Top Tips When Buying Investment Property in Louisville, Kentucky
Are you a new investor in the real estate market? While you may be enticed to invest in “hot markets” like New York City and California, markets like Louisville, Kentucky are proving to be a better choice.
Unlike hot markets, the entry cost to the Louisville market is quite low. The market is diverse, offering low-cost affordable housing to luxury condos and villas. In addition, Louisville is one of the fastest-growing cities in the state of Kentucky. As an investor, this means higher occupancy rates, steady growth, and stable revenue.
Being new to the industry, you’ll need all the help you can get. Property investments have far-reaching effects that can be both positive and negative. On one side, you will be enjoying passive monthly income and tax benefits due to owning a rental property. Flip the coin, however, and you will have the issue of liquidity.
Research into the Louisville real estate market will be necessary. After all, any rational investor wants to make the most of their new investment.
Alltrade Properties seeks to empower investors who want to buy property in Louisville. Our experience in the real estate industry has proven critical to many clients in the past. Contact us today to find out how we can help you with your investing journey!
With the recommendations below, you can grow your next rental property investment.
The Reality of Louisville Real Estate
A quarter of the population in Louisville is between the ages of 35-54, while another estimated 15% is between 25 and 34.
These are young, single professionals or new families who are looking to start their lives in Louisville, Kentucky. That means that there is a dire need for housing. With a metro area population of over 1 million, the real estate market is spreading outwards.
The population is moving to the neighboring suburbs. You can enjoy all the benefits of being near an urban area without many of the drawbacks. Some of the best neighborhoods for investment in Louisville are upcoming and established suburban neighborhoods, which include: Hurstbourne, Indian Hills, Anchorage, Windy Hills, and Prospect.
A prudent investor is one who can stay abreast of the market. Louisville has quite the range when it comes to property types. Income levels, population growth, and other economic data should be analyzed by any investor. With a smart choice, one can build their investment portfolio.
Louisville Real Estate Investment Tips
Tip #1: Understand your price range
You will have plenty of choices as an investor in Louisville. From studio apartments to condos to luxury villas, the biggest consideration as an investor should always be your budget. This will help you gain a laser-focus scrutiny with regards to the particular property type.
The price range will also be determined by your other financial needs. Weigh the effect of sinking your resources into that potential investment. You should also take into consideration related taxes and Homeowner’s Association fees.
Tip #2. Look out for a high-rent neighborhood
In any investment, the goal is to maximize the return on the investment, the ROI. This is where information on market prices vs. rental value comes into play. The perfect property is one that has a high rent to market value ratio. In the property industry, this ratio is known as the price to rent ratio and is key for investors.
A high price-to-rent ratio is what a prudent investor looks for. It indicates the demand for property in that neighborhood. On the other hand, a neighborhood with a low price-to-rent ratio is more suitable for homeownership than rental property investment. You may want to factor in a property’s proximity to Louisville attractions as well.
Also, browse for new developments that may be in the area. This has an effect on older properties in neighboring areas. New developments may reduce the asking price of older ones but not their market rent. The result is the ideal high price-to-rent ratio.
Tip #3: Consider hiring a professional
Contemplate the two tips above. You need specialized information and advice on Louisville property to make the right decision. Only an expert in the property sector can provide the information needed on price range and neighborhood data.
Management of a rental property is another animal. Self-managing can be quite a hassle for any individual and requires a considerable amount of time investment. You need to be ready to answer to requests and complaints of your tenants and neighbors, be it during normal hours of the day or the wee hours of the morning, in case of an emergency.
The services of an experienced and respectable property management company will come in handy. With a customized solution, the unique needs of your property are met. A well-managed property equals a high tenant and stable revenue.
Tip #4. Do the math
The property rental market is influenced by other economic and social factors. They will determine the growth rate and possible returns for investors. Projections and growth scenarios are important elements to be considered before making the final decision.
Dabble around with a growth scenario for your Louisville. It is recommended you choose a conservative future setting for your calculations. Positive developments that surpass your projections will always bring a smile to your face.
Other elements that you should consider during your calculations include mortgage repayments (if applicable), taxes and other fees, renovation and management expenses.
Tip #5: Up your property’s appeal
There will be upfront costs to boost the appeal of your potential property. Tenants are highly visual. That’s why your final selection needs to be in tip-top shape. If that’s not so, choose one that has little renovation needs.
New fittings will be needed for the common areas and the bathrooms. Compare the cost of wallpapering as opposed to an interior paint job. We recommend you visit a few open houses as well as some home expos. You will get to know what’s trending in terms of home improvement and décor fittings.
The Bottom Line
Louisville has quite a vibrant real estate market for both investors and tenants. Investors can expect sale prices that are on average 25 percent less than the country’s average.
On the other hand, tenants are enjoying the variety of spaces available to rent. There is also the welcoming attitude of the locals. A tenant can plug into the community thanks to the friendly and receptive environment. This bodes well for investors.
Is the Louisville Housing market on your radar? You will need to make an informed decision to maximize your rental property. Trust the experts at Alltrade Properties who have the experience and knowledge in all real estate sectors.