Houses under $60k worth investing in?

Question

I've been trying to narrow down markets where investing in SFR makes sense for houses in the sub $60k range. I see these houses all over the west end of Louisville, and I'm wondering if anyone has had any success with them. According to city-data.com the crime rate seems pretty low for an area with such high unemployment. It doesn't look like the taxes are high either.

Does this price range mean there is a lot of deferred maintenance? Do tenants who rent these places pay late, if at all? Is rent control about to be implemented?

Thank You

Michael Seeker · Answer

@Drew Sommers - I know of several investors who purchased property in the West End of Lou and are now stuck with them. They don't want to own them, they don't make money on them and they would have to come out of pocket to sell them. There are definitely people doing alright in the west end and making money, but I think you'd have a really hard time doing so without being in town and learning the neighborhoods very well.

These properties do not appreciate and they only cashflow if you get tenants in them that pay and don't move out which can be a challenge.

The numbers will look good on paper, but you should talk to somebody who owns property in the specific neighborhoods you want to invest in and see what their experience has been. As @Rob Bergeron points out, there are some pockets experiencing higher demand/growth but if you're not familiar with them then you could end up buying a block or two the wrong direction and having a horrible time with your investment.

Rob Bergeron · Answer

Good morning Drew. I love the $60-$90k entry level cost homes. The cap rate is awesome and you can almost always surpass the 1% rule. Shawnee and Portland has a lot going on. I'd also recommend PRP, Valley Station, Iroquois park, and Okolona. If the property management company is willing to manage it, I'm willing to buy it.

Jacob Michal · Answer

@Drew Sommers hey drew I’m from Louisville message me with any questions .

James Wilcox · Answer

@Michael Seeker very well said. @Drew Sommers I would like to add that you should look to invest where you can build a great team. Being out of state, you rely heavily on your boots on the ground. Without a good team, you are destined to fail even if on paper the numbers work. I will second what Michael said but there are definitely areas of L-ville that can provide a great return. You just need to know them very well.

Jeff V. · Answer

Drew - in my opinion, Micheals assessment is spot on. There’s various efforts ongoing in attempt to clean up the west side, but I just don’t see anything material happening anytime soon. If you dont find a long term — respectful — tenant, you’ll wind up spinning your tires on repair and rent and repair and rent, likely for an ultimate loss. I drive the west side ever few weeks and man, it’s just a completely different world west of 9th and it gets sketchier and sketchier as you go further west and south.

J

David Heath · Answer

Shively is another good area you should look at. Zip code 40216.

Joel Kleyer · Answer

You could try the PRP (Pleasure Ridge Park) area in SW Louisville as @Rob Bergeron mentioned. I have a friend who has a portfolio of 30+ SFH in the area. It's a blue collar neighborhood and houses priced in the sub $100K range. Hope this helps.

Dan Close · Answer

If you decide you are interested in the area I have a property at 3517 w Kentucky, 3 bed 1 bath rented for 750. I would sell for 40k. Would need some light rehab after these tenants but fairly good condition with central air. Roof is older but I would split the cost with someone on that.

Drew Sommers · Answer

@Rob Bergeron Are there areas in Louisville that aren't as hit or miss? I would be OK in paying a higher price if it meant steady cash flow, and less tenant drama.

@Michael Seeker Thank you for the advice. I noticed the disparity between what the homes sold for and what there were listed at. Which is one of the reasons I came here.

@James Wilcox Absolutely on the team building. I made that mistake when I was investing in Phoenix and am still paying for it three years later.

Houses under $60k worth investing in?

Houses under $60k worth investing in?

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