Ultimate Ottawa County Real Estate Investing Guide for 2024

The term BRRRR is a description of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. If you desire to expand your investments, the BRRRR is a proven strategy to use. This strategy depends on your ability to withdraw cash out when you refinance.

When you have concluded repairing the investment property, its market value should be higher than your complete acquisition and renovation costs. Then you take the value you produced from the asset in a “cash-out” refinance. You employ that money to acquire another house and the operation begins again. This helps you to reliably expand your portfolio and your investment income.

After you have accumulated a large portfolio of income producing residential units, you may choose to authorize others to handle your rental business while you receive recurring income. Discover Ottawa County investment property management firms when you search through our directory of experts.

Factors to Consider

Population Growth

The growth or decrease of the population can signal if that city is interesting to rental investors. An expanding population normally demonstrates vibrant relocation which means additional tenants. Relocating companies are attracted to rising communities offering job security to households who relocate there. An expanding population constructs a reliable base of tenants who will keep up with rent raises, and a vibrant property seller’s market if you need to unload any investment assets.

Property Taxes

Real estate taxes, regular upkeep expenses, and insurance specifically hurt your bottom line. Investment assets situated in excessive property tax communities will have smaller returns. Unreasonable real estate taxes may signal a fluctuating region where expenses can continue to expand and should be considered a warning.

Price to Rent Ratio

The price to rent ratio (p/r) is a clue to what amount of rent can be demanded in comparison to the cost of the asset. The price you can charge in a location will limit the sum you are willing to pay depending on how long it will take to pay back those funds. You are trying to see a lower p/r to be confident that you can set your rents high enough for good returns.

Median Gross Rents

Median gross rents are an accurate barometer of the acceptance of a rental market under discussion. Hunt for a steady expansion in median rents over time. If rental rates are shrinking, you can scratch that location from deliberation.

Median Population Age

The median population age that you are searching for in a vibrant investment environment will be similar to the age of salaried adults. This may also signal that people are relocating into the market. A high median age signals that the existing population is leaving the workplace without being replaced by younger workers migrating in. A vibrant economy can’t be bolstered by retired people.

Employment Base Diversity

Accommodating a variety of employers in the region makes the economy less volatile. When the region’s working individuals, who are your renters, are spread out across a varied number of businesses, you cannot lose all all tenants at once (as well as your property’s value), if a significant company in the city goes out of business.

Unemployment Rate

It’s a challenge to achieve a sound rental market when there is high unemployment. Normally strong businesses lose customers when other employers lay off employees. Individuals who still keep their jobs may find their hours and incomes reduced. Even renters who are employed may find it challenging to stay current with their rent.

Income Rates

Median household and per capita income level is a critical indicator to help you navigate the areas where the tenants you are looking for are living. Your investment research will consider rent and asset appreciation, which will depend on wage augmentation in the community.

Number of New Jobs Created

The more jobs are continuously being created in a region, the more reliable your renter source will be. Additional jobs equal additional renters. This allows you to purchase additional rental assets and replenish existing unoccupied units.

School Ratings

School quality in the community will have a significant impact on the local property market. When a company looks at an area for potential relocation, they remember that first-class education is a requirement for their workers. Relocating businesses relocate and draw prospective renters. New arrivals who buy a residence keep property values strong. You can’t discover a vibrantly growing housing market without good schools.

Property Appreciation Rates

Robust real estate appreciation rates are a must for a profitable long-term investment. You want to know that the odds of your real estate appreciating in price in that community are good. Weak or shrinking property value in a market under assessment is inadmissible.

A furnished house or condo where clients reside for less than a month is regarded as a short-term rental. Short-term rental businesses charge more rent per night than in long-term rental business. With tenants coming and going, short-term rental units need to be repaired and sanitized on a consistent basis.

Home sellers standing by to close on a new home, vacationers, and individuals traveling on business who are stopping over in the city for about week prefer renting a residential unit short term. House sharing websites like AirBnB and VRBO have helped countless residential property owners to participate in the short-term rental industry. This makes short-term rental strategy a feasible method to try residential property investing.

Short-term rental units demand engaging with tenants more frequently than long-term ones. As a result, landlords manage problems regularly. You might want to protect your legal liability by working with one of the best Ottawa County investor friendly real estate lawyers.

