Investing In First House Hack Property - Advice & Realtor Needed

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Investing In First House Hack Property - Advice & Realtor Needed

Kurt K.
Nashville Tennessee · Member since 2016 · 5 posts · 1 vote

Hello! 


My wife & I just recently moved to Nashville late last year. We are currently renting in the East Nashville area and are looking to purchase a house hack in the next 3-6 months. We have a 20% down payment saved and have been doing some preliminary property analysis while researching our investment options (Ideally a small multifamily but am open to a SFH). It's obviously a very competitive market right now so I'd love to get connected to an agent that has relevant experience to help guide us. Please let me know if you have any referrals or recommendations!

Below are the two investment options we are considering and looking into:

Option 1: Duplex - Owner occupied, renting out the 2nd unit. The goal being we'd move out after 2 years and keep as rental unit.

- Easier said than done, I haven't been able to find a duplex COCROI that is more than 7% in Nashville. Personally, I'd be okay with a 10% COCROI but even that seems tough to find here. Is this realistic?

Option 2: 3/2 SFH - Rent or AirBnb a single room.

- This is a back up plan if a small multifamily doesn't pan out. I do still need to research AirBnB permits etc.

- Does anyone have experience doing this? Curious what income/vacancy rate can be expected here. Obviously there are a lot of variables that factor into that answer but generally speaking. 

Thanks in advance!

Kurt

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Luka Milicevic
Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
6y

@Kurt K.

Welcome to the forums!!!!

Option 1: Yes, it's realistic for sure but more than likely not going to happen on the MLS. With a 20% downpayment you can most definitely get a 7% to 10% return in this market. It also depends on what you will be considering your return. If you are talking about ONE side of a duplex returning that amount then really you are looking for a 14-20% return on total asset. This gets a bit more tricky.

Option 2: If you can find something that makes sense in terms of layout. A large bonus room, detached unit, etc then this will be a great option for sure. Since it's a legitimate personal residence then permitting is much easier than an investor only owned STR.

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  • Koki Agata
    Member since 2019 · 67 posts · 21 votes
    6y

    @Kurt K.

    I don't live in Nashville, nor do I have any valuable information to share with you, but I used to live in East Tennessee (Knoxville) and am just rooting for you.

    Good luck on your house hacking endeavor and keep us updated!

    Cheers

    1Reply
  • Joseph High
    Specialist · Nashville, TN · Member since 2019 · 75 posts · 50 votes
    6y

    @Kurt K.

    Glad to hear that you're ready to get started on your journey of financial freedom!

    I am live in East Nashville as well and am a Realtor/Investment Analyst for a property management firm here in Nashville. Those are great numbers to be shooting for, but that is on the higher side of returns for the Nashville area. The Nashville average CoC Return is 6%, so if you're above that, you're getting a good deal.

    I've looked a purchasing a duplex myself, and most of the duplexes I've seen wouldn't cover the mortgage if you were only renting out the other unit. However, I've seen properties that are above that 6% mark, but they go so fast! 

    Come 2022, new permits for AirBnbs in residentially zoned areas will no longer be issued. 

    0Reply
  • Account Closed
    Investor · United States · Member since 2018 · 565 posts · 356 votes
    6y
    Originally posted by @Kurt K.:

    Hello! 


    My wife & I just recently moved to Nashville late last year. We are currently renting in the East Nashville area and are looking to purchase a house hack in the next 3-6 months. We have a 20% down payment saved and have been doing some preliminary property analysis while researching our investment options (Ideally a small multifamily but am open to a SFH). It's obviously a very competitive market right now so I'd love to get connected to an agent that has relevant experience to help guide us. Please let me know if you have any referrals or recommendations!

    Below are the two investment options we are considering and looking into:

    Option 1: Duplex - Owner occupied, renting out the 2nd unit. The goal being we'd move out after 2 years and keep as rental unit.

    - Easier said than done, I haven't been able to find a duplex COCROI that is more than 7% in Nashville. Personally, I'd be okay with a 10% COCROI but even that seems tough to find here. Is this realistic?

    Option 2: 3/2 SFH - Rent or AirBnb a single room.

    - This is a back up plan if a small multifamily doesn't pan out. I do still need to research AirBnB permits etc.

    - Does anyone have experience doing this? Curious what income/vacancy rate can be expected here. Obviously there are a lot of variables that factor into that answer but generally speaking. 

    Thanks in advance!

    Kurt

     I'd go with the Airbnb option. You'll have more cashflow and more options.

    0Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    6y

    @Kurt K.

    Welcome to the forums!!!!

    Option 1: Yes, it's realistic for sure but more than likely not going to happen on the MLS. With a 20% downpayment you can most definitely get a 7% to 10% return in this market. It also depends on what you will be considering your return. If you are talking about ONE side of a duplex returning that amount then really you are looking for a 14-20% return on total asset. This gets a bit more tricky.

    Option 2: If you can find something that makes sense in terms of layout. A large bonus room, detached unit, etc then this will be a great option for sure. Since it's a legitimate personal residence then permitting is much easier than an investor only owned STR.

    1Reply
  • Kurt K.
    OP
    Nashville Tennessee · Member since 2016 · 5 posts · 1 vote
    6y

    haha good deal and thank you, @Koki Agata!

    Thanks for the CoC info and the heads up on Airbnb @Joseph High — I'll look into that.

    Thanks, @Luka Milicevic! Glad to hear it's not impossible - we're ready for the challenge though! The 10% return would include both sides. I'm definitely going to research SFHs/Airbnb though. Between a duplex and SFH w/ detached unit - any idea which one may be easier to find/close?

    0Reply
  • Bonnie Williams
    Rental Property Investor · Nashville, TN · Member since 2018 · 20 posts · 17 votes
    6y

    Hello! I'm also an east Nashviller. Be very careful with the Airbnb thing. I had a permited client (I have a cleaining company) that moved out of state. The new buyer was not able to obtain a permit. The first time the Fire Marshal inspection was fine. This time, the inspector had a list of problems for the new owners, denied the permit, and said he would be investingating the previous owners as they never should have gotten a permit.

    It is a 100 year old east Nash house and I assume they are now requiring modern everything but nowhere does the State clearly define requirements.

    0Reply
  • Kurt K.
    OP
    Nashville Tennessee · Member since 2016 · 5 posts · 1 vote
    6y

    Right on, I appreciate the heads up. Thanks, @Bonnie Williams!

    0Reply
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