New Real Estate Investor in Nashville

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New Real Estate Investor in Nashville

Carl Fitch
Member since 2022 · 4 posts · 2 votes

Hello everyone! I am currently an undergraduate student and plan to move to Nashville for my internship at PWC next summer and then pursue my graduate degree afterwards. I plan to rent for a few months, get a feel for the area and then hope to purchase a home sometime around next January and rent out any spare bedrooms I have for a few years until I become more established in my career. Eventually (within 5 years) I would like to move back to my hometown in Northwest Arkansas and keep this home in Nashville as a rental property. I forgot to mention that I have family in the Nashville area so I wouldn’t mind coming back to check on this property regularly. 

Does my plan sound logical? Does anyone have any similar experiences? Should I rent for the 4-5 years I'm in Nashville? Does anyone have any insight into what properties are doing well in the area (SFR/condos)? Any advice on how to find good deals? I am currently reading Brandon Turners book on rental property and hoping to learn as much as I can over the next year. My budget is $300,000 max and preferably under $250,000. Any advice would be great for me! Thanks!

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Reid Chauvin
Lender · Nashville TN - Licensed in AL AR DC FL GA LA MD TN, TX and VA · Member since 2021 · 583 posts · 338 votes
4y

Seems like a solid plan, @Carl Fitch. Financing a property as an owner-occupant and later turning it into an income producing property is a great way to get started. First question I would have: how are you going to qualify for a loan? For a conventional mortgage, (the loan type best suited for your plan), you will need more than twice as much monthly income as monthly debts (including the new mortgage, student loans, car notes, credit cards, etc.). That may prove to be a challenge if you are pursuing a graduate degree. You do have the option to get a relative to co-sign on the loan with you so that you can use their income to help you qualify. Be aware though that this mortgage will be counted against them as a debt for them going forward until it's paid off. 

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  • Reid Chauvin
    Lender · Nashville TN - Licensed in AL AR DC FL GA LA MD TN, TX and VA · Member since 2021 · 583 posts · 338 votes
    4y

    Seems like a solid plan, @Carl Fitch. Financing a property as an owner-occupant and later turning it into an income producing property is a great way to get started. First question I would have: how are you going to qualify for a loan? For a conventional mortgage, (the loan type best suited for your plan), you will need more than twice as much monthly income as monthly debts (including the new mortgage, student loans, car notes, credit cards, etc.). That may prove to be a challenge if you are pursuing a graduate degree. You do have the option to get a relative to co-sign on the loan with you so that you can use their income to help you qualify. Be aware though that this mortgage will be counted against them as a debt for them going forward until it's paid off. 

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  • Carl Fitch
    OP
    Member since 2022 · 4 posts · 2 votes
    4y

    @Reid Chauvin That's probably the biggest hold up in my plan right now for sure. Fortunately I have no debt right now and will not have any from graduate school. I have saved up enough to make a good down payment on a conventional loan but was also thinking of going the FHA route if possible so I would have a little bit of a buffer in how much I have saved up for my payments until I can get a full time job. Once I am fully employed I would like to refinance it as a 15 year and be aggressive in trying to pay it off quickly. My plan is also to be working part time during graduate school in order to have some income. Otherwise I would have to delay until May when I could get a job. I'm interested in purchasing around January because I've read that that is often the cheapest time to buy but maybe it would be best to hold off until late spring.

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  • Alexander M Dant
    Investor · Middle Tennesse · Member since 2019 · 37 posts · 54 votes
    4y

    @Carl Fitch hey man, I'm currently living in Nashville, house hacking and have a few rentals in the area. @Reid Chauvin brings up an awesome point about getting qualified for the loan so I'll focus a little more on the area.

    You're going to have a damn near impossible time finding a single family home that cash flows as a traditional rental in Nashville. Like many area's, it's appreciate far past what rents are now. Granted this is a down the road plan so no one knows for sure what direction Nashville's rent is going to go(probably continue up) and housing market will go(probably continuing up but I doubt it will be at the same rate its been going up for the last decade).

    That doesn't mean Nashville's not an awesome place to buy R.E., you just have to get creative with it or buy in area's you know are going to appreciate(both offer risk/rewards). When I put my rooms up for rent in my 4 bed 2 bathroom, I started them out at $850 and found out very quickly I would not have an issue filling the extra bedrooms. All of my rentals are rent out by the room too because I can bring in more cash flow from them. Check out my other posts if you want more info on that strategy.

    As for the house, you will have a tough time finding houses less then $300,000 relatively close to downtown and the major schools in the area. My house I bought as a 4bd 2 bth at $315,000 and it's about 15 minutes from downtown. Granted it was newly remodeled but only 1150 sqr/ft(yes you read that right). You CAN get a better deal then I got, but myn just worked for me and my numbers because I had a 0% down VA loan.

    I hope this little bit of info on the area helped and reach out to me if you have any other questions about middle tennessee REI. I highly suggest join the Real Estate Investors of Nashville group, it meets a dozen times a month and I'd be happy to send you the link to a meetup when you move down here.

    Lastly, for getting qualified for the loan, I got a full time job with the full intention of using it to get a VA loan. I was a full time student as well as I worked. As much as this seems like a lot, it was well worth it and as long as you can handle the workload it may be something to think about.

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  • Carl Fitch
    OP
    Member since 2022 · 4 posts · 2 votes
    4y

    @Alexander M Dant thanks for the reply! I would absolutely be interested in joining that group when I’m in the area this summer! 

    And renting out by the room as a more permanent thing is something I hadn’t actually thought of yet but seems like a great idea. I have been searching Zillow pretty much daily and found some homes in the north Nashville and Antioch areas that look like that need a little work but nothing major in the range of $250,000-280,000. But they tend to disappear very quickly within a few days or less. My dad worked in construction growing up and I have a good deal of experience/access to help through him and definitely wouldn’t mind finding something that could use a small amount of remodeling. 

    And I would probably prefer to work full time while going to school because that would help out a lot but I think the times would conflict unless there are night classes. Something I need to check into though! 

    Thanks again for the reply and insight! Hope to meet you and the others in the Nashville group next summer! 

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  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    4y

    @Carl Fitch

    I have represented many buyers over the past year that were in the sub 350k range, and here are a few points that I will make that might help you:

    Firstly, anything under 350k is in the MOST competitive price range. I showed a house this weekend that was way overpriced, and needed a bunch of work, but was under 350k. There was a line out the door of agents with their clients waiting to show the property. 

    All of the buyers I represented were either cash or conventional loans with high downpayments. Even with cash, it was VERY tough to get a house in that price range. Several offers over asking and still losing out....

    I would tell you that using an FHA loan during buying season is probably not going to happen at that price range.

    My advice would be to look at townhomes with low HOA fees and surrounding areas such as Dickson, Lebanon, Spring Hill, Columbia.

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