Ultimate McDowell County Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term rental plan — Buy, Rehab, Rent, Refinance, Repeat. When you plan to expand your investments, the BRRRR is a good method to employ. This strategy hinges on your ability to withdraw money out when you refinance.

You improve the worth of the property above the amount you spent acquiring and renovating it. Then you pocket the value you produced from the asset in a “cash-out” mortgage refinance. You buy your next house with the cash-out amount and start anew. You add improving investment assets to the balance sheet and lease income to your cash flow.

After you have accumulated a considerable collection of income creating real estate, you might choose to authorize others to manage your operations while you get repeating income. Find one of the best investment property management firms in McDowell County WV with a review of our comprehensive list.

Factors to Consider

Population Growth

The rise or decline of the population can tell you whether that location is desirable to rental investors. If the population growth in a city is high, then new tenants are likely relocating into the area. The community is attractive to businesses and working adults to move, work, and raise families. Growing populations maintain a dependable tenant mix that can handle rent growth and homebuyers who assist in keeping your property prices up.

Property Taxes

Property taxes, just like insurance and upkeep spendings, can differ from place to place and should be looked at carefully when predicting potential returns. Steep property taxes will decrease a real estate investor’s profits. Communities with steep property taxes are not a stable setting for short- and 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 demanded in comparison to the market worth of the property. If median property prices are high and median rents are low — a high p/r, it will take more time for an investment to recoup your costs and achieve good returns. A large p/r tells you that you can charge lower rent in that location, a lower one informs you that you can demand more.

Median Gross Rents

Median gross rents show whether an area’s lease market is robust. You need to find a community with stable median rent expansion. You will not be able to achieve your investment predictions in a region where median gross rental rates are declining.

Median Population Age

Median population age in a good long-term investment environment must mirror the usual worker’s age. If people are moving into the community, the median age will have no challenge staying at the level of the employment base. A high median age illustrates that the existing population is retiring with no replacement by younger people relocating in. This is not good for the impending economy of that market.

Employment Base Diversity

A varied employment base is what an intelligent long-term rental property owner will hunt for. If the community’s workers, who are your tenants, are hired by a diversified combination of employers, you can’t lose all all tenants at once (and your property’s value), if a dominant employer in the area goes out of business.

Unemployment Rate

It’s difficult to maintain a secure rental market when there are many unemployed residents in it. Non-working individuals will not be able to buy products or services. Workers who continue to have jobs can find their hours and salaries cut. Current tenants may delay their rent in this situation.

Income Rates

Median household and per capita income will illustrate if the tenants that you want are residing in the city. Your investment budget will take into consideration rental charge and asset appreciation, which will depend on salary raise in the area.

Number of New Jobs Created

The dynamic economy that you are hunting for will be creating plenty of jobs on a consistent basis. An environment that generates jobs also adds more participants in the real estate market. Your strategy of leasing and acquiring additional properties needs an economy that can develop enough jobs.

School Ratings

School rankings in the district will have a strong effect on the local real estate market. Businesses that are thinking about relocating want top notch schools for their workers. Moving businesses bring and draw potential tenants. New arrivals who buy a place to live keep property market worth high. For long-term investing, search for highly accredited schools in a prospective investment market.

Property Appreciation Rates

Strong property appreciation rates are a necessity for a viable long-term investment. You need to be confident that your assets will grow in market price until you decide to liquidate them. You don’t need to allot any time surveying regions that have substandard property appreciation rates.

A short-term rental is a furnished unit where a renter resides for less than 30 days. Short-term rental owners charge a higher rate a night than in long-term rental properties. With tenants fast turnaround, short-term rentals need to be maintained and cleaned on a regular basis.

Home sellers waiting to close on a new property, backpackers, and corporate travelers who are stopping over in the city for a few days enjoy renting apartments short term. Any homeowner can transform their residence into a short-term rental unit with the services made available by virtual home-sharing websites like VRBO and AirBnB. A simple approach to get into real estate investing is to rent a property you already own for short terms.

Vacation rental landlords necessitate interacting directly with the occupants to a greater extent than the owners of yearly leased units. That results in the investor being required to regularly handle complaints. Consider defending yourself and your assets by adding one of real estate law firms in McDowell County WV to your network of professionals.

Factors to Consider

Short-Term Rental Income

You have to define the range of rental revenue you’re looking for according to your investment calculations. Being aware of the typical rate of rent being charged in the area for short-term rentals will help you select a good place to invest.

