buying homes. You will not find a dynamically soaring housing market without good schools.

Property Appreciation Rates

The basis of a long-term investment approach is to keep the investment property. You have to be confident that your real estate assets will appreciate in price until you need to liquidate them. You do not need to take any time navigating locations showing low property appreciation rates.

A short-term rental is a furnished unit where a renter resides for less than one month. The nightly rental prices are always higher in short-term rentals than in long-term rental properties. Because of the high number of tenants, short-term rentals require additional regular care and sanitation.

Normal short-term renters are backpackers, home sellers who are waiting to close on their replacement home, and people traveling on business who need more than hotel accommodation. Regular property owners can rent their homes on a short-term basis using sites such as AirBnB and VRBO. This makes short-term rental strategy an easy approach to endeavor residential real estate investing.

Short-term rental owners require working one-on-one with the occupants to a larger degree than the owners of longer term leased properties. As a result, owners handle problems regularly. Give some thought to handling your exposure with the help of one of the top real estate attorneys in Lucas KS.

Factors to Consider

Short-Term Rental Income

You need to find the range of rental income you’re searching for according to your investment budget. A market’s short-term rental income levels will quickly reveal to you if you can look forward to reach your estimated rental income range.

Median Property Prices

Thoroughly assess the budget that you want to spend on additional real estate. To check if a community has potential for investment, check the median property prices. You can fine-tune your market search by analyzing the median price in specific sub-markets.

Price Per Square Foot

Price per square foot can be misleading when you are looking at different properties. If you are analyzing similar types of property, like condominiums or detached single-family residences, the price per square foot is more consistent. You can use the price per sq ft information to see a good broad idea of real estate values.

Short-Term Rental Occupancy Rate

The ratio of short-term rental properties that are currently occupied in a location is critical information for an investor. A location that requires new rental housing will have a high occupancy rate. If the rental occupancy indicators are low, there is not much need in the market and you must search elsewhere.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return will tell you if the investment is a logical use of your own funds. You can compute the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by the cash you are putting in. The result will be a percentage. High cash-on-cash return shows that you will recoup your funds faster and the investment will be more profitable. Financed purchases can yield stronger cash-on-cash returns as you will be spending less of your own cash.

Average Short-Term Rental Capitalization (Cap) Rates

One measurement conveys the market value of an investment property as a revenue-producing asset — average short-term rental capitalization (cap) rate. An income-generating asset that has a high cap rate as well as charging average market rents has a strong market value. When properties in a city have low cap rates, they generally will cost too much. Divide your expected Net Operating Income (NOI) by the property’s market worth or purchase price. The percentage you get is the property’s cap rate.

Local Attractions

Short-term tenants are commonly tourists who visit a city to attend a recurring special activity or visit unique locations. If a location has sites that periodically hold sought-after events, like sports stadiums, universities or colleges, entertainment centers, and amusement parks, it can attract people from outside the area on a constant basis. Notable vacation attractions are located in mountain and coastal points, along rivers, and national or state parks.

To fix and flip real estate, you should pay less than market price, perform any required repairs and improvements, then sell the asset for higher market worth. The keys to a profitable fix and flip are to pay a lower price for the house than its current worth and to carefully compute the amount needed to make it marketable.

Research the prices so that you are aware of the exact After Repair Value (ARV). You always want to check the amount of time it takes for listings to sell, which is determined by the Days on Market (DOM) data. Liquidating real estate without delay will keep your expenses low and guarantee your revenue.

Help determined real estate owners in locating your firm by featuring it in our directory of the best Lucas cash home buyers and top Lucas real estate investing companies.

Also, hunt for bird dogs for real estate investors in Lucas KS. Professionals in our directory focus on acquiring distressed property investment opportunities while they are still under the radar.

Factors to Consider

Median Home Price

When you hunt for a lucrative market for house flipping, look into the median housing price in the neighborhood. You are hunting for median prices that are low enough to reveal investment opportunities in the region. This is a fundamental ingredient of a fix and flip market.

When your research indicates a sudden drop in property market worth, it may be a signal that you will uncover real property that meets the short sale requirements. Investors who team with short sale negotiators in Lucas KS receive regular notifications concerning possible investment real estate. Find out how this happens by reviewing our explanation ⁠— What Do You Need to Buy a Short Sale House?.

Property Appreciation Rate

The shifts in real estate market worth in an area are vital. You are looking for a consistent appreciation of the city’s real estate market rates. Home market values in the community need to be going up steadily, not rapidly. Buying at a bad period in an unsteady market condition can be devastating.

Average Renovation Costs

You’ll want to evaluate construction costs in any prospective investment region. Other spendings, like permits, could increase your budget, and time which may also develop into additional disbursement. To create a detailed financial strategy, you will want to understand whether your construction plans will have to use an architect or engineer.

