Ultimate Polk County Real Estate Investing Guide for 2024

BRRRR means “Buy, Rehab, Rent, Refinance, Repeat”. This is a strategy to grow your investment portfolio rather than purchase a single investment property. This strategy rests on your ability to extract cash out when you refinance.

You improve the worth of the property beyond what you spent purchasing and rehabbing the asset. Next, you withdraw the equity you generated out of the investment property in a “cash-out” refinance. You purchase your next rental with the cash-out money and do it all over again. You acquire additional assets and continually expand your lease revenues.

If an investor holds a significant collection of investment properties, it is wise to hire a property manager and create a passive income stream. Find one of the best investment property management firms in Polk County IA with the help of our exhaustive list.

Factors to Consider

Population Growth

Population increase or contraction signals you if you can expect sufficient results from long-term property investments. If the population growth in a region is high, then new renters are definitely relocating into the area. The community is appealing to businesses and employees to move, find a job, and grow families. This equates to stable tenants, higher rental income, and more possible homebuyers when you want to unload the asset.

Property Taxes

Real estate taxes, upkeep, and insurance spendings are considered by long-term rental investors for calculating expenses to estimate if and how the efforts will be viable. Investment homes located in high property tax markets will provide weaker profits. If property taxes are unreasonable in a particular area, you will want to search somewhere else.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property prices and median lease rates that will signal how high of a rent the market can tolerate. If median real estate prices are strong and median rents are small — a high p/r — it will take more time for an investment to pay for itself and achieve profitability. You will prefer to discover a lower p/r to be assured that you can set your rents high enough for good profits.

Median Gross Rents

Median gross rents demonstrate whether a city’s lease market is robust. Look for a repeating rise in median rents year over year. You will not be able to achieve your investment targets in an area where median gross rental rates are declining.

Median Population Age

Median population age in a strong long-term investment market should equal the normal worker’s age. This could also show that people are relocating into the community. If you see a high median age, your supply of tenants is reducing. That is a weak long-term economic scenario.

Employment Base Diversity

Accommodating numerous employers in the community makes the economy not as unpredictable. If the residents are employed by a couple of dominant employers, even a minor problem in their business might cost you a lot of tenants and raise your liability tremendously.

Unemployment Rate

It is not possible to maintain a stable rental market if there is high unemployment. The unemployed cannot pay for goods or services. The still employed workers could find their own salaries marked down. This could cause late rent payments and defaults.

Income Rates

Median household and per capita income will tell you if the tenants that you prefer are residing in the area. Historical income information will illustrate to you if wage raises will allow you to adjust rental fees to meet your income calculations.

Number of New Jobs Created

The strong economy that you are looking for will be generating plenty of jobs on a consistent basis. More jobs equal more tenants. This enables you to buy more rental real estate and replenish existing vacancies.

School Ratings

School reputation in the community will have a significant impact on the local residential market. When a company explores a city for possible relocation, they know that good education is a necessity for their workers. Business relocation attracts more tenants. Property values rise thanks to additional employees who are purchasing properties. For long-term investing, look for highly rated schools in a prospective investment market.

Property Appreciation Rates

High property appreciation rates are a prerequisite for a viable long-term investment. You have to ensure that the odds of your property appreciating in market worth in that location are promising. Low or decreasing property appreciation rates should remove a region from being considered.

A short-term rental is a furnished apartment or house where a tenant lives for less than 30 days. Long-term rental units, such as apartments, require lower rent per night than short-term ones. These properties might involve more periodic care and sanitation.

Short-term rentals are popular with corporate travelers who are in the region for a few days, those who are moving and need transient housing, and backpackers. Any property owner can turn their home into a short-term rental with the tools given by virtual home-sharing websites like VRBO and AirBnB. Short-term rentals are regarded as an effective technique to embark upon investing in real estate.

The short-term rental venture requires interaction with renters more frequently compared to yearly lease units. This results in the landlord having to constantly deal with complaints. Give some thought to managing your liability with the aid of one of the top real estate lawyers in Polk County IA.

Factors to Consider

Short-Term Rental Income

You need to calculate the range of rental revenue you are aiming for according to your investment analysis. Understanding the usual amount of rental fees in the market for short-term rentals will enable you to pick a preferable location to invest.

Median Property Prices

When acquiring real estate for short-term rentals, you must know how much you can spend. The median price of real estate will show you if you can manage to invest in that city. You can also utilize median prices in targeted sections within the market to pick communities for investment.

