Ultimate Wichita Falls Real Estate Investing Guide for 2024

BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat”. This is a plan to increase your investment assets rather than acquire one income generating property. It is essential that you are qualified to do a “cash-out” mortgage refinance for the system to work.

The After Repair Value (ARV) of the asset needs to total more than the total buying and rehab expenses. The home is refinanced using the ARV and the balance, or equity, is given to you in cash. This money is placed into another investment property, and so on. You acquire more and more houses or condos and continually increase your rental revenues.

When an investor holds a significant portfolio of real properties, it seems smart to employ a property manager and create a passive income source. Find the best property management companies in Wichita Falls TX by using our list.

Factors to Consider

Population Growth

Population rise or fall tells you if you can count on good results from long-term real estate investments. When you see strong population expansion, you can be certain that the region is pulling possible renters to it. Employers see this market as an attractive place to situate their business, and for workers to relocate their families. Rising populations develop a reliable renter mix that can handle rent bumps and home purchasers who assist in keeping your investment property prices high.

Property Taxes

Real estate taxes, upkeep, and insurance spendings are examined by long-term rental investors for computing expenses to assess if and how the investment strategy will be successful. Rental assets located in steep property tax communities will have less desirable returns. Regions with unreasonable property tax rates are not a dependable setting for short- and long-term investment and should be bypassed.

Price to Rent Ratio

The price to rent ratio (p/r) is a comparison of median property values and median lease rates that will show you how high of a rent the market can allow. If median home values are high and median rents are small — a high p/r, it will take more time for an investment to recoup your costs and attain good returns. You want to find a low p/r to be assured that you can price your rental rates high enough to reach acceptable returns.

Median Gross Rents

Median gross rents are a specific benchmark of the approval of a lease market under consideration. You need to identify a market with repeating median rent expansion. You will not be able to reach your investment targets in an area where median gross rents are shrinking.

Median Population Age

The median residents’ age that you are on the lookout for in a good investment market will be approximate to the age of waged adults. You will learn this to be accurate in cities where people are migrating. If you find a high median age, your source of renters is going down. That is a poor long-term economic scenario.

Employment Base Diversity

Accommodating numerous employers in the area makes the economy not as risky. When the region’s workers, who are your renters, are spread out across a diversified combination of companies, you will not lose all of them at once (together with your property’s market worth), if a major company in the market goes bankrupt.

Unemployment Rate

You will not be able to benefit from a stable rental income stream in an area with high unemployment. Normally successful businesses lose clients when other companies lay off workers. People who continue to have jobs can find their hours and wages reduced. This may cause missed rent payments and tenant defaults.

Income Rates

Median household and per capita income stats help you to see if a sufficient number of preferred tenants reside in that region. Improving salaries also tell you that rental fees can be hiked throughout the life of the asset.

Number of New Jobs Created

The more jobs are continuously being generated in a region, the more consistent your renter source will be. An economy that provides jobs also adds more people who participate in the housing market. This allows you to acquire more lease properties and backfill current unoccupied properties.

School Ratings

School ratings in the area will have a large impact on the local real estate market. When a business explores a city for potential expansion, they know that first-class education is a must for their workers. Good tenants are a by-product of a robust job market. Recent arrivals who need a residence keep property values strong. You will not find a vibrantly expanding residential real estate market without quality schools.

Property Appreciation Rates

The essence of a long-term investment method is to keep the investment property. Investing in properties that you intend to maintain without being confident that they will increase in price is a formula for disaster. You do not need to spend any time surveying cities showing below-standard property appreciation rates.

A furnished property where tenants live for shorter than 30 days is considered a short-term rental. The per-night rental rates are always higher in short-term rentals than in long-term rental properties. Short-term rental units may require more periodic maintenance and sanitation.

Home sellers waiting to close on a new house, excursionists, and people traveling for work who are staying in the area for about week prefer renting a residential unit short term. Regular real estate owners can rent their homes on a short-term basis through platforms such as AirBnB and VRBO. Short-term rentals are deemed as a good technique to start investing in real estate.

Short-term rental units require interacting with occupants more frequently than long-term ones. That means that property owners deal with disagreements more often. Consider defending yourself and your properties by adding any of real estate law offices in Wichita Falls TX to your network of experts.

Factors to Consider

Short-Term Rental Income

You should find out how much rental income needs to be earned to make your investment profitable. A glance at a market’s present standard short-term rental rates will show you if that is a strong location for your project.

