Ultimate Phillips County Real Estate Investing Guide for 2024

A long-term investment strategy that includes Buying a rental, Refurbishing, Renting, Refinancing it, and Repeating the process by employing the cash from the refinance is called BRRRR. BRRRR is a plan for consistent expansion. A key component of this plan is to be able to get a “cash-out” mortgage refinance.

You enhance the worth of the property beyond the amount you spent acquiring and renovating the property. Then you withdraw the equity you created from the investment property in a “cash-out” refinance. You purchase your next property with the cash-out funds and do it all over again. This strategy allows you to steadily increase your portfolio and your investment income.

If your investment real estate collection is big enough, you might contract out its oversight and receive passive income. Find top Phillips County property management companies by looking through our list.

Factors to Consider

Population Growth

The rise or downturn of a region’s population is an accurate barometer of the market’s long-term appeal for rental property investors. If the population increase in a location is strong, then additional renters are assuredly moving into the market. The market is attractive to businesses and employees to move, find a job, and have households. An increasing population develops a stable foundation of renters who will keep up with rent increases, and a vibrant seller’s market if you want to liquidate any investment assets.

Property Taxes

Real estate taxes, ongoing upkeep expenses, and insurance directly affect your profitability. Investment property located in unreasonable property tax cities will provide weaker profits. Regions with steep property taxes are not a stable situation for short- and long-term investment and must be avoided.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of how high of a rent can be demanded in comparison to the value of the investment property. An investor can not pay a large price for an investment asset if they can only demand a modest rent not allowing them to repay the investment in a appropriate timeframe. A high p/r tells you that you can charge modest rent in that community, a lower ratio signals you that you can demand more.

Median Gross Rents

Median gross rents are a true benchmark of the approval of a lease market under examination. Median rents should be expanding to warrant your investment. Dropping rents are an alert to long-term rental investors.

Median Population Age

Median population age should be close to the age of a normal worker if a market has a good stream of renters. If people are resettling into the neighborhood, the median age will have no problem staying at the level of the workforce. A high median age signals that the existing population is aging out with no replacement by younger people relocating in. That is a poor long-term economic prospect.

Employment Base Diversity

Accommodating various employers in the area makes the economy less risky. When there are only one or two major employers, and either of them relocates or disappears, it will lead you to lose paying customers and your property market rates to drop.

Unemployment Rate

You will not get a stable rental income stream in an area with high unemployment. Otherwise successful companies lose customers when other companies retrench people. This can create increased layoffs or shrinking work hours in the location. This could result in late rent payments and tenant defaults.

Income Rates

Median household and per capita income data is a beneficial indicator to help you discover the cities where the renters you need are living. Your investment planning will take into consideration rental charge and asset appreciation, which will be determined by income raise in the community.

Number of New Jobs Created

The more jobs are continuously being created in a region, the more stable your tenant source will be. An environment that creates jobs also adds more people who participate in the housing market. This reassures you that you can sustain a high occupancy rate and acquire additional assets.

School Ratings

School rankings in the area will have a big effect on the local property market. Well-graded schools are a necessity for businesses that are considering relocating. Relocating businesses relocate and draw potential tenants. Recent arrivals who are looking for a place to live keep property market worth high. Superior schools are an essential component for a strong property investment market.

Property Appreciation Rates

The foundation of a long-term investment strategy is to hold the asset. You need to be assured that your property assets will grow in value until you need to dispose of them. You do not want to allot any time surveying cities showing unimpressive property appreciation rates.

Residential units where renters live in furnished accommodations for less than thirty days are called short-term rentals. The per-night rental prices are always higher in short-term rentals than in long-term ones. Short-term rental units may necessitate more continual repairs and cleaning.

House sellers waiting to relocate into a new house, vacationers, and individuals traveling on business who are staying in the location for about week enjoy renting a residential unit short term. House sharing sites like AirBnB and VRBO have helped numerous property owners to participate in the short-term rental business. An easy way to enter real estate investing is to rent a residential property you currently own for short terms.

The short-term rental housing strategy includes dealing with occupants more regularly in comparison with yearly lease properties. This results in the owner being required to constantly manage protests. You might need to protect your legal bases by hiring one of the good Phillips County real estate lawyers.

Factors to Consider

Short-Term Rental Income

You need to determine the level of rental income you are targeting based on your investment analysis. Knowing the average amount of rental fees in the area for short-term rentals will help you select a profitable market to invest.

