Ultimate Platte County Real Estate Investing Guide for 2024

The term BRRRR is a description of a long-term lease strategy — Buy, Rehab, Rent, Refinance, Repeat. This is a way to expand your investment portfolio rather than purchase a single asset. This strategy depends on your ability to take money out when you refinance.

When you are done with refurbishing the asset, its value must be more than your complete purchase and fix-up costs. Next, you remove the value you created from the investment property in a “cash-out” mortgage refinance. You purchase your next investment property with the cash-out money and begin all over again. You buy additional rental homes and repeatedly increase your lease income.

When your investment real estate portfolio is large enough, you may outsource its management and get passive cash flow. Locate Platte County investment property management companies when you look through our directory of professionals.

Factors to Consider

Population Growth

The expansion or decrease of the population can tell you if that city is of interest to rental investors. If you see strong population expansion, you can be confident that the area is attracting possible tenants to it. Moving businesses are drawn to rising regions giving job security to families who move there. Rising populations maintain a dependable renter mix that can handle rent growth and home purchasers who assist in keeping your investment property prices high.

Property Taxes

Property taxes, maintenance, and insurance expenses are examined by long-term rental investors for forecasting costs to estimate if and how the investment strategy will pay off. Excessive expenses in these categories threaten your investment’s profitability. If property taxes are excessive in a specific market, you probably need to search in a different location.

Price to Rent Ratio

The price to rent ratio (p/r) is a contrast of median property prices and median lease rates that will signal how high of a rent the market can handle. If median real estate prices are strong and median rents are small — a high p/r — it will take longer for an investment to repay your costs and achieve profitability. You will prefer to discover a low p/r to be comfortable that you can price your rental rates high enough to reach good returns.

Median Gross Rents

Median gross rents let you see whether a community’s lease market is robust. Median rents must be increasing to justify your investment. Dropping rents are a bad signal to long-term rental investors.

Median Population Age

Median population age in a reliable long-term investment environment should equal the usual worker’s age. If people are migrating into the neighborhood, the median age will have no problem staying at the level of the labor force. If working-age people are not venturing into the market to follow retirees, the median age will go higher. A thriving real estate market can’t be bolstered by retired professionals.

Employment Base Diversity

A diversified employment base is what an intelligent long-term rental property owner will hunt for. If the city’s workers, who are your renters, are employed by a diversified number of employers, you cannot lose all of them at once (as well as your property’s value), if a significant employer in the area goes out of business.

Unemployment Rate

High unemployment results in fewer renters and an unreliable housing market. Normally successful companies lose customers when other companies lay off employees. This can generate increased retrenchments or fewer work hours in the location. Even tenants who have jobs will find it a burden to pay rent on time.

Income Rates

Median household and per capita income level is a helpful tool to help you discover the regions where the renters you prefer are living. Rising salaries also show you that rental rates can be raised throughout your ownership of the rental home.

Number of New Jobs Created

The more jobs are continually being produced in a city, the more stable your renter supply will be. The workers who fill the new jobs will be looking for housing. Your objective of leasing and purchasing additional rentals requires an economy that will develop enough jobs.

School Ratings

The status of school districts has a strong impact on housing market worth throughout the community. Businesses that are interested in relocating want outstanding schools for their employees. Dependable renters are the result of a vibrant job market. Real estate market values increase with new workers who are buying homes. Reputable schools are an important ingredient for a reliable property investment market.

Property Appreciation Rates

The essence of a long-term investment method is to hold the property. You have to be certain that your real estate assets will rise in market value until you need to move them. Inferior or shrinking property value in a city under assessment is inadmissible.

A furnished property where clients live for less than a month is considered a short-term rental. Long-term rental units, such as apartments, require lower rent per night than short-term rentals. With renters coming and going, short-term rentals need to be maintained and sanitized on a continual basis.

House sellers standing by to relocate into a new house, people on vacation, and corporate travelers who are stopping over in the city for a few days like to rent apartments short term. Regular real estate owners can rent their homes on a short-term basis through sites like AirBnB and VRBO. Short-term rentals are regarded as a smart technique to jumpstart investing in real estate.

Short-term rentals require interacting with occupants more frequently than long-term ones. That dictates that property owners deal with disputes more regularly. Consider protecting yourself and your portfolio by joining one of real estate lawyers in Platte County MO to your network of professionals.