Factors to Consider

Short-Term Rental Income

First, figure out how much rental income you should have to meet your anticipated return. A city’s short-term rental income levels will quickly tell you when you can expect to accomplish your estimated rental income range.

Median Property Prices

Thoroughly evaluate the amount that you can afford to spend on additional real estate. Look for communities where the budget you need is appropriate for the current median property prices. You can narrow your area search by looking at the median values in specific neighborhoods.

Price Per Square Foot

Price per square foot can be affected even by the design and layout of residential properties. When the designs of potential homes are very different, the price per square foot might not provide a precise comparison. If you take note of this, the price per square foot can provide you a general view of local prices.

Short-Term Rental Occupancy Rate

The number of short-term rental units that are presently tenanted in a community is vital data for an investor. A high occupancy rate indicates that an additional amount of short-term rental space is wanted. When the rental occupancy levels are low, there is not enough need in the market and you must look in a different place.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to estimate the value of an investment venture. You can determine the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by the cash you are putting in. The result will be a percentage. The higher it is, the sooner your investment funds will be repaid and you’ll start realizing profits. If you take a loan for a fraction of the investment budget and put in less of your own cash, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are commonly used by real property investors to estimate the worth of rentals. High cap rates indicate that rental units are available in that area for fair prices. Low cap rates show higher-priced properties. Divide your estimated Net Operating Income (NOI) by the investment property’s market worth or listing price. The result is the yearly return in a percentage.

Local Attractions

Important public events and entertainment attractions will attract visitors who want short-term rental houses. People come to specific locations to enjoy academic and athletic activities at colleges and universities, see professional sports, support their children as they compete in kiddie sports, have the time of their lives at annual fairs, and stop by adventure parks. Natural tourist sites like mountainous areas, lakes, coastal areas, and state and national nature reserves will also attract potential renters.

When a real estate investor purchases a property below market worth, renovates it so that it becomes more valuable, and then sells the house for a return, they are referred to as a fix and flip investor. To get profit, the investor needs to pay lower than the market value for the property and know what it will cost to rehab the home.

You also have to know the real estate market where the home is located. You always have to research how long it takes for real estate to close, which is determined by the Days on Market (DOM) information. Liquidating real estate fast will keep your costs low and ensure your returns.

Help motivated real property owners in locating your company by featuring it in our catalogue of Ottawa County cash real estate buyers and the best Ottawa County real estate investment firms.

In addition, work with Ottawa County bird dogs for real estate investors. Specialists on our list concentrate on securing little-known investments while they’re still unlisted.

Factors to Consider

Median Home Price

The area’s median home price will help you locate a suitable neighborhood for flipping houses. Low median home prices are a hint that there is a steady supply of residential properties that can be acquired for less than market worth. You need lower-priced properties for a profitable fix and flip.

If you see a quick decrease in home values, this could mean that there are potentially houses in the location that will work for a short sale. You can be notified concerning these possibilities by partnering with short sale processing companies in Ottawa County KS. Learn more concerning this type of investment explained in our guide How to Buy a Short Sale Property.

Property Appreciation Rate

The changes in real estate values in a region are crucial. You’re searching for a steady increase of the area’s real estate market values. Unpredictable price shifts aren’t beneficial, even if it’s a remarkable and quick growth. When you’re acquiring and liquidating rapidly, an unstable market can hurt your investment.

Average Renovation Costs

A comprehensive analysis of the market’s renovation costs will make a substantial impact on your market selection. The way that the municipality processes your application will affect your investment as well. You want to understand if you will need to use other contractors, like architects or engineers, so you can be prepared for those costs.

Population Growth

Population data will inform you if there is steady necessity for homes that you can provide. If there are buyers for your renovated properties, the data will indicate a positive population increase.

Median Population Age

The median citizens’ age can additionally tell you if there are potential homebuyers in the market. If the median age is the same as the one of the average worker, it’s a positive indication. People in the regional workforce are the most stable real estate purchasers. The needs of retired people will probably not be included your investment project plans.

Unemployment Rate

When you see an area having a low unemployment rate, it is a strong indicator of good investment opportunities. An unemployment rate that is less than the US average is what you are looking for. If the community’s unemployment rate is less than the state average, that’s an indication of a preferable investing environment. Non-working individuals won’t be able to purchase your homes.

