Ultimate Washington County Real Estate Investing Guide for 2024

The abbreviation BRRRR is an illustration of a long-term lease strategy — Buy, Rehab, Rent, Refinance, Repeat. This is a strategy to grow your investment assets not just acquire a single rental property. It is critical that you are qualified to obtain a “cash-out” mortgage refinance for the method to work.

The After Repair Value (ARV) of the rental needs to total more than the total acquisition and refurbishment expenses. Then you receive a cash-out mortgage refinance loan that is calculated on the higher property worth, and you take out the balance. You utilize that money to acquire another property and the process starts again. You purchase more and more properties and constantly expand your lease income.

When an investor holds a substantial collection of investment properties, it is wise to pay a property manager and create a passive income source. Locate one of property management agencies in Washington County KY with a review of our complete directory.

Factors to Consider

Population Growth

Population expansion or shrinking tells you if you can expect good results from long-term property investments. When you discover good population growth, you can be confident that the area is pulling possible tenants to the location. Relocating businesses are drawn to rising communities giving job security to people who relocate there. This equates to stable tenants, higher lease income, and a greater number of possible homebuyers when you need to liquidate the property.

Property Taxes

Property taxes, maintenance, and insurance expenses are examined by long-term lease investors for calculating expenses to estimate if and how the investment strategy will be successful. Rental homes located in steep property tax communities will have lower profits. If property tax rates are unreasonable in a specific community, you will prefer to look elsewhere.

Price to Rent Ratio

Price to rent ratio (p/r) is a market indicator that shows you how much you can anticipate to collect as rent. An investor will not pay a large amount for a property if they can only collect a limited rent not letting them to pay the investment off within a reasonable time. A high price-to-rent ratio signals you that you can collect modest rent in that area, a low one tells you that you can collect more.

Median Gross Rents

Median gross rents illustrate whether a community’s rental market is robust. You want to identify a market with regular median rent growth. If rents are shrinking, you can eliminate that city from discussion.

Median Population Age

Median population age in a reliable long-term investment environment must equal the typical worker’s age. You’ll discover this to be factual in areas where people are moving. When working-age people aren’t coming into the location to take over from retirees, the median age will rise. This is not advantageous for the impending financial market of that community.

Employment Base Diversity

A diversified amount of companies in the region will increase your prospects for strong profits. If people are employed by a few dominant companies, even a slight issue in their business might cause you to lose a lot of renters and raise your exposure considerably.

Unemployment Rate

You will not get a stable rental cash flow in a city with high unemployment. Jobless citizens can’t be customers of yours and of other businesses, which creates a ripple effect throughout the city. Those who still keep their workplaces may discover their hours and incomes reduced. This may cause missed rents and tenant defaults.

Income Rates

Median household and per capita income will reflect if the tenants that you want are living in the area. Current income statistics will illustrate to you if wage growth will allow you to mark up rental fees to meet your income predictions.

Number of New Jobs Created

The strong economy that you are looking for will be creating plenty of jobs on a regular basis. An environment that adds jobs also adds more stakeholders in the property market. This allows you to acquire more rental assets and backfill existing unoccupied properties.

School Ratings

Community schools can make a major influence on the real estate market in their neighborhood. Highly-graded schools are a requirement of employers that are thinking about relocating. Moving businesses bring and attract potential tenants. Home market values benefit with new workers who are homebuyers. For long-term investing, look for highly ranked schools in a potential investment market.

Property Appreciation Rates

High real estate appreciation rates are a requirement for a profitable long-term investment. You need to be positive that your property assets will appreciate in market value until you decide to sell them. Low or decreasing property value in a location under review is inadmissible.

A furnished residential unit where tenants reside for shorter than a month is regarded as a short-term rental. Long-term rental units, like apartments, require lower payment per night than short-term ones. With tenants coming and going, short-term rental units need to be maintained and cleaned on a constant basis.

House sellers waiting to move into a new house, tourists, and individuals traveling on business who are stopping over in the city for about week like to rent a residential unit short term. Anyone can convert their property into a short-term rental with the assistance made available by virtual home-sharing websites like VRBO and AirBnB. This makes short-term rental strategy a good technique to endeavor real estate investing.

The short-term rental housing venture includes interaction with renters more frequently in comparison with annual rental properties. That means that property owners deal with disputes more often. You may need to protect your legal exposure by hiring one of the top Washington County real estate lawyers.

