Ultimate Southaven Real Estate Investing Guide for 2024

The abbreviation BRRRR is an illustration of a long-term rental strategy — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a system for repeated growth. This method hinges on your ability to remove cash out when you refinance.

When you have finished improving the property, its value should be more than your total acquisition and fix-up expenses. Then you receive a cash-out refinance loan that is based on the larger property worth, and you take out the difference. You acquire your next rental with the cash-out amount and begin anew. You acquire more and more assets and constantly increase your rental revenues.

Once you’ve built a considerable portfolio of income generating real estate, you may choose to allow others to manage all operations while you receive repeating net revenues. Find Southaven property management agencies when you search through our list of experts.

Factors to Consider

Population Growth

The increase or deterioration of a market’s population is an accurate barometer of its long-term desirability for rental investors. When you find strong population growth, you can be confident that the community is attracting likely tenants to it. Relocating employers are attracted to increasing locations offering job security to families who move there. An expanding population constructs a steady foundation of renters who will stay current with rent increases, and a robust property seller’s market if you need to liquidate your assets.

Property Taxes

Real estate taxes, maintenance, and insurance expenses are considered by long-term lease investors for calculating expenses to estimate if and how the plan will pay off. Excessive expenses in these areas jeopardize your investment’s profitability. Unreasonable real estate taxes may predict a fluctuating area where costs can continue to increase and should be thought of as a red flag.

Price to Rent Ratio

Price to rent ratio (p/r) is a market signal that informs you the amount you can predict to charge as rent. The amount of rent that you can demand in a location will limit the amount you are able to pay depending on the number of years it will take to repay those funds. A high p/r shows you that you can demand lower rent in that area, a low p/r tells you that you can demand more.

Median Gross Rents

Median gross rents are an accurate yardstick of the desirability of a lease market under discussion. Median rents must be expanding to justify your investment. You will not be able to reach your investment targets in a market where median gross rental rates are shrinking.

Median Population Age

Median population age should be similar to the age of a typical worker if an area has a strong source of tenants. This can also show that people are moving into the city. A high median age illustrates that the current population is retiring without being replaced by younger people relocating there. That is an unacceptable long-term financial scenario.

Employment Base Diversity

A diverse employment base is something a wise long-term rental property investor will look for. When there are only one or two major employers, and either of them relocates or disappears, it can lead you to lose tenants and your asset market prices to go down.

Unemployment Rate

You won’t benefit from a steady rental income stream in a region with high unemployment. People who don’t have a job can’t pay for goods or services. Those who continue to have workplaces can find their hours and incomes decreased. Current renters might become late with their rent in these circumstances.

Income Rates

Median household and per capita income level is a useful indicator to help you navigate the regions where the tenants you prefer are living. Current wage statistics will reveal to you if income raises will enable you to mark up rental rates to achieve your income projections.

Number of New Jobs Created

A growing job market equates to a steady supply of tenants. An economy that creates jobs also increases the amount of players in the housing market. Your objective of renting and buying more assets requires an economy that will produce new jobs.

School Ratings

School quality in the community will have a strong impact on the local housing market. Well-accredited schools are a necessity for business owners that are looking to relocate. Good tenants are a consequence of a strong job market. Property market values benefit thanks to additional employees who are buying homes. Quality schools are an essential ingredient for a robust property investment market.

Property Appreciation Rates

The foundation of a long-term investment plan is to keep the property. Investing in assets that you intend to hold without being certain that they will increase in market worth is a recipe for failure. You don’t need to spend any time looking at cities with poor property appreciation rates.

A short-term rental is a furnished residence where a renter stays for shorter than one month. Short-term rental owners charge a higher rate a night than in long-term rental business. Because of the increased number of tenants, short-term rentals necessitate more frequent care and cleaning.

Short-term rentals appeal to people traveling for business who are in town for a couple of days, those who are moving and want temporary housing, and tourists. Ordinary real estate owners can rent their homes on a short-term basis via sites like AirBnB and VRBO. An easy technique to get started on real estate investing is to rent a residential property you currently own for short terms.

Vacation rental unit owners necessitate working personally with the renters to a greater extent than the owners of annually leased units. That leads to the investor being required to frequently deal with grievances. Ponder covering yourself and your properties by adding any of real estate law offices in Southaven MS to your network of professionals.

