Ultimate Tompkins County Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. This is a way to expand your investment assets rather than purchase a single investment property. It is required that you be able to receive a “cash-out” refinance for the strategy to work.

You enhance the worth of the investment asset above the amount you spent purchasing and renovating it. The home is refinanced using the ARV and the balance, or equity, comes to you in cash. This cash is reinvested into one more investment property, and so on. This allows you to reliably expand your portfolio and your investment income.

When your investment property collection is big enough, you can contract out its oversight and receive passive income. Locate one of the best investment property management firms in Tompkins County NY with a review of our exhaustive list.

Factors to Consider

Population Growth

The expansion or decline of a market’s population is a valuable benchmark of the area’s long-term desirability for rental property investors. A booming population usually demonstrates active relocation which equals new tenants. The location is attractive to companies and employees to move, find a job, and have households. An expanding population creates a reliable base of renters who can keep up with rent raises, and an active seller’s market if you need to unload any assets.

Property Taxes

Real estate taxes, upkeep, and insurance spendings are considered by long-term rental investors for determining expenses to estimate if and how the efforts will be successful. Investment property located in unreasonable property tax cities will have lower returns. Unreasonable real estate taxes may predict an unreliable area where costs can continue to increase and must be considered a red flag.

Price to Rent Ratio

The price to rent ratio (p/r) is an illustration of how high of a rent can be demanded in comparison to the cost of the asset. If median real estate prices are high and median rents are weak — a high p/r, it will take more time for an investment to repay your costs and reach good returns. The less rent you can collect the higher the p/r, with a low p/r indicating a more robust rent market.

Median Gross Rents

Median gross rents show whether a community’s lease market is dependable. Median rents must be increasing to validate your investment. You will not be able to reach your investment goals in a city where median gross rental rates are dropping.

Median Population Age

Median population age will be close to the age of a typical worker if a location has a good stream of tenants. If people are moving into the district, the median age will not have a problem staying in the range of the workforce. If working-age people are not coming into the community to take over from retiring workers, the median age will rise. That is a poor long-term economic picture.

Employment Base Diversity

A diversified number of employers in the area will increase your prospects for better profits. When the community’s employees, who are your tenants, are spread out across a diverse assortment of employers, you can’t lose all all tenants at once (together with your property’s market worth), if a dominant employer in the community goes out of business.

Unemployment Rate

High unemployment results in a lower number of renters and a weak housing market. The unemployed cannot purchase goods or services. This can result in a high amount of dismissals or fewer work hours in the location. Even people who have jobs may find it a burden to stay current with their rent.

Income Rates

Median household and per capita income level is a beneficial instrument to help you find the areas where the tenants you prefer are residing. Existing wage data will illustrate to you if salary raises will allow you to hike rents to achieve your profit calculations.

Number of New Jobs Created

The more jobs are constantly being provided in a region, the more reliable your tenant source will be. A larger amount of jobs equal more renters. This gives you confidence that you will be able to maintain an acceptable occupancy level and buy additional assets.

School Ratings

Local schools will cause a major effect on the real estate market in their neighborhood. Highly-rated schools are a requirement of companies that are looking to relocate. Business relocation provides more renters. Home market values benefit thanks to additional workers who are homebuyers. For long-term investing, be on the lookout for highly respected schools in a potential investment market.

Property Appreciation Rates

Good property appreciation rates are a prerequisite for a viable long-term investment. Investing in real estate that you expect to hold without being sure that they will appreciate in price is a blueprint for disaster. Inferior or declining property worth in a location under evaluation is unacceptable.

Residential properties where renters stay in furnished units for less than four weeks are known as short-term rentals. Short-term rental businesses charge a higher rate a night than in long-term rental business. Short-term rental units could demand more constant repairs and tidying.

Home sellers waiting to close on a new residence, backpackers, and business travelers who are staying in the location for about week like to rent apartments short term. House sharing platforms like AirBnB and VRBO have opened doors to numerous real estate owners to venture in the short-term rental industry. This makes short-term rentals a feasible approach to try residential property investing.

Short-term rental units demand dealing with occupants more frequently than long-term rentals. This means that property owners face disputes more regularly. Consider controlling your exposure with the support of any of the top real estate law firms in Tompkins County NY.

Factors to Consider

Short-Term Rental Income

You need to calculate the level of rental revenue you’re looking for based on your investment calculations. A market’s short-term rental income levels will quickly tell you if you can predict to achieve your projected income figures.