Income Rates

Median household and per capita income numbers tell you whether you will find enough purchasers in that market for your residential properties. When home buyers acquire a property, they normally need to take a mortgage for the home purchase. Home purchasers’ ability to obtain financing rests on the level of their salaries. Median income will let you know if the regular homebuyer can buy the property you intend to list. In particular, income growth is vital if you are looking to grow your investment business. To keep up with inflation and rising construction and material expenses, you have to be able to periodically mark up your prices.

Number of New Jobs Created

The number of jobs appearing every year is valuable insight as you contemplate on investing in a target community. Homes are more conveniently sold in a market with a vibrant job environment. With additional jobs created, new potential home purchasers also come to the city from other cities.

Hard Money Loan Rates

Fix-and-flip property investors often use hard money loans rather than typical financing. Doing this enables them complete desirable projects without delay. Find real estate hard money lenders in Ottawa County KS and estimate their mortgage rates.

If you are unfamiliar with this funding product, discover more by reading our guide — What Is Hard Money?.

In real estate wholesaling, you find a house that investors would think is a profitable opportunity and sign a contract to purchase it. A real estate investor then “buys” the sale and purchase agreement from you. The owner sells the property under contract to the investor not the real estate wholesaler. The real estate wholesaler doesn’t sell the residential property itself — they simply sell the purchase contract.

This business involves using a title company that’s familiar with the wholesale purchase and sale agreement assignment operation and is able and predisposed to manage double close transactions. Look for title companies that work with wholesalers in Ottawa County KS in HouseCashin’s list.

Read more about this strategy from our comprehensive guide — Real Estate Wholesaling Explained for Beginners. When employing this investment strategy, include your firm in our directory of the best real estate wholesalers in Ottawa County KS. This way your desirable audience will know about your availability and contact you.

Factors to Consider

Median Home Prices

Median home values are key to discovering markets where homes are selling in your real estate investors’ purchase price point. Reduced median purchase prices are a solid indicator that there are plenty of residential properties that could be acquired below market worth, which investors need to have.

Accelerated weakening in property market worth may result in a supply of homes with no equity that appeal to short sale property buyers. Short sale wholesalers frequently gain advantages using this opportunity. However, it also creates a legal liability. Find out more regarding wholesaling short sales with our comprehensive explanation. If you want to give it a try, make sure you have one of short sale real estate attorneys in Ottawa County KS and property foreclosure attorneys in Ottawa County KS to consult with.

Property Appreciation Rate

Property appreciation rate boosts the median price statistics. Some investors, including buy and hold and long-term rental landlords, notably need to find that home values in the market are expanding over time. A weakening median home value will indicate a weak rental and housing market and will disappoint all sorts of investors.

Population Growth

Population growth stats are something that your future real estate investors will be familiar with. When the population is multiplying, new residential units are needed. This combines both leased and ‘for sale’ properties. If a city is declining in population, it does not necessitate additional residential units and investors will not look there.

Median Population Age

A reliable housing market for investors is strong in all areas, notably renters, who become homeowners, who move up into larger real estate. This needs a robust, constant workforce of residents who feel confident enough to move up in the residential market. An area with these attributes will show a median population age that is equivalent to the working resident’s age.

Income Rates

The median household and per capita income show constant growth over time in areas that are good for real estate investment. Income increment shows a place that can absorb rental rate and home purchase price raises. Real estate investors have to have this in order to achieve their projected returns.

Unemployment Rate

Investors will pay close attention to the location’s unemployment rate. High unemployment rate causes many renters to make late rent payments or miss payments entirely. Long-term investors won’t take a home in a location like this. Real estate investors can’t rely on renters moving up into their properties if unemployment rates are high. This is a problem for short-term investors purchasing wholesalers’ agreements to repair and resell a house.

Number of New Jobs Created

Understanding how frequently new jobs appear in the area can help you determine if the home is positioned in a vibrant housing market. Fresh jobs created draw a large number of employees who require places to rent and purchase. Employment generation is helpful for both short-term and long-term real estate investors whom you count on to take on your contracted properties.

Average Renovation Costs

Rehab costs will be crucial to most property investors, as they typically purchase bargain neglected homes to rehab. Short-term investors, like fix and flippers, don’t make money when the acquisition cost and the improvement expenses equal to more money than the After Repair Value (ARV) of the home. The less you can spend to update a property, the more lucrative the community is for your potential purchase agreement buyers.

