Ultimate McDowell County Real Estate Investing Guide for 2024

BRRRR is an abbreviation of “Buy, Rehab, Rent, Refinance, Repeat”. This is a plan to expand your investment assets not just buy a single investment property. It is essential that you be able to receive a “cash-out” refinance loan for the system to work.

You add to the value of the investment property above what you spent buying and rehabbing the property. Then you remove the equity you produced from the investment property in a “cash-out” refinance. You utilize that money to get an additional investment property and the operation begins again. You add income-producing assets to your portfolio and lease income to your cash flow.

If an investor holds a significant number of investment properties, it seems smart to employ a property manager and establish a passive income source. Discover the best real estate management companies in McDowell County NC by looking through our list.

Factors to Consider

Population Growth

The rise or fall of the population can illustrate if that market is desirable to landlords. When you find robust population expansion, you can be certain that the area is drawing likely tenants to it. The market is desirable to businesses and working adults to locate, work, and raise households. Growing populations maintain a dependable renter reserve that can keep up with rent increases and home purchasers who help keep your property values up.

Property Taxes

Real estate taxes, similarly to insurance and maintenance expenses, may differ from place to market and must be considered cautiously when assessing potential profits. Rental assets located in unreasonable property tax areas will provide less desirable returns. Areas with unreasonable property taxes are not a dependable setting for short- or long-term investment and must be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a signal of how high of a rent can be collected in comparison to the cost of the property. If median home prices are high and median rents are small — a high p/r — it will take more time for an investment to pay for itself and reach good returns. A higher price-to-rent ratio tells you that you can collect lower rent in that area, a lower one informs you that you can demand more.

Median Gross Rents

Median gross rents are an accurate benchmark of the approval of a lease market under consideration. You want to discover a market with consistent median rent growth. If rental rates are being reduced, you can eliminate that city from discussion.

Median Population Age

Median population age will be similar to the age of a typical worker if an area has a consistent supply of renters. You’ll discover this to be factual in locations where workers are relocating. A high median age shows that the current population is aging out without being replaced by younger people relocating there. A thriving investing environment can’t be maintained by retired individuals.

Employment Base Diversity

A varied amount of employers in the city will improve your prospects for strong profits. When there are only one or two significant employers, and either of them moves or closes shop, it can make you lose renters and your property market prices to decrease.

Unemployment Rate

It’s a challenge to have a stable rental market when there is high unemployment. People who don’t have a job will not be able to purchase products or services. This can result in a large number of retrenchments or shrinking work hours in the community. Existing tenants may delay their rent payments in this situation.

Income Rates

Median household and per capita income data is a helpful instrument to help you pinpoint the cities where the tenants you prefer are located. Existing income data will communicate to you if income raises will permit you to adjust rental charges to achieve your profit calculations.

Number of New Jobs Created

The vibrant economy that you are looking for will be creating enough jobs on a constant basis. The individuals who are employed for the new jobs will be looking for housing. This allows you to purchase more lease real estate and replenish existing empty units.

School Ratings

Local schools can have a significant impact on the housing market in their location. When an employer evaluates a city for potential expansion, they remember that good education is a requirement for their workforce. Relocating companies relocate and attract potential renters. Recent arrivals who need a place to live keep property prices strong. For long-term investing, search for highly respected schools in a potential investment area.

Property Appreciation Rates

The basis of a long-term investment approach is to hold the asset. Investing in assets that you want to hold without being sure that they will rise in value is a blueprint for disaster. You don’t want to take any time reviewing cities showing depressed property appreciation rates.

A short-term rental is a furnished unit where a tenant stays for shorter than 30 days. Long-term rentals, such as apartments, impose lower payment per night than short-term ones. Because of the high number of occupants, short-term rentals necessitate additional regular care and cleaning.

Short-term rentals appeal to individuals traveling on business who are in the region for several nights, people who are relocating and want temporary housing, and vacationers. House sharing portals such as AirBnB and VRBO have enabled numerous homeowners to take part in the short-term rental industry. This makes short-term rentals a good method to pursue residential real estate investing.

The short-term rental housing venture includes interaction with tenants more often in comparison with yearly lease units. This leads to the landlord having to frequently manage complaints. You might need to cover your legal exposure by working with one of the best McDowell County investor friendly real estate attorneys.

Factors to Consider

Short-Term Rental Income

You should calculate the range of rental revenue you’re targeting based on your investment strategy. Knowing the standard rate of rental fees in the community for short-term rentals will enable you to choose a preferable city to invest.

