If you are looking for a comprehensive guide to start flipping houses in the state of Kentucky, you’ve come to the right place.
One of the simplest methods to begin investing in real estate is to flip properties. It might be a profitable business venture. However, because it is a high-risk investment, a lot of variables must be considered.
But don’t worry; I’ll be here to assist you with your studies and decisions. The market research, appraisal, and strategy for flipping houses in Kentucky are all broken down in this comprehensive book.
Flipping Houses in Kentucky
Kentucky has one of the hottest housing markets in the country. For house flippers, it’s a once-in-a-lifetime opportunity to make money. Despite the low property market valuation, investors who choose the correct properties and flip houses in Kentucky win handsomely.
Every investment, including real estate, is highly specific to its location, and Kentucky is no exception. Paying attention to current market happenings and knowing how to respond fast will assist you in determining whether you have made a profit or loss. You should always work with a local specialist real estate agent to understand the trends in these local markets and find investment possibilities. Their comprehensive understanding of the ins and outs of these particular property markets can assist you at every turn.
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Analyzing the Kentucky Housing Market in 2022
Kentucky is the 5th most affordable housing market in the USA. Kentucky’s average house value in April 2022 was $193,000, far lower than the national average of $344,000 In addition, home prices in Kentucky climbed by a little more than 8% in 2021, and are expected to rise by a stunning 15% in 2022. These prices, on the other hand, change even within the state, indicating how real estate markets are regional and specialized.
This property market trend in Kentucky has drawn real estate investors from all around the country. Kentucky homes are in more demand than they are available. This has resulted in a strong seller’s market in Kentucky’s housing market. It’s easy to understand why investors are flocking to Kentucky’s real estate market. Two of the key reasons for development are the expanding population and better employment and education sectors. Kentucky has an 85.7 percent high school graduation rate and a $49,000 average family income.
Kentucky’s economy has exhibited significant signs of development as of June 2022. Despite the fact that the unemployment rate has dropped, payroll employment has risen. The signs for the housing market were varied but mostly encouraging.
Furthermore, the cheap housing costs in Kentucky make the market more accessible to first-time real estate investors. You’ll need less money to get started, which means there will be more newcomers and hence more competition in the future.
How to know if the house in Kentucky is a good investment?
After you’ve learned about Kentucky’s housing market and economy in general, you’ll probably want to look into a more specific area and neighborhood to find possible homes. Keep in mind that not every local real estate market has the same kind of investment opportunities.
In general, a variety of factors go into assessing whether or not a property is a good investment. While you’re just starting started, avoid local marketplaces with a lot of inventory and postings that have been active for a long time. Houses in Lexington sell after an average of 37 days on the market. This means that if the property in the region is still operational after 37-50 days, it’s a no-go.
If the price of a property in Kentucky is less than the local market average, it is another sign that it is a good investment. Looking for houses that are significantly less costly than past sales in the region is one of the simplest ways to detect potential value. Remember that the less expensive homes will require significantly more changes than the more expensive ones.
How much should I pay for a house in Kentucky?
It’s usually a good idea to keep to the 70% rule when deciding how much to spend on a home in Kentucky. According to this rule, you should never spend more than 70% of the house’s after-repair worth, less repair and renovation expenses. Let’s say you buy a house in Kentucky for $120,000 and want to spend $20,000 on repairs and remodeling. Keep in mind that upgrades raise the property’s market value.
According to the 70% rule, you must sell this property for a minimum of $200,000. If you don’t believe it is possible, then you should move on to a new property lookout.
It’s critical to keep in mind that the 70% rule is discretionary. It’s only an estimate of the house’s genuine worth. This rule aims to create a profit margin that is substantial enough to pay all other costs while flipping houses in Kentucky while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in Kentucky?
You don’t need a real estate license to flip houses in Kentucky. However, if you want to start flipping properties in Kentucky full-time, getting both a realtor and a contractor license is usually a good idea.
If you don’t want to deal with the hassles of getting a realtor or contractor license in Kentucky, that’s alright. In this instance, I strongly advise you to use a seasoned realtor and contractor with whom you can establish a positive working relationship.
Finally, if you are new to Kentucky, finding a trustworthy contractor or repairman may be challenging. Furthermore, zoning restrictions and standards vary by city, and market trends shift often. Working with a trustworthy agent or contractor might help you foresee problems.
How to start flipping houses in Kentucky and make a profit?
You’re ready to begin your home flipping journey in Kentucky once you’ve done comprehensive research on the Kentucky property market and are confident that the house is a solid investment. Follow these six steps to begin flipping houses in Kentucky and benefit handsomely from this type of real estate investing.