Price Per Square Foot

Price per sq ft provides a basic idea of market values when estimating similar units. If you are analyzing similar kinds of property, like condos or detached single-family homes, the price per square foot is more consistent. If you remember this, the price per sq ft can provide you a general view of real estate prices.

Short-Term Rental Occupancy Rate

A quick check on the community’s short-term rental occupancy rate will tell you if there is a need in the district for more short-term rental properties. When most of the rental properties have renters, that community requires more rentals. Low occupancy rates denote that there are more than enough short-term rentals in that market.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return will show you if the property is a practical use of your own funds. You can compute the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by the cash you are putting in. The return comes as a percentage. High cash-on-cash return shows that you will get back your investment quicker and the purchase will have a higher return. If you borrow part of the investment budget and put in less of your cash, you will receive a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Another metric indicates the market value of a property as a return-yielding asset — average short-term rental capitalization (cap) rate. A rental unit that has a high cap rate as well as charges average market rental prices has a high market value. Low cap rates signify more expensive investment properties. The cap rate is determined by dividing the Net Operating Income (NOI) by the listing price or market worth. The result is the per-annum return in a percentage.

Local Attractions

Short-term rental units are desirable in areas where visitors are attracted by events and entertainment sites. When a region has places that annually produce sought-after events, such as sports coliseums, universities or colleges, entertainment halls, and theme parks, it can attract people from out of town on a recurring basis. Popular vacation sites are situated in mountain and beach areas, along rivers, and national or state parks.

When a property investor buys a house below market value, rehabs it so that it becomes more valuable, and then sells the home for a profit, they are referred to as a fix and flip investor. To keep the business profitable, the property rehabber must pay lower than the market value for the house and calculate what it will take to fix the home.

You also need to understand the real estate market where the property is positioned. Select a city with a low average Days On Market (DOM) indicator. As a “house flipper”, you’ll want to sell the repaired home right away in order to stay away from upkeep spendings that will diminish your profits.

In order that real property owners who have to liquidate their property can effortlessly find you, highlight your availability by using our catalogue of the best real estate cash buyers in Polk County IA along with top real estate investing companies in Polk County IA.

In addition, look for top property bird dogs in Polk County IA. These specialists concentrate on quickly locating lucrative investment opportunities before they are listed on the market.

Factors to Consider

Median Home Price

Median property price data is a critical gauge for assessing a prospective investment area. Low median home values are a sign that there may be a steady supply of residential properties that can be purchased below market value. This is a basic feature of a fix and flip market.

When area information indicates a rapid decrease in real estate market values, this can highlight the availability of potential short sale properties. Investors who partner with short sale processors in Polk County IA get regular notices about potential investment real estate. You’ll find more data concerning short sales in our extensive blog post ⁠— What to Expect when Buying a Short Sale Home?.

Property Appreciation Rate

Are home prices in the area moving up, or on the way down? You are eyeing for a steady growth of local home values. Unreliable value fluctuations aren’t desirable, even if it is a significant and quick increase. When you’re buying and selling rapidly, an unstable market can harm your venture.

Average Renovation Costs

Look carefully at the possible renovation costs so you will be aware whether you can achieve your goals. The time it will take for getting permits and the local government’s rules for a permit application will also influence your plans. To draft a detailed financial strategy, you will want to know if your construction plans will be required to involve an architect or engineer.

Population Growth

Population information will show you whether there is solid demand for homes that you can supply. When there are buyers for your fixed up homes, it will demonstrate a robust population growth.

Median Population Age

The median citizens’ age can additionally show you if there are adequate home purchasers in the community. The median age shouldn’t be lower or higher than that of the regular worker. Employed citizens can be the people who are potential homebuyers. Aging people are getting ready to downsize, or move into age-restricted or retiree neighborhoods.

Unemployment Rate

If you run across a city demonstrating a low unemployment rate, it’s a solid indicator of likely investment opportunities. The unemployment rate in a future investment region needs to be less than the national average. When it is also lower than the state average, it’s much better. If you don’t have a vibrant employment environment, an area won’t be able to provide you with enough homebuyers.

Income Rates

Median household and per capita income are a great indication of the scalability of the real estate conditions in the location. When people purchase a house, they usually have to get a loan for the home purchase. Homebuyers’ ability to be given financing depends on the size of their income. Median income will help you know if the standard home purchaser can afford the houses you are going to sell. You also prefer to have salaries that are improving consistently. To stay even with inflation and increasing building and supply costs, you have to be able to periodically mark up your purchase rates.