Median Property Prices

When purchasing real estate for short-term rentals, you must calculate the budget you can afford. Scout for communities where the purchase price you prefer correlates with the current median property values. You can also employ median values in localized sub-markets within the market to choose communities for investment.

Price Per Square Foot

Price per sq ft could be inaccurate when you are examining different properties. When the styles of available homes are very different, the price per square foot might not give a precise comparison. Price per sq ft can be a fast way to analyze multiple sub-markets or properties.

Short-Term Rental Occupancy Rate

The ratio of short-term rental units that are presently tenanted in a market is important data for an investor. A high occupancy rate means that an extra source of short-term rentals is wanted. When the rental occupancy rates are low, there isn’t much space in the market and you should look somewhere else.

Short-Term Rental Cash-on-Cash Return

To determine if you should put your cash in a particular investment asset or city, calculate 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 answer is shown as a percentage. If an investment is profitable enough to recoup the capital spent soon, you will get a high percentage. Funded projects will have a stronger cash-on-cash return because you’re spending less of your money.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are largely utilized by real property investors to estimate the worth of rental units. An income-generating asset that has a high cap rate and charges typical market rental prices has a good value. If investment real estate properties in a city have low cap rates, they usually will cost more money. Divide your expected Net Operating Income (NOI) by the property’s market worth or listing price. This shows you a ratio that is the yearly return, or cap rate.

Local Attractions

Short-term rental apartments are popular in areas where sightseers are drawn by events and entertainment sites. Vacationers visit specific areas to enjoy academic and sporting events at colleges and universities, be entertained by professional sports, support their kids as they compete in kiddie sports, have fun at yearly festivals, and drop by theme parks. Natural scenic attractions such as mountains, waterways, beaches, and state and national parks will also draw future renters.

The fix and flip strategy requires acquiring a house that needs repairs or restoration, creating more value by enhancing the building, and then selling it for its full market price. Your assessment of improvement spendings has to be correct, and you have to be capable of acquiring the house for less than market price.

Investigate the housing market so that you are aware of the accurate After Repair Value (ARV). The average number of Days On Market (DOM) for homes sold in the region is important. As a “house flipper”, you’ll need to liquidate the renovated property without delay so you can avoid upkeep spendings that will diminish your profits.

In order that real estate owners who need to sell their home can conveniently locate you, highlight your availability by using our list of the best cash property buyers in McDowell County NC along with top real estate investors in McDowell County NC.

In addition, work with McDowell County bird dogs for real estate investors. Experts located here will help you by quickly finding conceivably successful ventures prior to the opportunities being listed.

Factors to Consider

Median Home Price

Median real estate value data is an important benchmark for assessing a potential investment market. You are hunting for median prices that are modest enough to reveal investment opportunities in the community. This is a vital element of a profitable investment.

When you notice a fast decrease in home market values, this may mean that there are potentially houses in the city that will work for a short sale. You can receive notifications about these opportunities by joining with short sale negotiators in McDowell County NC. You’ll discover additional information regarding short sales in our article ⁠— How to Buy Short Sale Real Estate.

Property Appreciation Rate

The movements in property prices in a city are crucial. Fixed growth in median values reveals a strong investment market. Housing prices in the market should be increasing regularly, not abruptly. You may wind up buying high and selling low in an hectic market.

Average Renovation Costs

Look carefully at the potential repair spendings so you will be aware if you can reach your projections. The time it will take for acquiring permits and the local government’s requirements for a permit request will also influence your plans. To make an accurate financial strategy, you’ll want to find out whether your construction plans will have to use an architect or engineer.

Population Growth

Population growth statistics let you take a look at housing demand in the community. Flat or negative population growth is a sign of a sluggish market with not a lot of buyers to validate your risk.

Median Population Age

The median citizens’ age is a straightforward indication of the presence of possible home purchasers. The median age should not be lower or higher than that of the typical worker. These are the people who are qualified homebuyers. Aging individuals are planning to downsize, or relocate into age-restricted or retiree communities.

Unemployment Rate

If you find a market demonstrating a low unemployment rate, it’s a good indication of lucrative investment possibilities. An unemployment rate that is lower than the country’s median is good. A positively reliable investment market will have an unemployment rate lower than the state’s average. If you don’t have a vibrant employment base, a location won’t be able to supply you with enough home purchasers.

