Ultimate Montgomery County Real Estate Investing Guide for 2024

BRRRR means “Buy, Rehab, Rent, Refinance, Repeat”. This is a way to expand your investment assets not just acquire one rental home. It is essential that you are qualified to receive a “cash-out” mortgage refinance for the system to be successful.

You add to the value of the asset beyond what you spent acquiring and renovating the property. Then you take a cash-out mortgage refinance loan that is calculated on the larger value, and you pocket the difference. You utilize that capital to purchase an additional rental and the procedure starts again. You add income-producing assets to the portfolio and rental income to your cash flow.

When you’ve accumulated a large portfolio of income producing residential units, you may choose to hire others to handle all operations while you get repeating income. Discover the best property management companies in Montgomery County KS by browsing our list.

Factors to Consider

Population Growth

The growth or downturn of a community’s population is a valuable benchmark of the market’s long-term appeal for rental property investors. A booming population often demonstrates busy relocation which equals additional tenants. Businesses view such a region as an appealing area to relocate their business, and for workers to relocate their households. This equates to dependable renters, more lease income, and more possible buyers when you need to sell your asset.

Property Taxes

Real estate taxes, upkeep, and insurance spendings are investigated by long-term rental investors for forecasting costs to predict if and how the project will be successful. Unreasonable property taxes will decrease a property investor’s profits. Excessive real estate tax rates may indicate a fluctuating area where expenditures can continue to grow and must be treated as a warning.

Price to Rent Ratio

The price to rent ratio (p/r) is a clue to how high of a rent can be collected in comparison to the purchase price of the investment property. If median property prices are strong and median rents are low — a high p/r, it will take longer for an investment to pay for itself and reach good returns. The less rent you can collect the higher the p/r, with a low p/r indicating a stronger rent market.

Median Gross Rents

Median gross rents show whether an area’s lease market is solid. Hunt for a stable increase in median rents year over year. Dropping rents are an alert to long-term rental investors.

Median Population Age

Median population age will be nearly the age of a normal worker if a location has a consistent supply of tenants. You’ll learn this to be accurate in regions where workers are migrating. A high median age illustrates that the current population is leaving the workplace with no replacement by younger people migrating in. A dynamic real estate market cannot be maintained by retiring workers.

Employment Base Diversity

Having diverse employers in the community makes the market less volatile. When the region’s working individuals, who are your renters, are employed by a varied assortment of businesses, you can’t lose all of them at the same time (as well as your property’s market worth), if a significant enterprise in town goes bankrupt.

Unemployment Rate

It’s not possible to maintain a stable rental market when there is high unemployment. Non-working individuals can’t purchase goods or services. This can create a large number of dismissals or shrinking work hours in the location. Even renters who are employed may find it tough to stay current with their rent.

Income Rates

Median household and per capita income data is a useful indicator to help you discover the communities where the renters you prefer are located. Rising wages also tell you that rental rates can be raised throughout your ownership of the property.

Number of New Jobs Created

The dynamic economy that you are on the lookout for will be creating a high number of jobs on a regular basis. Additional jobs equal new renters. Your strategy of leasing and acquiring more rentals needs an economy that will generate enough jobs.

School Ratings

School rankings in the city will have a big influence on the local housing market. When an employer evaluates a community for possible expansion, they keep in mind that quality education is a requirement for their workers. Moving businesses bring and attract prospective renters. Housing prices benefit thanks to additional employees who are homebuyers. You can’t find a dynamically expanding residential real estate market without quality schools.

Property Appreciation Rates

Property appreciation rates are an integral part of your long-term investment plan. You need to be confident that your investment assets will grow in market price until you need to dispose of them. Substandard or dropping property worth in a location under examination is not acceptable.

A furnished home where tenants reside for less than 4 weeks is considered a short-term rental. The per-night rental rates are normally higher in short-term rentals than in long-term units. Because of the increased rotation of renters, short-term rentals involve additional frequent maintenance and cleaning.

Short-term rentals appeal to people on a business trip who are in the area for a couple of nights, people who are migrating and want short-term housing, and vacationers. Any homeowner can turn their residence into a short-term rental unit with the assistance offered by online home-sharing websites like VRBO and AirBnB. This makes short-term rentals a convenient method to pursue residential real estate investing.

