Ultimate Oakland County Real Estate Investing Guide for 2024

The acronym BRRRR is an illustration of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. This is a plan to increase your investment assets not just own a single rental home. This method depends on your ability to take money out when you refinance.

The After Repair Value (ARV) of the property has to total more than the total acquisition and repair costs. Then you receive a cash-out refinance loan that is based on the superior property worth, and you extract the balance. You use that money to acquire an additional rental and the operation starts again. This program enables you to reliably add to your portfolio and your investment income.

After you’ve built a substantial list of income creating properties, you can decide to authorize someone else to oversee all operations while you collect repeating income. Discover one of the best property management firms in Oakland County MI with a review of our complete directory.

Factors to Consider

Population Growth

Population increase or fall shows you if you can count on sufficient returns from long-term property investments. If the population increase in a location is strong, then new tenants are obviously coming into the community. Relocating employers are drawn to increasing regions providing job security to households who relocate there. This equates to stable renters, greater rental revenue, and a greater number of likely homebuyers when you intend to unload the rental.

Property Taxes

Real estate taxes, ongoing upkeep expenditures, and insurance directly hurt your profitability. Unreasonable payments in these areas jeopardize your investment’s profitability. Areas with high property tax rates aren’t considered a reliable situation for short- and long-term investment and need to be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property values and median lease rates that will show you how high of a rent the market can handle. How much you can charge in an area will determine the sum you are able to pay determined by the time it will take to repay those funds. The less rent you can collect the higher the price-to-rent ratio, with a low p/r showing a stronger rent market.

Median Gross Rents

Median gross rents illustrate whether a city’s rental market is solid. Median rents should be expanding to warrant your investment. You will not be able to reach your investment predictions in an area where median gross rental rates are going down.

Median Population Age

Median population age in a dependable long-term investment market should equal the typical worker’s age. This could also show that people are moving into the region. If you see a high median age, your stream of renters is reducing. That is a weak long-term financial picture.

Employment Base Diversity

A larger number of companies in the location will increase your prospects for success. If the residents are concentrated in a couple of major businesses, even a small problem in their operations could cost you a lot of renters and raise your risk significantly.

Unemployment Rate

High unemployment results in smaller amount of tenants and an unsteady housing market. Historically strong businesses lose clients when other employers retrench people. This can generate a high amount of retrenchments or reduced work hours in the community. This could increase the instances of delayed rent payments and renter defaults.

Income Rates

Median household and per capita income data is a critical indicator to help you navigate the places where the tenants you prefer are residing. Your investment analysis will use rental fees and property appreciation, which will be determined by salary raise in the region.

Number of New Jobs Created

An expanding job market equates to a consistent pool of tenants. A higher number of jobs equal new renters. This allows you to purchase more rental assets and fill current unoccupied units.

School Ratings

The ranking of school districts has a significant impact on real estate prices throughout the community. Companies that are interested in moving prefer superior schools for their employees. Business relocation attracts more tenants. New arrivals who are looking for a house keep housing values up. Quality schools are a vital component for a robust property investment market.

Property Appreciation Rates

Property appreciation rates are an imperative element of your long-term investment strategy. Investing in real estate that you want to keep without being confident that they will appreciate in market worth is a blueprint for disaster. Substandard or dropping property value in an area under assessment is unacceptable.

A short-term rental is a furnished residence where a renter lives for less than a month. Long-term rental units, such as apartments, require lower rental rates per night than short-term rentals. Because of the increased rotation of renters, short-term rentals require more recurring repairs and tidying.

Home sellers standing by to relocate into a new house, tourists, and corporate travelers who are staying in the location for a few days like to rent a residence short term. Regular property owners can rent their homes on a short-term basis with sites such as AirBnB and VRBO. This makes short-term rentals an easy technique to endeavor real estate investing.

Short-term rental properties demand dealing with renters more repeatedly than long-term rental units. This results in the investor being required to regularly manage complaints. Think about managing your liability with the support of one of the top real estate attorneys in Oakland County MI.

Factors to Consider

Short-Term Rental Income

You need to decide how much rental income needs to be generated to make your investment lucrative. A glance at an area’s present typical short-term rental prices will tell you if that is an ideal area for your plan.