Median Property Prices

You also must decide the budget you can spare to invest. To see whether a city has opportunities for investment, examine the median property prices. You can tailor your property search by analyzing median values in the location’s sub-markets.

Price Per Square Foot

Price per square foot gives a general idea of values when analyzing similar units. If you are analyzing the same kinds of property, like condominiums or detached single-family residences, the price per square foot is more reliable. You can use the price per square foot criterion to get a good overall idea of property values.

Short-Term Rental Occupancy Rate

A peek into the community’s short-term rental occupancy levels will inform you whether there is demand in the region for additional short-term rental properties. A market that requires additional rental units will have a high occupancy rate. If investors in the community are having issues filling their existing units, you will have difficulty filling yours.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to evaluate 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 your cash investment. The resulting percentage is your cash-on-cash return. When a project is profitable enough to repay the amount invested fast, you will get a high percentage. Financed investments will reap better cash-on-cash returns as you will be spending less of your own money.

Average Short-Term Rental Capitalization (Cap) Rates

One measurement conveys the market value of real estate as a return-yielding asset — average short-term rental capitalization (cap) rate. High cap rates show that income-producing assets are available in that area for decent prices. When cap rates are low, you can prepare to spend more cash for rental units in that community. Divide your projected Net Operating Income (NOI) by the property’s market value or purchase price. This presents you a ratio that is the per-annum return, or cap rate.

Local Attractions

Short-term tenants are usually tourists who visit a community to enjoy a yearly significant activity or visit tourist destinations. People go to specific communities to attend academic and athletic activities at colleges and universities, see competitions, cheer for their kids as they compete in fun events, have the time of their lives at annual fairs, and drop by adventure parks. Must-see vacation spots are located in mountainous and coastal areas, near lakes, and national or state parks.

The fix and flip approach involves purchasing a house that needs fixing up or rehabbing, generating more value by enhancing the building, and then selling it for its full market price. Your calculation of renovation costs should be precise, and you need to be able to purchase the home for lower than market worth.

It’s important for you to understand the rates homes are selling for in the city. The average number of Days On Market (DOM) for houses listed in the community is important. Disposing of real estate quickly will help keep your expenses low and ensure your profitability.

So that homeowners who need to liquidate their property can easily locate you, highlight your status by utilizing our directory of companies that buy homes for cash in Phillips County CO along with top real estate investing companies in Phillips County CO.

In addition, coordinate with Phillips County property bird dogs. Specialists located here will help you by quickly discovering conceivably lucrative ventures ahead of the projects being marketed.

Factors to Consider

Median Home Price

When you search for a promising location for real estate flipping, research the median house price in the city. Lower median home values are a hint that there must be a good number of residential properties that can be purchased below market value. This is a primary feature of a fix and flip market.

When regional data indicates a quick drop in real property market values, this can point to the availability of possible short sale houses. You will find out about potential investments when you team up with Phillips County short sale negotiation companies. Find out how this works by studying our explanation ⁠— How to Buy a House in a Short Sale.

Property Appreciation Rate

The shifts in property market worth in a region are crucial. You are searching for a consistent growth of the area’s property prices. Erratic price fluctuations aren’t desirable, even if it’s a significant and quick increase. Acquiring at the wrong point in an unsteady market can be disastrous.

Average Renovation Costs

Look thoroughly at the possible rehab expenses so you’ll know if you can achieve your targets. Other expenses, like clearances, can increase your budget, and time which may also turn into an added overhead. If you need to show a stamped set of plans, you will have to include architect’s rates in your budget.

Population Growth

Population growth metrics let you take a peek at housing need in the city. When the number of citizens is not going up, there isn’t going to be a sufficient pool of homebuyers for your houses.

Median Population Age

The median population age is a variable that you may not have included in your investment study. The median age in the community needs to be the one of the typical worker. People in the regional workforce are the most reliable home buyers. Older individuals are preparing to downsize, or relocate into senior-citizen or retiree neighborhoods.

Unemployment Rate

You aim to have a low unemployment rate in your considered community. An unemployment rate that is lower than the country’s average is good. When it is also less than the state average, that is much more preferable. If you don’t have a robust employment base, a region won’t be able to provide you with qualified homebuyers.