Factors to Consider

Short-Term Rental Income

You should calculate the range of rental income you are targeting according to your investment analysis. Knowing the typical amount of rent being charged in the region for short-term rentals will enable you to pick a preferable market to invest.

Median Property Prices

You also must know how much you can allow to invest. To see whether an area has potential for investment, look at the median property prices. You can fine-tune your real estate search by examining median market worth in the location’s sub-markets.

Price Per Square Foot

Price per square foot gives a broad picture of values when estimating comparable real estate. A building with open entrances and vaulted ceilings cannot be compared with a traditional-style residential unit with bigger floor space. Price per sq ft may be a fast method to compare different sub-markets or properties.

Short-Term Rental Occupancy Rate

The percentage of short-term rentals that are currently tenanted in an area is critical knowledge for a future rental property owner. A community that demands additional rental properties will have a high occupancy rate. Low occupancy rates communicate that there are already too many short-term units in that community.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return can show you if the property is a practical use of your cash. You can determine the cash-on-cash return by determining your Net Operating Income (NOI) and dividing it by the cash you are putting in. The result is a percentage. High cash-on-cash return shows that you will recoup your capital faster and the investment will have a higher return. Lender-funded investment purchases can yield higher cash-on-cash returns as you will be spending less of your own money.

Average Short-Term Rental Capitalization (Cap) Rates

Another metric shows the market value of a property as a cash flow asset — average short-term rental capitalization (cap) rate. An investment property that has a high cap rate as well as charges market rents has a good value. When cap rates are low, you can prepare to spend more money for rental units in that location. The cap rate is determined by dividing the Net Operating Income (NOI) by the purchase price or market value. The answer is the per-annum return in a percentage.

Local Attractions

Short-term tenants are commonly people who come to a region to attend a recurrent important event or visit tourist destinations. This includes major sporting tournaments, children’s sports competitions, colleges and universities, huge concert halls and arenas, carnivals, and amusement parks. At certain occasions, locations with outdoor activities in mountainous areas, coastal locations, or along rivers and lakes will draw large numbers of tourists who need short-term rental units.

The fix and flip strategy involves acquiring a home that demands repairs or renovation, creating more value by enhancing the property, and then liquidating it for its full market price. The essentials to a successful fix and flip are to pay less for real estate than its as-is worth and to carefully compute the amount needed to make it sellable.

You also need to evaluate the real estate market where the house is positioned. You always have to check the amount of time it takes for properties to sell, which is shown by the Days on Market (DOM) metric. Liquidating the property fast will help keep your costs low and guarantee your returns.

To help motivated residence sellers locate you, enter your firm in our directories of all cash home buyers in Southaven MS and real estate investors in Southaven MS.

Additionally, look for top real estate bird dogs in Southaven MS. Specialists on our list specialize in procuring little-known investment opportunities while they’re still under the radar.

Factors to Consider

Median Home Price

When you hunt for a profitable market for home flipping, check the median housing price in the district. If values are high, there might not be a consistent source of fixer-upper real estate available. You must have inexpensive homes for a profitable fix and flip.

If your review indicates a rapid drop in housing values, it might be a sign that you will find real property that meets the short sale criteria. Investors who partner with short sale specialists in Southaven MS get continual notices about possible investment real estate. Discover how this is done by reading our article ⁠— How to Buy a House in a Short Sale.

Property Appreciation Rate

Are property prices in the region going up, or moving down? You have to have a city where real estate market values are constantly and continuously moving up. Unsteady price fluctuations aren’t beneficial, even if it is a substantial and quick growth. You may wind up purchasing high and liquidating low in an unstable market.

Average Renovation Costs

A thorough review of the city’s construction costs will make a substantial impact on your location choice. The manner in which the local government goes about approving your plans will have an effect on your venture as well. To create a detailed financial strategy, you’ll need to know whether your plans will have to involve an architect or engineer.

Population Growth

Population growth figures provide a look at housing need in the city. Flat or reducing population growth is an indication of a poor market with not a lot of purchasers to justify your effort.

Median Population Age

The median citizens’ age is an indicator that you may not have considered. The median age in the region needs to equal the one of the usual worker. Workforce can be the people who are probable homebuyers. The goals of retirees will most likely not suit your investment venture plans.

Unemployment Rate

You want to have a low unemployment level in your considered city. An unemployment rate that is lower than the national average is good. If it’s also lower than the state average, that is even more attractive. If you don’t have a dynamic employment environment, an area cannot supply you with enough homebuyers.

