Nashville Market Strategy New Investors

12 Replies

Hi everyone!

I am new to Bigger Pockets and looking to learn more about the Nashville, TN market, specifically duplexes. I know the market is currently hot, hot, HOT, but my wife and I have about a year to wait things out and search for the right deal. 

You see, we are moving back to Nashville at the end of this year and would like to take advantage of our VA loan entitlement that allows for ~$600,000 loan in Davidson County to jump start our real estate journey. We are looking to live in one unit and rent the other as you might expect at least until we find our dream home :)

I have been in the Army National Guard for about 6 years as a side hustle to my full-time job in consulting. Due to us being fortunate enough to obtain scholarships for our undergrads, we have been able to pile away more than enough cash to keep a hefty emergency fund, pay closing costs on a large duplex, and even be ready to find another deal in Middle Tennessee! 

We would appreciate any strategy guidance or pointers this wonderful community might have to help us get started in the right direction. A few  specific questions I have: 

1.) If we can't find a duplex right away, should we take advantage of an FHA loan for an SFR or just use a conventional loan and pay the 20% since we have it?

2.) How the heck can we find good deals in Nashville right now? 

3.) How long in advance of our physical move to Nashville should we consider closing if we find the right deal? We are currently in the D.C. Metro, but my immediate family all live in Nashville and would eagerly help out. 

My goal in real estate: Essentially I'd like to quit my 'fiscally responsible' day job and develop a passive income from REI to complement a lower paying (but awesome!!) job in public service. Also, to give us some flexibility to go hiking around the world before our bones hate us.

Thank you all ahead of time!

Hi Harrison, I know the Nashville market and neighborhoods very well I have been here most of my life and I'm a local Realtor here now. I work with other investors here in the Nashville metro area and would love to help you out anyway I can with your search for your perfect house hacking duplex for you and your family. As far as finding deals in Nashville, it's really just comes down to your network and hustle. There are still some goodness deals that come on the MLS but you just have to know what your looking it all come down to consistency and persistence. If you would like to talk more or If i can help in any way feel free to reach out.

Hey Harrison! Welcome to the REI family! Best decision ever man.
I would love to be of assistance for you and your wife and be on the lookout for you when the move comes.
I am a local here and realtor and specialize in the Nashville market and surrounding areas and focus on working with investors!
I’ll send you a friend request and PM and will can help answer your questions more thoroughly.

1. Is a smart alternative but it just depends and some other variables.

2. Although deals are harder to come by they ARE still out there. You just need to have someone you’re working with who are your feet and ears and knows the market well and knows where to look!

3. Also just depends. Obviously if you find the perfect deal and it is before you move, then you’d want to be able to pull the trigger at that point. So biggest things is just having all the steps in order ahead of time to be ready for that moment.

Talk soon!

Hey Harrison, add me and send me a PM with your contact info. I know a couple investors who have duplexes they could sell to you right now if you really wanted one. They are landlord contacts so they are all off market, which is probably the best way to go these days. Also @Luka Milicevic has a quad plex he could sell you right now that has one unit unoccupied. Lots of options, just decide what you want and where and pull the trigger.

@Harrison Preston

Welcome to the forums.

1) depends on the deal. Until you are looking at an actual deal/deals, can’t really say

2) how to find deals in Nashville-by the grace of God. (Ive stopped mailing and re-assessing my strategy. deals are coming from networking right now)

3) if you find the right deal in Nashville you need to pull the trigger immediately and not wait a second longer. 

Another Nashville agent here. Duplexes in Davidson County are hard right now. Our city is experiencing a massive building boom that is focused mainly on urban renewal. You are going to find that you are in competition with cash-paying developers when it comes to duplexes - at least in the popular urban neighborhoods. In many instances a duplex can be torn down and two shiny new and expensive tall skinny properties can be constructed in its place. 

You will likely also find that using VA and FHA financing will be tricky. Listing agents are especially biased when counselling their sellers in multiple offers situations. Government loans are perceived as having tough appraisers. In a city experiencing 10%+ appreciation year-over-year, low appraisals are always a concern. This will be the case whether you are buying a multi-family home are a conventional home. If you have the ability to put 20% down - I would recommend doing so. Especially if the listing has only been on the market a few days or a few weeks.