Median Property Prices

You also must know the amount you can spare to invest. Look for locations where the purchase price you have to have is appropriate for the existing median property prices. You can also employ median values in localized sections within the market to choose cities for investment.

Price Per Square Foot

Price per square foot can be affected even by the style and layout of residential properties. If you are looking at the same kinds of property, like condominiums or detached single-family residences, the price per square foot is more reliable. It may be a quick method to gauge multiple communities or buildings.

Short-Term Rental Occupancy Rate

The need for new rentals in an area may be verified by evaluating the short-term rental occupancy level. When most of the rental units are filled, that city demands more rentals. When the rental occupancy indicators are low, there is not enough need in the market and you should explore elsewhere.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a method to calculate the profitability of an investment plan. Take your estimated Net Operating Income (NOI) and divide it by the cash amount you’re ready to invest. The percentage you get is your cash-on-cash return. When a venture is lucrative enough to return the investment budget soon, you’ll get a high percentage. Sponsored investments will show stronger cash-on-cash returns as you are utilizing less of your own funds.

Average Short-Term Rental Capitalization (Cap) Rates

This metric shows the comparability of rental property worth to its annual revenue. An income-generating asset that has a high cap rate as well as charging average market rental prices has a high value. If investment real estate properties in an area have low cap rates, they generally will cost more. Divide your expected Net Operating Income (NOI) by the property’s market worth or listing price. The percentage you will receive is the property’s cap rate.

Local Attractions

Short-term rental properties are desirable in regions where visitors are attracted by activities and entertainment spots. Tourists come to specific areas to watch academic and athletic activities at colleges and universities, see competitions, cheer for their kids as they participate in kiddie sports, have the time of their lives at annual fairs, and go to amusement parks. Famous vacation attractions are found in mountainous and beach points, along rivers, and national or state nature reserves.

To fix and flip a property, you have to buy it for below market price, handle any needed repairs and upgrades, then sell it for higher market worth. To keep the business profitable, the investor must pay lower than the market price for the property and calculate what it will cost to fix the home.

Look into the prices so that you understand the exact After Repair Value (ARV). You always have to analyze the amount of time it takes for real estate to close, which is shown by the Days on Market (DOM) metric. Disposing of real estate without delay will help keep your expenses low and secure your returns.

So that real estate owners who have to unload their house can effortlessly discover you, showcase your status by using our catalogue of the best cash property buyers in Tompkins County NY along with top real estate investors in Tompkins County NY.

Additionally, look for real estate bird dogs in Tompkins County NY. Professionals located here will assist you by immediately locating possibly lucrative ventures prior to the projects being listed.

Factors to Consider

Median Home Price

Median property price data is an important gauge for evaluating a future investment location. When purchase prices are high, there might not be a reliable reserve of fixer-upper residential units in the market. You must have inexpensive houses for a lucrative fix and flip.

If market data indicates a quick decrease in real property market values, this can highlight the accessibility of possible short sale houses. Investors who work with short sale negotiators in Tompkins County NY get continual notifications regarding potential investment properties. Uncover more concerning this type of investment by reading our guide How to Buy a Short Sale Home.

Property Appreciation Rate

Dynamics is the track that median home values are going. You want a market where home market values are constantly and continuously going up. Unpredictable price fluctuations aren’t desirable, even if it is a substantial and unexpected increase. When you’re buying and liquidating rapidly, an unstable market can sabotage your venture.

Average Renovation Costs

A comprehensive review of the community’s renovation expenses will make a huge influence on your area selection. The way that the municipality processes your application will affect your investment too. If you are required to present a stamped suite of plans, you will have to incorporate architect’s charges in your costs.

Population Growth

Population increase metrics let you take a look at housing need in the area. When the number of citizens isn’t increasing, there is not going to be a sufficient pool of homebuyers for your fixed homes.

Median Population Age

The median residents’ age can additionally tell you if there are potential home purchasers in the region. The median age in the city must equal the age of the average worker. A high number of such citizens reflects a stable source of home purchasers. Individuals who are preparing to exit the workforce or have already retired have very restrictive housing needs.

Unemployment Rate

When checking a community for investment, look for low unemployment rates. It should always be less than the country’s average. When the local unemployment rate is less than the state average, that’s a sign of a good economy. Without a robust employment base, a market can’t supply you with qualified homebuyers.