Median Property Prices

When acquiring investment housing for short-term rentals, you have to determine how much you can spend. To check whether an area has opportunities for investment, examine the median property prices. You can also make use of median values in particular areas within the market to pick locations for investing.

Price Per Square Foot

Price per square foot can be impacted even by the design and floor plan of residential units. A home with open foyers and high ceilings can’t be compared with a traditional-style residential unit with larger floor space. If you remember this, the price per sq ft can provide you a basic estimation of property prices.

Short-Term Rental Occupancy Rate

A look at the location’s short-term rental occupancy rate will tell you if there is an opportunity in the market for additional short-term rental properties. When the majority of the rentals have few vacancies, that market needs more rental space. If property owners in the market are having issues renting their current properties, you will have trouble filling yours.

Short-Term Rental Cash-on-Cash Return

To find out whether you should invest your capital in a specific rental unit or location, compute the cash-on-cash return. You can calculate the cash-on-cash return by taking your Net Operating Income (NOI) and dividing it by your cash investment. The answer will be a percentage. High cash-on-cash return means that you will get back your investment faster and the investment will have a higher return. If you get financing for a fraction of the investment and put in less of your capital, you will get a higher cash-on-cash return.

Average Short-Term Rental Capitalization (Cap) Rates

Another metric shows the market value of real estate as a revenue-producing asset — average short-term rental capitalization (cap) rate. High cap rates mean that properties are accessible in that area for reasonable prices. When cap rates are low, you can assume to pay more for investment properties in that market. The cap rate is calculated by dividing the Net Operating Income (NOI) by the asking price or market value. The percentage you will get is the property’s cap rate.

Local Attractions

Major festivals and entertainment attractions will attract vacationers who will look for short-term rental properties. People go to specific regions to watch academic and sporting events at colleges and universities, be entertained by competitions, support their children as they participate in fun events, have the time of their lives at annual festivals, and drop by amusement parks. Popular vacation spots are situated in mountain and beach areas, along lakes, and national or state nature reserves.

When a home flipper acquires a house below market value, repairs it so that it becomes more valuable, and then sells the house for a profit, they are known as a fix and flip investor. Your calculation of rehab spendings should be accurate, and you have to be capable of buying the property for lower than market price.

You also need to analyze the resale market where the house is located. The average number of Days On Market (DOM) for properties listed in the city is important. To successfully “flip” a property, you must sell the rehabbed home before you have to spend money maintaining it.

To help motivated home sellers discover you, place your company in our lists of all cash home buyers in Wichita Falls TX and property investors in Wichita Falls TX.

In addition, hunt for real estate bird dogs in Wichita Falls TX. These professionals concentrate on quickly locating lucrative investment prospects before they are listed on the marketplace.

Factors to Consider

Median Home Price

Median home value data is a critical indicator for evaluating a future investment location. You are looking for median prices that are modest enough to show investment opportunities in the area. This is an important component of a lucrative rehab and resale project.

If area data signals a sudden drop in property market values, this can highlight the availability of possible short sale real estate. Investors who partner with short sale processors in Wichita Falls TX receive regular notices concerning possible investment real estate. Learn how this works by reviewing our guide ⁠— How to Buy a Short Sale House Quickly.

Property Appreciation Rate

The shifts in real estate market worth in a region are vital. Fixed surge in median values shows a strong investment environment. Accelerated market worth growth may indicate a market value bubble that is not sustainable. When you’re purchasing and liquidating quickly, an unstable environment can harm your venture.

Average Renovation Costs

A thorough review of the market’s construction costs will make a substantial impact on your area choice. The time it takes for getting permits and the local government’s rules for a permit application will also affect your plans. To create an on-target financial strategy, you’ll need to know if your construction plans will be required to involve an architect or engineer.

Population Growth

Population increase is a solid indicator of the potential or weakness of the community’s housing market. Flat or negative population growth is an indicator of a weak market with not a lot of buyers to validate your risk.

Median Population Age

The median citizens’ age is a variable that you might not have considered. If the median age is the same as that of the regular worker, it’s a good sign. Individuals in the area’s workforce are the most steady house buyers. Individuals who are preparing to leave the workforce or have already retired have very particular residency needs.

Unemployment Rate

You want to have a low unemployment level in your prospective community. The unemployment rate in a prospective investment community should be lower than the nation’s average. A really reliable investment area will have an unemployment rate lower than the state’s average. Jobless individuals cannot acquire your houses.