1. Create a Budget and Secure Financing
The first thing to consider when flipping houses in Kentucky is your financial situation. It’s always a good idea to conduct the arithmetic before looking at potential qualities.
You should already know how much money you have if you have cash on hand. By paying cash for your Kentucky house flips, you may avoid financing charges, mortgage payments, and any other closing expenses or fees. As a result, if you’re flipping properties in Kentucky and have cash on hand, you should always use it.
Using a loan or other kinds of financing to acquire and restore a property may lower your potential returns dramatically. You’ll continue making mortgage payments until the home is sold if you took out a $200,000 loan to buy a house in Kentucky. Even a 10% down payment on a home might cost around $20,000 to purchase. Furthermore, you’ll need to invest an extra $10,000 in addition to the $25,000 for repairs and improvements.
Unfortunately, repairs and improvements take time. As a result, you may end up paying your mortgage for a longer length of time, perhaps resulting in a significant profit margin loss. Furthermore, you may not be able to earn any money after accounting for property taxes, building permits, utilities, marketing costs, closing fees, home insurance, broker commissions, and other expenditures associated with flipping houses in Kentucky.
As a consequence, having cash on hand may help you save money on all of these things while also preserving as much of your earnings as possible.
If you don’t have any cash on hand, don’t worry. There are a few more ways to keep your house-flipping business afloat on a shoestring budget.
2. Research the Cities and Neighborhoods
After you’ve found the homes that are listed below market value and taken into consideration other factors such as active days on the market, you can assess the neighborhood’s attractiveness. When it comes to flipping houses in Kentucky, the quality of the neighborhood is crucial. Other quantitative variables, such as the quality of education, entertainment, parks and recreations, and the neighborhood’s shopping experience, should be examined in addition to the listing and sales price.
Existing housing stock in Kentucky’s older villages, as well as a rapidly growing urban region, might benefit from rehabilitation and repair. In Kentucky, you may make a nice livelihood by flipping properties. You must, however, learn to recognize the appropriate options.
Here is a list of the 4 best cities to flip houses in Kentucky for 2022.
Flipping Houses in Lexington, KY
Lexington is the biggest city in the state of Kentucky. This city is composed of 113 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Lexington is just $318,500, trending up 15.8% year-over-year. The median listing home price per square foot is $164. The median home sold price was $285,000. The sale to list price ratio is 101.11%, which confirms a strong seller’s market.
On Average, houses in Lexington sell after 37 days in the market. The city offers 99 public schools rated good and higher by GreatSchools and 26 private and charter schools. Lexington also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 113 neighborhoods in Lexington, Lansdowne Shadeland East is the most expensive one with a median home price of $875,000. On the other hand, Bryan Station is the most affordable neighborhood, with a median listing home price of just around $200,000. There are also some other great neighborhoods like Liberty Area, Materson Station, and Gainesway.
Flipping Houses in Frankfort, KY
Frankfort is the capital city of Kentucky. It is composed of 4 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing home price in Frankfort is $239,000, trending up 22.4% year-over-year. The median listing home price per square foot is $135. The median home sold price was $190,000. The sale to list price ratio is 100%, which confirms a strong seller’s market.
The city offers 18 public schools rated good and higher by GreatSchools and 5 private and charter schools. Frankfort also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
On Average, houses in Frankfort sell after 45 days in the market. Out of the 4 neighborhoods in Frankfort, Silverlake Farm is the most expensive one with a median home price of $271,500. Conversely, Franklin Heights is the most affordable neighborhood, with a median listing home price of just around $162,000.
Flipping Houses in Louisville, KY
Louisville is a city in Kentucky that consists of 66 neighborhoods and offers multiple affordable duplexes, triplexes, and affordable multi-family homes. As of April 2022, the median listing home price in Louisville is $225,000, trending up 9.8% year-over-year. The median listing home price per square foot is $143. The median home sold price was $187,500. The sale to list price ratio is 97.26%, which confirms the supply of homes in Louisville is more than the demand. Therefore, use extra caution while flipping houses in Louisville, KY.
On Average, houses in Louisville sell after 24 days in the market. The city offers 113 public schools rated good and higher by GreatSchools and 42 private and charter schools. Louisville also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 66 neighborhoods in Louisville, Cherokee Triangle is the most expensive with a median home price of $440,000. On the other hand, Portland is the most affordable neighborhood, with a median listing home price of just around $52,500. There are also some other great neighborhoods like Beechmont, Crescent Hill, and Old Louisville.
