Ultimate San Juan County Real Estate Investing Guide for 2024

The term BRRRR is a description of a long-term lease strategy — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a plan for repeated expansion. It is a must that you are qualified to do a “cash-out” refinance for the system to be successful.

When you are done with rehabbing the asset, the market value must be more than your total acquisition and fix-up spendings. The property is refinanced using the ARV and the difference, or equity, comes to you in cash. This cash is put into the next property, and so on. You buy more and more assets and continually grow your lease income.

After you have built a substantial collection of income creating residential units, you can prefer to authorize someone else to handle your operations while you get recurring income. Find San Juan County investment property management companies when you search through our directory of professionals.

Factors to Consider

Population Growth

The rise or downturn of an area’s population is an accurate benchmark of its long-term attractiveness for lease property investors. A booming population usually demonstrates vibrant relocation which translates to additional renters. Employers think of this as an attractive place to move their enterprise, and for workers to situate their households. Rising populations create a reliable renter mix that can afford rent bumps and home purchasers who assist in keeping your investment asset prices up.

Property Taxes

Real estate taxes, ongoing upkeep expenses, and insurance directly decrease your profitability. Steep property tax rates will negatively impact a real estate investor’s profits. Steep real estate tax rates may indicate an unreliable community where costs can continue to expand and should be thought of as a red flag.

Price to Rent Ratio

Price to rent ratio (p/r) is a market signal that shows you the amount you can anticipate to collect as rent. How much you can demand in a location will affect the sum you are able to pay depending on the number of years it will take to repay those funds. You need to find a lower p/r to be assured that you can set your rents high enough for good returns.

Median Gross Rents

Median gross rents are a significant indicator of the stability of a rental market. Hunt for a continuous expansion in median rents year over year. You will not be able to reach your investment targets in a community where median gross rental rates are being reduced.

Median Population Age

The median citizens’ age that you are on the lookout for in a reliable investment environment will be approximate to the age of employed individuals. This may also illustrate that people are relocating into the market. When working-age people aren’t coming into the region to replace retirees, the median age will go higher. An active economy can’t be supported by retired individuals.

Employment Base Diversity

Accommodating numerous employers in the area makes the market less risky. When the market’s workpeople, who are your tenants, are hired by a varied assortment of employers, you cannot lose all all tenants at the same time (and your property’s market worth), if a dominant enterprise in town goes out of business.

Unemployment Rate

It is hard to achieve a secure rental market when there is high unemployment. Historically successful companies lose customers when other employers retrench people. This can result in a large number of dismissals or shorter work hours in the market. This may increase the instances of missed rent payments and renter defaults.

Income Rates

Median household and per capita income stats help you to see if a sufficient number of suitable renters dwell in that region. Your investment study will use rental charge and property appreciation, which will be determined by wage raise in the city.

Number of New Jobs Created

A growing job market equals a consistent flow of tenants. Additional jobs mean additional renters. This allows you to acquire more rental assets and replenish existing unoccupied properties.

School Ratings

School quality in the community will have a large impact on the local residential market. Companies that are considering moving need outstanding schools for their workers. Moving businesses bring and draw prospective renters. Recent arrivals who need a place to live keep property market worth strong. Quality schools are an essential factor for a reliable property investment market.

Property Appreciation Rates

Property appreciation rates are an imperative component of your long-term investment plan. Investing in assets that you aim to keep without being positive that they will improve in price is a formula for failure. You do not need to spend any time inspecting markets showing below-standard property appreciation rates.

A furnished house or condo where clients reside for shorter than 30 days is called a short-term rental. Long-term rentals, such as apartments, impose lower payment a night than short-term ones. With tenants coming and going, short-term rental units need to be maintained and sanitized on a constant basis.

Home sellers waiting to close on a new residence, backpackers, and individuals traveling on business who are stopping over in the location for about week enjoy renting apartments short term. Any property owner can convert their property into a short-term rental with the assistance made available by virtual home-sharing sites like VRBO and AirBnB. This makes short-term rental strategy a feasible technique to try residential real estate investing.

Vacation rental owners require dealing one-on-one with the tenants to a larger degree than the owners of yearly rented units. That results in the landlord having to regularly manage protests. You might need to defend your legal exposure by working with one of the best San Juan County investor friendly real estate lawyers.

