Investing in Nashville

7 Replies

Hi,

I recently went to Nashville for the first time and noticed that there are cranes everywhere building out the city. I know many people say that Nashville is played out as an investment area, but many have also said that of bigger cities like LA, which has continued to appreciate in value for years.

Does anyone have advice on Nashville? Are there cash flowing properties? Are there passive rehabs that can be made with an existing team who's done it?  I'm only looking for a relatively passive investment as I have a f/t, OOS job.

@Corey M.

If you’re investing for appreciation Nashville is a good market. Very difficult to find a property that meets the 1% rule here however you can cash flow if you’re willing to put more down.

I am not a big believer in cash flow, as you're not going to get rich off $200/mo. But in looking at Redfin, it appears that anything around the tourist-y area of Downtown is uber expensive.  I imagine there's a robust Airbnb market in that area of town, but even a 700 sq ft condo is going for $400k+. Is it likely that at 20% down almost everything in Nashville would be cash negative? I'd be interested in neutral cash flow, open to l/t rental or airbnb rental.

I'm personally having to take the approach of financing properties as primary residences and later turning them into investment properties in order to (hopefully) realize a positive cash-flow. That's not to say neutral-positive cf can't be achieved by financing an investment property here. Rehab properties in locations that are currently less desirable are likely going to be your best bet. I don't have any existing rehab teams to offer up but I'm more than happy to help run loan estimates on any properties you're interested in! 

Curious to know if there is any advice on investing in any of these areas: Brentwood, Franklin, Inglewood and East Nashville. What’s the rental market look like for a single family residential house there a d how much rent goes as far as 3 bd/2 ba and 4bd/2ba homes? Thanks.

Hey @Ingrid B. , those are all areas that have seen a lot of appreciation in Nashville so it's hard to offer blanket rental projections for any of them. However, if you look just a little bit outside of those areas you'll see returns that are higher - namely Donelson, Old Hickory, Hermitage, and up until a few months ago Woodbine/Glencliff. Of those areas I'll sometimes see properties hitting about a .8% rent to price ratio on the high end, but really if you're looking to invest in Nashville you're investing more for appreciation than cashflow. 

Another thing to take into consideration is that rental rates for new builds are an entirely different ballpark than rental rates for older homes - for example, in East Nashville I was helping a client look at a 3/2 new build renting for $2800 and a 3/2 1970s house renting for $1600/mo. Rents have gone up since then but it's not uncommon to have a substantial difference between new builds and older homes. 

@Corey M. I sent you a message, but you're right on with the appreciation piece - in Nashville, I always invest and encourage others to invest for appreciation as long as the cashflow is positive and has enough cushion to hold onto the property until your target exit date. I'd rather have a property double in value over the next 15 years and reap those benefits than receive $300/mo and have the value just barely keep pace with inflation. 

I hope this helps!

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