Ultimate Shawnee County Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. This is a strategy to expand your investment portfolio not just purchase one investment property. It is a must that you be able to do a “cash-out” refinance loan for the strategy to be successful.

You improve the value of the investment asset above what you spent buying and renovating the property. Then you remove the value you generated from the investment property in a “cash-out” refinance. You acquire your next rental with the cash-out amount and begin anew. You buy more and more houses or condos and repeatedly increase your lease revenues.

If an investor has a large portfolio of investment homes, it seems smart to employ a property manager and create a passive income source. Discover one of property management companies in Shawnee County KS with the help of our comprehensive directory.

Factors to Consider

Population Growth

The growth or fall of a region’s population is a valuable barometer of the community’s long-term attractiveness for lease property investors. An increasing population often illustrates vibrant relocation which equals additional tenants. The market is attractive to businesses and working adults to situate, find a job, and grow households. This equals stable renters, greater lease revenue, and a greater number of likely homebuyers when you need to sell the rental.

Property Taxes

Real estate taxes, upkeep, and insurance spendings are considered by long-term rental investors for determining costs to assess if and how the project will work out. Unreasonable costs in these areas jeopardize your investment’s profitability. High real estate tax rates may signal a fluctuating region where expenditures can continue to grow and must be considered a red flag.

Price to Rent Ratio

The price to rent ratio (p/r) is a signal of what amount of rent can be demanded in comparison to the market worth of the property. If median property values are strong and median rents are low — a high p/r, it will take longer for an investment to pay for itself and reach good returns. A higher p/r signals you that you can demand less rent in that area, a small one signals you that you can collect more.

Median Gross Rents

Median gross rents are an important illustration of the strength of a rental market. Hunt for a consistent increase in median rents during a few years. Reducing rents are a bad signal to long-term investor landlords.

Median Population Age

Median population age will be nearly the age of a typical worker if a region has a good supply of renters. If people are migrating into the area, the median age will not have a challenge remaining at the level of the workforce. If you find a high median age, your stream of renters is shrinking. That is an unacceptable long-term financial prospect.

Employment Base Diversity

A varied amount of employers in the region will improve your prospects for strong returns. When the market’s working individuals, who are your renters, are spread out across a diversified assortment of businesses, you will not lose all of them at the same time (and your property’s market worth), if a major enterprise in the community goes bankrupt.

Unemployment Rate

High unemployment equals smaller amount of tenants and an unstable housing market. Historically strong businesses lose clients when other employers lay off people. Individuals who still have jobs can find their hours and salaries reduced. Existing tenants could fall behind on their rent payments in this scenario.

Income Rates

Median household and per capita income will let you know if the renters that you are looking for are living in the area. Current wage statistics will reveal to you if salary increases will allow you to adjust rental fees to achieve your profit predictions.

Number of New Jobs Created

An increasing job market provides a steady flow of tenants. An environment that creates jobs also increases the amount of stakeholders in the property market. Your plan of leasing and purchasing additional real estate requires an economy that can provide enough jobs.

School Ratings

School ratings in the community will have a strong impact on the local residential market. Employers that are thinking about moving prefer outstanding schools for their employees. Relocating companies bring and draw prospective renters. Recent arrivals who buy a house keep real estate market worth strong. Superior schools are an important component for a strong property investment market.

Property Appreciation Rates

Real estate appreciation rates are an imperative element of your long-term investment approach. You need to be certain that your property assets will appreciate in market price until you need to move them. Weak or shrinking property worth in a city under evaluation is inadmissible.

A furnished residence where renters live for less than 4 weeks is referred to as a short-term rental. Long-term rentals, like apartments, charge lower rent a night than short-term rentals. With renters not staying long, short-term rental units have to be repaired and sanitized on a constant basis.

Short-term rentals serve people on a business trip who are in the region for several days, those who are migrating and want temporary housing, and tourists. Regular property owners can rent their houses or condominiums on a short-term basis via websites like AirBnB and VRBO. An easy method to get into real estate investing is to rent a condo or house you currently keep for short terms.

Short-term rentals require engaging with tenants more repeatedly than long-term ones. That leads to the investor having to frequently handle protests. You might need to defend your legal bases by engaging one of the good Shawnee County real estate attorneys.

Factors to Consider

Short-Term Rental Income

You should imagine the level of rental revenue you’re searching for based on your investment budget. A location’s short-term rental income rates will promptly show you when you can assume to accomplish your projected rental income figures.