Buying mortgage notes (loans) works when the loan can be bought for a lower amount than the face value. The debtor makes subsequent mortgage payments to the investor who is now their new lender.

When a mortgage loan is being repaid on time, it’s considered a performing loan. Performing loans bring consistent income for investors. Some mortgage note investors prefer non-performing loans because when they cannot satisfactorily restructure the loan, they can always purchase the collateral property at foreclosure for a low price.

At some time, you could create a mortgage note collection and notice you are needing time to oversee your loans on your own. In this event, you can hire one of note servicing companies in Ottawa County KS that will essentially turn your investment into passive cash flow.

If you choose to utilize this plan, affix your business to our list of promissory note buyers in Ottawa County KS. Once you do this, you’ll be noticed by the lenders who publicize desirable investment notes for procurement by investors like yourself.

Factors to consider

Foreclosure Rates

Performing loan investors seek regions with low foreclosure rates. High rates could indicate investment possibilities for non-performing note investors, however they have to be cautious. The locale should be active enough so that investors can foreclose and resell properties if called for.

Foreclosure Laws

Successful mortgage note investors are thoroughly well-versed in their state’s laws regarding foreclosure. Are you working with a mortgage or a Deed of Trust? A mortgage dictates that you go to court for approval to start foreclosure. You simply have to file a public notice and proceed with foreclosure process if you’re utilizing a Deed of Trust.

Mortgage Interest Rates

Note investors inherit the interest rate of the loan notes that they acquire. That rate will significantly impact your returns. Interest rates are significant to both performing and non-performing mortgage note investors.

Traditional lenders charge dissimilar mortgage interest rates in various locations of the US. Mortgage loans offered by private lenders are priced differently and may be more expensive than traditional loans.

Experienced mortgage note buyers routinely check the rates in their community set by private and traditional mortgage companies.

Demographics

A lucrative note investment strategy incorporates a review of the region by using demographic information. It is important to determine if an adequate number of citizens in the market will continue to have good employment and wages in the future.
Performing note buyers look for customers who will pay on time, developing a repeating income flow of mortgage payments.

Mortgage note investors who seek non-performing notes can also take advantage of growing markets. A vibrant local economy is required if they are to find buyers for collateral properties they’ve foreclosed on.

Property Values

The greater the equity that a homebuyer has in their property, the better it is for you as the mortgage note owner. This improves the possibility that a possible foreclosure auction will make the lender whole. Appreciating property values help improve the equity in the home as the borrower pays down the balance.

Property Taxes

Many borrowers pay property taxes via lenders in monthly portions along with their loan payments. The lender pays the property taxes to the Government to make sure the taxes are submitted promptly. The mortgage lender will have to make up the difference if the house payments cease or the lender risks tax liens on the property. When property taxes are delinquent, the government’s lien leapfrogs any other liens to the head of the line and is satisfied first.

If property taxes keep growing, the client’s loan payments also keep increasing. This makes it hard for financially strapped borrowers to make their payments, so the loan might become delinquent.

Real Estate Market Strength

A city with appreciating property values promises excellent potential for any mortgage note buyer. They can be assured that, if required, a defaulted collateral can be liquidated at a price that makes a profit.

Note investors additionally have a chance to generate mortgage loans directly to homebuyers in reliable real estate regions. For successful investors, this is a valuable part of their business strategy.

A REIT, or Real Estate Investment Trust, is a business that invests in income-generating properties. REITs were created to enable ordinary people to buy into real estate. Most people today are capable of investing in a REIT.

Shareholders’ investment in a REIT classifies as passive investing. Investment exposure is diversified throughout a group of real estate. Investors can sell their REIT shares anytime they want. Something you can’t do with REIT shares is to select the investment properties. You are confined to the REIT’s selection of assets for investment.

Mutual funds that own shares of real estate businesses are referred to as real estate investment funds. Any actual real estate is possessed by the real estate companies, not the fund. This is an additional way for passive investors to allocate their investments with real estate without the high initial expense or liability. Whereas REITs must distribute dividends to its members, funds do not. The profit to investors is generated by changes in the value of the stock.

Investors can pick a fund that concentrates on specific segments of the real estate industry but not specific areas for individual property investment. As passive investors, fund participants are content to let the management team of the fund determine all investment decisions.