Median Property Prices

You also must know the amount you can spare to invest. Hunt for cities where the budget you prefer is appropriate for the existing median property values. You can narrow your property hunt by analyzing median prices in the area’s sub-markets.

Price Per Square Foot

Price per square foot can be influenced even by the look and layout of residential properties. When the designs of prospective homes are very different, the price per square foot may not make a precise comparison. It may be a fast method to gauge several sub-markets or residential units.

Short-Term Rental Occupancy Rate

A quick look at the area’s short-term rental occupancy rate will tell you whether there is a need in the site for more short-term rental properties. A region that requires more rentals will have a high occupancy level. Weak occupancy rates reflect that there are more than too many short-term rental properties in that market.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return will tell you if the property is a wise use of your cash. Divide the Net Operating Income (NOI) by the amount of cash invested. The answer will be a percentage. High cash-on-cash return shows that you will regain your cash faster and the purchase will be more profitable. When you borrow part of the investment budget and use less of your capital, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

This benchmark compares investment property worth to its per-annum income. An income-generating asset that has a high cap rate as well as charges market rental rates has a strong market value. When investment properties in a region have low cap rates, they typically will cost more money. You can determine the cap rate for possible investment real estate by dividing the Net Operating Income (NOI) by the Fair Market Value or purchase price of the investment property. The result is the yearly return in a percentage.

Local Attractions

Short-term renters are often tourists who visit a region to enjoy a recurring significant event or visit unique locations. Vacationers visit specific regions to attend academic and sporting events at colleges and universities, see professional sports, cheer for their children as they compete in kiddie sports, have fun at annual carnivals, and stop by adventure parks. Outdoor scenic attractions like mountainous areas, waterways, beaches, and state and national parks can also invite potential tenants.

The fix and flip approach requires acquiring a house that demands fixing up or restoration, creating added value by upgrading the building, and then selling it for a better market worth. Your estimate of improvement costs must be precise, and you have to be capable of buying the home for lower than market price.

You also have to evaluate the resale market where the home is situated. Look for a city that has a low average Days On Market (DOM) metric. As a ”rehabber”, you’ll want to sell the upgraded home without delay so you can eliminate upkeep spendings that will lessen your revenue.

Assist motivated real estate owners in locating your business by featuring your services in our directory of the best McDowell County cash home buyers and top McDowell County property investment companies.

In addition, hunt for property bird dogs in McDowell County WV. Professionals on our list focus on securing little-known investments while they are still unlisted.

Factors to Consider

Median Home Price

Median real estate price data is a key indicator for evaluating a potential investment environment. Low median home prices are a hint that there must be a good number of residential properties that can be purchased for lower than market value. You must have cheaper homes for a successful fix and flip.

When market data shows a sharp decrease in real estate market values, this can highlight the availability of potential short sale homes. Investors who partner with short sale facilitators in McDowell County WV receive regular notices regarding potential investment real estate. You will uncover valuable data regarding short sales in our guide ⁠— What Is the Process to Buy a Short Sale House?.

Property Appreciation Rate

Are property market values in the area going up, or on the way down? You need a market where property prices are regularly and consistently moving up. Speedy price surges may reflect a value bubble that isn’t sustainable. You could wind up buying high and selling low in an hectic market.

Average Renovation Costs

Look closely at the possible repair costs so you will find out whether you can achieve your predictions. The time it takes for acquiring permits and the municipality’s regulations for a permit request will also affect your decision. You want to know whether you will be required to employ other experts, such as architects or engineers, so you can get prepared for those spendings.

Population Growth

Population growth is a strong indicator of the strength or weakness of the region’s housing market. Flat or decelerating population growth is a sign of a poor market with not an adequate supply of buyers to validate your effort.

Median Population Age

The median citizens’ age is a direct sign of the availability of desirable home purchasers. When the median age is the same as the one of the typical worker, it is a good indication. A high number of such citizens demonstrates a stable source of homebuyers. Aging individuals are getting ready to downsize, or relocate into age-restricted or assisted living neighborhoods.

Unemployment Rate

If you stumble upon an area having a low unemployment rate, it is a solid evidence of good investment prospects. It must certainly be less than the US average. A really strong investment location will have an unemployment rate less than the state’s average. Without a vibrant employment environment, a market can’t provide you with qualified homebuyers.