Number of New Jobs Created

The number of employment positions created on a consistent basis indicates if income and population increase are feasible. A higher number of citizens purchase homes when the community’s economy is generating jobs. Competent skilled professionals looking into buying a property and settling opt for moving to cities where they will not be unemployed.

Hard Money Loan Rates

People who purchase, fix, and liquidate investment properties prefer to employ hard money instead of conventional real estate loans. Hard money loans enable these investors to take advantage of hot investment opportunities immediately. Discover the best private money lenders in Polk County IA so you can compare their fees.

If you are unfamiliar with this financing product, understand more by reading our article — How Does a Hard Money Loan Work in Real Estate?.

As a real estate wholesaler, you enter a sale and purchase agreement to buy a house that some other real estate investors might want. But you don’t close on the house: once you control the property, you allow another person to become the buyer for a fee. The property is bought by the real estate investor, not the real estate wholesaler. The wholesaler doesn’t sell the residential property itself — they only sell the purchase and sale agreement.

Wholesaling hinges on the involvement of a title insurance firm that’s okay with assignment of purchase contracts and knows how to proceed with a double closing. Find title services for real estate investors in Polk County IA on our list.

Our comprehensive guide to wholesaling can be found here: A-to-Z Guide to Property Wholesaling. When you choose wholesaling, add your investment venture in our directory of the best investment property wholesalers in Polk County IA. This will allow any desirable clients to find you and initiate a contact.

Factors to Consider

Median Home Prices

Median home prices in the region will tell you if your ideal purchase price level is achievable in that location. Since real estate investors need properties that are on sale below market value, you will have to take note of lower median purchase prices as an indirect hint on the potential source of houses that you may acquire for below market worth.

Rapid worsening in property values could lead to a lot of properties with no equity that appeal to short sale flippers. Short sale wholesalers can gain advantages using this method. Nevertheless, it also presents a legal liability. Learn about this from our detailed article How Can You Wholesale a Short Sale Property?. When you have decided to try wholesaling short sale homes, be sure to engage someone on the directory of the best short sale attorneys in Polk County IA and the best foreclosure attorneys in Polk County IA to advise you.

Property Appreciation Rate

Median home purchase price trends are also vital. Real estate investors who intend to sit on real estate investment assets will need to discover that residential property values are regularly going up. Both long- and short-term real estate investors will avoid a city where housing purchase prices are decreasing.

Population Growth

Population growth data is crucial for your potential contract assignment purchasers. An increasing population will require more residential units. This includes both leased and ‘for sale’ properties. A place with a dropping population will not interest the real estate investors you need to purchase your purchase contracts.

Median Population Age

Real estate investors have to be a part of a dynamic housing market where there is a considerable pool of renters, first-time homebuyers, and upwardly mobile citizens buying bigger houses. In order for this to take place, there needs to be a stable employment market of potential tenants and homeowners. When the median population age matches the age of employed residents, it signals a reliable housing market.

Income Rates

The median household and per capita income in a stable real estate investment market have to be going up. Surges in rent and sale prices have to be backed up by improving income in the area. Experienced investors stay out of locations with poor population wage growth figures.

Unemployment Rate

The region’s unemployment numbers are a critical consideration for any targeted contracted house purchaser. Tenants in high unemployment cities have a challenging time staying current with rent and some of them will skip payments entirely. Long-term real estate investors who depend on reliable lease income will suffer in these markets. Tenants can’t transition up to ownership and current homeowners can’t liquidate their property and shift up to a more expensive home. This can prove to be difficult to find fix and flip investors to acquire your buying contracts.

Number of New Jobs Created

The amount of fresh jobs being created in the community completes an investor’s assessment of a future investment spot. New jobs created result in a high number of employees who require homes to rent and buy. Long-term investors, such as landlords, and short-term investors that include rehabbers, are attracted to areas with consistent job production rates.

Average Renovation Costs

An important consideration for your client investors, especially house flippers, are rehabilitation expenses in the location. Short-term investors, like home flippers, will not earn anything when the acquisition cost and the rehab costs equal to more money than the After Repair Value (ARV) of the home. Look for lower average renovation costs.

Buying mortgage notes (loans) is successful when the mortgage loan can be bought for a lower amount than the remaining balance. The debtor makes subsequent loan payments to the mortgage note investor who has become their current lender.

