Louisville KY House Hack Advice

OP

New to Real Estate · Louisville, KY · Member since 2019 · 127 posts · 86 votes

@Rob Bergeron

Awesome advice, thanks Rob!

Curious what areas you would most recommend for a house hack, I would love to make it work in the Germantown area if possible but haven’t seen many multi family properties there. Considering the Portland area next, as it seems to have a lot of potential upside in the near future.

Also, I’ve heard conflicting stories about it being difficult to get permitted for Airbnb rentals, do you have any difficulty with that? Or any advice to make sure it will work before buying a property?

Rob Bergeron

Real Estate Agent · Louisville, KY · Member since 2017 · 1k+ posts · 1k+ votes

Quote from @Isaac Pyle:

@Rob Bergeron

Awesome advice, thanks Rob!

Curious what areas you would most recommend for a house hack, I would love to make it work in the Germantown area if possible but haven’t seen many multi family properties there. Considering the Portland area next, as it seems to have a lot of potential upside in the near future.

Also, I’ve heard conflicting stories about it being difficult to get permitted for Airbnb rentals, do you have any difficulty with that? Or any advice to make sure it will work before buying a property?

I wouldn't be looking to do Airbnb in Jefferson County for the foreseeable future. I'd do a small multifamily. I think midterms are oversaturated currently = bad bet. Our market has lots of killer areas, we are very fortunate.

OP

New to Real Estate · Louisville, KY · Member since 2019 · 127 posts · 86 votes

@Rob Bergeron

That makes sense, thanks! Will look to long-term rent out additional units.

James WilcoxBusiness Member

Real Estate Agent · Bowling Green KY ~ Lexington, KY · Member since 2015 · 1k+ posts · 603 votes

Quote from @Isaac Pyle:

Hello BP!

Not making this a starting out post since I already "Started Out" a few years ago, but now that I'm in a better spot financially I'm back here and looking to purchase a house hack in the near future and would love some advice from local investors.

I am new to the Louisville area (moved here so my partner could go to medical school) and as such I am trying to identify what areas make sense for a house hack. Ideally I would find a duplex or triplex, but for the most part, any multi families within a decent commute to downtown seem to be in either Old Louisville or the Portland / Russell area. Curious if you were in my position trying to get started with a house hack, where would you be looking?

My rough plan is to try and find something that works with an FHA 203k loan, preferably mostly cosmetic work as I want have more experience with rehabs before diving into a major project (probably a pretty generic / popular formula, which I expect is why I don't see many options that fit these criteria). I also feel like the Smoketown / Germantown areas would be great but don't seem to have many multi family properties. Thoughts?

I have already spoken loosely with a lender and an agent, but if you have recommendations for either of those in the area I would love to know too. Thank you!!

Embarking on "House Hacking" is indeed an excellent method to initiate your journey into real estate investing. While properties like 4plexes, triplexes, and duplexes offer optimal utilization of FHA loans, it's important not to overlook single-family homes (SFHs). Simply search for a property that aligns with this concept, featuring distinct living spaces, enabling you to generate rental income. Exploring medium-term rentals alongside your partner who's in medical school could prove to be a promising blend. Alternatively, you might consider accommodating a fellow student as well. Embrace creative thinking and remain adaptable. Best of luck in your property search @Isaac Pyle!

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OP

New to Real Estate · Louisville, KY · Member since 2019 · 127 posts · 86 votes

@James Wilcox

That makes sense! I like the idea of a large SFH for a house hack, will look into that more. Thanks!

2 Reply

Ryan ThomsonBusiness Member

Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes

@Isaac Pyle

I imagine that specific neighborhoods/suburbs are less important than how the actual house will perform and the options it has for exit plans. When it comes to House Hacking location I usually tell me clients in Colorado Springs that the house is more important than the exact neighborhood.

Three things to consider that are more important than location (but also take location into account):
1. Are you comfortable living there for a year?
2. Does it provide an acceptable house hacking strategy while you live there?
3. Does it have a good exit plan for renting the property when you scale to the 2nd house in a year?
Remember if your goal is to scale you only have to live there for a year.

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Michael Seeker

Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes

@Isaac Pyle - my first multifamily deal was a house hack in Old Louisville. I fixed up the "owner's unit" of a fourplex and then redid the other 3 units over time. It was a fantastic investment and great way to learn a lot about rehabbing and semi-passive investing.