Flipping Houses in Bowling Green, KY
Bowling Green is a city in Kentucky and is composed of 31 neighborhoods and offers multiple affordable duplexes, triplexes, and affordable multi-family homes. As of April 2022, the median listing home price in Bowling Green is $270,000, trending up 8% year-over-year. The median listing home price per square foot is $153.
On Average, houses in Bowling Green sell after 52 days in the market. The city offers 66 public schools rated good and higher by GreatSchools and 4 private and charter schools. Bowling Green also offers hundreds of grocery stores, restaurants, and cafes. There are also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 31 neighborhoods in Bowling Green, The Gulch is the most expensive one with a median home price of $849,500. On the other hand, Glasgow is the most affordable neighborhood, with a median listing home price of just around $190,000.
3. Assemble your team
Whether you want to flip houses full-time or part-time in Kentucky, you’ll need a team of people to make each flip a success. You’ll very certainly need the help of a real estate lawyer, a lender, a real estate agent, a general contractor, a few workers, and an accountant.
Furthermore, if you want to make home flipping a regular part of your investment strategy, working with a trusted team rather than a new specialist for each job is ideal.
4. Select and Purchase your Kentucky House
It’s finally time to buy your property in Kentucky after you’ve sorted out your finances and determined whether or not it’s a suitable investment. Another thing to bear in mind when buying a property is that properties that require more maintenance and upkeep are frequently less expensive to acquire. As a result, reselling them will take longer.
On the other hand, houses in good shape that do not require considerable repairs and renovations are much more expensive. You will save a lot of money in the long run and will not have to worry about house improvements if you spend more money upfront.
As a consequence, when looking for a house in Kentucky, try to find a middle ground between these issues. Choose a home that is appropriate for your ability, budget, and time frame.
5. Repair and Renovate the House
Consider how much money will be required for repairs and upgrades, as well as how long they will take. Determine which upgrades will add the most value and whether or not they will appeal to potential buyers. Adding air conditioning and energy-efficient modifications to a home may quickly increase its value for homeowners who want to escape the hot and humid Kentucky summers and chilly Kentucky winters.
Furthermore, power washing the outside of the house, painting the inside, fixing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all small but vital jobs that will help your property sell faster.
6. Resell the Renovated Kentucky House for a Profit
It’s time to re-list the property after you’ve finished fixing and restoring it. You have two options for reselling your home in Kentucky. The first choice is to sell as a for-sale-by-owner (FSBO), while the second is to sell through a real estate agency.
Saving money on commissions is one of the numerous advantages of selling your home without the help of a real estate agent. Even if you sell your Kentucky property on your own, you must pay the buyer’s agent a commission (3 percent ). You’ll need to be ready to bargain like a pro and fill out all of the paperwork correctly if you want to sell your property swiftly.
If you don’t want to deal with the hassle of selling the home yourself, you may always hire a professional real estate agent. The process of preparing contracts, discussing them, signing them, and closing them will all be expedited. However, you will be required to pay them a 3% fee for their services.
How much money do house flippers make in Kentucky?
The average revenue per flip in the United States is $60,000, whereas it’s only approximately $72,000 in Kentucky. As a result, Kentucky’s average revenue per flip is $12,000 lower than the national average. That is to say, it makes sense. In this state, affordable housing and rising quality of life attract a large number of real estate investors, driving up real estate prices and, as a result, increasing revenue per flip.
It’s also vital to note that the revenue per flip is not the same as the net profit. You’ll also need money set aside for repairs and restorations. Depending on the existing status of the property, a broad variety of repairs may be required, but if you invest $30,000 in repairs, the home will be worth it. After subtracting all additional expenditures and fees, you’ll have a net profit of roughly $20,000 to $25,000.
As a result, it’s reasonable to anticipate that flipping a single property in Kentucky will net you at least $20,000 on average. In addition, the average real estate investor flips 4-5 residences each year. That indicates that flipping properties in Kentucky might earn you roughly $100,000 per year.
Final Thoughts
Overall, flipping houses in Kentucky is an excellent method to begin investing in real estate. Kentucky is fast expanding and has a lot to offer its residents since it is one of the most profitable states for real estate flipping. Furthermore, discovering lucrative flips in the Bluegrass State necessitates a blend of your skills, expertise, and chance. Once you’ve found a fantastic deal on a house in Kentucky, be sure to follow a well-planned strategy, renovate the property if needed, and sell it to a high-end buyer.