Performing notes are loans where the homeowner is consistently current on their loan payments. They give you monthly passive income. Some mortgage investors prefer non-performing loans because when they cannot satisfactorily restructure the mortgage, they can always take the collateral at foreclosure for a low price.

At some time, you may build a mortgage note portfolio and find yourself needing time to service it by yourself. In this event, you can employ one of residential mortgage servicers in Polk County IA that will basically turn your portfolio into passive cash flow.

If you decide to take on this investment plan, you ought to place your project in our directory of the best real estate note buying companies in Polk County IA. This will make you more noticeable to lenders providing profitable possibilities to note buyers like you.

Factors to consider

Foreclosure Rates

Performing loan purchasers try to find areas that have low foreclosure rates. Non-performing loan investors can cautiously take advantage of cities that have high foreclosure rates too. The neighborhood needs to be active enough so that mortgage note investors can foreclose and liquidate properties if needed.

Foreclosure Laws

Professional mortgage note investors are thoroughly well-versed in their state’s laws for foreclosure. They will know if their state requires mortgages or Deeds of Trust. A mortgage dictates that the lender goes to court for authority to foreclose. You only need to file a public notice and start foreclosure process if you’re working with a Deed of Trust.

Mortgage Interest Rates

Note investors inherit the interest rate of the loan notes that they purchase. Your investment profits will be impacted by the interest rate. Interest rates impact the plans of both kinds of note investors.

Traditional lenders charge different interest rates in different locations of the US. The stronger risk taken by private lenders is accounted for in higher mortgage loan interest rates for their loans in comparison with conventional loans.

Note investors should consistently know the current local mortgage interest rates, private and traditional, in potential investment markets.

Demographics

If mortgage note buyers are choosing where to buy notes, they’ll research the demographic data from considered markets. The community’s population increase, unemployment rate, job market growth, income standards, and even its median age contain important information for you.
A youthful growing region with a vibrant job market can provide a reliable revenue flow for long-term investors looking for performing mortgage notes.

Non-performing mortgage note purchasers are interested in related elements for different reasons. If foreclosure is required, the foreclosed home is more conveniently unloaded in a strong property market.

Property Values

As a mortgage note investor, you should search for deals with a cushion of equity. When you have to foreclose on a mortgage loan without much equity, the foreclosure auction may not even cover the balance invested in the note. As mortgage loan payments lessen the balance owed, and the value of the property appreciates, the homeowner’s equity increases.

Property Taxes

Payments for real estate taxes are most often given to the lender simultaneously with the mortgage loan payment. That way, the mortgage lender makes certain that the taxes are paid when payable. If the homebuyer stops paying, unless the mortgage lender pays the property taxes, they won’t be paid on time. If property taxes are past due, the government’s lien jumps over all other liens to the front of the line and is taken care of first.

If property taxes keep going up, the customer’s house payments also keep going up. Delinquent borrowers might not be able to keep up with growing payments and might stop making payments altogether.

Real Estate Market Strength

A place with appreciating property values offers excellent opportunities for any note buyer. They can be confident that, if required, a defaulted property can be unloaded at a price that makes a profit.

Mortgage note investors also have an opportunity to make mortgage notes directly to homebuyers in reliable real estate regions. It is a supplementary stage of a note investor’s career.

A REIT, or Real Estate Investment Trust, means a firm that invests in income-producing assets. Before REITs were invented, real estate investing was considered too costly for most people. Most investors currently are capable of investing in a REIT.

Shareholders’ investment in a REIT classifies as passive investing. REITs handle investors’ liability with a diversified selection of real estate. Shares may be unloaded whenever it is beneficial for the investor. One thing you cannot do with REIT shares is to choose the investment real estate properties. You are confined to the REIT’s selection of assets for investment.

Real estate investment funds are basically mutual funds that specialize in real estate firms, such as REITs. The investment properties aren’t held by the fund — they’re held by the companies in which the fund invests. This is an additional method for passive investors to diversify their portfolio with real estate avoiding the high initial cost or liability. Funds are not obligated to distribute dividends unlike a REIT. The value of a fund to an investor is the anticipated appreciation of the worth of the fund’s shares.

Investors can choose a fund that focuses on particular segments of the real estate business but not specific locations for each real estate property investment. Your selection as an investor is to choose a fund that you believe in to supervise your real estate investments.