Income Rates

Median household and per capita income rates tell you if you can get qualified home purchasers in that city for your houses. The majority of individuals who buy a house need a home mortgage loan. Their salary will show how much they can afford and if they can buy a home. Median income can let you analyze whether the typical homebuyer can buy the houses you are going to offer. You also want to have incomes that are growing consistently. Construction expenses and housing purchase prices go up periodically, and you want to be sure that your potential customers’ income will also improve.

Number of New Jobs Created

The number of employment positions created on a regular basis indicates if salary and population growth are feasible. An expanding job market means that a larger number of prospective home buyers are comfortable with purchasing a house there. Fresh jobs also lure people migrating to the city from other places, which further strengthens the property market.

Hard Money Loan Rates

People who buy, repair, and resell investment properties opt to engage hard money and not normal real estate loans. Doing this allows investors negotiate profitable projects without delay. Discover top-rated hard money lenders in Phillips County CO so you may compare their fees.

Anyone who wants to understand more about hard money financing products can find what they are as well as how to use them by reading our guide titled What Is a Hard Money Loan for Real Estate?.

In real estate wholesaling, you find a residential property that real estate investors may count as a profitable opportunity and sign a purchase contract to purchase the property. A real estate investor then “buys” the purchase contract from you. The owner sells the house to the real estate investor instead of the real estate wholesaler. You’re selling the rights to the purchase contract, not the house itself.

Wholesaling hinges on the involvement of a title insurance company that is comfortable with assigned contracts and knows how to work with a double closing. Find Phillips County title services for real estate investors by reviewing our directory.

To understand how wholesaling works, read our insightful article How Does Real Estate Wholesaling Work?. As you select wholesaling, include your investment business on our list of the best wholesale real estate investors in Phillips County CO. This will enable any potential clients to locate you and initiate a contact.

Factors to Consider

Median Home Prices

Median home prices in the community under consideration will immediately show you whether your real estate investors’ target real estate are positioned there. Since real estate investors prefer investment properties that are available for less than market value, you will need to see reduced median prices as an implied hint on the possible supply of homes that you could acquire for lower than market value.

A quick decrease in the price of property could generate the accelerated appearance of properties with negative equity that are hunted by wholesalers. Wholesaling short sale homes often delivers a list of uncommon perks. However, be cognizant of the legal risks. Find out details about wholesaling a short sale property from our exhaustive article. When you want to give it a try, make sure you employ one of short sale law firms in Phillips County CO and foreclosure attorneys in Phillips County CO to work with.

Property Appreciation Rate

Median home market value changes explain in clear detail the home value picture. Some investors, like buy and hold and long-term rental landlords, particularly need to find that residential property values in the area are growing consistently. Both long- and short-term investors will avoid a city where housing prices are depreciating.

Population Growth

Population growth information is something that your prospective investors will be knowledgeable in. When they know the community is growing, they will conclude that new housing is needed. This involves both leased and resale real estate. A place with a declining community will not attract the investors you need to buy your contracts.

Median Population Age

A vibrant housing market necessitates individuals who start off renting, then shifting into homeownership, and then buying up in the residential market. For this to happen, there needs to be a strong employment market of potential renters and homeowners. If the median population age corresponds with the age of wage-earning adults, it illustrates a dynamic real estate market.

Income Rates

The median household and per capita income display consistent growth historically in regions that are desirable for real estate investment. Income hike demonstrates a city that can handle rental rate and housing price surge. Investors want this if they are to reach their projected profits.

Unemployment Rate

Investors whom you reach out to to close your contracts will deem unemployment figures to be an important piece of knowledge. Delayed lease payments and lease default rates are prevalent in areas with high unemployment. This upsets long-term investors who want to lease their residential property. Tenants cannot level up to ownership and existing homeowners can’t put up for sale their property and move up to a more expensive home. This is a challenge for short-term investors buying wholesalers’ agreements to renovate and flip a property.

Number of New Jobs Created

Learning how frequently additional job openings are produced in the city can help you find out if the real estate is situated in a dynamic housing market. Job generation signifies more workers who need a place to live. Long-term investors, like landlords, and short-term investors that include rehabbers, are gravitating to cities with consistent job production rates.

Average Renovation Costs

Rehabilitation expenses have a big impact on an investor’s profit. When a short-term investor repairs a house, they have to be able to resell it for more money than the combined cost of the acquisition and the improvements. The less you can spend to rehab a unit, the more profitable the location is for your future contract clients.

