Ultimate Union County Real Estate Investing Guide for 2024

The abbreviation BRRRR is a description of a long-term investment plan — Buy, Rehab, Rent, Refinance, Repeat. BRRRR is a method for repeated growth. This method rests on your ability to extract money out when you refinance.

The After Repair Value (ARV) of the home needs to equal more than the combined acquisition and renovation expenses. The house is refinanced based on the ARV and the balance, or equity, comes to you in cash. You purchase your next property with the cash-out funds and begin anew. This enables you to consistently enhance your portfolio and your investment revenue.

After you have accumulated a substantial collection of income producing real estate, you can prefer to hire others to oversee all operations while you get repeating net revenues. Locate Union County property management companies when you look through our list of professionals.

Factors to Consider

Population Growth

The increase or fall of a region’s population is a valuable gauge of the market’s long-term desirability for rental investors. A growing population normally illustrates active relocation which means new tenants. Employers view this community as an attractive area to situate their business, and for employees to situate their families. This equals dependable renters, more lease revenue, and a greater number of likely homebuyers when you want to sell your asset.

Property Taxes

Real estate taxes, regular maintenance costs, and insurance directly influence your revenue. Excessive property tax rates will hurt a property investor’s returns. High real estate tax rates may signal an unstable region where costs can continue to rise and must be treated as a warning.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property values and median rental rates that will show you how much rent the market can allow. If median property values are steep and median rents are weak — a high p/r — it will take more time for an investment to pay for itself and reach profitability. A higher price-to-rent ratio informs you that you can charge lower rent in that location, a smaller ratio says that you can charge more.

Median Gross Rents

Median gross rents are a true yardstick of the desirability of a rental market under examination. You want to discover a location with stable median rent expansion. If rents are declining, you can drop that community from consideration.

Median Population Age

Median population age in a strong long-term investment environment must show the usual worker’s age. If people are migrating into the region, the median age will not have a problem remaining at the level of the workforce. When working-age people are not venturing into the location to replace retiring workers, the median age will rise. That is a poor long-term financial picture.

Employment Base Diversity

Accommodating numerous employers in the community makes the economy less unstable. When there are only a couple major hiring companies, and one of them moves or goes out of business, it will cause you to lose paying customers and your asset market rates to go down.

Unemployment Rate

It is not possible to maintain a stable rental market if there is high unemployment. Normally strong businesses lose customers when other companies lay off employees. Those who continue to have jobs may discover their hours and salaries reduced. This may result in missed rent payments and tenant defaults.

Income Rates

Median household and per capita income stats show you if enough preferred tenants reside in that area. Current income records will show you if wage increases will permit you to hike rental fees to hit your income projections.

Number of New Jobs Created

An increasing job market equates to a steady stream of tenants. An environment that produces jobs also boosts the number of participants in the housing market. Your strategy of leasing and buying additional properties requires an economy that can create more jobs.

School Ratings

The rating of school districts has a significant effect on real estate market worth throughout the city. Highly-accredited schools are a requirement of business owners that are thinking about relocating. Relocating employers relocate and attract prospective tenants. Home prices increase with additional employees who are homebuyers. Reputable schools are an essential component for a vibrant property investment market.

Property Appreciation Rates

Real estate appreciation rates are an imperative ingredient of your long-term investment scheme. Investing in real estate that you are going to to hold without being positive that they will appreciate in value is a formula for disaster. You don’t want to take any time surveying areas with substandard property appreciation rates.

A short-term rental is a furnished residence where a renter resides for less than a month. The per-night rental rates are always higher in short-term rentals than in long-term units. With renters not staying long, short-term rental units have to be maintained and cleaned on a continual basis.

Short-term rentals are popular with people on a business trip who are in the region for several days, people who are moving and need transient housing, and excursionists. House sharing platforms such as AirBnB and VRBO have helped a lot of real estate owners to venture in the short-term rental industry. Short-term rentals are viewed to be a good approach to start investing in real estate.

Vacation rental unit owners require dealing one-on-one with the tenants to a greater extent than the owners of longer term rented properties. This results in the owner being required to regularly handle grievances. You may want to protect your legal liability by hiring one of the top Union County investor friendly real estate law firms.

Factors to Consider

Short-Term Rental Income

You need to calculate how much income needs to be produced to make your investment successful. A region’s short-term rental income rates will quickly tell you when you can assume to accomplish your projected rental income figures.

