Ultimate Okemos Real Estate Investing Guide for 2024

The term BRRRR is an illustration of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a method for repeated growth. It is required that you are qualified to receive a “cash-out” refinance loan for the strategy to work.

You add to the worth of the investment property above what you spent acquiring and renovating it. Then you get a cash-out mortgage refinance loan that is based on the higher market value, and you extract the balance. You buy your next house with the cash-out capital and begin all over again. This strategy assists you to reliably grow your portfolio and your investment revenue.

Once you have built a substantial group of income creating properties, you may decide to authorize others to manage all rental business while you receive mailbox income. Locate good Okemos property management companies by browsing our list.

Factors to Consider

Population Growth

Population increase or decline tells you if you can depend on sufficient results from long-term investments. A booming population often illustrates vibrant relocation which equals new tenants. Businesses view it as an attractive region to situate their enterprise, and for workers to relocate their households. An expanding population creates a steady base of renters who will stay current with rent increases, and an active property seller’s market if you need to sell any investment properties.

Property Taxes

Real estate taxes, upkeep, and insurance expenses are considered by long-term lease investors for determining expenses to predict if and how the plan will be viable. Investment homes located in high property tax areas will bring lower returns. Areas with unreasonable property tax rates aren’t considered a reliable setting for short- or long-term investment and must be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is a clue to how much rent can be charged in comparison to the cost of the investment property. If median home values are high and median rents are low — a high p/r — it will take longer for an investment to repay your costs and achieve good returns. The lower rent you can collect the higher the price-to-rent ratio, with a low p/r illustrating a stronger rent market.

Median Gross Rents

Median gross rents are a significant sign of the stability of a rental market. You want to discover a market with repeating median rent growth. You will not be able to achieve your investment predictions in an area where median gross rents are declining.

Median Population Age

Median population age in a strong long-term investment market should mirror the typical worker’s age. If people are resettling into the area, the median age will have no problem staying at the level of the labor force. A high median age signals that the existing population is leaving the workplace with no replacement by younger workers moving there. A thriving economy cannot be supported by retiring workers.

Employment Base Diversity

Accommodating diverse employers in the location makes the market not as risky. If the area’s workpeople, who are your tenants, are hired by a diversified group of companies, you will not lose all of them at the same time (together with your property’s market worth), if a significant employer in the area goes out of business.

Unemployment Rate

High unemployment results in smaller amount of tenants and an unsafe housing market. Unemployed people can’t be clients of yours and of related businesses, which produces a ripple effect throughout the region. This can generate increased layoffs or reduced work hours in the region. Even renters who have jobs may find it challenging to stay current with their rent.

Income Rates

Median household and per capita income will illustrate if the renters that you need are residing in the area. Rising incomes also inform you that rental rates can be hiked throughout your ownership of the rental home.

Number of New Jobs Created

An increasing job market results in a consistent pool of tenants. A market that provides jobs also adds more stakeholders in the property market. This reassures you that you can maintain a high occupancy level and purchase more assets.

School Ratings

School ratings in the district will have a large effect on the local residential market. When a business assesses an area for possible expansion, they remember that first-class education is a must for their workforce. Business relocation produces more tenants. Homeowners who relocate to the community have a good influence on home prices. For long-term investing, search for highly respected schools in a potential investment area.

Property Appreciation Rates

Strong real estate appreciation rates are a requirement for a viable long-term investment. You want to ensure that the odds of your investment going up in value in that location are likely. You do not want to spend any time reviewing communities showing depressed property appreciation rates.

A short-term rental is a furnished unit where a renter lives for shorter than four weeks. The nightly rental rates are usually higher in short-term rentals than in long-term units. With tenants fast turnaround, short-term rental units have to be repaired and sanitized on a consistent basis.

Short-term rentals appeal to individuals traveling for business who are in the region for a few nights, those who are moving and want transient housing, and excursionists. Any property owner can turn their home into a short-term rental unit with the tools offered by online home-sharing platforms like VRBO and AirBnB. This makes short-term rental strategy a good technique to pursue real estate investing.

The short-term rental strategy requires dealing with renters more frequently in comparison with yearly rental units. This means that landlords face disputes more often. Think about managing your exposure with the assistance of one of the best real estate lawyers in Okemos MI.