Income Rates

The citizens’ income statistics inform you if the community’s financial environment is strong. Most home purchasers normally get a loan to buy a house. Their income will determine how much they can borrow and if they can buy a property. Median income will help you know if the regular homebuyer can afford the homes you intend to sell. Particularly, income growth is vital if you need to scale your investment business. Building costs and home prices increase from time to time, and you need to be sure that your target homebuyers’ income will also get higher.

Number of New Jobs Created

The number of employment positions created on a continual basis indicates whether salary and population increase are feasible. More residents acquire homes if the local economy is generating jobs. With more jobs created, more potential buyers also relocate to the community from other locations.

Hard Money Loan Rates

Real estate investors who work with renovated properties regularly employ hard money loans instead of traditional loans. Doing this lets them make profitable projects without delay. Locate top hard money lenders for real estate investors in Southaven MS so you can review their fees.

In case you are inexperienced with this funding vehicle, learn more by studying our article — What Are Hard Money Loans?.

As a real estate wholesaler, you enter a purchase contract to purchase a home that other real estate investors will need. But you don’t close on the house: after you have the property under contract, you get someone else to become the buyer for a price. The seller sells the property to the real estate investor instead of the wholesaler. The wholesaler does not sell the residential property — they sell the contract to purchase it.

The wholesaling mode of investing includes the employment of a title company that grasps wholesale purchases and is informed about and active in double close transactions. Find Southaven title companies for real estate investors by using our list.

To learn how wholesaling works, study our informative article How Does Real Estate Wholesaling Work?. While you conduct your wholesaling activities, put your name in HouseCashin’s list of Southaven top wholesale real estate companies. This will help your future investor clients find and call you.

Factors to Consider

Median Home Prices

Median home values in the city under review will roughly tell you whether your real estate investors’ preferred real estate are situated there. Reduced median values are a good indicator that there are enough residential properties that might be bought for lower than market worth, which investors need to have.

Accelerated deterioration in real property prices might lead to a number of properties with no equity that appeal to short sale property buyers. Short sale wholesalers can reap advantages from this method. However, be aware of the legal liability. Get more information on how to wholesale short sale real estate in our comprehensive guide. When you’ve resolved to try wholesaling these properties, be sure to hire someone on the directory of the best short sale real estate attorneys in Southaven MS and the best foreclosure attorneys in Southaven MS to assist you.

Property Appreciation Rate

Median home value changes clearly illustrate the home value picture. Many real estate investors, such as buy and hold and long-term rental landlords, particularly need to know that home values in the area are increasing steadily. Dropping values indicate an equally poor rental and housing market and will dismay investors.

Population Growth

Population growth information is essential for your prospective contract assignment purchasers. An increasing population will need new housing. There are many individuals who lease and plenty of customers who buy houses. When a population is not growing, it does not require new houses and real estate investors will search in other areas.

Median Population Age

A dynamic housing market needs people who start off leasing, then moving into homebuyers, and then moving up in the housing market. A location with a big workforce has a consistent source of tenants and purchasers. A city with these features will have a median population age that is the same as the wage-earning resident’s age.

Income Rates

The median household and per capita income demonstrate steady increases over time in areas that are ripe for real estate investment. Surges in lease and sale prices have to be backed up by improving wages in the area. That will be vital to the property investors you want to draw.

Unemployment Rate

The market’s unemployment rates are a critical aspect for any future contract purchaser. Overdue rent payments and default rates are prevalent in areas with high unemployment. Long-term investors who depend on steady rental income will do poorly in these places. High unemployment creates problems that will keep people from purchasing a property. This can prove to be hard to locate fix and flip investors to acquire your contracts.

Number of New Jobs Created

The amount of jobs generated per year is a critical element of the housing structure. New jobs generated lead to a high number of employees who need houses to rent and buy. Long-term real estate investors, such as landlords, and short-term investors such as flippers, are gravitating to places with impressive job appearance rates.

Average Renovation Costs

Rehabilitation expenses will be critical to many property investors, as they typically purchase cheap neglected properties to renovate. Short-term investors, like house flippers, will not reach profitability if the price and the renovation costs equal to a larger sum than the After Repair Value (ARV) of the house. Look for lower average renovation costs.