Income Rates

Median household and per capita income numbers show you whether you will find adequate buyers in that city for your houses. Most people have to obtain financing to buy real estate. Their income will show how much they can afford and if they can purchase a property. You can figure out from the area’s median income if enough individuals in the community can afford to buy your houses. Search for locations where the income is improving. To keep pace with inflation and soaring building and material costs, you need to be able to regularly mark up your rates.

Number of New Jobs Created

The number of employment positions created on a continual basis indicates if income and population growth are viable. An increasing job market communicates that a larger number of people are comfortable with buying a house there. Fresh jobs also draw wage earners arriving to the city from elsewhere, which further strengthens the property market.

Hard Money Loan Rates

Fix-and-flip investors often utilize hard money loans rather than typical loans. Hard money financing products enable these investors to take advantage of current investment opportunities without delay. Research top-rated Wichita Falls hard money lenders and compare financiers’ costs.

If you are unfamiliar with this financing type, learn more by reading our informative blog post — What Is Hard Money?.

In real estate wholesaling, you search for a home that real estate investors may consider a profitable deal and enter into a sale and purchase agreement to buy it. When a real estate investor who wants the residential property is spotted, the contract is assigned to the buyer for a fee. The real estate investor then settles the purchase. The real estate wholesaler does not sell the property itself — they only sell the rights to buy it.

The wholesaling method of investing involves the use of a title firm that understands wholesale transactions and is savvy about and engaged in double close deals. Find real estate investor friendly title companies in Wichita Falls TX on our list.

To learn how wholesaling works, read our insightful guide Complete Guide to Real Estate Wholesaling as an Investment Strategy. When pursuing this investment plan, place your business in our directory of the best home wholesalers in Wichita Falls TX. This will allow any possible clients to see you and get in touch.

Factors to Consider

Median Home Prices

Median home values in the region being considered will quickly inform you whether your real estate investors’ target investment opportunities are situated there. A city that has a large source of the below-market-value residential properties that your investors need will have a below-than-average median home purchase price.

A rapid downturn in home worth could be followed by a sizeable selection of ’upside-down’ homes that short sale investors hunt for. Wholesaling short sale houses repeatedly delivers a collection of particular benefits. However, there may be risks as well. Gather more details on how to wholesale a short sale with our extensive instructions. Once you’ve decided to try wholesaling these properties, make sure to employ someone on the directory of the best short sale real estate attorneys in Wichita Falls TX and the best foreclosure law firms in Wichita Falls TX to help you.

Property Appreciation Rate

Property appreciation rate completes the median price data. Investors who need to liquidate their investment properties in the future, like long-term rental investors, want a place where property values are growing. Both long- and short-term real estate investors will stay away from a region where home values are depreciating.

Population Growth

Population growth information is a contributing factor that your prospective real estate investors will be familiar with. When they see that the community is multiplying, they will presume that new housing is required. There are a lot of people who rent and more than enough clients who buy real estate. When an area is shrinking in population, it doesn’t need new housing and investors will not be active there.

Median Population Age

A vibrant housing market necessitates residents who start off renting, then transitioning into homeownership, and then moving up in the housing market. A community with a huge employment market has a steady pool of tenants and buyers. That is why the market’s median age should be the age of skilled workers in the employment market.

Income Rates

The median household and per capita income in a reliable real estate investment market need to be improving. When renters’ and homebuyers’ wages are getting bigger, they can handle soaring lease rates and real estate purchase prices. That will be important to the real estate investors you are looking to attract.

Unemployment Rate

Real estate investors will pay close attention to the location’s unemployment rate. Overdue lease payments and default rates are higher in communities with high unemployment. Long-term real estate investors who count on reliable rental income will suffer in these places. Tenants can’t level up to homeownership and existing owners can’t sell their property and shift up to a more expensive residence. This can prove to be hard to reach fix and flip real estate investors to buy your purchase agreements.

Number of New Jobs Created

The amount of new jobs being produced in the area completes an investor’s estimation of a potential investment spot. New citizens settle in a location that has more jobs and they need housing. Employment generation is advantageous for both short-term and long-term real estate investors whom you rely on to buy your sale contracts.

Average Renovation Costs

Improvement costs will be critical to many real estate investors, as they normally buy inexpensive distressed homes to update. When a short-term investor repairs a property, they have to be able to resell it for more than the entire expense for the purchase and the improvements. Seek lower average renovation costs.