Income Rates

Median household and per capita income are an important indicator of the robustness of the real estate market in the city. When people purchase a house, they normally need to borrow money for the home purchase. To get a home loan, a borrower can’t be using for monthly repayments more than a particular percentage of their salary. You can determine based on the community’s median income if a good supply of people in the region can afford to purchase your properties. You also prefer to have wages that are growing over time. When you need to augment the asking price of your houses, you need to be sure that your homebuyers’ wages are also rising.

Number of New Jobs Created

The number of jobs created per annum is vital data as you consider investing in a particular community. A higher number of people purchase homes when their area’s financial market is creating jobs. Additional jobs also lure workers migrating to the city from another district, which additionally reinforces the local market.

Hard Money Loan Rates

Fix-and-flip investors regularly use hard money loans in place of conventional financing. Hard money loans empower these purchasers to pull the trigger on pressing investment projects without delay. Discover the best private money lenders in McDowell County NC so you can compare their charges.

If you are inexperienced with this funding product, discover more by reading our guide — How Does a Hard Money Loan Work in Real Estate?.

In real estate wholesaling, you locate a property that real estate investors may count as a lucrative deal and enter into a sale and purchase agreement to buy it. However you don’t purchase it: once you have the property under contract, you get another person to become the buyer for a price. The property under contract is sold to the real estate investor, not the wholesaler. The real estate wholesaler doesn’t sell the property — they sell the contract to buy it.

The wholesaling form of investing involves the employment of a title company that grasps wholesale purchases and is knowledgeable about and involved in double close purchases. Discover McDowell County title companies for wholesaling real estate by using our directory.

To learn how wholesaling works, read our insightful article What Is Wholesaling in Real Estate Investing?. When following this investment method, place your company in our directory of the best home wholesalers in McDowell County NC. This will let your possible investor buyers locate and reach you.

Factors to Consider

Median Home Prices

Median home prices in the region under consideration will quickly tell you whether your investors’ required properties are positioned there. A place that has a good pool of the marked-down residential properties that your clients need will have a lower median home price.

A quick downturn in housing prices might be followed by a large number of ‘underwater’ houses that short sale investors hunt for. This investment method regularly brings several uncommon advantages. Nonetheless, it also raises a legal liability. Find out more concerning wholesaling short sale properties with our extensive guide. Once you are prepared to begin wholesaling, search through McDowell County top short sale legal advice experts as well as McDowell County top-rated foreclosure law offices lists to discover the best counselor.

Property Appreciation Rate

Median home value dynamics are also vital. Investors who want to liquidate their properties anytime soon, such as long-term rental investors, want a market where real estate market values are going up. Dropping prices indicate an equivalently poor rental and home-selling market and will dismay investors.

Population Growth

Population growth figures are a predictor that real estate investors will analyze thoroughly. When they find that the community is growing, they will presume that additional housing is needed. They are aware that this will combine both rental and owner-occupied housing units. A community with a shrinking population will not interest the real estate investors you want to purchase your contracts.

Median Population Age

A lucrative residential real estate market for investors is strong in all areas, including tenants, who evolve into homeowners, who move up into bigger properties. A city that has a huge employment market has a strong pool of tenants and purchasers. That’s why the location’s median age needs to be the age of skilled workers in the employment market.

Income Rates

The median household and per capita income in a good real estate investment market have to be going up. Income improvement proves an area that can keep up with rental rate and home purchase price increases. Property investors avoid places with unimpressive population salary growth numbers.

Unemployment Rate

Real estate investors will carefully evaluate the community’s unemployment rate. High unemployment rate triggers a lot of renters to pay rent late or default entirely. This negatively affects long-term investors who plan to lease their residential property. Investors can’t depend on renters moving up into their properties when unemployment rates are high. This is a concern for short-term investors buying wholesalers’ agreements to fix and flip a property.

Number of New Jobs Created

The number of more jobs being generated in the area completes an investor’s evaluation of a potential investment location. Workers move into a location that has more jobs and they look for housing. No matter if your client base is comprised of long-term or short-term investors, they will be drawn to a market with stable job opening creation.

Average Renovation Costs

Renovation spendings have a strong effect on a rehabber’s returns. When a short-term investor flips a property, they need to be able to liquidate it for a larger amount than the combined sum they spent for the acquisition and the repairs. Seek lower average renovation costs.

Mortgage note investing includes purchasing debt (mortgage note) from a mortgage holder at a discount. This way, you become the mortgage lender to the first lender’s client.