Median Property Prices

You also need to decide the amount you can afford to invest. To find out whether a city has potential for investment, look at the median property prices. You can also use median market worth in specific neighborhoods within the market to choose locations for investing.

Price Per Square Foot

Price per square foot may be inaccurate when you are looking at different buildings. If you are examining the same kinds of real estate, like condos or stand-alone single-family homes, the price per square foot is more consistent. If you keep this in mind, the price per sq ft may provide you a general idea of local prices.

Short-Term Rental Occupancy Rate

A look at the location’s short-term rental occupancy rate will inform you if there is demand in the market for additional short-term rental properties. If the majority of the rental units are filled, that market requires more rental space. When the rental occupancy indicators are low, there isn’t enough demand in the market and you must explore elsewhere.

Short-Term Rental Cash-on-Cash Return

A short-term rental’s cash-on-cash return can inform you if the property is a practical use of your money. Take your projected 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. High cash-on-cash return indicates that you will regain your capital faster and the purchase will be more profitable. Funded projects will have a higher cash-on-cash return because you’re investing less of your cash.

Average Short-Term Rental Capitalization (Cap) Rates

This criterion shows the comparability of rental property value to its annual income. An income-generating asset that has a high cap rate as well as charging average market rental prices has a good market value. If investment properties in a location have low cap rates, they generally will cost more money. Divide your projected Net Operating Income (NOI) by the property’s value or asking price. The percentage you will get is the property’s cap rate.

Local Attractions

Major public events and entertainment attractions will attract tourists who want short-term rental houses. Vacationers come to specific places to enjoy academic and sporting events at colleges and universities, see professional sports, cheer for their kids as they compete in kiddie sports, have the time of their lives at yearly festivals, and drop by amusement parks. Outdoor scenic spots such as mountains, lakes, beaches, and state and national nature reserves will also attract future tenants.

To fix and flip real estate, you need to pay below market value, handle any necessary repairs and upgrades, then liquidate the asset for full market worth. The keys to a successful fix and flip are to pay less for the investment property than its actual market value and to accurately calculate what it will cost to make it saleable.

You also need to evaluate the real estate market where the home is positioned. The average number of Days On Market (DOM) for properties listed in the market is critical. Liquidating the house quickly will keep your expenses low and secure your revenue.

To help motivated property sellers locate you, enter your firm in our directories of all cash home buyers in Union County IL and real estate investing companies in Union County IL.

In addition, look for the best bird dogs for real estate investors in Union County IL. Experts discovered here will help you by rapidly discovering potentially lucrative deals ahead of the projects being sold.

Factors to Consider

Median Home Price

When you hunt for a profitable market for real estate flipping, investigate the median house price in the neighborhood. You are searching for median prices that are modest enough to indicate investment possibilities in the area. You have to have inexpensive real estate for a lucrative fix and flip.

If you notice a sudden drop in real estate values, this might signal that there are potentially homes in the city that will work for a short sale. You’ll hear about potential investments when you join up with Union County short sale negotiators. Learn how this happens by reviewing our article ⁠— What Are the Steps to Buying a Short Sale Home?.

Property Appreciation Rate

The movements in real property values in a location are crucial. You want a region where home market values are constantly and consistently ascending. Home prices in the area should be going up consistently, not abruptly. You could end up buying high and liquidating low in an hectic market.

Average Renovation Costs

Look carefully at the possible rehab costs so you’ll find out if you can reach your projections. The manner in which the municipality goes about approving your plans will have an effect on your venture too. To make an on-target financial strategy, you will need to understand whether your plans will have to involve an architect or engineer.

Population Growth

Population growth is a strong gauge of the potential or weakness of the region’s housing market. If the population is not growing, there isn’t going to be an ample pool of homebuyers for your fixed homes.

Median Population Age

The median population age is a straightforward indicator of the supply of possible homebuyers. If the median age is equal to the one of the typical worker, it is a good sign. Individuals in the local workforce are the most stable house buyers. The goals of retirees will most likely not fit into your investment project plans.

Unemployment Rate

You need to see a low unemployment level in your potential city. An unemployment rate that is lower than the country’s average is what you are looking for. When it is also less than the state average, that is much better. If they want to purchase your renovated property, your potential clients are required to be employed, and their clients too.