Population Growth

Population increase metrics let you take a look at housing demand in the city. When there are buyers for your renovated houses, it will illustrate a robust population increase.

Median Population Age

The median residents’ age is an indicator that you may not have included in your investment study. It mustn’t be less or more than the age of the usual worker. People in the local workforce are the most steady home purchasers. Individuals who are preparing to leave the workforce or are retired have very restrictive housing needs.

Unemployment Rate

You need to see a low unemployment level in your target area. An unemployment rate that is less than the nation’s median is preferred. When it is also lower than the state average, that is much more desirable. Without a vibrant employment environment, a city can’t supply you with qualified homebuyers.

Income Rates

Median household and per capita income are a solid indication of the scalability of the home-buying environment in the community. Most people who purchase a house have to have a home mortgage loan. Homebuyers’ eligibility to be approved for a mortgage depends on the level of their salaries. Median income can let you know whether the typical home purchaser can afford the property you intend to sell. Particularly, income growth is vital if you need to grow your investment business. If you need to increase the purchase price of your residential properties, you have to be positive that your clients’ salaries are also going up.

Number of New Jobs Created

The number of employment positions created on a steady basis shows if wage and population increase are feasible. Houses are more conveniently sold in a region that has a strong job environment. Experienced skilled workers looking into purchasing a property and deciding to settle opt for migrating to places where they won’t be jobless.

Hard Money Loan Rates

People who acquire, repair, and sell investment homes like to employ hard money and not regular real estate financing. This plan lets them make lucrative deals without holdups. Locate hard money lenders in Lucas KS and compare their mortgage rates.

Someone who wants to know about hard money funding options can find what they are as well as how to use them by reading our guide titled What Does Hard Money Mean in Real Estate?.

Wholesaling is a real estate investment approach that involves scouting out residential properties that are desirable to investors and putting them under a purchase contract. When a real estate investor who approves of the residential property is spotted, the sale and purchase agreement is sold to the buyer for a fee. The owner sells the house to the investor instead of the wholesaler. The real estate wholesaler doesn’t sell the residential property itself — they just sell the rights to buy it.

The wholesaling method of investing includes the employment of a title firm that understands wholesale deals and is informed about and involved in double close purchases. Find title companies that work with investors in Lucas KS on our list.

Our extensive guide to wholesaling can be found here: Property Wholesaling Explained. When employing this investment method, include your firm in our list of the best home wholesalers in Lucas KS. This will allow any possible partners to find you and reach out.

Factors to Consider

Median Home Prices

Median home values are instrumental to discovering regions where properties are selling in your real estate investors’ purchase price level. Below average median purchase prices are a valid indication that there are enough properties that can be bought under market worth, which real estate investors prefer to have.

Accelerated weakening in property prices could result in a lot of properties with no equity that appeal to short sale property buyers. This investment method regularly provides several unique benefits. But it also presents a legal risk. Learn about this from our in-depth blog post Can You Wholesale a Short Sale House?. When you’re prepared to start wholesaling, hunt through Lucas top short sale real estate attorneys as well as Lucas top-rated foreclosure attorneys lists to locate the appropriate advisor.

Property Appreciation Rate

Property appreciation rate completes the median price stats. Real estate investors who plan to keep real estate investment properties will have to find that home market values are constantly appreciating. Shrinking market values indicate an unequivocally weak rental and housing market and will scare away investors.

Population Growth

Population growth information is something that investors will look at thoroughly. When the population is growing, additional residential units are required. There are a lot of people who lease and additional customers who buy homes. A market that has a dropping population will not attract the real estate investors you want to buy your purchase contracts.

Median Population Age

Real estate investors have to be a part of a dynamic real estate market where there is a good pool of renters, first-time homebuyers, and upwardly mobile residents moving to more expensive residences. A location with a large employment market has a strong pool of renters and purchasers. That’s why the community’s median age should be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income in a stable real estate investment market have to be increasing. When renters’ and home purchasers’ incomes are going up, they can manage soaring rental rates and real estate purchase costs. Property investors avoid communities with declining population wage growth figures.

Unemployment Rate

Investors whom you reach out to to purchase your sale contracts will consider unemployment data to be an essential bit of information. Late lease payments and lease default rates are worse in cities with high unemployment. Long-term real estate investors who rely on steady rental payments will do poorly in these locations. High unemployment builds uncertainty that will keep people from buying a house. This makes it tough to find fix and flip investors to close your contracts.

Number of New Jobs Created

The frequency of additional jobs being produced in the community completes an investor’s review of a future investment spot. More jobs produced attract a large number of workers who need homes to lease and buy. Whether your client pool is comprised of long-term or short-term investors, they will be attracted to a region with regular job opening generation.