This strategy involves purchasing debt (mortgage note) from a mortgage holder at a discount. This way, the investor becomes the mortgage lender to the initial lender’s borrower.

Performing notes are mortgage loans where the homeowner is always current on their payments. Performing loans bring repeating revenue for investors. Some investors prefer non-performing notes because if the investor cannot satisfactorily restructure the mortgage, they can always acquire the collateral property at foreclosure for a low amount.

At some point, you may grow a mortgage note portfolio and find yourself lacking time to oversee your loans on your own. In this case, you can opt to employ one of third party mortgage servicers in Phillips County CO that would basically turn your investment into passive income.

Should you choose to adopt this investment plan, you should put your venture in our list of the best promissory note buyers in Phillips County CO. Once you do this, you’ll be discovered by the lenders who announce lucrative investment notes for acquisition by investors such as yourself.

Factors to consider

Foreclosure Rates

Investors searching for stable-performing loans to acquire will hope to find low foreclosure rates in the market. Non-performing mortgage note investors can carefully take advantage of locations that have high foreclosure rates too. However, foreclosure rates that are high can signal a weak real estate market where selling a foreclosed house would be a no easy task.

Foreclosure Laws

Professional mortgage note investors are thoroughly aware of their state’s laws for foreclosure. They will know if the state requires mortgages or Deeds of Trust. While using a mortgage, a court has to agree to a foreclosure. You simply have to file a public notice and start foreclosure process if you’re working with a Deed of Trust.

Mortgage Interest Rates

Note investors take over the interest rate of the loan notes that they buy. This is a big determinant in the returns that you achieve. Mortgage interest rates are important to both performing and non-performing mortgage note buyers.

The mortgage loan rates quoted by traditional lenders aren’t identical in every market. Loans issued by private lenders are priced differently and may be higher than conventional mortgage loans.

A mortgage note investor needs to be aware of the private as well as conventional mortgage loan rates in their areas all the time.

Demographics

An area’s demographics information assist mortgage note buyers to streamline their efforts and effectively distribute their assets. It’s critical to determine if a suitable number of residents in the community will continue to have good paying jobs and incomes in the future.
A young expanding market with a strong job market can generate a consistent income flow for long-term note buyers hunting for performing notes.

Non-performing mortgage note investors are interested in related indicators for other reasons. If foreclosure is necessary, the foreclosed collateral property is more conveniently unloaded in a growing property market.

Property Values

The more equity that a homebuyer has in their property, the more advantageous it is for you as the mortgage loan holder. If the investor has to foreclose on a loan with little equity, the foreclosure sale may not even repay the balance owed. Growing property values help raise the equity in the collateral as the borrower reduces the balance.

Property Taxes

Usually, lenders receive the property taxes from the homeowner every month. When the taxes are due, there needs to be enough payments being held to pay them. The mortgage lender will need to compensate if the house payments halt or they risk tax liens on the property. If a tax lien is filed, the lien takes a primary position over the mortgage lender’s note.

Since property tax escrows are included with the mortgage payment, increasing taxes indicate larger mortgage payments. Past due customers may not be able to maintain growing loan payments and could interrupt paying altogether.

Real Estate Market Strength

A growing real estate market with consistent value increase is beneficial for all types of note buyers. The investors can be assured that, if necessary, a foreclosed collateral can be liquidated for an amount that is profitable.

Strong markets often create opportunities for private investors to generate the initial mortgage loan themselves. This is a profitable source of revenue for accomplished investors.

A trust buying income-generating properties and that sells shares to the public is a REIT — Real Estate Investment Trust. REITs are invented to empower average people to buy into real estate. Shares in REITs are not too costly to the majority of investors.

Shareholders in these trusts are completely passive investors. Investment liability is spread across a package of real estate. Shareholders have the option to sell their shares at any moment. Investors in a REIT aren’t allowed to advise or pick real estate properties for investment. You are restricted to the REIT’s collection of assets for investment.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate businesses. The investment assets aren’t held by the fund — they’re owned by the businesses the fund invests in. This is another method for passive investors to spread their investments with real estate without the high initial cost or risks. Funds aren’t required to distribute dividends like a REIT. As with any stock, investment funds’ values rise and drop with their share value.

You can find a fund that focuses on a distinct type of real estate business, like multifamily, but you cannot select the fund’s investment assets or markets. Your decision as an investor is to select a fund that you trust to oversee your real estate investments.