Short-term rental properties require interacting with occupants more repeatedly than long-term rentals. That leads to the investor having to regularly deal with protests. Consider controlling your exposure with the assistance of any of the top real estate attorneys in Montgomery County KS.

Factors to Consider

Short-Term Rental Income

Initially, figure out the amount of rental revenue you need to achieve your estimated return. Understanding the average amount of rent being charged in the city for short-term rentals will help you choose a profitable area to invest.

Median Property Prices

You also must know the budget you can allow to invest. To find out whether a community has possibilities for investment, examine the median property prices. You can fine-tune your property search by analyzing median market worth in the area’s sub-markets.

Price Per Square Foot

Price per sq ft can be influenced even by the style and floor plan of residential properties. If you are analyzing the same types of real estate, like condominiums or separate single-family residences, the price per square foot is more reliable. You can use the price per sq ft information to get a good overall idea of housing values.

Short-Term Rental Occupancy Rate

The ratio of short-term rental units that are currently occupied in a market is vital knowledge for a landlord. If nearly all of the rentals are full, that area needs more rental space. When the rental occupancy indicators are low, there isn’t enough demand in the market and you need to search elsewhere.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to estimate the value of an investment. Divide the Net Operating Income (NOI) by the amount of cash invested. The result is shown as a percentage. When a project is profitable enough to reclaim the amount invested quickly, you will have a high percentage. When you borrow a fraction of the investment and put in less of your own funds, you will realize a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are largely utilized by real estate investors to estimate the worth of investment opportunities. High cap rates show that properties are available in that region for decent prices. When cap rates are low, you can assume to pay more cash for investment properties in that market. The cap rate is calculated by dividing the Net Operating Income (NOI) by the price or market worth. The result is the yearly return in a percentage.

Local Attractions

Short-term renters are often people who come to an area to attend a recurrent major activity or visit unique locations. When a city has sites that annually produce interesting events, like sports coliseums, universities or colleges, entertainment centers, and adventure parks, it can invite visitors from outside the area on a recurring basis. Popular vacation spots are found in mountainous and coastal areas, near lakes, and national or state nature reserves.

When a property investor acquires a property below market worth, renovates it and makes it more valuable, and then sells the house for a profit, they are known as a fix and flip investor. Your calculation of improvement expenses has to be correct, and you should be able to buy the property for less than market price.

Investigate the values so that you know the exact After Repair Value (ARV). Choose a city that has a low average Days On Market (DOM) indicator. Disposing of the home immediately will help keep your costs low and ensure your revenue.

So that home sellers who have to liquidate their property can readily find you, promote your status by utilizing our list of the best real estate cash buyers in Montgomery County KS along with top property investment companies in Montgomery County KS.

In addition, team up with Montgomery County bird dogs for real estate investors. These experts concentrate on rapidly locating promising investment ventures before they come on the marketplace.

Factors to Consider

Median Home Price

When you hunt for a suitable area for house flipping, check the median home price in the neighborhood. You are searching for median prices that are low enough to show investment opportunities in the city. You must have cheaper houses for a profitable fix and flip.

If your research entails a quick drop in home values, it could be a heads up that you’ll discover real estate that meets the short sale criteria. You will find out about possible opportunities when you team up with Montgomery County short sale processing companies. Discover how this works by reading our article ⁠— How Can I Buy a Short Sale House?.

Property Appreciation Rate

The shifts in real estate prices in an area are vital. You are eyeing for a reliable appreciation of the city’s real estate market values. Real estate purchase prices in the area need to be increasing consistently, not quickly. Acquiring at an inconvenient moment in an unstable market condition can be problematic.

Average Renovation Costs

Look closely at the potential rehab costs so you will understand if you can achieve your predictions. The way that the local government goes about approving your plans will affect your project as well. If you have to present a stamped suite of plans, you will have to incorporate architect’s rates in your budget.

Population Growth

Population increase statistics provide a look at housing need in the area. Flat or negative population growth is a sign of a poor environment with not enough buyers to justify your effort.

Median Population Age

The median residents’ age will also tell you if there are potential homebuyers in the area. When the median age is equal to the one of the average worker, it’s a good indication. These can be the people who are possible 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 rate in your investment region. The unemployment rate in a prospective investment community needs to be lower than the US average. If the city’s unemployment rate is lower than the state average, that is an indicator of a strong economy. If they want to purchase your rehabbed houses, your buyers need to be employed, and their customers as well.