Factors to Consider

Short-Term Rental Income

Initially, determine the amount of rental revenue you need to meet your estimated profits. A community’s short-term rental income levels will promptly reveal to you when you can expect to achieve your projected income figures.

Median Property Prices

You also have to determine the amount you can afford to invest. The median price of real estate will show you whether you can manage to be in that market. You can customize your real estate hunt by looking at median values in the city’s sub-markets.

Price Per Square Foot

Price per square foot gives a general idea of property prices when analyzing similar units. A building with open entrances and vaulted ceilings can’t be contrasted with a traditional-style residential unit with greater floor space. It may be a fast method to compare multiple communities or properties.

Short-Term Rental Occupancy Rate

A closer look at the city’s short-term rental occupancy rate will show you whether there is a need in the region for additional short-term rental properties. If the majority of the rental units are full, that city requires more rental space. If landlords in the area are having issues filling their existing units, you will have trouble finding renters for yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to assess the value of an investment. Take your expected Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The resulting percentage is your cash-on-cash return. If an investment is lucrative enough to recoup the investment budget quickly, you will have a high percentage. Mortgage-based investment purchases can yield better cash-on-cash returns as you will be utilizing less of your own money.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are commonly utilized by real property investors to assess the market value of rental properties. High cap rates indicate that rental units are available in that area for decent prices. If cap rates are low, you can assume to spend a higher amount for real estate in that area. The cap rate is computed by dividing the Net Operating Income (NOI) by the listing price or market value. The result is the annual return in a percentage.

Local Attractions

Short-term rental properties are popular in locations where visitors are drawn by activities and entertainment sites. When a community has sites that periodically hold sought-after events, such as sports stadiums, universities or colleges, entertainment halls, and adventure parks, it can draw people from out of town on a regular basis. Outdoor attractions like mountains, lakes, beaches, and state and national parks can also bring in potential renters.

The fix and flip approach means buying a house that needs fixing up or renovation, putting additional value by upgrading the property, and then liquidating it for a better market worth. The keys to a profitable fix and flip are to pay less for the property than its present market value and to accurately determine the amount needed to make it marketable.

It’s important for you to figure out the rates properties are going for in the area. You always want to analyze the amount of time it takes for real estate to close, which is shown by the Days on Market (DOM) indicator. Selling the property promptly will help keep your expenses low and maximize your profitability.

Help motivated real property owners in discovering your business by featuring your services in our catalogue of Okemos cash property buyers and Okemos property investment firms.

In addition, search for property bird dogs in Okemos MI. Specialists on our list focus on procuring desirable investments while they’re still unlisted.

Factors to Consider

Median Home Price

Median home price data is a crucial gauge for assessing a prospective investment environment. Lower median home prices are an indicator that there should be a good number of homes that can be acquired for lower than market worth. This is a necessary feature of a fix and flip market.

When you notice a sudden weakening in property market values, this could indicate that there are possibly houses in the market that will work for a short sale. You will receive notifications about these opportunities by working with short sale processing companies in Okemos MI. Learn more regarding this type of investment described by our guide How to Buy a Short Sale Home.

Property Appreciation Rate

Are home values in the market moving up, or on the way down? Stable increase in median prices demonstrates a robust investment market. Volatile market value changes are not good, even if it’s a significant and sudden surge. You may end up buying high and liquidating low in an unpredictable market.

Average Renovation Costs

You’ll have to look into construction expenses in any potential investment region. The way that the local government goes about approving your plans will have an effect on your venture as well. You need to be aware if you will need to employ other experts, such as architects or engineers, so you can be prepared for those spendings.

Population Growth

Population increase is a solid indication of the strength or weakness of the community’s housing market. Flat or declining population growth is a sign of a sluggish market with not enough purchasers to justify your effort.

Median Population Age

The median citizens’ age is a simple indicator of the accessibility of possible home purchasers. The median age shouldn’t be less or higher than the age of the typical worker. A high number of such citizens shows a substantial pool of home purchasers. People who are planning to leave the workforce or have already retired have very specific residency requirements.

Unemployment Rate

You want to have a low unemployment rate in your considered community. The unemployment rate in a prospective investment market needs to be lower than the US average. If it’s also less than the state average, it’s even more preferable. Unemployed people won’t be able to purchase your property.

