I live just south of Cincinnati and am hoping to find my first rental property in the northern Kentucky area. I am a veterinarian and absolutely love my career, however I feel strongly that real estate could be an excellent side-gig or even perhaps a great way to move into a second career whenever I'm ready to retire from veterinary medicine. I'm still trying to assemble my team and learn as much as I can. I'm still a little confused about the best way to finance my first buy. I do have some money in savings that I could use for a down payment, however if I use only that money, I will be quite limited in how much I can spend. If I supplement that cash with some money from a HELOC, my buying power will be significantly better. Obviously, in the current market, I understand that cash flow can be very difficult. Although I believe I can see the path to my first rental easily, I'm having a hard time figuring out how I'd get to the next one. I'm open to any and all advice!
I live just south of Cincinnati and am hoping to find my first rental property in the northern Kentucky area. I am a veterinarian and absolutely love my career, however I feel strongly that real estate could be an excellent side-gig or even perhaps a great way to move into a second career whenever I'm ready to retire from veterinary medicine. I'm still trying to assemble my team and learn as much as I can. I'm still a little confused about the best way to finance my first buy. I do have some money in savings that I could use for a down payment, however if I use only that money, I will be quite limited in how much I can spend. If I supplement that cash with some money from a HELOC, my buying power will be significantly better. Obviously, in the current market, I understand that cash flow can be very difficult. Although I believe I can see the path to my first rental easily, I'm having a hard time figuring out how I'd get to the next one. I'm open to any and all advice!
Ashley
Hey @Ashley Dewees. It's great that you enjoy your career—keep pursuing that passion, but building a nest egg in real estate too is a great idea. A solid W2 income can be a big advantage when it comes to securing investment property loans, so it's smart that you're recognizing that. Have you spoken with a lender yet? They could likely help answer some of your questions.
I’m guessing you chose the NKY market because you want to invest close to home, and I’m sure there are plenty of opportunities there. I’d suggest finding the niche that interests you most and focusing on that. Also, consider where you can build the strongest team. Kentucky offers great opportunities all across the state.
With the impending economic downturn, northern KY may be affected more than Cincinnati. This is an opportunity. Land contract is what would work best for you in that environment. A seller can keep his low interest loan and start receiving his equity from your land contract payments. Land contract emerged as the most attractive alternative financing in the last two recessions. Get a realtor who knows how they work and will scout them out for you when things slow down.
In NKY you can't beat Ft Thomas and Ft Mitchell. House in both are very safe. Avoid multi family properties in areas in Cov and Newport that you would not feel comfortable walking through at night, which is most everywhere there except up on the hills.
@James Wilcox Thanks for your reply, I'm working on my team now. I have spoken with a lender and have already been preapproved for a loan, but you're probably right that I should just reach out to him again and run some of the newer information I've learned by him. I also know a couple of investors in the area that have given me some great advice. Yes, I'd prefer to keep my first investment close to home. At this point, I believe I'm just waiting for the right property. Trying to analyze as many as I can so that hopefully I'll recognize a good deal when one comes. Also narrowing down my realtor choices to see who will be able to help me the most.
@Gregory Wilson I'm not familiar with land contracts at all...I'm googling now but if you have any other information you'd be willing to share (don't hesitate to dumb it down for me) that would be great! I'm very familiar with Ft. Thomas and Ft. Mitchell but haven't really looked too close at those areas as I don't really have enough capital for a traditional home purchase in those towns. Thanks for the advice, would love any more info you can provide (or websites you can recommend for me to peruse).
Land contract tend to disappear when money is plentiful especially in a seller's market. When things get rough land contracts reappear. Here is what Gemini AI says, better put than I can:
Land Contracts in Kentucky: A Brief Overview
A land contract, also known as a contract for deed or installment sale contract, is a type of real estate purchase agreement where the seller retains title to the property until the buyer has paid the full purchase price, typically in installments. Key Features of a Kentucky Land Contract:
Conditional Title Transfer: The seller maintains legal title to the property until the buyer has fully paid the purchase price. Installment Payments: The buyer makes regular payments to the seller, which include both principal and interest. Possession: The buyer typically takes possession of the property immediately upon signing the contract. Equitable Title: While the seller retains legal title, the buyer acquires equitable title, meaning they have a beneficial interest in the property.
Benefits and Risks of Land Contracts:
Benefits for Buyers:
Lower Down Payment: Land contracts often require a smaller down payment compared to traditional mortgages. Easier Qualification: Buyers with less-than-perfect credit may find it easier to qualify for a land contract. Flexibility: Land contracts can offer more flexibility in terms of payment schedules and interest rates.
Risks for Buyers:
Lack of Protection: Buyers may have fewer legal protections than with a traditional mortgage, especially if the contract is not properly drafted. Seller Default: If the seller defaults on their obligations, the buyer may face challenges in recovering their investment. Difficulty in Financing: Selling a property purchased under a land contract can be more difficult, as potential buyers may be hesitant to take on the remaining payments.
Benefits for Sellers:
Deferred Capital Gains Tax: Sellers may be able to defer capital gains taxes on the sale of the property if certain conditions are met. Secured Debt: The land contract provides the seller with a secured debt, which can be a valuable asset.
Risks for Sellers:
Lack of Payment: If the buyer fails to make payments, the seller may face delays in recovering the property. Legal Issues: Disputes between buyers and sellers can arise, leading to potential legal complications.
Important Considerations:
Contract Terms: It's crucial to have a well-drafted land contract that clearly outlines the rights and obligations of both parties. Legal Advice: Consulting with an attorney experienced in real estate law is highly recommended before entering into a land contract. Recording: The land contract should be recorded with the county clerk's office to protect the buyer's interest.
By understanding the key features, benefits, and risks of land contracts, buyers and sellers in Kentucky can make informed decisions about this type of real estate transaction.
Thanks, Gregory. I was just reading some articles that echo that information. Sounds like one of the challenges will be finding the right seller. I'll look into it more, I really appreciate the advice.
Thanks, Gregory. I was just reading some articles that echo that information. Sounds like one of the challenges will be finding the right seller. I'll look into it more, I really appreciate the advice.
The really experienced advisers will tell you that the most interesting opportunities come up in a recession. It is a shame that someone has to suffer, but the distress often creates really big opportunities. Keep your cash safe and get a realtor who actually sold real estate prior to 2008. Anyone can make money in a rising market. Let's see how they do in a downturn.
