Quote from @Celli Mowery:
Hi James
interesting message -I know I’ve seen your name often on the Bluegrass Investors Group
I have spent the last 5 years investing in London and while some of the concerns you mentioned did exist when we started I’m finding we haven’t had issues with tradesmen coming from Lexington & Richmond for us in recent years. We also have some great crews locally that have done well for us.
I’ve found interest blowing up for rentals in the market and the lower rents we once saw have risen significantly in the last 3 years. Berea is extremely difficult for renters to find low price points and they’ve pushed themselves deeper into Eastern KY while Lexington commuters come into southern Madison county and beyond as they did into Jessamine county. I see a lot of new construction in Richmond and Berea as I travel from Lex nearly every day
im excited to see how the mega site in Mt Vernon and Richmond grow these areas
What surrounding areas of Lexington are you seeing more activity?
Quote from
@James Wilcox:
Quote from @Celli Mowery:
As a BP binge listener, investor and agent, I'm curious why smaller areas of Kentucky are not receiving focus with their low land costs, & lower entry points? Ohio & Michigan were recently highlighted in the rust belt as good values that cash flow. Kentucky should have been expanded into their calculations. Too many people are sleeping on this.
Kentucky Economic Development has many site ready properties in smaller areas that are ripe for rentals. Most notably, Mt Vernon, Berea, London & Corbin all along the I-75 corridor. The Rockcastle Megasite is an example of a site ready property & is only 20 minutes north of London. https://dataispower.org/rockcastle-mega-site/. The site is just south of Lexington, another market desperately in need of rentals but higher points of entry.
A rent heavy market, with a shortage, I am receiving regular requests for rentals in these markets.
While smaller towns in Kentucky often have lower price points, which means less capital is required, there are limitations to the profitability of these markets. The price-to-rent ratios are generally unfavorable, and a shortage of skilled tradespeople and reliable property management can hinder the success of buy-and-hold rental investments. For instance, Berea is a charming college town, but the combination of local taxes and less favorable price-to-rent ratios makes it less appealing for investment compared to other areas in the state.
That's because it's the group I help run and I was one of the speakers last month.
The markets you mentioned are generally considered fourth-tier markets. While there are certainly opportunities for finding trades and deals in these areas, they’re often pursued by local, mom-and-pop operations. Richmond certainly would have some potential in pulling trades from, but coming from Lexington, you might face an added trip charge on top of the service provided.
Over the past few years, rents have increased nationwide. Central Kentucky, in particular, has benefited from Lexington's growth, with many people commuting from outside the city for work. While there are some who commute to Lexington from those towns you mentioned, the numbers are relatively small, with most coming from Richmond. That being the next "big" city along the interstate but you are talking about smaller cities even further south than that.
To attract more interest, a higher population and greater economic or job growth are necessary. Most out-of-state syndications or hedge funds wouldn’t typically consider the cities you mentioned. Generally, a population of at least 300,000 is needed to capture their attention. That’s why small towns often go unnoticed by major investors unless they have local ties or connections to the area.
Within about an hour’s drive from Lexington, there has been significant activity. Louisville and NKY of course. Some growth along I65 between E-town and Bowling Green as well.
