Welcome Back,

Happy Wednesday everyone, I hope you are having a fantastic week so far! Today we are back again to discuss another real estate market, one of which in the great state of Kentucky. Today we will be going over the Lexington market. Enjoy!

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Real Estate Investing

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Market Snapshot:

Market Snapshot: Lexington, Kentucky
The Lexington real estate market is gaining traction, fueled by a growing tech and education-driven economy. The median home price in Lexington is $295,000, up 4.3% year-over-year, reflecting steady appreciation. The city benefits from its proximity to the University of Kentucky and a thriving healthcare industry. Active listings have increased to 2,400, providing more inventory for buyers and investors. Rising interest rates have cooled first-time buyer demand, but the rental market remains strong, driven by the influx of students and professionals.

Median Home Price: $295,000

YoY Price Growth: 4.3%

Active Listings: 2,400

Deal Of The Day:

2 Property Deal Near Downtown Lexington
Price: $895,000
Units: 14 (8 Studios, 4 2-Bed, 1-Bath, 2 1-Bed, 1-Bath)
Monthly Rental Income: $14,000
Cap Rate: 7.8%

This deal includes 2 properties located adjacent from one another, located just minutes from downtown Lexington, offers an attractive 7.8% cap rate. With a monthly rental income of $14,000, it generates $168,000 annually, making it a reliable cash flow investment. Proximity to Transylvania University and local employers ensures high tenant demand. Ideal for investors looking to capitalize on Lexington’s booming rental market. This property also holds 1 commercial spaces making it a 15 unit deal in total.

Deal Rating: 9.5/10

This 2 property deal is a great deal for investors looking for cashflow. With the price being just under $900k, it is one of the higher priced properties in the area but with that said there is still plenty of room for appreciation over the next couple of years. The main downside I notice is the proximity to large streets which may redirect renters looking for a quieter place.

Real Estate Tip:

Investment Strategy:

Buy and Hold with Value-Add Potential
Investing in properties with room for improvement—like outdated interiors or underutilized spaces—can boost long-term returns. Look for opportunities to renovate or modernize units to increase rental income and property value. For instance, adding energy-efficient appliances or upgrading kitchens and bathrooms can justify a 10-15% rent hike. In Lexington, properties near UK Medical Center are prime for value-add enhancements, attracting higher-paying tenants.

Current Interest Rates:

Lexington, Kentucky

30-Year Fixed Residential: 7.2%

15-Year Fixed Residential: 6.7%

Commercial Rates: Starting at 6.9%

Mortgage rates in Lexington remain slightly above the national average. Higher rates have slowed some buyer activity but have driven more demand for rentals, benefiting multifamily investors.

Navigating Rising Rates for Long-Term Success

As mortgage rates hover near 7%, many investors are hesitant to dive into real estate. However, higher rates often create unique opportunities for savvy buyers. Properties lingering on the market for over 90 days are ripe for negotiation. Sellers may be more willing to offer concessions, such as covering closing costs or reducing prices.

One strategy gaining popularity is interest rate buydowns. Buyers can negotiate with sellers to pay points upfront, reducing the interest rate by 1-2% for the first few years. For example, on a $400,000 loan, a 1% rate reduction saves buyers nearly $2,500 annually in interest payments.

Another tactic involves focusing on cash-flowing properties rather than speculative ones. Rental demand in cities like Lexington is growing, with the average rent for a 2-bedroom apartment at $1,350/month, up 8% year-over-year. Investors prioritizing cash flow can mitigate the impact of higher borrowing costs.

While rising rates can be intimidating, they can also shift the market balance in favor of well-prepared buyers. Staying informed and negotiating creatively can unlock significant opportunities, even in a challenging environment.

Economic Conditions

Lexington’s economy is bolstered by a 3.2% unemployment rate, significantly lower than the national average. The city’s healthcare and education sectors continue to thrive, with job growth in these industries driving housing demand. Meanwhile, inflation has stabilized at 5.3%, allowing developers to predict construction costs more accurately. Rising costs for materials have slowed new builds, making existing properties more valuable for investors.

Market Rating: 7.6/10

Although showing great potential for appreciation over the next few years, the low rents and extremely high mortgage rates may pose problems to many investors looking to buy a cash flowing property in the areas with high appreciation. Definitely an option though if your willing to take the hit of a negative cash flowing property for a couple of years.

Key Takeaways:

• Lexington’s median home price is $295,000, with steady 4.3% YoY growth, offering opportunities for appreciation.

• A 2 property deal near downtown, priced at $895,000, provides a 7.8% cap rate and strong cash flow.

• Understand zoning laws to uncover value-add opportunities like duplex conversions or ADUs.

• Focus on cash-flowing properties in high-demand rental areas to offset rising interest rates.

• Lexington’s 3.2% unemployment rate and thriving economy make it an suitable market for real estate investors.

That’s All For Today

I hope you enjoyed today’s issue. If you have any questions regarding today’s issue or future issues feel free to ask. Come back tomorrow for information on how to grow your income and wealth. I hope to see you.

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Disclaimer: This newsletter is for informational and educational purposes only and reflects the opinions of its editors and contributors. The content provided, including but not limited to real estate tips, stock market insights, business marketing strategies, and startup advice, is shared for general guidance and does not constitute financial, investment, real estate, legal, or business advice. We do not guarantee the accuracy, completeness, or reliability of any information provided. Past performance is not indicative of future results. All investment, real estate, and business decisions involve inherent risks, and readers are encouraged to perform their own due diligence and consult with qualified professionals before taking any action. This newsletter does not establish a fiduciary, advisory, or professional relationship between the publishers and readers.