Income Rates

The population’s wage levels tell you if the region’s financial market is stable. Most people need to get a loan to buy a house. To be issued a home loan, a borrower should not be using for monthly repayments a larger amount than a certain percentage of their wage. The median income stats tell you if the location is appropriate for your investment endeavours. You also need to see wages that are growing consistently. When you need to augment the price of your residential properties, you need to be sure that your homebuyers’ wages are also improving.

Number of New Jobs Created

The number of jobs generated yearly is important data as you reflect on investing in a particular market. Houses are more easily liquidated in a city that has a strong job market. Fresh jobs also attract employees migrating to the area from another district, which also reinforces the property market.

Hard Money Loan Rates

Real estate investors who flip upgraded real estate regularly employ hard money loans instead of regular loans. Doing this lets them complete desirable ventures without delay. Find the best private money lenders in Okemos MI so you can compare their costs.

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

In real estate wholesaling, you search for a residential property that real estate investors may consider a good deal and sign a purchase contract to purchase the property. A real estate investor then “buys” the contract from you. The property under contract is bought by the investor, not the wholesaler. You are selling the rights to buy the property, not the home itself.

This business includes using a title firm that is knowledgeable about the wholesale contract assignment operation and is capable and inclined to handle double close purchases. Hunt for wholesale friendly title companies in Okemos MI that we collected for you.

Read more about the way to wholesale property from our definitive guide — Wholesale Real Estate Investing 101 for Beginners. As you conduct your wholesaling venture, place your company in HouseCashin’s directory of Okemos top investment property wholesalers. This will let your possible investor clients locate and reach you.

Factors to Consider

Median Home Prices

Median home prices are essential to discovering cities where residential properties are being sold in your investors’ price range. As investors prefer investment properties that are on sale below market price, you will need to see below-than-average median purchase prices as an implied hint on the potential source of residential real estate that you could buy for below market worth.

A quick drop in real estate values might be followed by a sizeable selection of ‘underwater’ properties that short sale investors search for. Short sale wholesalers often gain advantages from this strategy. However, it also creates a legal risk. Learn details concerning wholesaling short sale properties with our extensive explanation. When you decide to give it a try, make certain you have one of short sale real estate attorneys in Okemos MI and mortgage foreclosure attorneys in Okemos MI to work with.

Property Appreciation Rate

Property appreciation rate boosts the median price data. Investors who want to hold real estate investment properties will have to know that home prices are regularly increasing. A dropping median home price will show a poor rental and housing market and will exclude all kinds of real estate investors.

Population Growth

Population growth figures are a predictor that real estate investors will analyze carefully. If they find that the community is multiplying, they will presume that more residential units are required. There are many people who lease and additional clients who buy houses. When a community is not multiplying, it doesn’t need more houses and real estate investors will search somewhere else.

Median Population Age

A friendly housing market for investors is agile in all aspects, especially renters, who evolve into home purchasers, who transition into larger properties. For this to take place, there needs to be a solid employment market of potential tenants and homebuyers. If the median population age mirrors the age of wage-earning residents, it shows a robust housing market.

Income Rates

The median household and per capita income in a reliable real estate investment market have to be growing. Increases in rent and listing prices have to be sustained by growing income in the market. Investors have to have this in order to reach their projected profits.

Unemployment Rate

Real estate investors whom you reach out to to purchase your sale contracts will regard unemployment figures to be a significant bit of knowledge. Renters in high unemployment cities have a challenging time making timely rent payments and a lot of them will miss payments altogether. Long-term investors who depend on uninterrupted lease payments will suffer in these communities. Real estate 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 home.

Number of New Jobs Created

The frequency of new jobs being generated in the city completes a real estate investor’s evaluation of a prospective investment location. Additional jobs produced lead to more workers who look for spaces to lease and purchase. No matter if your purchaser pool is made up of long-term or short-term investors, they will be drawn to a community with constant job opening creation.

Average Renovation Costs

Repair costs will be critical to most investors, as they usually purchase low-cost neglected houses to update. The purchase price, plus the costs of repairs, should amount to less than the After Repair Value (ARV) of the property to create profitability. Below average restoration expenses make a community more desirable for your top clients — flippers and long-term investors.

Mortgage note investing professionals buy a loan from lenders when the investor can obtain the note below the balance owed. This way, you become the mortgage lender to the initial lender’s debtor.