Factors to Consider

Short-Term Rental Income

You have to find the level of rental income you’re looking for based on your investment calculations. A glance at a city’s current average short-term rental rates will show you if that is an ideal community for your investment.

Median Property Prices

You also have to determine how much you can spare to invest. Search for cities where the budget you count on is appropriate for the present median property worth. You can adjust your property search by looking at median values in the area’s sub-markets.

Price Per Square Foot

Price per sq ft may be inaccurate when you are comparing different properties. When the styles of prospective properties are very contrasting, the price per sq ft might not help you get an accurate comparison. You can use the price per square foot metric to get a good broad idea of home values.

Short-Term Rental Occupancy Rate

A quick check on the city’s short-term rental occupancy rate will show you if there is a need in the district for more short-term rentals. A location that necessitates new rental units will have a high occupancy rate. Low occupancy rates mean that there are already too many short-term rental properties in that market.

Short-Term Rental Cash-on-Cash Return

To know whether you should invest your money in a specific investment asset or community, compute the cash-on-cash return. Divide the Net Operating Income (NOI) by the amount of cash put in. The resulting percentage is your cash-on-cash return. High cash-on-cash return shows that you will get back your funds quicker and the investment will have a higher return. Financed ventures will have a stronger cash-on-cash return because you’re spending less of your capital.

Average Short-Term Rental Capitalization (Cap) Rates

This benchmark shows the comparability of investment property worth to its annual income. High cap rates indicate that properties are available in that location for reasonable prices. When cap rates are low, you can assume to pay more for real estate in that location. You can calculate the cap rate for possible investment real estate by dividing the Net Operating Income (NOI) by the market worth or asking price of the property. The result is the per-annum return in a percentage.

Local Attractions

Short-term rental properties are desirable in places where vacationers are attracted by events and entertainment venues. Vacationers visit specific places to attend academic and athletic activities at colleges and universities, be entertained by competitions, cheer for their kids as they participate in fun events, have fun at yearly carnivals, and go to amusement parks. Outdoor tourist sites such as mountains, waterways, beaches, and state and national nature reserves will also attract potential renters.

When a property investor acquires a property below market value, fixes it and makes it more attractive and pricier, and then sells the house for a profit, they are referred to as a fix and flip investor. The secrets to a profitable fix and flip are to pay less for the home than its actual market value and to carefully compute the amount you need to spend to make it sellable.

You also want to understand the resale market where the home is positioned. The average number of Days On Market (DOM) for properties sold in the community is critical. To effectively “flip” real estate, you need to sell the repaired house before you are required to spend funds to maintain it.

Assist compelled real property owners in locating your company by listing it in our catalogue of San Juan County all cash home buyers and top San Juan County real estate investors.

In addition, team up with San Juan County property bird dogs. Experts located on our website will help you by rapidly discovering conceivably successful deals ahead of the opportunities being sold.

Factors to Consider

Median Home Price

Median property price data is a valuable gauge for assessing a potential investment environment. If values are high, there may not be a stable amount of run down real estate in the market. This is a crucial ingredient of a profit-making rehab and resale project.

If your review shows a rapid drop in home market worth, it might be a heads up that you’ll find real property that meets the short sale criteria. Investors who partner with short sale processors in San Juan County CO receive regular notices concerning potential investment real estate. You will find additional information about short sales in our article ⁠— How to Buy Short Sale Real Estate.

Property Appreciation Rate

Are property values in the city on the way up, or moving down? You want a region where real estate market values are regularly and consistently ascending. Unpredictable market value changes are not good, even if it’s a substantial and quick growth. You may end up purchasing high and liquidating low in an unsustainable market.

Average Renovation Costs

A comprehensive analysis of the region’s construction expenses will make a substantial difference in your market choice. The time it requires for getting permits and the municipality’s requirements for a permit application will also impact your decision. To draft a detailed budget, you’ll need to know whether your plans will be required to use an architect or engineer.

Population Growth

Population growth statistics allow you to take a peek at housing need in the area. Flat or negative population growth is an indication of a weak environment with not enough purchasers to validate your risk.

Median Population Age

The median residents’ age is a direct indication of the availability of potential home purchasers. When the median age is equal to that of the average worker, it’s a positive indication. Employed citizens are the individuals who are potential homebuyers. Aging individuals are getting ready to downsize, or relocate into age-restricted or assisted living communities.

