- Why you should invest in Lexington, KY real estate
- An escape from urban congestion
- Great location and accessibility
- Pleasant weather throughout the year
- Stable economy and reasonable cost of living
- Affordable homes
- Is it wise to make a real estate investment move now?
- Those who can invest in a home should do it now
- Price fluctuations due to foreclosures are highly unlikely
- A decrease in home prices may not happen this year but it will come eventually
- 6 key steps to take when investing in Lexington, KY
- Define your investment strategy and goals
- Look for your ideal location and examine the local market
- Learn how more experienced investors are approaching it
- Secure financing
- Track expenses related to your investment
- Work with a seasoned real estate agent in Lexington
- Work with me, Paul Campbell, for top investment opportunities in Lexington
Lexington, Kentucky takes the best of big city living and packages it in a dense, yet comfortable suburban neighborhood.
For most non-residents, however, non-residents specifically, Lexington is most often associated with one thing – Thoroughbreds. They’re not mistaken. The city has built an industry around the development of these high-performing horses since the 1820s. Lexington’s eponymous Thoroughbred racing champion (famously known as Big Lex), among other multi-champion steeds, helped solidify the city’s reputation as the Horse Capital of the World.
Others will also point to the city’s exquisitely produced bourbon. Just spend one night exploring Lexington’s iconic Distillery District and sample different kinds of local, barrel-aged spirits, and you’ll see what they mean.
Lexington is just as well known for its strong sports culture, especially when it comes to basketball, where many former Kentucky Wildcats are now excelling professionally in the NBA (Anthony Davis, Rajon Rondo, John Wall, Pat Riley, to name a few).
In addition, Forbes cites Lexington’s superb attention to the arts, listing the presence of “a professional orchestra, two ballet companies, professional theatre, several museums, and a highly respected opera program at the University of Kentucky.”
And therein lies the clue. Lexington is a picture of diversity. It attracts similarly diverse opportunities. Of 228 cities surveyed by Niche.com, Lexington garnered the following rankings:
- #13 – Best Cities to Buy a House in America
- #36 – Best Cities to Raise a Family in America
- #37 – Best Cities to Live in America
Clearly, investing in Lexington, KY bristles with opportunity.
Why you should invest in Lexington, KY real estate
1. An escape from urban congestion
Lexington is located in Fayette County, Kentucky, at the heart of the Bluegrass Region. With a population of a little over 320,000, it has the second-highest population in the state of Kentucky. Nationally, the city holds 62nd place in terms of population. Those looking to escape the commuter rush and hectic atmosphere in highly urbanized cities will find the environment in Lexington a welcome change. Furthermore, when you consider the COVID-induced exodus of many urban residents from big cities, the prospect of investing in a Lexington home becomes all the more appealing.
2. Great location and accessibility
The city is by no means a sleepy small town. Local and international tourists, frequent visitors, entrepreneurs, new residents, among others, go in and out of Lexington on a daily basis. Blue Grass Airport or LEX is just six miles from downtown. There are direct flights to about 17 domestic destinations and connecting services to hundreds of international destinations.
Lexington is also conveniently located at the convergence of Interstate 64 and 75. The downtown area is connected to several main arterial roads that branch out into various locations throughout the city. If you prefer driving, it’s a great way to explore horse country at your own pace. Personally, I think it’s one of the best ways to marvel at the acres of scenic horse farms. Additionally, there are several public bus services available. Plus, booking a taxi, Lyft, or Uber isn’t an issue.
3. Pleasant weather throughout the year
Lexington has pleasant conditions for most of the year. It’s the reason the Bluegrass Region is remarkably fertile – perfect conditions for raising pasture. Poa pratensis (what’s commonly referred to as Kentucky bluegrass) has been instrumental in the sustenance of quality livestock and Thoroughbred horses.
For temperature, Lexington averages around 55 degrees Fahrenheit. Blizzards are rare and residents here don’t take too kindly to snow. There are no heat waves, either. Cool breezes and moderate temperatures are the norm.
4. Stable economy and reasonable cost of living
Due to its ideal climate and fertile land, Lexington has been economically prosperous throughout most of its history. The city generates major revenue from horses, livestock, bourbon whiskey, and tobacco, among other traditional products. The prestigious University of Kentucky is also a major employer in the city, with over 17,000 workers.
But that’s not all that the city has to offer. Lexington has been diversifying into new products and services: industrial fans, IT software, e-commerce, automobile fuel, and more. Major companies like Conduent, Amazon, UPS, and Lockheed Martin have offices in the city.