Median Property Prices

When acquiring real estate for short-term rentals, you have to figure out how much you can pay. To check whether a city has opportunities for investment, investigate the median property prices. You can also make use of median values in specific sub-markets within the market to pick cities for investing.

Price Per Square Foot

Price per sq ft can be misleading if you are comparing different buildings. A home with open foyers and high ceilings can’t be compared with a traditional-style residential unit with bigger floor space. If you remember this, the price per sq ft may give you a general estimation of local prices.

Short-Term Rental Occupancy Rate

The demand for new rental units in a city can be verified by going over the short-term rental occupancy level. A high occupancy rate signifies that a new supply of short-term rentals is necessary. When the rental occupancy rates are low, there is not much need in the market and you should explore elsewhere.

Short-Term Rental Cash-on-Cash Return

To find out if it’s a good idea to invest your money in a certain rental unit or city, calculate the cash-on-cash return. You can calculate the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by the cash you are putting in. The answer you get is a percentage. High cash-on-cash return indicates that you will regain your capital more quickly and the purchase will earn more profit. Sponsored investments can reap stronger cash-on-cash returns as you’re spending less of your own funds.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion compares property value to its per-annum income. High cap rates show that properties are available in that region for decent prices. Low cap rates reflect higher-priced real estate. Divide your expected Net Operating Income (NOI) by the investment property’s market worth or asking price. The answer is the annual return in a percentage.

Local Attractions

Short-term rental apartments are popular in communities where sightseers are drawn by events and entertainment venues. When an area has sites that periodically produce sought-after events, such as sports coliseums, universities or colleges, entertainment halls, and amusement parks, it can attract people from other areas on a regular basis. At certain occasions, places with outdoor activities in mountainous areas, at beach locations, or along rivers and lakes will attract large numbers of visitors who want short-term rental units.

To fix and flip real estate, you should get it for lower than market price, perform any needed repairs and upgrades, then dispose of it for after-repair market price. Your evaluation of fix-up spendings must be correct, and you need to be able to purchase the home for lower than market worth.

Assess the prices so that you know the actual After Repair Value (ARV). The average number of Days On Market (DOM) for homes listed in the region is critical. To profitably “flip” real estate, you need to sell the repaired home before you have to put out a budget to maintain it.

To help motivated residence sellers discover you, list your company in our catalogues of home cash buyers in Oakland County MI and real estate investment companies in Oakland County MI.

Additionally, search for the best bird dogs for real estate investors in Oakland County MI. Professionals discovered on our website will help you by immediately finding possibly profitable projects ahead of them being listed.

Factors to Consider

Median Home Price

Median home value data is a valuable gauge for assessing a potential investment region. You’re on the lookout for median prices that are modest enough to suggest investment possibilities in the region. This is a key element of a cost-effective rehab and resale project.

When area information shows a rapid decline in property market values, this can indicate the availability of potential short sale houses. You’ll find out about potential investments when you join up with Oakland County short sale facilitators. Uncover more about this kind of investment by reading our guide How to Buy a Short Sale House.

Property Appreciation Rate

The movements in real estate values in a community are critical. You’re looking for a steady growth of local home values. Accelerated property value surges could indicate a value bubble that is not practical. Acquiring at a bad moment in an unsteady environment can be disastrous.

Average Renovation Costs

Look carefully at the possible renovation expenses so you will be aware if you can achieve your predictions. Other costs, like permits, can shoot up expenditure, and time which may also develop into an added overhead. If you are required to present a stamped set of plans, you will have to include architect’s fees in your expenses.

Population Growth

Population growth is a good indication of the reliability or weakness of the location’s housing market. When there are buyers for your fixed up houses, it will illustrate a positive population growth.

Median Population Age

The median residents’ age is a direct indicator of the accessibility of preferable home purchasers. The median age in the region should be the age of the typical worker. A high number of such residents demonstrates a substantial source of home purchasers. The needs of retired people will most likely not suit your investment venture plans.

Unemployment Rate

When you find a location having a low unemployment rate, it is a solid indication of good investment prospects. An unemployment rate that is less than the nation’s median is preferred. A really reliable investment area will have an unemployment rate less than the state’s average. Without a robust employment base, an area can’t supply you with enough home purchasers.