Factors to Consider

Short-Term Rental Income

You need to calculate the amount of rental income you’re searching for based on your investment budget. A city’s short-term rental income rates will quickly tell you when you can look forward to reach your estimated rental income range.

Median Property Prices

Thoroughly assess the amount that you can afford to pay for additional investment properties. Look for communities where the purchase price you count on is appropriate for the present median property prices. You can fine-tune your real estate hunt by evaluating median values in the city’s sub-markets.

Price Per Square Foot

Price per square foot can be impacted even by the design and layout of residential properties. If you are comparing similar types of property, like condominiums or detached single-family residences, the price per square foot is more consistent. You can use the price per square foot information to see a good overall idea of home values.

Short-Term Rental Occupancy Rate

A look at the community’s short-term rental occupancy rate will tell you if there is demand in the market for more short-term rental properties. If the majority of the rentals are filled, that location needs more rental space. If the rental occupancy levels are low, there is not much need in the market and you must search elsewhere.

Short-Term Rental Cash-on-Cash Return

Cash-on-cash return is a means to assess the profitability of an investment plan. Take your expected Net Operating Income (NOI) and divide it by your investment cash budget. The percentage you get is your cash-on-cash return. When an investment is profitable enough to reclaim the investment budget fast, you’ll receive a high percentage. When you take a loan for part of the investment amount and put in less of your money, you will realize a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

One measurement conveys the market value of real estate as a revenue-producing asset — average short-term rental capitalization (cap) rate. In general, the less a property will cost (or is worth), the higher the cap rate will be. When cap rates are low, you can assume to spend more money for rental units in that location. You can calculate the cap rate for potential investment property by dividing the Net Operating Income (NOI) by the Fair Market Value or purchase price of the residential property. The result is the annual return in a percentage.

Local Attractions

Big public events and entertainment attractions will entice vacationers who want short-term rental houses. Tourists visit specific areas to watch academic and athletic activities at colleges and universities, be entertained by professional sports, support their children as they compete in kiddie sports, have fun at annual carnivals, and stop by amusement parks. At particular seasons, regions with outside activities in the mountains, coastal locations, or near rivers and lakes will bring in crowds of visitors who want short-term rental units.

When a home flipper acquires a property cheaper than its market value, repairs it and makes it more valuable, and then disposes of the property for a profit, they are referred to as a fix and flip investor. Your assessment of fix-up costs must be precise, and you have to be capable of acquiring the home for less than market price.

It is crucial for you to be aware of how much properties are selling for in the community. The average number of Days On Market (DOM) for properties listed in the area is crucial. To profitably “flip” a property, you must sell the renovated home before you have to spend money to maintain it.

Help compelled real estate owners in discovering your business by placing it in our catalogue of Washington County companies that buy houses for cash and Washington County property investment firms.

Additionally, team up with Washington County property bird dogs. These specialists concentrate on rapidly locating good investment ventures before they are listed on the marketplace.

Factors to Consider

Median Home Price

The region’s median home price could help you spot a good city for flipping houses. Lower median home prices are an indication that there should be an inventory of homes that can be bought below market worth. You must have cheaper houses for a lucrative deal.

When you see a fast decrease in property values, this might signal that there are possibly houses in the region that qualify for a short sale. You’ll learn about potential investments when you partner up with Washington County short sale processors. Discover more about this type of investment by studying our guide How to Buy a Home on Short Sale.

Property Appreciation Rate

Are home values in the community moving up, or going down? You have to have an environment where real estate prices are constantly and consistently going up. Accelerated property value surges may show a market value bubble that isn’t practical. Buying at the wrong point in an unstable market can be catastrophic.

Average Renovation Costs

You’ll need to evaluate building costs in any potential investment community. Other expenses, such as permits, could shoot up expenditure, and time which may also develop into an added overhead. You want to understand whether you will be required to employ other experts, such as architects or engineers, so you can be prepared for those costs.

Population Growth

Population growth metrics allow you to take a peek at housing need in the area. If there are buyers for your renovated houses, the statistics will demonstrate a positive population increase.

Median Population Age

The median citizens’ age is a straightforward indication of the supply of potential homebuyers. The median age in the area should be the one of the average worker. A high number of such residents demonstrates a stable source of home purchasers. Individuals who are about to exit the workforce or have already retired have very particular housing requirements.

Unemployment Rate

While researching a community for real estate investment, search for low unemployment rates. It should certainly be less than the country’s average. A very solid investment community will have an unemployment rate lower than the state’s average. In order to acquire your improved property, your prospective buyers need to work, and their clients too.