There are also employment opportunities just outside of Lexington’s boundaries. For instance, a good chunk of residents take the short 20-minute drive to nearby Georgetown, where there is a Toyota manufacturing facility. In 2017, this Toyota plant employed over 10,000 workers, most of whom are Lexingtonians.
The cost of living has increased in recent years, especially as the population continues to grow. However, the city still manages to be affordable compared to most metro areas around the country due in large part to a sizable population of college students and young professionals. Nearby University of Kentucky is a big draw for those looking for the best education and continued professional development.
5. Affordable homes
Lexington has some of the lowest home prices in the country. The COVID-19 pandemic and the current low inventory trend may have pushed prices up, but the figures are still low when compared to other metro areas like New York or Los Angeles.
The median home price is now around $220,000 to $250,000 in the Lexington, KY area. Nationally, home price averages have been going beyond the $300,000 mark in 2021. Overall, Lexington real estate is faring quite well and remains a lucrative investment option for many people. If you speak with the right agent, you can even buy a house for $150,000 or less. It won’t be easy, but it’s not impossible to secure a property around that price point.
What are some property types you’ll find in the market?
Spacious single-family homes can be found throughout, from Versailles Road to Athens Walnut Hill Road and from Lakewood Drive to Houston Antioch Road. Colonial-style farmhouses in the outskirts of the city provide generous indoor and outdoor spaces for large families and a tranquil community for retirees.
There are also luxury homes in Beaumont Park, which is close to the airport – ideal for entrepreneurs and people who are always on the move. And high-end lofts and condominiums in the downtown area will be appreciated by young professionals for their proximity to all kinds of amenities and cool hangouts.
Is it wise to make a real estate investment move now?
If you’ve been closely following real estate trends recently, you’ll notice that severe decreases in housing inventory and bidding wars have driven up prices. Naturally, this has discouraged some buyers from exploring the market. Should you wait it out until this seller’s market has cooled off a bit? Here’s my advice based on my own observations:
- Those who can invest in a home should do it now: If you are a first-time homebuyer or investor and it’s well within your capacity to qualify for a loan, it’s crucial to make a move now. If you move fast enough and work with a seasoned agent who knows the ins and outs of the Lexington real estate market, you can purchase property before prices increase a bit further later in the year (if the supply and demand trend continue as is).
- Price fluctuations due to foreclosures are highly unlikely: Consumer prices have been increasing and the US economy is still in the process of recovering from high unemployment due to the health crisis. However, as I mentioned in one of my recent blog posts, this is not a repeat of the 2008 housing crisis, where subprime mortgage lending was rampant. The recently enacted American Rescue Plan Act of 2021 will, among other things, provide $10 billion in direct financial aid to homeowners, allowing them to avoid foreclosures and catch up on the mortgage, property tax, and home insurance payments.
- A decrease in home prices may not happen this year but it will come eventually: Most experts and observers point to a continued increase in home prices throughout 2021, especially since construction costs are also steadily rising. Looking at the bigger picture, though, prices have historically dipped as the economy stabilizes. With the massive $1.9 trillion economic stimulus package, along with the speed with which COVID-19 vaccinations are being rolled out, hopes are high that prices will return to normal perhaps sooner than expected.
6 key steps to take when investing in Lexington, KY
Now that we’ve covered what you need to know about the overall real estate market and why you should invest in Lexington, it’s time to go through the key steps that will enable success in your real estate investment journey.
Contrary to the popular assumption, investing in real estate is not just for the wealthy. With the right knowledge and support, just about anyone can invest in a starter home, start collecting rent, and steadily earn a decent profit from the venture.
For many though, investing in real estate can be an incredibly daunting and downright scary prospect for first-timers. That’s understandable. Hence the need for a step-by-step approach, starting with:
Define your investment strategy and goals
First off, it’s important to go through the different ways you could profit from real estate and then focus on that one strategy. To find out which strategy works best, you have to define your investment goal – whether it’s to earn a steady income over a period of time, to make a profit as soon as possible, or something else.
Here are some options at your disposal:
- Cash flow income. This strategy is one that most people are familiar with. You can purchase a piece of property (single-family home, apartment unit, office building, etc.) and rent it out to tenants. With the right location and a nose for selecting the right tenants, this can be a stable and lucrative source of revenue.
- Non-ownership. Aside from the traditional approach of owning property, you can still get in on the action by investing in real estate exchange-traded securities or real estate investment trusts. It’s a less expensive way to get into real estate investment since you don’t have to buy and manage the actual, physical property. However, it can be quite complex, especially if you’re a beginner, and you do need to carefully weigh its pros and cons.