Income Rates

The residents’ income stats inform you if the location’s financial environment is stable. Most homebuyers usually obtain financing to buy a home. To be eligible for a mortgage loan, a borrower shouldn’t be spending for monthly repayments a larger amount than a particular percentage of their income. Median income can let you determine whether the regular homebuyer can buy the property you are going to flip. You also need to have wages that are expanding continually. If you want to raise the asking price of your houses, you want to be positive that your home purchasers’ salaries are also increasing.

Number of New Jobs Created

Finding out how many jobs appear annually in the region can add to your confidence in a region’s investing environment. A growing job market indicates that a higher number of potential homeowners are comfortable with investing in a home there. Competent skilled workers looking into purchasing a property and deciding to settle choose moving to regions where they won’t be unemployed.

Hard Money Loan Rates

Investors who flip renovated homes often employ hard money funding rather than conventional funding. Doing this lets investors negotiate profitable ventures without holdups. Find the best private money lenders in McDowell County WV so you can review their costs.

Someone who needs to learn about hard money funding options can learn what they are and the way to use them by reading our article titled How to Use Hard Money Lenders.

As a real estate wholesaler, you sign a contract to buy a house that some other real estate investors might need. But you don’t close on the house: once you have the property under contract, you allow someone else to become the buyer for a fee. The contracted property is sold to the real estate investor, not the real estate wholesaler. The wholesaler does not liquidate the property — they sell the rights to buy it.

Wholesaling depends on the assistance of a title insurance company that is okay with assigning purchase contracts and knows how to deal with a double closing. Find title companies for real estate investors in McDowell County WV in our directory.

Read more about the way to wholesale property from our comprehensive guide — Real Estate Wholesaling Explained for Beginners. When using this investment method, include your business in our list of the best property wholesalers in McDowell County WV. This will enable any likely partners to discover you and reach out.

Factors to Consider

Median Home Prices

Median home values in the city being considered will immediately tell you if your real estate investors’ target properties are positioned there. A city that has a sufficient source of the below-market-value investment properties that your investors require will have a lower median home price.

Accelerated weakening in property market worth could result in a number of homes with no equity that appeal to short sale property buyers. Short sale wholesalers frequently receive perks using this opportunity. Nevertheless, there could be liabilities as well. Find out more concerning wholesaling a short sale property from our exhaustive explanation. Once you want to give it a try, make certain you have one of short sale attorneys in McDowell County WV and foreclosure attorneys in McDowell County WV to work with.

Property Appreciation Rate

Median home value dynamics are also important. Some real estate investors, including buy and hold and long-term rental landlords, particularly want to know that residential property prices in the community are expanding steadily. Both long- and short-term real estate investors will avoid a city where home market values are depreciating.

Population Growth

Population growth stats are something that your prospective real estate investors will be familiar with. An expanding population will require more residential units. There are a lot of people who lease and plenty of clients who buy real estate. If a community is not growing, it doesn’t require additional housing and investors will invest in other areas.

Median Population Age

Real estate investors need to be a part of a dynamic housing market where there is a considerable supply of tenants, first-time homeowners, and upwardly mobile residents moving to bigger houses. For this to take place, there has to be a stable workforce of prospective renters and homebuyers. That’s why the market’s median age should be the age of skilled workers in the workplace.

Income Rates

The median household and per capita income in a strong real estate investment market need to be growing. Surges in rent and listing prices have to be aided by improving income in the area. That will be vital to the real estate investors you want to attract.

Unemployment Rate

The area’s unemployment rates are a crucial aspect for any targeted wholesale property purchaser. Late rent payments and default rates are higher in cities with high unemployment. Long-term investors who rely on uninterrupted rental income will lose money in these areas. Renters can’t level up to ownership and existing owners cannot liquidate their property and move up to a bigger home. This is a problem for short-term investors purchasing wholesalers’ contracts to fix and flip a property.

Number of New Jobs Created

The number of jobs produced per year is a crucial element of the housing picture. Workers move into a market that has new jobs and they look for housing. Whether your client pool is made up of long-term or short-term investors, they will be attracted to an area with consistent job opening creation.

Average Renovation Costs

An influential factor for your client investors, specifically fix and flippers, are rehab expenses in the community. When a short-term investor improves a home, they need to be able to liquidate it for more money than the combined cost of the purchase and the rehabilitation. The cheaper it is to renovate an asset, the friendlier the location is for your potential purchase agreement buyers.

Note investing professionals buy debt from lenders if they can buy it for less than the balance owed. When this occurs, the investor takes the place of the borrower’s lender.