Income Rates

Median household and per capita income numbers advise you if you will get qualified buyers in that area for your homes. Most people normally obtain financing to buy a home. The borrower’s wage will determine how much they can afford and if they can buy a house. Median income will help you determine if the typical home purchaser can buy the property you intend to list. In particular, income growth is important if you need to expand your investment business. Construction spendings and housing prices increase from time to time, and you need to be sure that your potential clients’ wages will also get higher.

Number of New Jobs Created

The number of jobs generated yearly is vital insight as you contemplate on investing in a particular community. Residential units are more quickly liquidated in a community that has a dynamic job market. With a higher number of jobs appearing, new potential home purchasers also relocate to the region from other places.

Hard Money Loan Rates

Investors who acquire, repair, and flip investment properties opt to employ hard money and not normal real estate funding. Hard money funds allow these purchasers to pull the trigger on hot investment possibilities immediately. Discover real estate hard money lenders in Washington County KY and compare their mortgage rates.

In case you are inexperienced with this funding product, discover more by studying our informative blog post — What Is Hard Money?.

As a real estate wholesaler, you enter a purchase contract to buy a home that some other real estate investors will need. But you don’t close on it: after you have the property under contract, you get someone else to take your place for a fee. The investor then finalizes the acquisition. The real estate wholesaler doesn’t liquidate the residential property — they sell the contract to purchase one.

This method involves using a title company that is experienced in the wholesale purchase and sale agreement assignment operation and is qualified and predisposed to coordinate double close purchases. Search for title services for wholesale investors in Washington County KY that we collected for you.

To understand how real estate wholesaling works, read our insightful article How Does Real Estate Wholesaling Work?. As you select wholesaling, include your investment business on our list of the best wholesale property investors in Washington County KY. That way your possible clientele will learn about your availability and contact you.

Factors to Consider

Median Home Prices

Median home values are instrumental to discovering areas where homes are selling in your investors’ price level. Reduced median purchase prices are a good indicator that there are plenty of houses that can be purchased under market worth, which investors need to have.

Accelerated worsening in property prices might result in a supply of properties with no equity that appeal to short sale property buyers. This investment plan frequently provides numerous different perks. However, be aware of the legal liability. Learn about this from our guide Can You Wholesale a Short Sale House?. Once you’re ready to begin wholesaling, search through Washington County top short sale real estate attorneys as well as Washington County top-rated foreclosure law offices directories to discover the right counselor.

Property Appreciation Rate

Median home value trends are also important. Investors who want to resell their investment properties anytime soon, like long-term rental investors, require a place where property values are growing. Both long- and short-term real estate investors will stay away from a market where residential values are dropping.

Population Growth

Population growth numbers are critical for your prospective contract assignment purchasers. If the population is growing, more residential units are required. Real estate investors are aware that this will combine both rental and owner-occupied residential housing. A market with a shrinking population does not draw the investors you want to buy your contracts.

Median Population Age

Investors want to work in a strong property market where there is a sufficient pool of renters, newbie homeowners, and upwardly mobile residents switching to bigger houses. In order for this to take place, there has to be a stable workforce of prospective tenants and homebuyers. An area with these features will display a median population age that mirrors the employed person’s age.

Income Rates

The median household and per capita income will be increasing in an active residential market that real estate investors prefer to participate in. When tenants’ and homeowners’ salaries are expanding, they can absorb surging lease rates and real estate prices. Real estate investors have to have this in order to achieve their expected profits.

Unemployment Rate

The community’s unemployment stats are a crucial aspect for any targeted wholesale property purchaser. High unemployment rate forces a lot of renters to make late rent payments or default altogether. Long-term real estate investors who rely on uninterrupted lease payments will lose revenue in these places. Investors cannot count on tenants moving up into their houses if unemployment rates are high. Short-term investors won’t take a chance on being stuck with a property they cannot sell quickly.

Number of New Jobs Created

The amount of jobs appearing on a yearly basis is a critical element of the residential real estate picture. Job production means more workers who need a place to live. This is advantageous for both short-term and long-term real estate investors whom you depend on to purchase your wholesale real estate.

Average Renovation Costs

An imperative factor for your client investors, particularly fix and flippers, are renovation expenses in the location. The price, plus the expenses for repairs, must reach a sum that is lower than the After Repair Value (ARV) of the home to allow for profitability. Below average repair spendings make a region more profitable for your priority customers — rehabbers and rental property investors.