Income Rates

Median household and per capita income are a solid indication of the scalability of the home-buying market in the region. Most families usually take a mortgage to buy a house. Homebuyers’ eligibility to be approved for a mortgage depends on the level of their wages. You can figure out based on the community’s median income if a good supply of individuals in the market can afford to buy your homes. Search for communities where the income is going up. To keep up with inflation and soaring construction and material expenses, you should be able to regularly adjust your prices.

Number of New Jobs Created

The number of jobs created annually is vital information as you reflect on investing in a particular city. Residential units are more quickly sold in a community with a robust job environment. Fresh jobs also entice people arriving to the city from other places, which further strengthens the local market.

Hard Money Loan Rates

Investors who acquire, fix, and sell investment real estate are known to enlist hard money instead of regular real estate loans. This strategy allows them negotiate desirable projects without delay. Locate private money lenders in Montgomery County KS and compare their rates.

Someone who needs to understand more about hard money financing products can discover what they are and the way to utilize them by reviewing our guide titled How Do Hard Money Lenders Work?.

Wholesaling is a real estate investment strategy that involves finding houses that are appealing to investors and putting them under a purchase contract. When an investor who needs the property is spotted, the purchase contract is assigned to the buyer for a fee. The property is bought by the investor, not the wholesaler. The real estate wholesaler does not sell the property — they sell the rights to purchase one.

The wholesaling method of investing includes the use of a title insurance firm that understands wholesale deals and is informed about and active in double close purchases. Hunt for title companies for wholesaling in Montgomery County KS in our directory.

To know how real estate wholesaling works, read our informative guide What Is Wholesaling in Real Estate Investing?. While you conduct your wholesaling activities, put your company in HouseCashin’s list of Montgomery County top property wholesalers. This way your desirable audience will know about your availability and reach out to you.

Factors to Consider

Median Home Prices

Median home prices in the area will inform you if your designated price point is possible in that market. Low median prices are a good indication that there are plenty of homes that might be purchased below market worth, which investors prefer to have.

A fast decline in the market value of real estate may cause the accelerated availability of houses with negative equity that are desired by wholesalers. Wholesaling short sales regularly brings a collection of uncommon benefits. But, be cognizant of the legal challenges. Gather additional data on how to wholesale a short sale with our complete explanation. Once you’ve chosen to try wholesaling short sales, make sure to employ someone on the list of the best short sale attorneys in Montgomery County KS and the best foreclosure lawyers in Montgomery County KS to advise you.

Property Appreciation Rate

Property appreciation rate completes the median price stats. Many investors, like buy and hold and long-term rental investors, specifically want to find that home market values in the area are expanding consistently. A declining median home value will illustrate a weak leasing and home-buying market and will turn off all types of real estate investors.

Population Growth

Population growth data is an indicator that investors will analyze thoroughly. If the community is multiplying, more housing is needed. This combines both leased and ‘for sale’ properties. A location with a shrinking population does not draw the real estate investors you want to purchase your contracts.

Median Population Age

Investors need to participate in a dependable housing market where there is a good pool of tenants, first-time homeowners, and upwardly mobile locals buying better residences. This necessitates a robust, reliable labor force of people who feel optimistic to step up in the residential market. If the median population age is the age of working residents, it signals a dynamic real estate market.

Income Rates

The median household and per capita income in a stable real estate investment market should be going up. Income improvement shows a city that can manage lease rate and home price surge. Investors want this in order to achieve their estimated profits.

Unemployment Rate

Investors will thoroughly estimate the market’s unemployment rate. Tenants in high unemployment markets have a hard time staying current with rent and many will stop making payments completely. Long-term investors won’t purchase real estate in a location like this. Renters can’t transition up to ownership and current homeowners can’t liquidate their property and move up to a bigger residence. Short-term investors will not take a chance on being stuck with real estate they can’t liquidate easily.

Number of New Jobs Created

The amount of more jobs being generated in the region completes an investor’s analysis of a prospective investment spot. New residents settle in a city that has more job openings and they look for a place to live. Long-term investors, such as landlords, and short-term investors which include flippers, are gravitating to regions with good job creation rates.

Average Renovation Costs

Rehab spendings will be crucial to many investors, as they typically purchase inexpensive distressed homes to renovate. When a short-term investor renovates a home, they have to be prepared to resell it for a higher price than the total expense for the acquisition and the rehabilitation. The less you can spend to rehab a home, the more attractive the location is for your prospective purchase agreement clients.