Purchasing mortgage notes (loans) works when the mortgage note can be bought for a lower amount than the remaining balance. When this happens, the note investor takes the place of the borrower’s mortgage lender.

Loans that are being paid off as agreed are considered performing loans. They earn you stable passive income. Investors also purchase non-performing loans that they either modify to assist the borrower or foreclose on to purchase the property less than market worth.

Ultimately, you might have multiple mortgage notes and need additional time to oversee them on your own. At that stage, you might want to employ our directory of Wichita Falls top home loan servicers and reassign your notes as passive investments.

If you decide to adopt this method, affix your venture to our list of real estate note buying companies in Wichita Falls TX. Joining will make you more noticeable to lenders providing lucrative possibilities to note buyers like yourself.

Factors to Consider

Foreclosure Rates

Performing note purchasers try to find regions with low foreclosure rates. Non-performing loan investors can carefully take advantage of places that have high foreclosure rates as well. If high foreclosure rates are causing an underperforming real estate market, it might be challenging to resell the collateral property after you seize it through foreclosure.

Foreclosure Laws

Professional mortgage note investors are fully aware of their state’s laws for foreclosure. Some states use mortgage paperwork and others use Deeds of Trust. A mortgage dictates that you go to court for permission to foreclose. Investors do not need the judge’s agreement with a Deed of Trust.

Mortgage Interest Rates

Acquired mortgage loan notes have a negotiated interest rate. That mortgage interest rate will significantly influence your investment returns. No matter the type of investor you are, the loan note’s interest rate will be critical to your forecasts.

Traditional interest rates may vary by up to a quarter of a percent around the US. The higher risk taken by private lenders is accounted for in higher loan interest rates for their mortgage loans compared to conventional loans.

A mortgage note investor needs to be aware of the private as well as conventional mortgage loan rates in their markets at any given time.

Demographics

A city’s demographics data allow mortgage note investors to streamline their efforts and properly use their assets. It’s critical to find out if an adequate number of residents in the region will continue to have reliable employment and incomes in the future.
Performing note investors look for customers who will pay without delay, developing a repeating income source of mortgage payments.

Note buyers who seek non-performing mortgage notes can also make use of strong markets. A vibrant local economy is required if investors are to reach homebuyers for properties they’ve foreclosed on.

Property Values

Lenders want to find as much equity in the collateral as possible. When the value isn’t higher than the loan amount, and the mortgage lender decides to start foreclosure, the house might not generate enough to repay the lender. Rising property values help increase the equity in the home as the borrower lessens the balance.

Property Taxes

Many borrowers pay real estate taxes through lenders in monthly installments together with their mortgage loan payments. This way, the lender makes certain that the real estate taxes are taken care of when due. If the homeowner stops performing, unless the note holder pays the taxes, they will not be paid on time. Tax liens go ahead of all other liens.

If a market has a record of rising property tax rates, the total house payments in that region are constantly expanding. Past due clients may not have the ability to keep paying increasing mortgage loan payments and might interrupt making payments altogether.

Real Estate Market Strength

Both performing and non-performing note investors can work in an expanding real estate environment. They can be assured that, when required, a foreclosed property can be sold for an amount that is profitable.

A growing real estate market could also be a good environment for making mortgage notes. For veteran investors, this is a profitable part of their business strategy.

A trust that owns income-generating real estate properties and that offers shares to people is a REIT — Real Estate Investment Trust. REITs were invented to allow average people to invest in real estate. Many people these days are capable of investing in a REIT.

Shareholders’ participation in a REIT is passive investing. Investment risk is spread throughout a package of investment properties. Shares in a REIT may be sold whenever it is convenient for the investor. Members in a REIT aren’t able to propose or pick assets for investment. Their investment is confined to the real estate properties owned by their REIT.

A Real Estate Investment Fund is a mutual fund that owns stocks of real estate firms. The fund doesn’t own properties — it owns shares in real estate firms. These funds make it possible for more investors to invest in real estate properties. Whereas REITs have to distribute dividends to its members, funds do not. As with any stock, investment funds’ values rise and go down with their share value.

You can select a fund that concentrates on a predetermined category of real estate you are familiar with, but you don’t get to choose the location of every real estate investment. As passive investors, fund members are happy to allow the directors of the fund handle all investment decisions.