FHA requirements and Airbnb ideas in Nashville, TN

7 Replies

Hi everyone! I'm newer to the real estate game, but very anxious to put in more work to earn more business than I have. Currently I own a condo that I used as a live in flip and have a renter in my guest room paying the mortgage. This plan worked out better than I could have anticipated and I feel like I caught the real estate bug. My only problem is that I don't have much capital remaining after this deal. I'm only 24 and trying to build up my investment portfolio leveraging the real estate industry. 

I had an idea that I want to get some opinions on. I currently live in Knoxville, but have been doing some research on airbnb. It seems that Nashville, (only 2.5 hours from me) is one of the top airbnb performers. I have a couple friends in Nashville right now looking to buy a property. I had the idea to try and buy a duplex with one of them so I could maybe qualify for an FHA loan. I want to know that if they are on the title with me and living in one side of the duplex, can I qualify for an FHA loan? This way I can use the other side as an airbnb or if that doesn't work out, plan b use as a long term rental. I feel that this may be a good way for me to score a good deal on a property without putting down too much capital. Ideally I'd move to Nashville, but I just landed an amazing engineering job here in Knoxville that pays really well and I do not want to give that up.

Please comment any advice or opinions you have on this idea. This industry has brought a ton of hope for me and I have the time to put into this, but right now I'm just hunting for more experience. 

Thank you all for your time,

Alex B 

Good afternoon Alex! I will go ahead and preface my comment with the fact that all I have at this point is research as I am currently working on my house in Knoxville prior to getting a HELOC to start my journey.

As far as what I have read FHA loans are only available for a primary residence so unless you plan on moving to live there you will not be able to do an FHA loan. Perhaps you can work with one of your friends who could carry the mortgage? Remember, financing options are available for strapped wallets you just have to be creative and discuss you goals with local banks (or other investors as you are on here).

Good luck on your adventure from a local hopeful investor and fellow engineer. 

Treavor Johnson

@Alex Boulger  

First.... Airbnb is basically illegal in Nashville. There are a couple of exceptions but the one you’re describing is not one of them so that’s out. 

Second.... the best short term rental (Airbnb) market arguably in the world is right down the street from you in pigeon forge where you could get in to a second home loan for as little as 10% down. 

You can only have one FHA loan at a time. How is the condo financed?

You must live in an FHA for a minimum of one year or have that INTENT. I don't know for a fact but I doubt you'll be able to put a partner on title with ab FHA. It's not worth the risk anyway you're basically telling the world that that person owns half of your house AND you're letting them live there. That's not going to end well you're basically giving them a free house.

My questions are rhetorical. I like when people hit the Vote button :)   

Good luck! 

@Lucas Carl I don't know why I never considered pigeon forge... but my condo is under a conventional mortgage loan, so I'm not currently using an FHA loan, but I wouldn't have the intent to move there. I haven't reached out to any lenders about a second home loan, but I assumed it would have to be 20% down. I will take your advice and call up my lender to see his options.

Thank you for the tips! Any further advice or references would be appreciated.

-Alex B

@Alex Boulger I second what @Lucas Carl said.  Nashville is heavily regulated, high-risk and has a high cost of entry at this point.  If you do it right (and the regulations don't change under your feet) then yeah, you can make some good money.  If you don't, you're gonna lose your shirt.

I own three cabins in Pigeon Forge and they all do awesome, they're easy to manage, and I did indeed put 10% down on one as my second home.  Super low risk investment, that area has zero motivation to put a bunch of restrictions on STRs.  @Parker Borofsky is the loan officer I work with and she not only knows all about loaning on these properties, she owns several of her own also.

Especially since you're currently in Knoxville, I say you should definitely check it out!

@Julie McCoy Thank you for the advice! I really think with your guys encouragement I am seriously considering shifting my direction to pigeon forge area. @Parker Borofsky please reach out to me, I’d love to chat about some options!

Thank you!

-Alex B

@Alex Boulger  You're most welcome!  It's awesome that you're getting started so young, there's never any time that's too late but all the better to begin with so much time ahead of you.  :)  If you have questions just ask :) 

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