Mortgage note investing professionals purchase debt from mortgage lenders when the investor can buy the note below the balance owed. When this occurs, the investor takes the place of the client’s mortgage lender.

Performing notes are loans where the debtor is regularly on time with their payments. Performing loans earn consistent income for investors. Non-performing notes can be rewritten or you can buy the property at a discount by conducting a foreclosure procedure.

One day, you might have many mortgage notes and need more time to handle them without help. In this event, you could hire one of third party mortgage servicers in Montgomery County KS that would basically turn your portfolio into passive income.

If you decide to utilize this strategy, affix your business to our list of real estate note buying companies in Montgomery County KS. Joining will make your business more visible to lenders providing desirable possibilities to note buyers like yourself.

Factors to consider

Foreclosure Rates

Performing note investors are on lookout for regions having low foreclosure rates. If the foreclosures happen too often, the community might still be good for non-performing note buyers. If high foreclosure rates are causing a slow real estate market, it may be difficult to get rid of the collateral property after you foreclose on it.

Foreclosure Laws

It’s imperative for mortgage note investors to learn the foreclosure regulations in their state. Are you dealing with a mortgage or a Deed of Trust? When using a mortgage, a court will have to allow a foreclosure. You simply need to file a notice and begin foreclosure process if you are utilizing a Deed of Trust.

Mortgage Interest Rates

Note investors acquire the interest rate of the mortgage loan notes that they acquire. Your investment profits will be affected by the interest rate. Interest rates are important to both performing and non-performing mortgage note buyers.

Traditional interest rates may vary by as much as a 0.25% around the United States. Private loan rates can be moderately higher than traditional mortgage rates due to the larger risk taken by private lenders.

A mortgage loan note investor should know the private and conventional mortgage loan rates in their regions at any given time.

Demographics

An efficient note investment strategy incorporates an assessment of the market by using demographic information. It is crucial to know whether enough residents in the neighborhood will continue to have good paying employment and wages in the future.
A young expanding community with a strong employment base can provide a stable income flow for long-term note buyers hunting for performing notes.

Note buyers who acquire non-performing mortgage notes can also make use of vibrant markets. In the event that foreclosure is called for, the foreclosed property is more conveniently sold in a strong market.

Property Values

Lenders need to see as much equity in the collateral as possible. This enhances the chance that a possible foreclosure auction will make the lender whole. The combination of loan payments that lower the loan balance and annual property value appreciation raises home equity.

Property Taxes

Payments for real estate taxes are typically sent to the mortgage lender simultaneously with the mortgage loan payment. The mortgage lender passes on the taxes to the Government to ensure they are paid on time. The mortgage lender will have to take over if the house payments stop or the lender risks tax liens on the property. Tax liens go ahead of all other liens.

If a municipality has a history of rising tax rates, the total home payments in that community are consistently expanding. Borrowers who are having a hard time making their loan payments could drop farther behind and ultimately default.

Real Estate Market Strength

A stable real estate market showing regular value growth is beneficial for all categories of mortgage note buyers. The investors can be confident that, when need be, a repossessed collateral can be sold for an amount that is profitable.

A strong real estate market may also be a profitable place for initiating mortgage notes. It’s another stage of a mortgage note buyer’s career.

Many real estate investment businesses are formed as trusts called Real Estate Investment Trusts or REITs. REITs are created to permit average investors to invest in properties. The average investor is able to come up with the money to invest in a REIT.

Shareholders’ involvement in a REIT falls under passive investing. REITs handle investors’ exposure with a diversified group of properties. Participants have the right to unload their shares at any moment. But REIT investors don’t have the option to choose individual real estate properties or markets. The properties that the REIT decides to acquire are the assets you invest in.

A Real Estate Investment Fund is a mutual fund that owns stocks of real estate firms. Any actual real estate property is possessed by the real estate companies rather than the fund. These funds make it feasible for a wider variety of investors to invest in real estate properties. Funds are not required to distribute dividends unlike a REIT. As with any stock, investment funds’ values grow and go down with their share price.

You can pick a fund that concentrates on a targeted kind of real estate you are knowledgeable about, but you do not get to choose the geographical area of every real estate investment. Your decision as an investor is to select a fund that you rely on to supervise your real estate investments.