Loans that are being paid off on time are thought of as performing loans. They give you stable passive income. Some mortgage investors prefer non-performing loans because if they cannot satisfactorily re-negotiate the mortgage, they can always acquire the collateral at foreclosure for a low amount.

One day, you may produce a group of mortgage note investments and lack the ability to handle them by yourself. In this case, you can opt to employ one of mortgage servicing companies in McDowell County WV that will basically convert your portfolio into passive cash flow.

If you want to take on this investment strategy, you ought to include your venture in our directory of the best promissory note buyers in McDowell County WV. Showing up on our list sets you in front of lenders who make lucrative investment possibilities accessible to note buyers such as you.

Factors to consider

Foreclosure Rates

Investors looking for current loans to purchase will prefer to uncover low foreclosure rates in the community. High rates could signal opportunities for non-performing note investors, but they should be careful. The locale needs to be robust enough so that investors can foreclose and liquidate properties if required.

Foreclosure Laws

Mortgage note investors are required to know the state’s regulations concerning foreclosure prior to pursuing this strategy. Are you faced with a mortgage or a Deed of Trust? A mortgage dictates that you go to court for authority to start foreclosure. Lenders do not have to have the judge’s permission with a Deed of Trust.

Mortgage Interest Rates

The mortgage interest rate is set in the mortgage loan notes that are bought by investors. This is an important determinant in the returns that lenders achieve. Interest rates are crucial to both performing and non-performing mortgage note investors.

Traditional lenders charge dissimilar mortgage loan interest rates in various parts of the US. The stronger risk taken by private lenders is shown in bigger interest rates for their mortgage loans in comparison with conventional loans.

Profitable investors regularly check the interest rates in their community set by private and traditional mortgage lenders.

Demographics

An effective mortgage note investment plan incorporates an assessment of the region by utilizing demographic information. It is critical to find out if a suitable number of citizens in the area will continue to have good employment and wages in the future.
Performing note investors want homeowners who will pay without delay, creating a consistent income flow of mortgage payments.

Non-performing note buyers are reviewing related elements for various reasons. If non-performing investors have to foreclose, they will need a stable real estate market when they liquidate the defaulted property.

Property Values

Note holders like to see as much home equity in the collateral as possible. If the property value isn’t much more than the mortgage loan amount, and the lender wants to start foreclosure, the property might not sell for enough to repay the lender. The combination of mortgage loan payments that lessen the loan balance and annual property market worth growth expands home equity.

Property Taxes

Most often, lenders collect the house tax payments from the borrower each month. The mortgage lender passes on the property taxes to the Government to ensure they are submitted promptly. If the borrower stops performing, unless the note holder pays the property taxes, they won’t be paid on time. If a tax lien is put in place, it takes first position over the mortgage lender’s note.

Because property tax escrows are included with the mortgage loan payment, increasing property taxes mean higher mortgage loan payments. Borrowers who are having a hard time affording their mortgage payments could drop farther behind and eventually default.

Real Estate Market Strength

A stable real estate market with regular value appreciation is good for all types of mortgage note buyers. It’s good to understand that if you are required to foreclose on a property, you will not have difficulty receiving an acceptable price for it.

Strong markets often open opportunities for note buyers to originate the initial loan themselves. This is a desirable source of income for accomplished investors.

A REIT, or Real Estate Investment Trust, is a company that makes investments in income-generating real estate. Before REITs existed, investing in properties used to be too costly for most investors. REIT shares are not too costly to the majority of investors.

Investing in a REIT is known as passive investing. The liability that the investors are assuming is diversified among a collection of investment real properties. Shares in a REIT can be liquidated whenever it is desirable for the investor. Something you can’t do with REIT shares is to choose the investment real estate properties. You are confined to the REIT’s portfolio of real estate properties for investment.

Mutual funds that hold shares of real estate companies are referred to as real estate investment funds. Any actual property is held by the real estate companies, not the fund. Investment funds are considered an affordable way to incorporate real estate in your allocation of assets without unnecessary exposure. Real estate investment funds are not required to distribute dividends like a REIT. The value of a fund to someone is the expected increase of the worth of the shares.

You can locate a real estate fund that specializes in a distinct type of real estate firm, like commercial, but you cannot propose the fund’s investment real estate properties or locations. As passive investors, fund members are satisfied to allow the administration of the fund determine all investment decisions.