377 Redding Rd

Lexington-Fayette, KY 40517

$325,000D

4 bd · 3.0 ba · 1,992 sqft · Built 1976 · MultiFamily · Pending · 3 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,569/mo
• Mortgage (P&I): −$1,704
• Tax + insurance: −$279
• HOA: −$0
• Vac / Maint / Mgmt: −$539
• Net cashflow: $46/mo
• Annual: $550/yr
• Cap rate: 6.46%
• Cash-on-cash: 0.60%
• DSCR: 1.03
• 1% rule: 0.79%
• Cash to close: $91,000

Investor read

• This is a 2 × 2-bed/2.5-bath units multifamily listed at $325k.
• At list price, monthly cash flow is $46 ($550/yr) — positive. Per door: $23/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $257k (21.0% below list).
• Only 3 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $257k (21.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $10k of value loss. Plan a longer hold.
• Location reads: area grade D — affects rentability + tenant quality, not the cash-flow math above.
• Fayette County (urban): math 35% / reading 45% proficiency, ranked #27 of 165 in KY (top 16%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Lansdowne Elementary School (math 26% / reading 28%, grade F, #434 of 676 statewide, top 69%, 558 students, 76% FRL); Southern Middle School (math 26% / reading 41%, grade F, #105 of 217 statewide, top 51%, 772 students, 54% FRL); Tates Creek High School (math 29% / reading 32%, grade F, #121 of 254 statewide, top 47%, 1,734 students, 52% FRL) — zoned schools average 60% FRL vs 44% district-wide (16 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: Rents rising fast (+4.5%/yr); 104 active listings in the ZIP; 12 comparable units currently listed for rent nearby; rentals at typical pace (median 26d on market — plan ~3-4 weeks tenant-placement turnaround); 1,036 units permitted in Fayette County in 2024 (542 in 5+ unit buildings).
• Fayette County population projected at +35% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 6 sale attempts since 27y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $241k; 35% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Cap rate 6.5% vs local median 3.8% in Lexington-Fayette — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• At $2,569/mo this rent would consume 57% of the median local household income ($54k/yr) (locally 2743% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1976 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.