When a mortgage loan is being repaid on time, it’s considered a performing note. These notes are a stable provider of passive income. Some investors prefer non-performing notes because when the mortgage investor can’t successfully restructure the mortgage, they can always acquire the collateral property at foreclosure for a below market amount.

At some point, you may create a mortgage note collection and find yourself lacking time to oversee it on your own. If this occurs, you might choose from the best mortgage servicers in McDowell County NC which will designate you as a passive investor.

If you decide to try this investment model, you should place your venture in our list of the best real estate note buying companies in McDowell County NC. Appearing on our list places you in front of lenders who make lucrative investment possibilities available to note buyers such as yourself.

Factors to consider

Foreclosure Rates

Investors looking for current mortgage loans to buy will prefer to see low foreclosure rates in the area. If the foreclosures are frequent, the city may nonetheless be profitable for non-performing note investors. If high foreclosure rates have caused a weak real estate environment, it may be tough to liquidate the collateral property after you seize it through foreclosure.

Foreclosure Laws

It is imperative for note investors to understand the foreclosure regulations in their state. Are you dealing with a Deed of Trust or a mortgage? A mortgage requires that the lender goes to court for authority to start foreclosure. A Deed of Trust enables the lender to file a notice and continue to foreclosure.

Mortgage Interest Rates

Mortgage note investors inherit the interest rate of the loan notes that they purchase. That rate will undoubtedly impact your returns. Regardless of the type of note investor you are, the mortgage loan note’s interest rate will be crucial for your calculations.

Traditional lenders price dissimilar mortgage interest rates in different parts of the country. Private loan rates can be slightly more than traditional interest rates because of the more significant risk taken by private lenders.

A note buyer should know the private and traditional mortgage loan rates in their regions all the time.

Demographics

When note investors are deciding on where to purchase mortgage notes, they will look closely at the demographic information from reviewed markets. Investors can interpret a great deal by estimating the extent of the population, how many citizens are employed, the amount they make, and how old the citizens are.
Performing note investors look for customers who will pay on time, creating a stable income source of loan payments.

The same area could also be good for non-performing mortgage note investors and their end-game plan. If non-performing note investors have to foreclose, they’ll have to have a vibrant real estate market in order to sell the defaulted property.

Property Values

As a mortgage note investor, you must search for borrowers with a cushion of equity. When the property value is not significantly higher than the mortgage loan balance, and the lender needs to start foreclosure, the house might not realize enough to repay the lender. Growing property values help improve the equity in the house as the borrower pays down the balance.

Property Taxes

Usually borrowers pay real estate taxes via lenders in monthly installments when they make their loan payments. When the property taxes are payable, there should be enough funds in escrow to handle them. If the homebuyer stops paying, unless the note holder takes care of the property taxes, they won’t be paid on time. If a tax lien is put in place, it takes precedence over the your note.

Since tax escrows are collected with the mortgage loan payment, rising taxes mean higher house payments. This makes it tough for financially strapped homeowners to make their payments, so the mortgage loan might become delinquent.

Real Estate Market Strength

A place with increasing property values has strong opportunities for any note investor. As foreclosure is a critical element of mortgage note investment planning, increasing real estate values are critical to locating a profitable investment market.

Vibrant markets often open opportunities for note buyers to originate the first mortgage loan themselves. For successful investors, this is a valuable part of their investment strategy.

A REIT, or Real Estate Investment Trust, is a firm that invests in income-generating properties. Before REITs existed, investing in properties was too expensive for many people. REIT shares are economical for the majority of people.

Shareholders in REITs are completely passive investors. The liability that the investors are taking is spread among a collection of investment real properties. Investors are able to unload their REIT shares whenever they choose. However, REIT investors don’t have the ability to pick specific assets or markets. You are confined to the REIT’s portfolio of assets for investment.

Real estate investment funds are essentially mutual funds concentrating on real estate companies, including REITs. Any actual real estate is owned by the real estate companies, not the fund. Investment funds can be an inexpensive method to include real estate properties in your allotment of assets without avoidable exposure. Fund members may not collect ordinary disbursements the way that REIT shareholders do. The return to investors is generated by growth in the value of the stock.

You can select a fund that focuses on a particular kind of real estate firm, like residential, but you cannot suggest the fund’s investment assets or locations. You must depend on the fund’s managers to decide which locations and real estate properties are picked for investment.