Median Property Prices

When acquiring investment housing for short-term rentals, you have to figure out the amount you can afford. Scout for cities where the purchase price you prefer is appropriate for the current median property prices. You can fine-tune your property search by evaluating median values in the area’s sub-markets.

Price Per Square Foot

Price per sq ft provides a general picture of property prices when estimating comparable real estate. If you are examining the same types of property, like condos or detached single-family residences, the price per square foot is more reliable. If you keep this in mind, the price per square foot can give you a broad estimation of property prices.

Short-Term Rental Occupancy Rate

The necessity for additional rental properties in a city can be determined by studying the short-term rental occupancy rate. If the majority of the rental properties have renters, that location necessitates new rental space. Weak occupancy rates indicate that there are more than too many short-term rentals in that location.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a way to evaluate the profitability of an investment venture. Divide the Net Operating Income (NOI) by the total amount of cash invested. The resulting percentage is your cash-on-cash return. High cash-on-cash return means that you will get back your money quicker and the investment will earn more profit. Financed investment purchases will yield stronger cash-on-cash returns as you will be using less of your own money.

Average Short-Term Rental Capitalization (Cap) Rates

Average short-term rental capitalization (cap) rates are widely utilized by real property investors to evaluate the market value of rental properties. Usually, the less a property costs (or is worth), the higher the cap rate will be. Low cap rates show more expensive properties. The cap rate is determined by dividing the Net Operating Income (NOI) by the asking price or market value. This gives you a percentage that is the annual return, or cap rate.

Local Attractions

Big public events and entertainment attractions will attract visitors who will look for short-term rental homes. Tourists go to specific communities to attend academic and sporting events at colleges and universities, see professional sports, cheer for their children as they compete in kiddie sports, have fun at yearly festivals, and go to amusement parks. Natural scenic attractions such as mountains, lakes, beaches, and state and national parks will also attract prospective tenants.

To fix and flip a residential property, you should get it for lower than market worth, perform any needed repairs and updates, then sell the asset for full market worth. Your calculation of repair expenses should be precise, and you have to be able to buy the property for lower than market price.

You also want to analyze the real estate market where the property is located. Select a region with a low average Days On Market (DOM) metric. To effectively “flip” a property, you must sell the repaired house before you have to come up with capital to maintain it.

Help determined real property owners in discovering your firm by placing your services in our catalogue of Shawnee County cash property buyers and the best Shawnee County real estate investors.

In addition, hunt for bird dogs for real estate investors in Shawnee County KS. Specialists located here will assist you by immediately discovering possibly lucrative deals prior to the projects being sold.

Factors to Consider

Median Home Price

Median home price data is a critical gauge for evaluating a future investment market. If values are high, there might not be a consistent supply of run down residential units in the location. You must have cheaper homes for a lucrative fix and flip.

When regional information indicates a sudden decline in property market values, this can highlight the accessibility of potential short sale houses. Investors who team with short sale specialists in Shawnee County KS receive regular notices regarding potential investment properties. Discover how this works by reading our explanation ⁠— How Do You Buy Short Sale Homes?.

Property Appreciation Rate

Are property values in the city moving up, or going down? Stable growth in median values articulates a vibrant investment environment. Speedy market worth surges can reflect a value bubble that is not practical. When you’re buying and selling fast, an uncertain market can hurt your venture.

Average Renovation Costs

Look closely at the possible repair expenses so you will know if you can achieve your projections. The way that the local government goes about approving your plans will affect your project too. To create an on-target financial strategy, you will want to know whether your construction plans will have to involve an architect or engineer.

Population Growth

Population growth metrics allow you to take a peek at housing demand in the city. Flat or declining population growth is an indicator of a sluggish market with not a lot of purchasers to validate your investment.

Median Population Age

The median residents’ age is a direct indication of the availability of ideal homebuyers. The median age in the region needs to be the one of the regular worker. Employed citizens can be the people who are qualified homebuyers. Aging individuals are getting ready to downsize, or relocate into senior-citizen or retiree communities.

Unemployment Rate

While researching an area for investment, look for low unemployment rates. The unemployment rate in a future investment community should be lower than the US average. A positively solid investment city will have an unemployment rate less than the state’s average. Unemployed people cannot buy your property.