I don't want to be a Debbie Downer. Nashville is a great town and you will love it, but it's seller's market - for sure. It's still very competitive in almost every market segment. 

Perhaps things will slow down later in the year. I've been thinking that this level of appreciation isn't sustainable - but I've been thinking that for several years now. 

1. triplex or quad is a good option too. I would look at using a home or small multifamily as an owner occupied short term rental. They make good $$$

2. networking, mail. Sounds like you're looking for a small sub set of the market. I can't imagine it would be more than $500 a month in mail


Thanks to everyone for the quick responses! There's some great information in here  and some contacts that I will certainly be reaching out to as the year progresses!

And thank you for the candid response @Stephanie Crawford .. your input seems consistent with all of my research and touches on many of my concerns for the area. Specifically, the sustainability of current market appreciation and whether buying at current price levels is worth it . 

We are truly looking to do most of our investing in the suburbs surrounding Nashville and perhaps Chattanooga and Clarksville. But as we plan to live and work in Nashville proper either way, I wanted to do some more digging on the possibilities of investing in our first home / duplex in the city itself. 

I would honestly prefer to wait for a market turn before buying, but I'm not sure the Middle Tennessee area is going to experience the same downturn  the rest of the nation will likely face in the near-ish future due to the high population growth and other demographic / economic factors seemingly driving migration to the Nashville area. Anyone have thoughts on this last point? I know this is mostly speculation as are all economic forecasts.. but I'd say important topics nonetheless! 

I've closed on two VA loans. Make sure you're dealing with USAA or Navy Federal, etc. They close these moans all the time, and won't mess your closing up.

You should be in touch with a VA lender now, and be looking now! You can close up to 6 months before you move in if you have the right circumstances. You just need to discuss Everything up front with the lender.

@Harrison Preston

There are some really great posts on Bigger Pockets about wether to invest in an inflated market or to wait for the "crash".

I'll just keep it simple in saying IF you can find a deal below market value that is CASH FLOWING (main point) and plan on holding it LONG term, you'll be just fine with any market "crash", as the rental markets will hardly see a drastic downturn that the the housing market will experience.

property values only matter if you are buying or selling a property!

If you want to read a very insightful blog on the subject of how to invest as risk free as possible in this current market I would suggest reading this blog post... It has tons of great nuggets!

@Harrison Preston
Harrison, you’ve gotten lots of good advice so far. Another bit of info....
Not having the built up network like the posts above is going to be the biggest issue with purchasing an investment property.

I currently own a house in East Nashville that cash flows well as a STRP, but Davidson county just passed legislation to phase out all residentially zoned, non-owner occupied STRPs. I only say this because I personally do not like cash flow of the SFHs market without an STRP option. Maybe you have different criteria, but I would advise you to get with one (or multiple) of the professionals above and talk zoning. I’m currently looking more in the Clarksville area... which is growing and hot as well. Seems to be true for all of Tennessee.

I’m in Arlington... I’d be happy to sit down, connect, and share any information I have on the area.

If you want to wait for the market to crash to buy cheap, then don't plan to buy in rapidly growing cities. As long as we are at 0.7% national population growth and Nashville is around 2%, our prices will rise from an increase in demand, not just the same few people moving around faster and paying more. Property seems expensive compared to historical Nashville prices, but it is still dirt cheap to live here compared to major cities. Look at the fact that almost half of all people moving to Nashville are coming from LA, NYC and Chicago, and you can see that our prices are still very attractive comparatively.

I know everyone ever has said "this time is different" right before it all blows up, and I'm not saying that Nashville prices will not have dips and stalls over the coming years, but to have a greater than 5% decrease in real estate prices in the next 5 years would entail all immigration to stop and some kind of severe national pressure. I think if there is a recession, things might even get crazier here as people become more mobile and flee to jobs, and we currently have the lowest unemployment rate in the country (it is really easy to get a good job here...)

I've never met anyone who did well long term trying to time markets perfectly, and for what it is worth, I'm confident that Nashville prices will be higher in 10 years than they are now. Hope having one more perspective helps.

Thanks for the insight @Sean Davidson .. You have confirmed my thoughts exactly. I think basic demographic analysis is key to market strategy. I am still planning to buy in Middle Tennessee this year despite the hot market for the reasons you described above. 

@Bo Goebel , thank you for the advise as well. I will reach out later in the year and appreciate any insights you'd like to share.

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