One thing you'll notice as you look around various neighborhoods is that most homes were built during the same era and in the same general size/style. Size and style dictate a lot about the ability to split up a space into multiple units. Because of this, you'll se a lot of converted small multifamily properties in the Highlands and Old Louisville. These areas are where the massive houses were built around the turn of the century which are conducive to splitting into anywhere from 2-6+ units. Smoketown and Germantown on the other hand are full of small houses, typically shotguns or bungalows, which are not conducive to splitting. I originally wanted to find a place in the Highlands, however even during the depressed real estate market of the early 2010's, the numbers didn't really work. I ended up in Old Louisville, and have continued investing there ever since. The numbers can still work there (definitely better than the Highlands anyway), and there is a large pool of potential investments to choose from.

OP

New to Real Estate · Louisville, KY · Member since 2019 · 127 posts · 86 votes

@Ryan Thomson

Great advice! Hard to argue with the property if the numbers work. There are some rougher neighborhoods here, and the more I hear about the Portland area the less I’m sure I would be comfortable being there for a year.

Exit strategy is to move and rent out my unit also, so I’m considering the future cash flow at that point.

Thanks!!

OP

New to Real Estate · Louisville, KY · Member since 2019 · 127 posts · 86 votes

@Michael Seeker

That’s awesome! Sounds like you did exactly what I’m looking to do, I might try to pick your brain as I get closer to purchasing something!

I’m a bit nervous (just a cautious person) about getting into some of these huge 4plex homes in old Louisville, as it feels harder for me to estimate the rehab / rent numbers accurately. Any advice there? It’s almost making me want to look for something more like a duplex or triplex with less sqft so my estimates are smaller ranges, if that makes sense.

After talking with people it seems like the general sentiment is that Old Louisville is one of the better areas to be looking right now, so thanks for weighing in on that!

Michael Seeker

Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes

Quote from @Isaac Pyle:

@Michael Seeker

That’s awesome! Sounds like you did exactly what I’m looking to do, I might try to pick your brain as I get closer to purchasing something!

I’m a bit nervous (just a cautious person) about getting into some of these huge 4plex homes in old Louisville, as it feels harder for me to estimate the rehab / rent numbers accurately. Any advice there? It’s almost making me want to look for something more like a duplex or triplex with less sqft so my estimates are smaller ranges, if that makes sense.

After talking with people it seems like the general sentiment is that Old Louisville is one of the better areas to be looking right now, so thanks for weighing in on that!

I'm happy to help. My general sentiment around the smaller properties (up to 4 units) is that the extra unit(s) means a better chance of keeping rent coming in at all times. If you buy a duplex and your tenant moves out, you're collecting $0. If you buy a 4-plex and one tenant moves out, you're still collecting roughly 2/3 of the rent.

Owner-occupied loans are good for up to 4 units, and my recommendation for anybody starting out (in any location) is always to buy a 4-plex and live in one unit if possible.

There are way more triplexes in Old Louisville than duplexes or quads. Generally when I do see 4-plexes, they are not much more expensive than triplexes (i.e. you tend to get higher rent vs. purchase price on them), but your best bet is to look at a few multifamily properties to get a feel for the neighborhood, then set your parameters around how much you want to spend and what kind of property you want to get. You can find anything from a complete gut-rehab project to a nicely appointed, completely remodeled property not needing any work.

OP

New to Real Estate · Louisville, KY · Member since 2019 · 127 posts · 86 votes

@Michael Seeker

That does make sense! I will look more into 3-4 unit properties, your point about tenants leaving makes a good argument for more than 2 total units. Thanks!!

Ryan ThomsonBusiness Member

Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes

Quote from @Isaac Pyle:

@Ryan Thomson

Great advice! Hard to argue with the property if the numbers work. There are some rougher neighborhoods here, and the more I hear about the Portland area the less I’m sure I would be comfortable being there for a year.

Exit strategy is to move and rent out my unit also, so I’m considering the future cash flow at that point.

Thanks!!

Sounds like you're thinking about the right things!

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Andrew Hesse

Rental Property Investor · Canton, OH · Member since 2019 · 9 posts · 8 votes

Good luck finding your next multifamily! One thing to consider since you mentioned you wanted to get more experience with rehabs by using a FHA 203K loan is that you cannot complete the rehab yourself. You need to have a registered contractor complete the work. I have not used a 203K loan so maybe someone with experience using the 203K loan can add more to this.

Thanks,

Andrew