Performing notes mean loans where the homeowner is always current on their payments. Performing loans provide consistent income for investors. Some mortgage investors want non-performing notes because when the investor cannot satisfactorily rework the mortgage, they can always take the collateral property at foreclosure for a low amount.

Eventually, you might produce a number of mortgage note investments and lack the ability to manage them without assistance. At that stage, you may want to utilize our catalogue of Okemos top mortgage loan servicing companies and redesignate your notes as passive investments.

When you decide to adopt this investment plan, you should place your venture in our directory of the best promissory note buyers in Okemos MI. Joining will make you more visible to lenders providing profitable opportunities to note investors like yourself.

Factors to Consider

Foreclosure Rates

Performing loan buyers are on lookout for areas showing low foreclosure rates. If the foreclosure rates are high, the place may still be profitable for non-performing note buyers. If high foreclosure rates are causing a weak real estate market, it could be challenging to resell the property if you seize it through foreclosure.

Foreclosure Laws

Note investors want to know the state’s laws concerning foreclosure before pursuing this strategy. Some states utilize mortgage paperwork and some use Deeds of Trust. A mortgage dictates that the lender goes to court for permission to start foreclosure. A Deed of Trust authorizes you to file a notice and continue to foreclosure.

Mortgage Interest Rates

The mortgage interest rate is memorialized in the mortgage notes that are bought by note buyers. Your investment profits will be influenced by the mortgage interest rate. Mortgage interest rates are critical to both performing and non-performing note investors.

The mortgage loan rates set by traditional lending companies aren’t identical everywhere. Loans offered by private lenders are priced differently and may be more expensive than conventional mortgage loans.

Mortgage note investors should consistently know the present market interest rates, private and traditional, in potential investment markets.

Demographics

If mortgage note investors are determining where to invest, they’ll examine the demographic statistics from considered markets. The neighborhood’s population increase, employment rate, job market growth, pay standards, and even its median age contain important facts for note investors.
A young expanding market with a diverse employment base can generate a consistent revenue flow for long-term note investors searching for performing mortgage notes.

Note investors who acquire non-performing mortgage notes can also take advantage of vibrant markets. If non-performing note buyers need to foreclose, they will have to have a strong real estate market in order to sell the REO property.

Property Values

The more equity that a borrower has in their home, the better it is for the mortgage note owner. This enhances the chance that a potential foreclosure sale will repay the amount owed. The combination of mortgage loan payments that reduce the loan balance and annual property value appreciation increases home equity.

Property Taxes

Usually homeowners pay property taxes through mortgage lenders in monthly installments while sending their mortgage loan payments. The mortgage lender pays the payments to the Government to ensure the taxes are submitted promptly. If loan payments are not being made, the lender will have to either pay the property taxes themselves, or they become past due. Tax liens take priority over all other liens.

If property taxes keep increasing, the client’s house payments also keep increasing. This makes it complicated for financially strapped borrowers to stay current, so the loan could become past due.

Real Estate Market Strength

Both performing and non-performing note buyers can do business in an expanding real estate environment. Because foreclosure is a crucial component of note investment strategy, increasing property values are crucial to discovering a strong investment market.

Growing markets often generate opportunities for private investors to make the initial mortgage loan themselves. This is a good source of revenue for successful investors.

A REIT, or Real Estate Investment Trust, means a company that invests in income-producing assets. REITs are developed to allow average investors to buy into real estate. Many people currently are capable of investing in a REIT.

Shareholders’ investment in a REIT falls under passive investment. The exposure that the investors are accepting is distributed within a selection of investment assets. Shares may be liquidated whenever it is agreeable for the investor. Something you can’t do with REIT shares is to choose the investment properties. You are confined to the REIT’s selection of properties for investment.

Real estate investment funds are essentially mutual funds that specialize in real estate firms, including REITs. The fund does not hold properties — it holds interest in real estate companies. These funds make it possible for additional investors to invest in real estate. Whereas REITs are required to disburse dividends to its shareholders, funds do not. The value of a fund to someone is the anticipated appreciation of the value of the fund’s shares.

You can find a fund that specializes in a specific category of real estate business, such as multifamily, but you cannot select the fund’s investment properties or markets. You must depend on the fund’s directors to decide which markets and real estate properties are selected for investment.