Best area for Rental Property in Louisville

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Best area for Rental Property in Louisville

William A.
Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes

I am interested in getting started in real estate investing in Louisville. I would like to start with a multi-family unit. What part of town can I get the best ROI?

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William R.
Investor · Louisville, KY · Member since 2013 · 139 posts · 43 votes
12y

I agree that having an overall plan is important, and starting with an understanding of what your getting into.  I'd also suggest not buying a very inexpensive, difficult to manage property as your first investment.

I think it is wise to manage your first few properties for a while, so you understand the ins and outs of property management and maintenance.  I'm sure others may disagree that its not the highest and best use of your time, but I found it invaluable.

I started with the idea of only buying multifamily in Old Louisville and focusing on students.  That plan has evolved over time, and I rent to very few student.  Most of my residents are young professionals.  My original plan also drastically limited potential opportunities.  I now have properties in a few neighborhoods and see it as a bit of diversification.

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  • Michael S.
    Investor, Property Manager · Louisville, KY · Member since 2013 · 42 posts · 1 vote
    12y

    North Dixie hwy for Multi-family units. but they are in a rougher area. Single Family homes are whats really good for the Louisville area.

    0Reply
  • William A.
    OP
    Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes
    12y

    @Michael S. What area do you recommend for single family homes? And what kind of ROI can I expect?

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  • Erik HitzelbergerPro Member
    Investor · Louisville, KY · Member since 2011 · 331 posts · 278 votes
    12y

    What's your goal?  Are you looking for cash flow, appreciation, or some combination?  What type of tenant do you want?  Section 8?  Blue collar? White Collar?  Students?  There are areas that support almost every combination.

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  • William A.
    OP
    Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes
    12y

    My goal is simply cash flow.     I am fairly new to this.  I rented my house out several years ago when I relocated to this city.  My tenants were military,  but I am open to Section 8, blue collar, white collar, and students. 

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  • Michael Seeker
    Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes
    12y

    @William A. - Higher cash flow usually means more work/stress/headaches, especially for somebody just starting out.  If your goal is to maximize cashflow and you're willing to deal with the stress and headaches (i.e. difficult tenants) to do so, then you should be looking at $30K single family homes in the west end that will rent for $700+ per month.  Just be prepared to work your butt off for that cashflow!

    1Reply
  • William A.
    OP
    Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes
    12y

    Thanks @Michael Siekerka.   I really wanted to stay away from the West end, but 700 rent on a 30K property is really tempting. Assuming $6000 down (20 percent) that would be quite a return on investment. Maybe I could even hire a property manager to take away some of the headaches.

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  • Clay SmithBusiness Member
    Investor · Louisville, KY · Member since 2013 · 419 posts · 244 votes
    12y

    To start, not many banks will touch a loan under 50k for a first time barrower. The loan officers are disinterested. It takes about 30k to control most properties (purchase+repair) with all cash offers. If you can not get private money or personal loans (401k, Mutual Funds, HELOC) then consider conventional financing.

    If you are using conventional financing then consider 1 of 2 options. 1) buying a SFR for 60-80k that rent rolls at 1.5% (2% rule) or better. Find areas with better than 45% rent vs Owner Occupant homes (city-data.com). Also look for <120 Days on Market (DOM) in Zillow. The idea here is to get a 30yr loan on a SFR that you can exit quickly (sell). Preferably brick or new vinyl, no corner lots, homes with good layout (3/1+). Consider Fannie Mea 10-15% down.

    2) Buy a Multi, live in one unit and buy it as a primary residence. Look for a 1.7% or better return if you were to rent the whole building. Be mindful of maintenance and common electric/utilities.

    Also, add a profile pic!

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  • Jason James
    Investor · Louisville, KY · Member since 2014 · 202 posts · 111 votes
    12y

    Like others have said it really all depends on your goals. I will say that Louisville is a great city to invest in since you have the multiple options listed in other post. I would suggest you really think about your long term goals. You could go so many directions you'll drive yourself crazy if you don't have some sort of plan. I too love cashflow but I am also selective of the areas I invest in. That said I have properties all over the city SFR and Multi. Don't get stuck on one area rather look at each deal as it presents itself, analyze it and if it works for you grab it up. Real estate to me is a living breathing thing and ever evolving therefore you have to evolve with it.

    Good luck and remember BP is your friend. 

    0Reply
  • William R.
    Investor · Louisville, KY · Member since 2013 · 139 posts · 43 votes
    12y

    I agree that having an overall plan is important, and starting with an understanding of what your getting into.  I'd also suggest not buying a very inexpensive, difficult to manage property as your first investment.