Average Renovation Costs

Repair costs will matter to most property investors, as they normally acquire inexpensive rundown houses to repair. Short-term investors, like house flippers, won’t earn anything if the purchase price and the repair costs equal to more than the After Repair Value (ARV) of the property. Lower average repair expenses make a region more desirable for your main customers — rehabbers and landlords.

This strategy involves buying debt (mortgage note) from a mortgage holder at a discount. When this occurs, the investor becomes the client’s lender.

When a loan is being repaid on time, it’s considered a performing loan. These loans are a steady provider of cash flow. Some note investors buy non-performing notes because when they can’t successfully re-negotiate the mortgage, they can always acquire the collateral at foreclosure for a low price.

Eventually, you could have a lot of mortgage notes and have a hard time finding more time to handle them by yourself. In this event, you might enlist one of third party mortgage servicers in Lucas KS that will essentially convert your investment into passive income.

If you choose to attempt this investment strategy, you ought to include your business in our list of the best promissory note buyers in Lucas KS. Showing up on our list sets you in front of lenders who make profitable investment possibilities available to note buyers such as you.

Factors to Consider

Foreclosure Rates

Performing note investors try to find areas showing low foreclosure rates. High rates may indicate investment possibilities for non-performing loan note investors, but they need to be careful. If high foreclosure rates are causing a weak real estate market, it could be challenging to get rid of the property if you seize it through foreclosure.

Foreclosure Laws

It is important for mortgage note investors to know the foreclosure laws in their state. They’ll know if the law uses mortgage documents or Deeds of Trust. You may have to get the court’s okay to foreclose on a house. A Deed of Trust allows you to file a public notice and continue to foreclosure.

Mortgage Interest Rates

Purchased mortgage loan notes contain a negotiated interest rate. That rate will significantly affect your profitability. Regardless of the type of note investor you are, the mortgage loan note’s interest rate will be critical to your predictions.

The mortgage loan rates quoted by conventional lenders are not the same everywhere. Loans issued by private lenders are priced differently and can be higher than conventional mortgages.

A mortgage note investor should be aware of the private as well as conventional mortgage loan rates in their areas all the time.

Demographics

A community’s demographics information help note investors to focus their work and appropriately use their assets. The city’s population growth, unemployment rate, employment market growth, wage standards, and even its median age hold pertinent data for investors.
Investors who specialize in performing mortgage notes look for regions where a lot of younger individuals have higher-income jobs.

Investors who seek non-performing mortgage notes can also make use of growing markets. If non-performing mortgage note investors need to foreclose, they will have to have a thriving real estate market in order to sell the REO property.

Property Values

As a note investor, you must search for borrowers having a cushion of equity. This improves the likelihood that a possible foreclosure liquidation will make the lender whole. The combination of mortgage loan payments that lower the loan balance and annual property market worth growth increases home equity.

Property Taxes

Payments for real estate taxes are typically paid to the lender simultaneously with the mortgage loan payment. The mortgage lender pays the taxes to the Government to make sure they are paid promptly. If loan payments aren’t current, the mortgage lender will have to either pay the property taxes themselves, or the taxes become past due. When taxes are delinquent, the government’s lien leapfrogs all other liens to the front of the line and is paid first.

If property taxes keep increasing, the client’s house payments also keep rising. Borrowers who have trouble making 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 a growing real estate environment. They can be assured that, when necessary, a repossessed collateral can be liquidated for an amount that is profitable.

Note investors also have an opportunity to make mortgage notes directly to homebuyers in strong real estate markets. For veteran investors, this is a useful part of their investment plan.

A REIT, or Real Estate Investment Trust, is a firm that makes investments in income-generating properties. This was first done as a method to permit the everyday investor to invest in real property. Most people at present are able to invest in a REIT.

Shareholders in these trusts are totally passive investors. The risk that the investors are assuming is spread among a collection of investment real properties. Shares may be sold whenever it’s beneficial for you. Shareholders in a REIT aren’t allowed to recommend or choose real estate properties for investment. Their investment is limited to the properties owned by their REIT.

Mutual funds owning shares of real estate businesses are referred to as real estate investment funds. The fund doesn’t own properties — it holds interest in real estate businesses. This is an additional method for passive investors to diversify their investments with real estate avoiding the high entry-level expense or risks. Fund shareholders may not get ordinary distributions like REIT participants do. The value of a fund to an investor is the expected appreciation of the worth of the shares.

You can select a fund that focuses on a targeted category of real estate you’re familiar with, but you do not get to choose the location of each real estate investment. Your decision as an investor is to choose a fund that you believe in to oversee your real estate investments.