- Appreciation. Are you willing to bet on a particular property appreciating over time? Then, calculate your risks. When the odds are in your favor, expect a bonanza. You could buy a home in a rapidly developing area and once the value reaches an ideal threshold, you can sell to the highest bidder.
Look for your ideal location and examine the local market
A good real estate investor knows what they’re getting into. You should find the best location that suits your strategy and goals. Familiarize yourself with the surrounding area and the local real estate market. This will give you a good sense of whether or not you’ll be making a good investment with minimal risk.
Aside from examining Lexington property listings, you should also consult with local real estate agents. These professionals are in the best position to provide you with relevant local information – from the value appreciation of some properties in any given area to the best time to buy and invest in, say, a starter home or an upscale development in the downtown area.
Learn how more experienced investors are approaching it
Learning the ins and outs of a particular real estate market is undoubtedly a crucial step, but some new investors often fall into a rabbit hole of overanalyzing trends and trying to make sense of rapidly changing data. To avoid this, it’s helpful to seek out tips and advice from other, more experienced investors.
Nowadays, there are several ways to go about this – for example, online forums and resources, or virtual or physical meetings of investor groups. There’s a lot to learn from the experts, from the concept of house flipping to every type of investment jargon.
Moreover, seeking out knowledge and resources from experts helps you rise above the apprehension you may feel when you’re getting into real estate investments for the first time.
Next, you need to start thinking of ways to finance your property investment. This is an extremely important part of the process. Selecting the optimal type of financing can potentially net you high returns. The following are the usual ways to fund a property investment:
- Conventional loan from a bank. This option is very similar to the process of purchasing a home to live in. However, if you’re coming in as an investor, the down payment is usually 30% of the purchase price, which is 10% higher than a residential homebuyer’s. Additionally, your credit history will factor into the likelihood of securing financing and having access to the best interest rates.
- Fix-and-flip loans from hard money lenders. Some investors will often go for a house flip, where you purchase a fixer-upper, renovate it quickly, and sell it at a significant profit. When done right, flipping houses can be more profitable than renting out property. Instead of seeking out traditional lenders, approach private companies and individuals (hard money lenders) who delve into the fix-and-flip loan business. It’s much easier to qualify for this type of loan, but take note that interest rates can go higher than 18%.
- Home equity loan. You can take out this type of loan if you’re an existing homeowner. Using the difference between your first home’s value and mortgage balance as collateral, you can finance the purchase of a second home. While it’s possible to find good interest rates through this approach, a second lien will be placed on the first home – essentially an insurance policy in the event of failed payment – which can be too risky.
Track expenses related to your investment
Once you’ve secured the financing on an investment property, the next step is to track your expenses, which include but are not limited to:
- Monthly mortgage
- Property taxes
- Repair and maintenance costs
- Broker fees
- Property management fees
- Insurance fees
- Homeowners association fees
- Utility costs (electricity, water, etc.)
- New furniture and improvements
Get a firm handle on all the expenses you could incur on a particular investment. Budgeting accordingly will help you forecast how much you’ll need to earn on a monthly or yearly basis to make a profit. Additionally, it will help you devise cost-cutting solutions for stretches when the property is vacant.
Work with a seasoned real estate agent in Lexington
Purchasing a home as an investment property isn’t entirely the same as buying a home to live in. As mentioned in this article, there are a number of things that are done differently. And more importantly, you have to be intimately familiar with the local real estate market to get the maximum value out of your investment in Lexington, KY.
Work with me, Paul Campbell, for top investment opportunities in Lexington
I’m a seasoned Lexington real estate agent who specializes in helping first-time homebuyers and investors buy property for as low as $150,000. And when the property has been improved significantly and its value grows to a certain point, I will help you sell at the highest possible market price.
My diverse background – real estate agent for 12+ years, organic farmer for 20 years, public school teacher for 30+ years, and army veteran – helps me empathize with people from many walks of life. I can easily establish rapport and strike the best and fairest deal for all parties.
I’ve helped people sell a range of properties, from single-family homes and farmhouses to the famous Kentucky Castle, a luxury boutique hotel near Lexington.
If you require the services of a professional real estate agent to help you identify investment opportunities here in Lexington, KY, look no further. Call me, Paul Campbell, at 859.684.5890 or send me an email at pcampbellhelps(at)gmail(dotted)com.
Get a head start on the economic recovery. Invest in Lexington, Kentucky today.