Income Rates

Median household and per capita income rates tell you if you can obtain qualified home purchasers in that market for your homes. Most homebuyers need to take a mortgage to purchase real estate. Their salary will determine the amount they can borrow and if they can buy a home. Median income can let you determine whether the regular homebuyer can afford the homes you are going to market. Specifically, income growth is vital if you want to scale your investment business. Building costs and home prices rise over time, and you want to be sure that your potential customers’ wages will also climb up.

Number of New Jobs Created

The number of jobs created on a continual basis indicates if salary and population increase are sustainable. More citizens purchase homes when the city’s financial market is adding new jobs. Fresh jobs also attract workers relocating to the area from elsewhere, which further reinforces the local market.

Hard Money Loan Rates

Investors who flip upgraded houses regularly employ hard money loans in place of traditional loans. Hard money financing products enable these investors to take advantage of existing investment opportunities right away. Look up Union County hard money lending companies and analyze lenders’ fees.

People who are not experienced regarding hard money lending can learn what they need to understand with our article for those who are only starting — How Do Hard Money Loans Work?.

As a real estate wholesaler, you enter a contract to purchase a residential property that some other real estate investors might need. When a real estate investor who approves of the residential property is found, the contract is sold to the buyer for a fee. The owner sells the home to the real estate investor instead of the real estate wholesaler. The real estate wholesaler doesn’t sell the property itself — they just sell the purchase contract.

This strategy includes using a title company that is familiar with the wholesale contract assignment operation and is capable and inclined to handle double close transactions. Find Union County title services for real estate investors by reviewing our list.

Our comprehensive guide to wholesaling can be read here: A-to-Z Guide to Property Wholesaling. When you choose wholesaling, add your investment business on our list of the best wholesale property investors in Union County IL. That will allow any potential customers to locate you and reach out.

Factors to Consider

Median Home Prices

Median home prices in the city being assessed will roughly tell you if your real estate investors’ required real estate are positioned there. As investors prefer properties that are available below market value, you will need to see lower median purchase prices as an implicit tip on the potential availability of residential real estate that you may purchase for less than market price.

A quick decrease in the price of real estate could generate the accelerated appearance of properties with negative equity that are desired by wholesalers. Short sale wholesalers frequently reap benefits using this method. Nonetheless, there could be risks as well. Get additional details on how to wholesale a short sale home with our exhaustive instructions. Once you want to give it a try, make sure you employ one of short sale legal advice experts in Union County IL and mortgage foreclosure lawyers in Union County IL to work with.

Property Appreciation Rate

Median home price movements clearly illustrate the housing value in the market. Real estate investors who intend to keep investment assets will need to know that housing purchase prices are consistently appreciating. Both long- and short-term real estate investors will stay away from a market where housing purchase prices are decreasing.

Population Growth

Population growth data is essential for your intended contract purchasers. When the community is expanding, new residential units are needed. This includes both rental and ‘for sale’ properties. When a population isn’t expanding, it doesn’t need more housing and real estate investors will invest in other areas.

Median Population Age

Real estate investors want to participate in a dynamic real estate market where there is a considerable source of renters, first-time homeowners, and upwardly mobile citizens purchasing better houses. This requires a vibrant, consistent workforce of people who feel optimistic enough to step up in the residential market. A city with these attributes will show a median population age that is the same as the employed adult’s age.

Income Rates

The median household and per capita income in a stable real estate investment market have to be growing. If renters’ and homebuyers’ incomes are expanding, they can handle soaring rental rates and home prices. Real estate investors need this in order to achieve their estimated profitability.

Unemployment Rate

Real estate investors whom you approach to close your contracts will consider unemployment numbers to be an essential piece of knowledge. High unemployment rate triggers many renters to make late rent payments or default altogether. Long-term investors who depend on uninterrupted lease payments will suffer in these cities. Investors cannot count on tenants moving up into their homes when unemployment rates are high. This makes it challenging to locate fix and flip investors to acquire your contracts.

Number of New Jobs Created

The number of fresh jobs being produced in the city completes a real estate investor’s analysis of a future investment spot. New jobs generated attract a large number of employees who require homes to rent and buy. This is helpful for both short-term and long-term real estate investors whom you depend on to take on your sale contracts.

Average Renovation Costs

Rehabilitation spendings will be critical to many real estate investors, as they normally acquire cheap distressed houses to update. When a short-term investor rehabs a house, they want to be able to liquidate it for more money than the whole cost of the acquisition and the rehabilitation. Seek lower average renovation costs.

