How is the RE market in Lexington, KY? And in North Virginia?

Question

Hey BP!

We may be moving from Miami, FL to either Lexington, KY or North Virginia (McLean, Viena, Fairfax area). We haven't decided yet, it will depend on what job my wife lands. I am a full time RE investor and I am wondering how is the RE market (pros/cons, strengths/weaknesses, rent vs. own, etc.), in both Lexington and North Virginia.

I primarily focus on:

1. Small multifamily buildings (less than 30 units).

2. SFHs that I flip and either sell for a profit or rent them out for monthly cash and refi.

I know this is a very broad question, let me know if you need me to provide with some specific questions I have. I am just trying to have a picture of the market for when we move to one of these two places.

Any suggestion, comment, recommendation and/or tip will help me a lot. Also, I will preciate if you can point me some website with local informayion about this topic that I can use to educate myself about these areas.

Thanks!

David

Carson Sweezy · Answer

What is your budget?

Understanding the breadth of your question, I will point out a few things to know about the Nova market, especially the areas in Fairfax county which you have mentioned. McLean and Vienna are some of the priciest markets in the DMV area (McLean especially). Investors are active in both cities, mainly in single family development. Teardowns and rebuilds of old construction are extremely common in those cities and you will see them far more than flips, simply because of the market demand. Buyers in those areas dont really care for a face-lift for the price point that they pay for. They want a new house. Some neighborhoods have a new construction on every street, and another in progress next door. The Town of Vienna has strict regulations and I caution you to do your research and really understand local codes before diving into that market especially. A colleague did a complete teardown rebuild 18 months ago, and had to redo the driveway because it was a few inches too wide, costing $10,000+ to redo. Because of this, you see the same handful of investors dealing in Vienna.

Fairfax is similar in some parts, but not as active for flipping or teardowns because there is a lot of new construction from larger developers in Fairfax currently, especially in Merrifield and Fairfax Circle.

As for the rest of Nova, flipping is prominent all over, it just depends on where you can make the numbers work. I have recently seen several flips in Alexandria and Manassas, but it really depends on where your numbers can work.

Many buy-and-hold investors in this area play for appreciation (for good or bad). It is possible to find a cash-flowing rental property, but it is difficult and takes dedication, and time (depends on your price point of course).

To your strategy of multi-families, Northern Va is almost entirely empty of this type of unit. For several reasons, including tax codes, urban sprawl, etc. You would need to go as far south as Richmond, or as far north as Baltimore to really find consistent inventory of this type of multifamily, though parts of DC and Maryland will have some supply.

David Fernandez · Answer

Thanks a lot for the info @Ryan Camenisch!

I did see that there's been quite an increase in prices there compare to the previous few years. I think this may be the case for most local markets in the US and, thus, is more important than ever to know your market and find good deals.

I will definitively let you know if we end up moving there. It will be great to get to know you and pick up yor brain about Lexington and KY investing. We visited the place briefly to check if we like it and it seems like an amazing place to live and raise kids. We really liked it. Now let's see if any of the two job offers pans out!

Ryan Camenisch · Answer

@David Fernandez, I can't speak to Northern VA, but here in Lex the market is currently very hot.  From an investment standpoint it is almost too hot. Homes are selling fast at record breaking prices. Many realtors and lenders I know are expecting a slight dip in home prices in the coming 6 months, so it could be timed perfectly for an experienced investor like yourself to buy. But, overall, Lexington is a wonderful place to live and invest. Let me know if you end up choosing Lex. I would love to meet up and chat about real estate and just central Ky in general!

David Fernandez · Answer

That would be great, Carson. I sent you a PM with my email address where you can send the google hangout invitation.

David Fernandez · Answer

Thank you very much for you reply @Carson Sweezy!

I knew that the multi-family game was hard in NOVA. As per some reasearch and from what I've read in the forums, it seems like your statement is very accurate about the lack of MF in this area. I didn't know much about the particularities of the flip/new construction market there though (thank you!).

I was already thinking, and your answer confirms my believe, that if we end up moving to this area, I will have to expand my target market to the more rural parts of Virginia and all the way up to Baltimore. I don't like spreading too much, although I'm used to 90 minutes driving distance here in SF. I guess I'll have to drive around and get to know where do I really want to start working on.

In regards to our budget, we just unloaded some properties as we are getting ready to move in the near future and the market is cooling off a little down here. I think I'll be able to answer this question better based on where we move, what opportunities are in each city (Nova or Lexington), how easy is to get financing, and what are the market prices, but I'd like to reinvest $200-$500k of our own money and leverage the rest.

David

How is the RE market in Lexington, KY? And in North Virginia?

Most Popular Reply