Income Rates

The population’s wage levels inform you if the community’s economy is scalable. When home buyers acquire a home, they normally have to take a mortgage for the purchase. Home purchasers’ eligibility to take a loan hinges on the size of their income. The median income levels will show you if the area is appropriate for your investment plan. You also prefer to see incomes that are going up continually. Building costs and home prices rise periodically, and you want to know that your prospective purchasers’ income will also climb up.

Number of New Jobs Created

Knowing how many jobs are created each year in the city can add to your confidence in a community’s investing environment. Residential units are more easily sold in a city with a vibrant job environment. Fresh jobs also lure wage earners arriving to the location from other districts, which further reinforces the real estate market.

Hard Money Loan Rates

Fix-and-flip real estate investors frequently use hard money loans rather than typical loans. This plan lets them make profitable projects without holdups. Review Oakland County hard money lenders and contrast financiers’ fees.

In case you are unfamiliar with this financing product, learn more by studying our article — What Is a Hard Money Loan in Real Estate?.

As a real estate wholesaler, you enter a purchase contract to buy a house that some other real estate investors will need. An investor then “buys” the sale and purchase agreement from you. The seller sells the property under contract to the investor not the real estate wholesaler. You are selling the rights to the contract, not the property itself.

This method requires using a title firm that’s knowledgeable about the wholesale purchase and sale agreement assignment procedure and is able and inclined to manage double close transactions. Find Oakland County real estate investor friendly title companies by utilizing our directory.

Discover more about the way to wholesale property from our comprehensive guide — Real Estate Wholesaling 101. While you manage your wholesaling activities, put your company in HouseCashin’s list of Oakland County top property wholesalers. This will enable any likely customers to locate you and reach out.

Factors to Consider

Median Home Prices

Median home prices are key to discovering regions where properties are being sold in your real estate investors’ purchase price level. As real estate investors want investment properties that are available for less than market price, you will want to see reduced median purchase prices as an indirect tip on the possible availability of residential real estate that you may buy for less than market price.

A quick decrease in the value of real estate may cause the accelerated availability of homes with negative equity that are wanted by wholesalers. Short sale wholesalers frequently gain perks from this method. Nevertheless, there could be risks as well. Learn about this from our detailed article How Can You Wholesale a Short Sale Property?. Once you decide to give it a go, make certain you employ one of short sale legal advice experts in Oakland County MI and foreclosure law offices in Oakland County MI to work with.

Property Appreciation Rate

Property appreciation rate completes the median price statistics. Many investors, such as buy and hold and long-term rental investors, specifically need to see that home values in the region are going up steadily. A dropping median home price will indicate a vulnerable leasing and home-buying market and will eliminate all kinds of real estate investors.

Population Growth

Population growth figures are important for your potential contract purchasers. An increasing population will require new residential units. There are a lot of people who lease and additional clients who buy houses. If a location is losing people, it does not necessitate additional housing and investors will not invest there.

Median Population Age

Real estate investors need to be a part of a dynamic housing market where there is a considerable source of tenants, first-time homeowners, and upwardly mobile residents buying bigger properties. This needs a strong, constant workforce of individuals who feel confident enough to shift up in the housing market. If the median population age is the age of wage-earning adults, it signals a robust residential market.

Income Rates

The median household and per capita income will be rising in a strong housing market that investors prefer to participate in. Surges in rent and purchase prices will be sustained by rising income in the market. Real estate investors need this if they are to meet their anticipated profits.

Unemployment Rate

The community’s unemployment stats will be a critical point to consider for any targeted contract buyer. Renters in high unemployment areas have a challenging time paying rent on schedule and some of them will skip rent payments altogether. Long-term real estate investors who depend on steady rental payments will lose revenue in these cities. Real estate investors can’t depend on tenants moving up into their properties if unemployment rates are high. This makes it tough to reach fix and flip investors to buy your purchase agreements.

Number of New Jobs Created

The frequency of new jobs being generated in the market completes an investor’s evaluation of a prospective investment site. Fresh jobs appearing result in an abundance of workers who require spaces to lease and purchase. This is beneficial for both short-term and long-term real estate investors whom you rely on to close your sale contracts.

Average Renovation Costs

Rehab expenses will matter to most real estate investors, as they usually buy bargain neglected properties to renovate. The price, plus the costs of improvement, should be lower than the After Repair Value (ARV) of the house to allow for profitability. Below average renovation expenses make a region more desirable for your priority clients — flippers and other real estate investors.