Factors to Consider

Short-Term Rental Income

First, compute how much rental revenue you should earn to meet your anticipated return. A glance at a city’s present typical short-term rental prices will tell you if that is an ideal market for you.

Median Property Prices

You also must determine the amount you can afford to invest. The median market worth of property will tell you if you can afford to invest in that city. You can also use median market worth in targeted sub-markets within the market to pick communities for investment.

Price Per Square Foot

Price per square foot could be misleading when you are looking at different properties. A house with open entryways and high ceilings can’t be compared with a traditional-style residential unit with larger floor space. It can be a quick method to compare several communities or buildings.

Short-Term Rental Occupancy Rate

The percentage of short-term rental properties that are presently tenanted in a market is important information for a rental unit buyer. A market that necessitates new rentals will have a high occupancy rate. Weak occupancy rates mean that there are already too many short-term rentals in that location.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to determine the value of an investment. Divide the Net Operating Income (NOI) by the total amount of cash used. The return comes as a percentage. When an investment is high-paying enough to pay back the investment budget fast, you will receive a high percentage. Lender-funded investments will reach stronger cash-on-cash returns as you’re utilizing less of your own cash.

Average Short-Term Rental Capitalization (Cap) Rates

Another metric conveys the value of a property as a return-yielding asset — average short-term rental capitalization (cap) rate. An income-generating asset that has a high cap rate as well as charging average market rents has a high value. When cap rates are low, you can prepare to spend more for real estate in that area. Divide your projected Net Operating Income (NOI) by the investment property’s value or listing price. The percentage you will obtain is the property’s cap rate.

Local Attractions

Short-term renters are usually individuals who come to a region to attend a yearly special event or visit places of interest. This includes collegiate sporting tournaments, children’s sports contests, schools and universities, huge auditoriums and arenas, fairs, and theme parks. Outdoor scenic attractions such as mountains, lakes, coastal areas, and state and national parks will also attract future renters.

The fix and flip strategy means purchasing a home that needs improvements or renovation, putting added value by enhancing the building, and then selling it for its full market worth. Your estimate of rehab spendings must be on target, and you have to be able to purchase the property for lower than market worth.

It’s important for you to figure out how much homes are being sold for in the region. The average number of Days On Market (DOM) for properties listed in the city is crucial. To successfully “flip” a property, you must dispose of the renovated home before you have to spend cash maintaining it.

To help distressed property sellers locate you, place your company in our catalogues of cash real estate buyers in Platte County MO and real estate investment companies in Platte County MO.

In addition, hunt for bird dogs for real estate investors in Platte County MO. Professionals found here will help you by rapidly finding conceivably lucrative ventures ahead of the opportunities being marketed.

Factors to Consider

Median Home Price

Median property price data is a valuable gauge for estimating a prospective investment community. You are searching for median prices that are low enough to indicate investment opportunities in the area. You need lower-priced properties for a lucrative fix and flip.

When regional data signals a sharp decline in real estate market values, this can point to the accessibility of possible short sale houses. You’ll learn about potential investments when you partner up with Platte County short sale specialists. Uncover more regarding this type of investment described by our guide How to Buy a House as a Short Sale.

Property Appreciation Rate

Dynamics means the track that median home values are taking. You want an area where home values are constantly and continuously going up. Accelerated property value increases can indicate a market value bubble that isn’t reliable. You could end up purchasing high and liquidating low in an unreliable market.

Average Renovation Costs

Look thoroughly at the possible renovation spendings so you will be aware whether you can achieve your predictions. The way that the local government goes about approving your plans will affect your venture too. To create an accurate financial strategy, you’ll want to know if your construction plans will have to involve an architect or engineer.

Population Growth

Population growth figures allow you to take a peek at housing demand in the region. Flat or declining population growth is a sign of a sluggish market with not an adequate supply of purchasers to validate your risk.

Median Population Age

The median residents’ age is a direct indication of the supply of desirable homebuyers. The median age in the market must be the one of the typical worker. People in the local workforce are the most stable real estate buyers. The demands of retired people will most likely not be a part of your investment venture plans.

Unemployment Rate

While evaluating a market for investment, search for low unemployment rates. It should certainly be lower than the US average. When the local unemployment rate is less than the state average, that is a sign of a desirable investing environment. Without a robust employment environment, a city cannot supply you with enough homebuyers.