Income Rates

Median household and per capita income levels show you whether you can see qualified purchasers in that market for your houses. Most families have to borrow money to buy a home. Homebuyers’ ability to qualify for financing depends on the size of their wages. Median income will let you determine whether the standard home purchaser can buy the houses you intend to sell. You also need to have salaries that are expanding continually. If you need to augment the purchase price of your homes, you want to be certain that your homebuyers’ salaries are also growing.

Number of New Jobs Created

Knowing how many jobs are generated every year in the region can add to your confidence in a city’s real estate market. Residential units are more quickly sold in a community with a vibrant job market. Qualified skilled professionals taking into consideration purchasing a home and settling prefer relocating to places where they will not be unemployed.

Hard Money Loan Rates

Investors who sell rehabbed houses frequently employ hard money loans in place of regular mortgage. This lets them to quickly pick up desirable real property. Locate top hard money lenders for real estate investors in Shawnee County KS so you may match their fees.

People who aren’t experienced regarding hard money financing can find out what they need to know with our resource for newbies — What Is Private Money?.

In real estate wholesaling, you locate a house that real estate investors would consider a lucrative investment opportunity and enter into a contract to buy it. A real estate investor then ”purchases” the purchase contract from you. The contracted property is sold to the investor, not the wholesaler. The wholesaler does not sell the residential property — they sell the rights to purchase one.

The wholesaling method of investing includes the engagement of a title insurance firm that grasps wholesale transactions and is knowledgeable about and active in double close deals. Discover Shawnee County title companies for real estate investors by using our list.

Our extensive guide to wholesaling can be found here: Ultimate Guide to Wholesaling Real Estate. When you select wholesaling, add your investment venture in our directory of the best wholesale real estate investors in Shawnee County KS. This will let your future investor customers locate and call you.

Factors to Consider

Median Home Prices

Median home prices in the city under consideration will immediately notify you if your investors’ required real estate are located there. A community that has a sufficient supply of the reduced-value investment properties that your investors need will show a low median home price.

A fast decrease in the market value of property may cause the accelerated appearance of houses with more debt than value that are desired by wholesalers. Short sale wholesalers frequently reap advantages from this method. Nevertheless, be cognizant of the legal challenges. Get additional details on how to wholesale a short sale with our exhaustive guide. When you’ve determined to try wholesaling short sales, make certain to employ someone on the directory of the best short sale legal advice experts in Shawnee County KS and the best mortgage foreclosure lawyers in Shawnee County KS to help you.

Property Appreciation Rate

Property appreciation rate enhances the median price data. Real estate investors who want to sit on investment assets will need to know that home market values are constantly increasing. Decreasing market values indicate an equally poor leasing and housing market and will dismay investors.

Population Growth

Population growth information is essential for your proposed purchase contract purchasers. If they realize the community is multiplying, they will conclude that additional residential units are needed. They understand that this will include both leasing and purchased residential units. If a population isn’t growing, it does not need new residential units and real estate investors will invest somewhere else.

Median Population Age

A good housing market for investors is strong in all areas, notably renters, who become homeowners, who transition into larger real estate. For this to be possible, there has to be a stable employment market of prospective tenants and homeowners. A market with these attributes will show a median population age that is equivalent to the employed person’s age.

Income Rates

The median household and per capita income will be on the upswing in a vibrant housing market that real estate investors prefer to participate in. Increases in lease and asking prices will be aided by rising income in the region. Investors stay away from markets with unimpressive population wage growth numbers.

Unemployment Rate

The area’s unemployment stats will be a vital consideration for any potential contracted house purchaser. Delayed lease payments and default rates are worse in cities with high unemployment. Long-term investors won’t purchase real estate in a community like this. Renters can’t level up to property ownership and current owners cannot liquidate their property and go up to a larger home. This is a problem for short-term investors buying wholesalers’ contracts to renovate and resell a house.

Number of New Jobs Created

The frequency of jobs appearing each year is a critical part of the housing structure. Job generation signifies added employees who need housing. Long-term investors, such as landlords, and short-term investors such as rehabbers, are gravitating to cities with impressive job production rates.

Average Renovation Costs

An indispensable factor for your client real estate investors, especially house flippers, are rehabilitation expenses in the community. Short-term investors, like home flippers, will not earn anything when the purchase price and the renovation expenses equal to more than the After Repair Value (ARV) of the property. The less you can spend to rehab an asset, the friendlier the area is for your prospective contract clients.