This strategy means purchasing a loan (mortgage note) from a mortgage holder at a discount. The borrower makes future mortgage payments to the investor who is now their current mortgage lender.

Performing loans mean mortgage loans where the borrower is consistently current on their mortgage payments. They give you long-term passive income. Investors also buy non-performing loans that the investors either restructure to assist the client or foreclose on to purchase the collateral less than market worth.

Someday, you might grow a number of mortgage note investments and not have the time to handle them by yourself. At that juncture, you may need to utilize our directory of Oakland County top home loan servicers and reassign your notes as passive investments.

When you choose to try this investment plan, you ought to place your venture in our directory of the best companies that buy mortgage notes in Oakland County MI. When you do this, you will be noticed by the lenders who market desirable investment notes for procurement by investors such as you.

Factors to consider

Foreclosure Rates

Low foreclosure rates are an indication that the market has opportunities for performing note investors. High rates might signal opportunities for non-performing mortgage note investors, but they have to be careful. However, foreclosure rates that are high sometimes indicate an anemic real estate market where unloading a foreclosed house will likely be tough.

Foreclosure Laws

It’s necessary for note investors to understand the foreclosure regulations in their state. Some states require mortgage documents and others utilize Deeds of Trust. When using a mortgage, a court has to agree to a foreclosure. A Deed of Trust permits you to file a public notice and continue to foreclosure.

Mortgage Interest Rates

Acquired mortgage loan notes contain an agreed interest rate. This is an important factor in the profits that you earn. Regardless of which kind of note investor you are, the note’s interest rate will be crucial to your forecasts.

Conventional interest rates can differ by up to a quarter of a percent throughout the country. Loans issued by private lenders are priced differently and may be more expensive than conventional loans.

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

Demographics

A successful mortgage note investment strategy uses a review of the region by using demographic data. The city’s population increase, employment rate, job market growth, income levels, and even its median age contain important data for mortgage note investors.
Performing note buyers want homebuyers who will pay on time, developing a consistent revenue flow of loan payments.

The same market could also be beneficial for non-performing note investors and their end-game plan. In the event that foreclosure is called for, the foreclosed collateral property is more easily liquidated in a growing market.

Property Values

As a mortgage note buyer, you will try to find deals that have a comfortable amount of equity. If the property value isn’t significantly higher than the mortgage loan amount, and the lender has to start foreclosure, the property might not realize enough to repay the lender. The combination of mortgage loan payments that reduce the mortgage loan balance and annual property market worth appreciation raises home equity.

Property Taxes

Typically, lenders collect the property taxes from the homebuyer each month. The lender pays the property taxes to the Government to make certain they are submitted on time. If the homebuyer stops paying, unless the lender pays the property taxes, they will not be paid on time. When property taxes are past due, the government’s lien supersedes all other liens to the front of the line and is paid first.

Because property tax escrows are collected with the mortgage payment, rising property taxes mean larger house payments. Overdue homeowners may not be able to keep up with rising loan payments and might interrupt making payments altogether.

Real Estate Market Strength

A region with growing property values has excellent opportunities for any note investor. It is good to know that if you have to foreclose on a collateral, you will not have difficulty getting a good price for the collateral property.

Note investors additionally have a chance to generate mortgage loans directly to borrowers in sound real estate areas. For experienced investors, this is a valuable part of their business strategy.

A REIT, or Real Estate Investment Trust, means a company that invests in income-producing properties. REITs were developed to enable average investors to invest in real estate. The typical investor can afford to invest in a REIT.

Shareholders in REITs are completely passive investors. Investment liability is diversified throughout a portfolio of properties. Participants have the right to unload their shares at any time. Shareholders in a REIT are not able to advise or pick real estate for investment. You are confined to the REIT’s collection of assets for investment.

A Real Estate Investment Fund is a mutual fund that possesses stocks of real estate firms. The investment assets are not held by the fund — they are owned by the firms the fund invests in. This is an additional method for passive investors to spread their investments with real estate without the high initial expense or exposure. Investment funds are not required to pay dividends like a REIT. The profit to you is created by appreciation in the value of the stock.

You can select a fund that focuses on a specific kind of real estate firm, such as multifamily, but you cannot choose the fund’s investment assets or markets. Your decision as an investor is to pick a fund that you believe in to supervise your real estate investments.