Louisville rental areas

[Steve Armstrong]

Question: Which is the better area for SFR rentals? Jeffersontown or Buechel? I appreciate your opinions!

[J. Clark Baird]

I think the answer is dependent upon your goals. If you're looking for ROI on investment via cash flow or the BRRRR method or simple appreciation.

My point I keep making over and over with my fellow investors is this:  for a rental in Louisville there are generally certain ranges of rent you will get for a house or apt based on the # of beds/baths.  Certain areas/zips will bump that rent # up or down. The question for me is, the price I have to pay to get into an upper zip code, is the amount of increase in rent worth it?  

In some areas like Okolona you may spend 80k for a decent 3/2 that you may rent for $1000-1100 tops.  I buy a 3/2 in Portland for $40k and rent it for 800-900.  I’m not looking for appreciation. I’m looking for cash flow. As long as I screen my tenants and maintain my property then I maintain cash flow. Oh and of course I can buy 2 x 3/2 for $80k and cash flow $1600-1800/month. 

This is extremely important if a person is using bank loans. Why tie up $500k in credit on 5-6 houses to generate let’s say $7500 a month rent when you can get 13 houses generating $11k/month?  Taxes and insurance costs will be about the same in each scenario.  Yes there could be more maintenance for 13 houses v 6 houses but alternatively if you have to evict a tenant or have a house sitting empty for a month, the expense of 1/13th is a lot less than 1/6th a loss of cash flow.