Mortgage note investing professionals purchase a loan from lenders when the investor can get it for less than face value. This way, the purchaser becomes the lender to the first lender’s borrower.

When a loan is being repaid on time, it is thought of as a performing loan. Performing loans give consistent revenue for you. Some mortgage investors buy non-performing loans because when they can’t satisfactorily rework the mortgage, they can always obtain the collateral property at foreclosure for a low amount.

At some time, you could create a mortgage note portfolio and notice you are lacking time to oversee your loans by yourself. In this case, you can opt to hire one of home loan servicers in Southaven MS that will essentially turn your investment into passive income.

Should you decide to attempt this investment model, you ought to include your project in our list of the best real estate note buying companies in Southaven MS. When you’ve done this, you’ll be noticed by the lenders who promote profitable investment notes for purchase by investors such as yourself.

Factors to Consider

Foreclosure Rates

Low foreclosure rates are an indication that the market has investment possibilities for performing note purchasers. If the foreclosures happen too often, the community could still be good for non-performing note investors. But foreclosure rates that are high may signal a weak real estate market where unloading a foreclosed home might be challenging.

Foreclosure Laws

It is critical for note investors to study the foreclosure regulations in their state. Are you dealing with a mortgage or a Deed of Trust? A mortgage requires that the lender goes to court for permission to start foreclosure. You merely have to file a notice and begin foreclosure steps if you are using a Deed of Trust.

Mortgage Interest Rates

The mortgage interest rate is indicated in the mortgage loan notes that are bought by investors. That mortgage interest rate will significantly influence your investment returns. Interest rates influence the strategy of both kinds of mortgage note investors.

The mortgage rates set by traditional mortgage lenders are not equal everywhere. Private loan rates can be slightly more than traditional interest rates because of the larger risk dealt with by private lenders.

Note investors ought to consistently know the current market interest rates, private and traditional, in possible note investment markets.

Demographics

An effective note investment plan includes a study of the region by utilizing demographic data. Note investors can discover a lot by estimating the extent of the populace, how many people are employed, how much they earn, and how old the people are.
Note investors who prefer performing mortgage notes hunt for markets where a high percentage of younger residents hold good-paying jobs.

Non-performing mortgage note purchasers are looking at related factors for different reasons. If non-performing note investors need to foreclose, they will require a stable real estate market to sell the collateral property.

Property Values

As a mortgage note investor, you must look for deals having a cushion of equity. If you have to foreclose on a loan with little equity, the foreclosure auction might not even cover the amount owed. The combined effect of loan payments that lessen the loan balance and annual property value growth increases home equity.

Property Taxes

Normally, mortgage lenders collect the house tax payments from the homeowner every month. When the property taxes are payable, there should be enough payments in escrow to take care of them. If the homebuyer stops paying, unless the note holder pays the property taxes, they will not be paid on time. If a tax lien is put in place, it takes a primary position over the lender’s note.

If property taxes keep rising, the homeowner’s loan payments also keep increasing. This makes it tough for financially challenged homeowners to meet their obligations, so the loan could become past due.

Real Estate Market Strength

A stable real estate market having good value growth is helpful for all types of note investors. Since foreclosure is an essential component of note investment planning, appreciating real estate values are crucial to finding a good investment market.

A vibrant real estate market can also be a profitable community for originating mortgage notes. This is a profitable source of income for accomplished investors.

A REIT, or Real Estate Investment Trust, is a company that makes investments in income-generating assets. REITs are created to empower average investors to buy into real estate. Most people at present are capable of investing in a REIT.

Shareholders’ investment in a REIT classifies as passive investing. Investment risk is diversified across a group of properties. Participants have the option to liquidate their shares at any moment. Participants in a REIT aren’t allowed to suggest or pick real estate properties for investment. Their investment is limited to the investment properties selected by their REIT.

A Real Estate Investment Fund is a mutual fund that owns stocks of real estate companies. The fund doesn’t hold properties — it owns interest in real estate businesses. This is an additional way for passive investors to spread their investments with real estate avoiding the high startup expense or liability. Investment funds aren’t obligated to distribute dividends unlike a REIT. Like other stocks, investment funds’ values increase and fall with their share market value.

You may choose a fund that concentrates on a targeted category of real estate you’re aware of, but you don’t get to pick the geographical area of each real estate investment. You have to depend on the fund’s directors to decide which locations and properties are chosen for investment.