This strategy means obtaining a loan (mortgage note) from a mortgage holder for less than the balance owed. The debtor makes remaining payments to the note investor who is now their new lender.

When a mortgage loan is being repaid on time, it’s considered a performing note. Performing notes earn stable cash flow for you. Investors also invest in non-performing mortgages that the investors either modify to help the borrower or foreclose on to acquire the collateral below market worth.

Eventually, you could have many mortgage notes and have a hard time finding more time to handle them without help. If this occurs, you could choose from the best third party loan servicing companies in Washington County KY which will make you a passive investor.

Should you determine that this model is a good fit for you, include your company in our list of Washington County top mortgage note buyers. When you’ve done this, you will be discovered by the lenders who market lucrative investment notes for acquisition by investors such as yourself.

Factors to consider

Foreclosure Rates

Low foreclosure rates are a sign that the region has investment possibilities for performing note purchasers. Non-performing mortgage note investors can cautiously make use of places that have high foreclosure rates as well. If high foreclosure rates are causing a weak real estate environment, it might be difficult to resell the property if you seize it through foreclosure.

Foreclosure Laws

Professional mortgage note investors are thoroughly aware of their state’s laws regarding foreclosure. Are you dealing with a Deed of Trust or a mortgage? A mortgage dictates that the lender goes to court for permission to foreclose. You simply have to file a public notice and start foreclosure process if you’re utilizing a Deed of Trust.

Mortgage Interest Rates

Purchased mortgage loan notes come with a negotiated interest rate. Your investment profits will be influenced by the interest rate. Regardless of the type of investor you are, the loan note’s interest rate will be important for your calculations.

Traditional lenders price different mortgage interest rates in various regions of the country. Private loan rates can be slightly higher than conventional rates because of the larger risk taken by private lenders.

Successful mortgage note buyers continuously check the rates in their market offered by private and traditional lenders.

Demographics

A region’s demographics statistics assist mortgage note investors to focus their efforts and effectively distribute their resources. The neighborhood’s population increase, unemployment rate, job market growth, wage standards, and even its median age provide pertinent data for note investors.
Performing note buyers seek borrowers who will pay on time, creating a repeating income stream of mortgage payments.

Note buyers who acquire non-performing notes can also make use of strong markets. If foreclosure is required, the foreclosed home is more conveniently unloaded in a strong real estate market.

Property Values

As a note investor, you will search for borrowers that have a comfortable amount of equity. This improves the likelihood that a potential foreclosure auction will make the lender whole. Rising property values help increase the equity in the home as the borrower lessens the amount owed.

Property Taxes

Usually, mortgage lenders collect the house tax payments from the customer each month. When the taxes are due, there needs to be enough funds being held to take care of them. The lender will need to take over if the house payments stop or the investor risks tax liens on the property. If property taxes are past due, the municipality’s lien supersedes any other liens to the front of the line and is paid first.

If property taxes keep going up, the customer’s loan payments also keep going up. Past due borrowers may not have the ability to keep up with increasing mortgage loan payments and could interrupt making payments altogether.

Real Estate Market Strength

Both performing and non-performing mortgage note buyers can thrive in a good real estate market. It is important to understand that if you are required to foreclose on a property, you will not have difficulty getting an appropriate price for it.

A growing market might also be a lucrative area for creating mortgage notes. For successful investors, this is a profitable portion of their investment strategy.

A REIT, or Real Estate Investment Trust, means a company that invests in income-generating properties. Before REITs appeared, real estate investing was too costly for many investors. The average person has the funds to invest in a REIT.

REIT investing is one of the types of passive investing. REITs manage investors’ risk with a varied selection of properties. Investors are able to liquidate their REIT shares whenever they wish. Something you cannot do with REIT shares is to determine the investment properties. You are confined to the REIT’s portfolio of assets for investment.

Real estate investment funds are in essence mutual funds that specialize in real estate firms, such as REITs. Any actual real estate property is possessed by the real estate companies rather than the fund. These funds make it doable for a wider variety of people to invest in real estate properties. Fund members may not collect regular distributions like REIT shareholders do. The return to you is created by growth in the value of the stock.

You can select a fund that concentrates on a predetermined category of real estate you’re familiar with, but you don’t get to choose the geographical area of every real estate investment. Your selection as an investor is to pick a fund that you trust to manage your real estate investments.