Income Rates

Median household and per capita income rates show you whether you will see adequate purchasers in that area for your residential properties. Most home purchasers need to get a loan to purchase real estate. The borrower’s salary will determine how much they can afford and if they can purchase a house. Median income can help you analyze if the typical home purchaser can afford the houses you intend to offer. In particular, income increase is important if you need to grow your business. To stay even with inflation and increasing building and material costs, you have to be able to periodically raise your purchase rates.

Number of New Jobs Created

The number of jobs created on a regular basis tells whether wage and population growth are viable. Residential units are more quickly liquidated in a city that has a vibrant job environment. Qualified trained workers looking into buying real estate and settling opt for moving to locations where they will not be jobless.

Hard Money Loan Rates

Fix-and-flip property investors regularly utilize hard money loans rather than conventional loans. Doing this enables investors make lucrative projects without delay. Review Tompkins County hard money lending companies and study lenders’ fees.

Investors who aren’t well-versed regarding hard money loans can discover what they need to understand with our resource for newbies — How Do Hard Money Loans Work?.

As a real estate wholesaler, you enter a sale and purchase agreement to buy a home that other investors will be interested in. However you don’t purchase the house: once you control the property, you get a real estate investor to become the buyer for a price. The property is sold to the real estate investor, not the real estate wholesaler. The wholesaler does not sell the property under contract itself — they simply sell the purchase and sale agreement.

Wholesaling relies on the assistance of a title insurance firm that’s okay with assigning contracts and knows how to work with a double closing. Locate Tompkins County title companies that work with investors by reviewing our directory.

To learn how real estate wholesaling works, study our informative guide Complete Guide to Real Estate Wholesaling as an Investment Strategy. While you conduct your wholesaling activities, put your firm in HouseCashin’s list of Tompkins County top investment property wholesalers. This way your likely customers will learn about your availability and contact you.

Factors to Consider

Median Home Prices

Median home values in the community will show you if your ideal purchase price level is viable in that location. Lower median prices are a solid indication that there are plenty of properties that can be acquired under market worth, which investors need to have.

Accelerated weakening in real property market values may lead to a number of real estate with no equity that appeal to short sale flippers. Wholesaling short sales repeatedly delivers a number of different advantages. Nevertheless, be aware of the legal risks. Learn about this from our detailed article How Can You Wholesale a Short Sale Property?. When you have determined to try wholesaling these properties, make sure to engage someone on the list of the best short sale lawyers in Tompkins County NY and the best foreclosure law firms in Tompkins County NY to advise you.

Property Appreciation Rate

Median home price dynamics are also critical. Real estate investors who plan to keep investment properties will have to know that housing market values are steadily appreciating. Both long- and short-term investors will avoid a city where home purchase prices are depreciating.

Population Growth

Population growth data is essential for your prospective contract assignment buyers. A growing population will need more residential units. Investors are aware that this will include both rental and purchased housing units. A community that has a shrinking community will not attract the investors you want to buy your purchase contracts.

Median Population Age

Real estate investors need to be a part of a thriving real estate market where there is a substantial source of renters, first-time homeowners, and upwardly mobile locals purchasing bigger properties. A community that has a large employment market has a consistent supply of tenants and buyers. A market with these features will display a median population age that is the same as the wage-earning person’s age.

Income Rates

The median household and per capita income will be growing in a vibrant residential market that investors want to participate in. When renters’ and homeowners’ incomes are expanding, they can manage surging rental rates and real estate prices. Investors have to have this in order to meet their estimated returns.

Unemployment Rate

Investors will thoroughly estimate the community’s unemployment rate. Renters in high unemployment markets have a hard time staying current with rent and a lot of them will skip payments entirely. Long-term real estate investors who rely on uninterrupted rental payments will lose revenue in these areas. Renters can’t level up to property ownership and current homeowners can’t sell their property and go up to a larger residence. This is a challenge for short-term investors purchasing wholesalers’ contracts to repair and flip a home.

Number of New Jobs Created

The amount of jobs generated annually is a crucial component of the housing framework. Job production means additional workers who need housing. No matter if your purchaser pool is made up of long-term or short-term investors, they will be attracted to a location with constant job opening creation.