Income Rates

Median household and per capita income are a great gauge of the scalability of the home-buying environment in the region. Most families need to take a mortgage to buy a home. Homebuyers’ capacity to qualify for a mortgage hinges on the level of their income. Median income will let you analyze if the typical homebuyer can afford the property you intend to put up for sale. In particular, income growth is critical if you plan to scale your business. Building spendings and home purchase prices rise from time to time, and you want to know that your target homebuyers’ wages will also improve.

Number of New Jobs Created

Knowing how many jobs appear every year in the city can add to your assurance in a community’s investing environment. More residents acquire homes when the region’s financial market is adding new jobs. With more jobs created, more prospective homebuyers also come to the area from other towns.

Hard Money Loan Rates

Short-term property investors normally borrow hard money loans rather than traditional loans. Doing this enables investors make profitable deals without delay. Review Platte County real estate hard money lenders and compare financiers’ fees.

If you are inexperienced with this funding vehicle, understand more by studying our guide — How Does a Hard Money Loan Work in Real Estate?.

Wholesaling is a real estate investment approach that requires finding houses that are desirable to real estate investors and putting them under a purchase contract. But you don’t close on it: once you control the property, you allow another person to take your place for a price. The property under contract is bought by the investor, not the real estate wholesaler. You’re selling the rights to the purchase contract, not the property itself.

The wholesaling method of investing involves the engagement of a title insurance company that grasps wholesale transactions and is informed about and involved in double close deals. Find real estate investor friendly title companies in Platte County MO on our list.

To understand how wholesaling works, study our informative guide How Does Real Estate Wholesaling Work?. When following this investment plan, list your business in our list of the best house wholesalers in Platte County MO. This way your possible clientele will see your availability and reach out to you.

Factors to Consider

Median Home Prices

Median home prices in the area will inform you if your required purchase price level is viable in that city. Reduced median prices are a solid sign that there are plenty of houses that can be bought for less than market value, which investors prefer to have.

A fast depreciation in the price of property could generate the sudden availability of properties with owners owing more than market worth that are desired by wholesalers. Short sale wholesalers can receive perks using this strategy. However, there may be challenges as well. Obtain additional data on how to wholesale a short sale house with our thorough guide. If you choose to give it a try, make certain you have one of short sale law firms in Platte County MO and real estate foreclosure attorneys in Platte County MO to consult with.

Property Appreciation Rate

Median home value fluctuations clearly illustrate the home value in the market. Investors who intend to keep investment assets will have to see that housing purchase prices are consistently going up. Declining prices indicate an equally weak rental and home-selling market and will chase away real estate investors.

Population Growth

Population growth numbers are crucial for your proposed contract purchasers. When they find that the community is growing, they will conclude that more housing units are a necessity. This involves both leased and resale properties. A place with a declining community will not attract the investors you need to buy your purchase contracts.

Median Population Age

A dynamic housing market prefers individuals who start off renting, then transitioning into homebuyers, and then buying up in the residential market. To allow this to be possible, there has to be a reliable employment market of potential renters and homeowners. When the median population age mirrors the age of employed residents, it signals a robust housing market.

Income Rates

The median household and per capita income display consistent growth continuously in locations that are ripe for real estate investment. Income hike shows an area that can handle rent and home price increases. Real estate investors need this if they are to achieve their expected returns.

Unemployment Rate

The market’s unemployment numbers are a crucial consideration for any targeted contract buyer. High unemployment rate prompts a lot of renters to delay rental payments or miss payments altogether. Long-term investors won’t buy a house in a city like that. Investors can’t depend on renters moving up into their homes if unemployment rates are high. This is a challenge for short-term investors purchasing wholesalers’ agreements to renovate and resell a home.

Number of New Jobs Created

The frequency of additional jobs being generated in the region completes a real estate investor’s review of a prospective investment spot. Additional jobs generated result in more employees who require properties to lease and buy. Long-term investors, such as landlords, and short-term investors which include flippers, are gravitating to places with impressive job creation rates.

Average Renovation Costs

Rehabilitation costs will matter to most real estate investors, as they usually buy low-cost distressed homes to rehab. The purchase price, plus the expenses for repairs, should reach a sum that is less than the After Repair Value (ARV) of the house to ensure profitability. The cheaper it is to update an asset, the more profitable the market is for your future contract buyers.