    I think it is wise to manage your first few properties for a while, so you understand the ins and outs of property management and maintenance.  I'm sure others may disagree that its not the highest and best use of your time, but I found it invaluable.

    I started with the idea of only buying multifamily in Old Louisville and focusing on students.  That plan has evolved over time, and I rent to very few student.  Most of my residents are young professionals.  My original plan also drastically limited potential opportunities.  I now have properties in a few neighborhoods and see it as a bit of diversification.

    2Reply
  • Raven Parmer
    Architect · Louisville, KY · Member since 2014 · 94 posts · 47 votes
    12y

    @William R. (or anyone else, really)

    what other neighborhoods do you focus on in Louisville? I'm starting to think about what areas we want to invest in. I live and spend most of my time in the East End, but I don't think that's the best place to start because the prices are a little high. Curious where some good lower priced rental areas are? I feel like young professionals would be an ideal tenant for me, but I also presume they would prefer hipper areas like Highlands, which I feel is really competitive. As a novice, I'm not sure I'm prepared to compete. I definitely need to get a better grasp on the rental market here in Louisville, as my only knowledge of it is when I rented here 3 years ago. My perception is that, as a renter, I had a lot of competition to get into neighborhoods like the Higlands or Crescent Hill. Even Butchertown. So I feel like they would be a safe investment. Just hard to find a good deal. We ended up renting in Butchertown, and our landlord was also our realtor when we bought our home. I know he had 20+ applications on the place when we moved out. I don't know if that is good or average. I'm rambling here, but would love to hear more from those of you who have rental properties in town!

    0Reply
  • William A.
    OP
    Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes
    12y

    @Raven Parmer  I was just discussing the HIghlands with  a co-worker this morning that lives there.  He agreed that the highlands would be a safe place to invest with a nearly zero vacancy rate for rentals.  But that being said, it also a very competitive market for purchasing homes. He paid more than the asking price for the home when he bought it last year.   So it might be hard to make your money "going in" in that neighborhood.

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  • William R.
    Investor · Louisville, KY · Member since 2013 · 139 posts · 43 votes
    12y

    I would consider a great deal in almost any neighborhood and I would consider a good deal in a bit better areas.  With a bit more experience managing properties I feel like I can be a bit more aggressive in up-and-coming neighborhoods, but it'd have to be a killer deal to invest in some  parts of the West End because I've turned down some $5-10,000 deals that cash flow like crazy.  I may think differently if I was a full time investor and had the time.   I would suggest getting a bit nicer of a property for your first few investments instead of something that is going to run you ragged with repairs and difficult tenets.  You wouldn't want to be a landlord very long in that situation.  

    I'd also consider proximity of your properties.  I notice that my closer properties get more attention...  Maybe I'm lazy, or just don't like sitting in the car all day.

    Highlands is a great area and I live there myself, but I'm not sure about cash flow. I do not have any investments there and have really not looked at the market rents, but I love it here.   Per Sq Ft Sales prices seem to high to turn a profit renting them.

    I also believe that a unit with 20 paid applicants before you moved out means it was probably listed below the market rate.

    I'm also interested in Portland with the Portland Investment Initiative and all of that hype.

    1Reply
  • Marina Sud
    Investor · Louisville, KY · Member since 2013 · 37 posts · 9 votes
    12y

    I too live in the highlands. I did a bit of research by calling for rent signs. I think in a shared  housing situation it's anywhere from $650 to $850. Single family homes (2-3 bedrooms, 1000+ sq ft) are a different story; $1200-$1600 in the nicer areas. Condos are around $1200 and up. I think single family is the way to go but very competitive. A lot of the "apartments" or student-like rentals, like in the Cherokee triangle area/Cherokee road are small and not well-maintained. 

    0Reply
  • Raven Parmer
    Architect · Louisville, KY · Member since 2014 · 94 posts · 47 votes
    12y

    @William R. 

    if I had extra money to tie up, I'd invest in Portland. My office is in nulu, and the partners bought when it was still a rough area. It has changed drastically from what I am told. (I moved here after it was revitalized.) We have a project that we have been working on in Portland, that is unfortunately on hold, but will hopefully be realized. Artists have already moved into the area and investors have bought up a good chunk of property already.

    2Reply
  • Kristy Miles
    Linz, Upper Austria · Member since 2017 · 1 post · 0 votes
    9y

    my husband and myself have a 1 bed 1.5 bath in Clifton and we're looking to rent out our condo and buy a fixer upper in downtown Louisville. Is it possible to have an agreement with UofL or Humana for a year long or longer rental agreement? We're concerned about rental just to anyone because we want to make sure we have steady income. 

    Is that something that can happens?

    0Reply
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