Unemployment Rate

You need to have a low unemployment level in your potential area. An unemployment rate that is less than the US average is preferred. A really reliable investment location will have an unemployment rate less than the state’s average. Non-working people won’t be able to acquire your homes.

Income Rates

Median household and per capita income are an important indication of the robustness of the real estate environment in the location. When property hunters purchase a house, they usually need to take a mortgage for the purchase. The borrower’s wage will determine how much they can borrow and if they can purchase a house. Median income will let you know whether the typical homebuyer can buy the property you are going to put up for sale. Specifically, income increase is critical if you prefer to grow your business. Building spendings and home purchase prices go up periodically, and you want to know that your potential clients’ income will also climb up.

Number of New Jobs Created

The number of jobs generated every year is valuable data as you consider investing in a specific area. Homes are more effortlessly sold in a market with a dynamic job environment. Competent skilled employees taking into consideration buying a house and deciding to settle choose migrating to regions where they will not be unemployed.

Hard Money Loan Rates

Fix-and-flip real estate investors often utilize hard money loans rather than conventional loans. This allows them to immediately pick up desirable properties. Locate hard money lenders in San Juan County CO and compare their mortgage rates.

People who are not well-versed in regard to hard money lenders can uncover what they need to understand with our resource for newbies — How Hard Money Loans Work.

As a real estate wholesaler, you enter a purchase contract to purchase a house that other investors might need. A real estate investor then “buys” the sale and purchase agreement from you. The investor then completes the acquisition. The wholesaler doesn’t sell the residential property itself — they simply sell the purchase contract.

Wholesaling depends on the assistance of a title insurance company that’s experienced with assigning real estate sale agreements and knows how to proceed with a double closing. Find title companies for real estate investors in San Juan County CO on our list.

Discover more about this strategy from our definitive guide — Wholesale Real Estate Investing 101 for Beginners. When pursuing this investing strategy, list your firm in our list of the best real estate wholesalers in San Juan County CO. This will help your possible investor buyers locate and reach you.

Factors to Consider

Median Home Prices

Median home values in the market being considered will quickly show you whether your real estate investors’ preferred real estate are positioned there. A market that has a good source of the marked-down properties that your investors want will have a below-than-average median home purchase price.

A fast depreciation in the market value of real estate might generate the sudden appearance of houses with owners owing more than market worth that are hunted by wholesalers. This investment method regularly carries several uncommon advantages. Nonetheless, be cognizant of the legal challenges. Gather additional data on how to wholesale a short sale home with our comprehensive article. Once you choose to give it a go, make sure you have one of short sale lawyers in San Juan County CO and mortgage foreclosure lawyers in San Juan County CO to confer with.

Property Appreciation Rate

Median home value trends are also critical. Many real estate investors, such as buy and hold and long-term rental landlords, specifically need to see that home market values in the market are increasing consistently. A dropping median home value will show a vulnerable rental and home-buying market and will turn off all kinds of investors.

Population Growth

Population growth figures are a predictor that investors will look at carefully. An increasing population will need new residential units. There are many people who rent and more than enough clients who buy houses. If a region is losing people, it does not need additional residential units and real estate investors will not be active there.

Median Population Age

Investors want to see a steady real estate market where there is a considerable pool of tenants, first-time homeowners, and upwardly mobile locals buying better residences. This needs a vibrant, consistent labor pool of people who feel confident enough to buy up in the residential market. That’s why the community’s median age needs to be the age of skilled workers in the employment market.

Income Rates

The median household and per capita income in a stable real estate investment market should be improving. Income improvement shows a city that can absorb lease rate and housing listing price raises. Investors want this if they are to meet their projected returns.

Unemployment Rate

Real estate investors will take into consideration the region’s unemployment rate. High unemployment rate forces many tenants to delay rental payments or default completely. Long-term investors who count on reliable lease income will do poorly in these places. High unemployment causes poverty that will stop interested investors from buying a home. This can prove to be challenging to find fix and flip real estate investors to buy your buying contracts.

Number of New Jobs Created

The amount of fresh jobs appearing in the region completes an investor’s study of a future investment location. People settle in a location that has additional jobs and they look for a place to live. No matter if your client pool consists of long-term or short-term investors, they will be drawn to a region with regular job opening generation.