Average Renovation Costs

Renovation expenses will be critical to most property investors, as they typically buy bargain distressed properties to fix. Short-term investors, like home flippers, can’t earn anything when the price and the improvement expenses total to a larger sum than the After Repair Value (ARV) of the property. Lower average repair costs make a region more desirable for your priority clients — flippers and long-term investors.

Acquiring mortgage notes (loans) is successful when the loan can be acquired for a lower amount than the face value. When this occurs, the investor takes the place of the client’s mortgage lender.

Loans that are being repaid on time are thought of as performing loans. Performing notes earn stable income for investors. Investors also obtain non-performing mortgages that they either rework to assist the borrower or foreclose on to obtain the collateral below actual worth.

At some time, you may build a mortgage note portfolio and start needing time to oversee your loans on your own. At that stage, you may want to employ our catalogue of Tompkins County top mortgage loan servicing companies and reassign your notes as passive investments.

If you decide to use this plan, append your business to our directory of companies that buy mortgage notes in Tompkins County NY. Being on our list puts you in front of lenders who make desirable investment possibilities accessible to note buyers such as you.

Factors to consider

Foreclosure Rates

Performing loan purchasers research regions that have low foreclosure rates. If the foreclosures happen too often, the neighborhood might still be desirable for non-performing note investors. The locale needs to be active enough so that investors can foreclose and liquidate properties if necessary.

Foreclosure Laws

Successful mortgage note investors are fully well-versed in their state’s laws concerning foreclosure. They will know if their state requires mortgages or Deeds of Trust. When using a mortgage, a court will have to agree to a foreclosure. Note owners do not need the judge’s permission with a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage loan notes contain an agreed interest rate. Your mortgage note investment profits will be affected by the interest rate. No matter the type of investor you are, the loan note’s interest rate will be crucial for your calculations.

Traditional lenders charge different mortgage loan interest rates in different locations of the country. Loans provided by private lenders are priced differently and can be more expensive than conventional mortgages.

Note investors should consistently know the prevailing local interest rates, private and conventional, in possible investment markets.

Demographics

A neighborhood’s demographics trends help note investors to focus their efforts and effectively use their assets. It’s crucial to find out if a suitable number of residents in the community will continue to have good jobs and wages in the future.
Performing note buyers want homeowners who will pay on time, generating a repeating income stream of loan payments.

The same area might also be advantageous for non-performing mortgage note investors and their exit plan. A strong regional economy is prescribed if investors are to reach buyers for properties they’ve foreclosed on.

Property Values

As a note buyer, you must look for deals with a comfortable amount of equity. This increases the possibility that a potential foreclosure sale will repay the amount owed. As loan payments reduce the amount owed, and the value of the property goes up, the borrower’s equity grows.

Property Taxes

Payments for real estate taxes are typically sent to the mortgage lender simultaneously with the loan payment. This way, the mortgage lender makes certain that the taxes are paid when due. The lender will have to compensate if the payments cease or they risk tax liens on the property. Tax liens leapfrog over all other liens.

Since property tax escrows are included with the mortgage loan payment, growing taxes indicate larger house payments. Past due customers might not be able to keep paying growing loan payments and could cease making payments altogether.

Real Estate Market Strength

A community with increasing property values offers strong potential for any note buyer. They can be assured that, if required, a foreclosed property can be sold for an amount that is profitable.

Mortgage note investors also have an opportunity to make mortgage notes directly to borrowers in consistent real estate markets. For successful investors, this is a useful portion of their investment strategy.

Many real estate investment companies are conceived as a trust termed Real Estate Investment Trusts or REITs. REITs were invented to allow ordinary investors to buy into properties. Most people currently are capable of investing in a REIT.

Investing in a REIT is a kind of passive investing. REITs oversee investors’ liability with a diversified collection of assets. Shareholders have the option to unload their shares at any moment. However, REIT investors do not have the capability to choose particular properties or locations. The properties that the REIT picks to purchase are the properties you invest in.

A Real Estate Investment Fund is a mutual fund that possesses stocks of real estate businesses. Any actual real estate is held by the real estate firms, not the fund. These funds make it doable for additional investors to invest in real estate properties. Fund shareholders may not collect usual distributions like REIT shareholders do. Like any stock, investment funds’ values grow and go down with their share market value.

You can select a real estate fund that focuses on a distinct category of real estate firm, like commercial, but you cannot propose the fund’s investment properties or locations. As passive investors, fund participants are satisfied to permit the administration of the fund determine all investment choices.