BUYING RENTAL PROPERTY IN NORTHERN KENTUCKY - CALL 859-360-9997
So you're thinking about buying real estate and renting it in the Greater Cincinnati area? Congratulations, you are looking in a fantastic market for cash flow and finding great deals. In this post, I will weigh some variables for you in the event you are a beginner. Feel free to call me with further questions.
Single Family vs. Multi-Family
Single Family homes are a wise investment because the appreciation is higher on these than duplexes and other multi-family properties. While the appreciation is higher, the cash flow can be lower from a monthly rental.
Multi-Family homes depending on the location, purchase price, and monthly rental rates can be highly profitable due to the multiple streams of income coming from one property with one mortgage payment. Another advantage that multi-family properties have is vacancy protection. Unless you have full vacancy, you still have tenants in the building paying down your mortgage (providing you have a mortgage on the property).
Locations to consider
Supply and demand are no different in this market than in any other market. Areas of Covington, KY with older homes may demand $550/month for a 2-3 bedroom apartment and areas like Florence, KY may allow an investor to get $1,000/month for a 3 bedroom brick ranch. When choosing your location, it is important that you choose an area that is convenient to your primary residence. If you need to visit the property, you don't want to have to drive a hour to get there.
If you are an experienced real estate investor you understand that you make your money when you buy. So by having an experienced real estate professional run comparable sales to make sure you aren't paying too much when you purchase is a best practice.
Offering too much for a rental property could mean that your cash flows will be lower and your resale will be impacted if you need to get rid of the property quickly. Conversely, offering too little for a property could lead to you missing out on a great investment. Personally, my preference is to establish what I deem to be the 'Fair market value' and do not pay more than 90% of that value. (example: If the property is advertised for $110,000 and the comparable sales tell me it is actually worth $100,000(Fair Market Value), I would be willing to pay up to $90,000 for the property.
Many lenders will allow an non-owner occupied property a 25% down payment and some will allow a 20% down payment. A best practice here is to establish a relationship with a mortgage lender that you can trust to close a deal quickly and without problems. Tell the lender that you are planning on purchasing rental properties and what your business plan looks like. Some banks will allow you to finance up to 10 properties including your personal residence. Some banks only allow 4. Depending on your goals for your properties, it may be worth your while to find a lender who can finance more properties for you if necessary.
If you are an investor and you want an experienced agent and team to help you find, buy, and help you profit in your business, call me at 859-360-9997. It is important to find a real estate professional who understands the logistics and strategy behind running a real estate investment business.
Shopping for Multi-Family Properties in Northern Kentucky? See the list below to view all MLS listings for these types of rental properties.
Multi Family Units:
Florence, KY Multi-Family
Covington, KY Multi-Family
Covington, KY Multi-Family
Erlanger, KY Multi-Family
Independence, KY Multi-Family
Newport, KY Multi-Family
Ft. Thomas, KY Multi-Family
Ft. Mitchell, KY Multi-Family
Ludlow, KY Multi-Family