Average Renovation Costs

Improvement expenses will be critical to many real estate investors, as they typically buy cheap neglected properties to rehab. The cost of acquisition, plus the costs of renovation, must be lower than the After Repair Value (ARV) of the house to create profit. Give priority status to lower average renovation costs.

This strategy means purchasing a loan (mortgage note) from a lender for less than the balance owed. This way, the purchaser becomes the mortgage lender to the first lender’s debtor.

Performing notes mean mortgage loans where the debtor is always on time with their mortgage payments. Performing notes give repeating income for investors. Non-performing loans can be rewritten or you can acquire the property for less than face value via foreclosure.

One day, you might produce a selection of mortgage note investments and lack the ability to manage them by yourself. At that point, you may need to use our list of San Juan County top home loan servicers and reassign your notes as passive investments.

Should you want to take on this investment method, you should place your venture in our directory of the best real estate note buyers in San Juan County CO. Showing up on our list places you in front of lenders who make desirable investment opportunities accessible to note investors such as yourself.

Factors to consider

Foreclosure Rates

Performing loan investors try to find markets that have low foreclosure rates. High rates could signal opportunities for non-performing note investors, however they need to be careful. The neighborhood ought to be active enough so that note investors can complete foreclosure and unload properties if called for.

Foreclosure Laws

It’s imperative for note investors to know the foreclosure laws in their state. Are you dealing with a Deed of Trust or a mortgage? You might have to obtain the court’s okay to foreclose on a mortgage note’s collateral. Investors do not need the court’s approval with a Deed of Trust.

Mortgage Interest Rates

The interest rate is set in the mortgage loan notes that are acquired by note investors. Your investment return will be affected by the interest rate. No matter the type of mortgage note investor you are, the loan note’s interest rate will be crucial for your predictions.

Traditional interest rates may differ by as much as a quarter of a percent throughout the United States. Mortgage loans offered by private lenders are priced differently and may be more expensive than traditional mortgages.

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

Demographics

A neighborhood’s demographics trends allow mortgage note buyers to focus their efforts and appropriately distribute their resources. The neighborhood’s population growth, unemployment rate, job market growth, wage levels, and even its median age provide important information for note investors.
Performing note investors want borrowers who will pay as agreed, developing a repeating revenue stream of loan payments.

Investors who acquire non-performing notes can also make use of strong markets. In the event that foreclosure is called for, the foreclosed house is more easily liquidated in a good market.

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 possible foreclosure liquidation will repay the amount owed. Growing property values help increase the equity in the property as the homeowner lessens the balance.

Property Taxes

Typically, lenders accept the house tax payments from the borrower every month. The lender pays the taxes to the Government to ensure they are submitted on time. If the borrower stops performing, unless the mortgage lender remits the taxes, they won’t be paid on time. Tax liens leapfrog over any other liens.

Since property tax escrows are collected with the mortgage loan payment, rising property taxes indicate higher mortgage payments. Delinquent clients may not have the ability to keep up with increasing mortgage loan payments and might cease making payments altogether.

Real Estate Market Strength

Both performing and non-performing mortgage note buyers can work in a vibrant real estate market. It is important to understand that if you need to foreclose on a collateral, you will not have trouble receiving an appropriate price for the property.

A growing market may also be a good area for making mortgage notes. For experienced investors, this is a valuable part of their investment strategy.

A REIT, or Real Estate Investment Trust, means a business that makes investments in income-generating properties. REITs were developed to allow average investors to buy into properties. Shares in REITs are affordable to most people.

Shareholders’ involvement in a REIT classifies as passive investing. The liability that the investors are taking is diversified within a group of investment real properties. Shares in a REIT may be unloaded when it is agreeable for the investor. Investors in a REIT are not allowed to suggest or choose assets for investment. Their investment is limited to the properties chosen by their REIT.

A Real Estate Investment Fund is a mutual fund that holds stocks of real estate firms. The investment real estate properties aren’t held by the fund — they are held by the firms in which the fund invests. This is another method for passive investors to diversify their portfolio with real estate without the high initial cost or risks. Fund shareholders may not receive ordinary disbursements the way that REIT members do. The profit to the investor is created by increase in the value of the stock.

You can select a fund that specializes in a distinct category of real estate company, like commercial, but you can’t select the fund’s investment real estate properties or markets. As passive investors, fund shareholders are content to allow the management team of the fund handle all investment selections.