Note investing means purchasing a loan (mortgage note) from a mortgage holder at a discount. This way, the purchaser becomes the mortgage lender to the first lender’s debtor.

When a mortgage loan is being paid as agreed, it is thought of as a performing note. Performing notes are a repeating provider of cash flow. Some note investors look for non-performing notes because if the investor can’t successfully restructure the mortgage, they can always acquire the collateral property at foreclosure for a below market price.

One day, you could produce a group of mortgage note investments and be unable to oversee the portfolio alone. In this event, you can employ one of home loan servicers in Shawnee County KS that will essentially turn your investment into passive income.

When you choose to try this investment model, you ought to put your business in our list of the best mortgage note buying companies in Shawnee County KS. Once you do this, you’ll be discovered by the lenders who announce lucrative investment notes for acquisition by investors like you.

Factors to consider

Foreclosure Rates

Performing loan purchasers research regions showing low foreclosure rates. High rates might signal investment possibilities for non-performing loan note investors, but they should be cautious. However, foreclosure rates that are high may signal an anemic real estate market where selling a foreclosed unit may be tough.

Foreclosure Laws

Mortgage note investors need to understand the state’s regulations regarding foreclosure before buying notes. Are you working with a mortgage or a Deed of Trust? A mortgage dictates that the lender goes to court for permission to start foreclosure. You do not have to have the judge’s agreement with a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage loan notes come with a negotiated interest rate. This is a significant factor in the returns that lenders reach. Interest rates affect the plans of both sorts of mortgage note investors.

Conventional interest rates can vary by as much as a quarter of a percent throughout the country. Private loan rates can be a little higher than traditional loan rates considering the more significant risk taken on by private lenders.

Profitable mortgage note buyers routinely review the interest rates in their region offered by private and traditional mortgage firms.

Demographics

A community’s demographics data allow mortgage note investors to focus their work and appropriately distribute their assets. Mortgage note investors can learn a lot by reviewing the size of the population, how many citizens are employed, the amount they make, and how old the people are.
A youthful growing region with a strong employment base can provide a stable income stream for long-term mortgage note investors searching for performing notes.

Non-performing note investors are interested in similar components for other reasons. If foreclosure is required, the foreclosed house is more easily liquidated in a good property market.

Property Values

Lenders want to see as much home equity in the collateral as possible. If the property value is not higher than the mortgage loan amount, and the lender needs to foreclose, the home might not sell for enough to repay the lender. The combination of loan payments that reduce the loan balance and yearly property market worth appreciation raises home equity.

Property Taxes

Payments for real estate taxes are normally sent to the lender simultaneously with the loan payment. When the property taxes are due, there should be enough payments being held to handle them. If loan payments aren’t current, the lender will have to either pay the taxes themselves, or the taxes become past due. If a tax lien is put in place, the lien takes first position over the lender’s note.

If an area has a history of growing property tax rates, the combined house payments in that city are consistently increasing. This makes it hard for financially strapped homeowners to make their payments, and the loan could become delinquent.

Real Estate Market Strength

An active real estate market with regular value increase is helpful for all kinds of note investors. It is crucial to understand that if you have to foreclose on a property, you won’t have difficulty obtaining an acceptable price for the collateral property.

Note investors additionally have a chance to make mortgage notes directly to homebuyers in sound real estate areas. It’s an additional stage of a note investor’s career.

A REIT, or Real Estate Investment Trust, means a company that invests in income-generating real estate. REITs were developed to enable average people to invest in real estate. The average investor can afford to invest in a REIT.

Participants in real estate investment trusts are entirely passive investors. The liability that the investors are assuming is diversified among a selection of investment assets. Investors can liquidate their REIT shares whenever they wish. Members in a REIT aren’t able to suggest or pick real estate properties for investment. The assets that the REIT decides to buy are the ones you invest in.

Mutual funds that own shares of real estate companies are referred to as real estate investment funds. Any actual property is held by the real estate companies rather than the fund. This is another way for passive investors to diversify their investments with real estate avoiding the high startup cost or risks. Where REITs are meant to distribute dividends to its participants, funds don’t. The return to you is created by changes in the worth of the stock.

You may select a fund that specializes in a predetermined type of real estate you are knowledgeable about, but you do not get to choose the geographical area of each real estate investment. You have to count on the fund’s managers to decide which markets and real estate properties are chosen for investment.