Mortgage note investing professionals obtain a loan from lenders when the investor can get the loan for a lower price than the outstanding debt amount. The debtor makes remaining mortgage payments to the investor who has become their current mortgage lender.

When a mortgage loan is being paid as agreed, it is thought of as a performing loan. These notes are a repeating generator of cash flow. Some note investors buy non-performing notes because when the note investor cannot successfully re-negotiate the mortgage, they can always acquire the collateral at foreclosure for a below market price.

Someday, you could have multiple mortgage notes and have a hard time finding additional time to oversee them by yourself. At that point, you might want to employ our directory of Platte County top mortgage servicing companies and reassign your notes as passive investments.

Should you decide to follow this investment strategy, you ought to place your business in our list of the best real estate note buyers in Platte County MO. When you’ve done this, you will be noticed by the lenders who market desirable investment notes for purchase by investors like you.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a signal that the community has opportunities for performing note buyers. If the foreclosures are frequent, the city could nevertheless be good for non-performing note buyers. The neighborhood should be robust enough so that investors can foreclose and resell properties if required.

Foreclosure Laws

Note investors are required to understand the state’s laws regarding foreclosure prior to investing in mortgage notes. They will know if the state uses mortgage documents or Deeds of Trust. A mortgage requires that you go to court for authority to foreclose. You only need to file a notice and begin foreclosure steps if you are using a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage notes have an agreed interest rate. Your investment return will be impacted by the mortgage interest rate. No matter which kind of mortgage note investor you are, the mortgage loan note’s interest rate will be crucial for your estimates.

Conventional interest rates may vary by up to a 0.25% around the US. The higher risk assumed by private lenders is shown in bigger interest rates for their mortgage loans compared to conventional loans.

A mortgage loan note investor ought to be aware of the private as well as traditional mortgage loan rates in their markets at any given time.

Demographics

If mortgage note buyers are choosing where to purchase notes, they’ll examine the demographic indicators from likely markets. Mortgage note investors can learn a great deal by reviewing the extent of the population, how many people are working, what they earn, and how old the citizens are.
A young growing region with a diverse employment base can provide a reliable income stream for long-term note buyers hunting for performing notes.

The same community may also be appropriate for non-performing mortgage note investors and their exit plan. If these investors have to foreclose, they will need a stable real estate market when they sell the collateral property.

Property Values

The more equity that a homeowner has in their property, the more advantageous it is for the mortgage note owner. This enhances the chance that a potential foreclosure sale will repay the amount owed. Rising property values help increase the equity in the house as the borrower reduces the amount owed.

Property Taxes

Usually borrowers pay property taxes through mortgage lenders in monthly portions together with their loan payments. By the time the taxes are payable, there needs to be sufficient money being held to handle them. If mortgage loan payments aren’t being made, the mortgage lender will have to choose between paying the property taxes themselves, or the taxes become delinquent. Tax liens leapfrog over all other liens.

Since property tax escrows are included with the mortgage loan payment, increasing property taxes indicate higher house payments. This makes it complicated for financially challenged borrowers to make their payments, and the loan could become delinquent.

Real Estate Market Strength

A region with increasing property values promises excellent opportunities for any mortgage note investor. It’s critical to know that if you need to foreclose on a collateral, you will not have trouble receiving an acceptable price for the property.

Note investors also have an opportunity to generate mortgage notes directly to borrowers in strong real estate markets. This is a good source of revenue for successful investors.

A trust owning income-generating real estate properties and that sells shares to others is a REIT — Real Estate Investment Trust. REITs were created to enable average people to buy into real estate. Most people at present are able to invest in a REIT.

Participants in such organizations are entirely passive investors. Investment exposure is spread throughout a group of properties. Shares may be sold whenever it is beneficial for you. Something you cannot do with REIT shares is to determine the investment assets. You are restricted to the REIT’s portfolio of assets for investment.

Mutual funds containing shares of real estate firms are termed real estate investment funds. The fund doesn’t hold real estate — it owns shares in real estate companies. These funds make it possible for more people to invest in real estate. Real estate investment funds are not obligated to pay dividends like a REIT. The worth of a fund to an investor is the projected increase of the worth of the shares.

You can pick a fund that specializes in a targeted category of real estate you’re aware of, but you don’t get to choose the geographical area of each real estate investment. You must count on the fund’s directors to select which locations and real estate properties are chosen for investment.