This strategy means obtaining debt (mortgage note) from a lender for less than the balance owed. By doing this, the purchaser becomes the lender to the original lender’s client.

When a loan is being paid as agreed, it’s thought of as a performing loan. These loans are a repeating provider of passive income. Non-performing loans can be restructured or you may buy the property at a discount by completing a foreclosure procedure.

Eventually, you could have a large number of mortgage notes and require more time to handle them without help. In this case, you might hire one of residential mortgage servicers in Union County IL that will essentially turn your portfolio into passive income.

Should you decide that this plan is perfect for you, place your business in our list of Union County top real estate note buyers. Appearing on our list puts you in front of lenders who make desirable investment opportunities accessible to note buyers such as yourself.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a signal that the area has opportunities for performing note investors. Non-performing loan investors can carefully make use of cities that have high foreclosure rates too. If high foreclosure rates are causing a slow real estate market, it may be difficult to resell the collateral property after you foreclose on it.

Foreclosure Laws

It’s necessary for note investors to know the foreclosure laws in their state. They’ll know if their law uses mortgage documents or Deeds of Trust. A mortgage requires that you go to court for permission to start foreclosure. Investors don’t need the court’s agreement with a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage notes have a negotiated interest rate. Your investment profits will be affected by the interest rate. Mortgage interest rates are significant to both performing and non-performing note buyers.

Conventional interest rates may differ by up to a 0.25% throughout the country. Private loan rates can be slightly higher than traditional interest rates due to the more significant risk taken on by private mortgage lenders.

A mortgage loan note buyer needs to be aware of the private as well as traditional mortgage loan rates in their regions at any given time.

Demographics

If mortgage note investors are choosing where to purchase notes, they’ll research the demographic information from reviewed markets. Investors can interpret a great deal by looking at the size of the population, how many people have jobs, how much they make, and how old the people are.
Performing note buyers seek clients who will pay on time, creating a repeating revenue flow of mortgage payments.

Non-performing mortgage note purchasers are looking at similar indicators for other reasons. If these note investors want to foreclose, they will have to have a strong real estate market when they unload the REO property.

Property Values

The greater the equity that a homeowner has in their property, the more advantageous it is for you as the mortgage note owner. If the investor has to foreclose on a mortgage loan with lacking equity, the foreclosure auction might not even cover the balance owed. The combination of loan payments that lessen the loan balance and annual property value appreciation increases home equity.

Property Taxes

Escrows for property taxes are normally paid to the lender along with the mortgage loan payment. When the property taxes are payable, there needs to be adequate money being held to take care of them. The lender will have to take over if the house payments stop or the investor risks tax liens on the property. When taxes are past due, the municipality’s lien supersedes any other liens to the front of the line and is satisfied first.

Since tax escrows are included with the mortgage loan payment, rising property taxes mean larger mortgage payments. Borrowers who have a hard time making their mortgage payments might drop farther behind and sooner or later default.

Real Estate Market Strength

A location with increasing property values has good opportunities for any mortgage note investor. They can be confident that, if necessary, a defaulted property can be unloaded at a price that makes a profit.

Strong markets often open opportunities for private investors to generate the initial mortgage loan themselves. For veteran investors, this is a useful segment of their business plan.

A REIT, or Real Estate Investment Trust, is a firm that makes investments in income-generating assets. This was originally invented as a way to permit the ordinary person to invest in real estate. Many people currently are capable of investing in a REIT.

Shareholders in real estate investment trusts are totally passive investors. The liability that the investors are accepting is distributed within a group of investment properties. Participants have the capability to liquidate their shares at any time. However, REIT investors do not have the capability to pick particular properties or markets. The land and buildings that the REIT decides to buy are the ones your funds are used to buy.

A Real Estate Investment Fund is a mutual fund that owns stocks of real estate companies. The fund doesn’t hold real estate — it owns shares in real estate businesses. This is another way for passive investors to diversify their investments with real estate avoiding the high entry-level cost or risks. Fund shareholders may not receive regular distributions the way that REIT members do. The benefit to you is created by increase in the worth of the stock.

You are able to select a fund that focuses on particular categories of the real estate business but not particular markets for each real estate property investment. Your choice as an investor is to select a fund that you believe in to oversee your real estate investments.