First Time Buyer - HouseHacking in rural areas

[Brandon Combs]

Hey there! :) First time posting the BP forums here. Just moved to Nashville and looking to acquire my first property via househacking. I was first searching for small multifam properties, but have been getting more settled with the idea of a 3bd single family home with a basement that I can convert into another bedroom/studio (I'm a musician/drummer, so it would ideal to have an area I can work out of where I also live). Planning to rent spare rooms to family/friends, and move out after a year or so and having it run as a LTR or MTR hybrid 

While still searching within Nashville Metro area, my realtor exposed me to Ashland City.....small town 30min away from Nashville and Clarksville. Seeing some cool properties, one in particular that's a new construction. Did my due diligence & know the numbers work as a househack (with good promise for competent rents down the line once I decide to move out).....Outside of dealing with an annoying back and forth with the seller/developer, I can't help but get cold feet due to the size of the town (around 5,000 population). Absolutely love the property, due to the fact that it's a new build (I'm not the most handy person, gotta know your strengths lol) but not familiar at all with investing in such a rural area. 

Any opinions/advice? Am I just getting in my own way? Is this yet another form of analysis paralysis? Lol 

Deal Context: Listing price $265K. Seller would offer $15K concessions. FHA loan. 3bd/2ba with 2door garage, and downstairs basement/living room, Side A of 2 story duplex, 2022 build

[Joshua Messinger]

Hey @Brandon Combs! 

Sounds like you're on the right track! My best recommendation would be to focus on the metro areas as it is less common for someone to house hack in rural areas. Besides that, if you need any help with your underwriting don't hesitate to reach out as we can get on a quick call! 

-

Josh

[Nate Sanow]

Sounds like a fair deal and a decent price in a generally good area… but having said that, is there any evidence of that 5,000 population growing? Builders tend to follow population growth and in my city most of the building permits are headed towards the suburbs. Cities tend to get landlocked. And a lot of population growth is connected to the MSA, not just the main city. If that’s true in your area, then maybe that makes this area something that could be a cool sub market in 5 years. 

[Nate Sanow]

Quote from @Nate Sanow:

Sounds like a fair deal and a decent price in a generally good area… but having said that, is there any evidence of that 5,000 population growing? Builders tend to follow population growth and in my city most of the building permits are headed towards the suburbs. Cities tend to get landlocked. And a lot of population growth is connected to the MSA, not just the main city. If that’s true in your area, then maybe that makes this area something that could be a cool sub market in 5 years. 

 Oh and also. Is there another opportunity with similar upside to weigh it against? If you pass up on this, does it feel like “opportunity cost “ and as if you won’t get a similar opportunity for a long time? Or can you explore with your agent something closer to the city and find out if that much closing costs etc can be paid for? Just a thought, and if weigh out your options with opportunity cost in mind it may lead you to the right decision.

[Wale Lawal]

@Brandon Combs

House hacking can be a fantastic way to start building wealth with real estate in an unconventional way. However, you do have to be comfortable with the fact that you're not going to be conforming to "traditional" social norms.

If you’re going to get into house hacking as a wealth-building strategy, then it’s important that the money works out in your favor. In particular, you need to save money while you’re living in the property and have the option to turn it into a cash-flowing rental when you decide to move. You don’t want to count on growing equity (especially in multifamily properties).

Read this this article for more information https://thecollegeinvestor.com...

Good luck!

[Brandon Combs]

Quote from @Nate Sanow:

Sounds like a fair deal and a decent price in a generally good area… but having said that, is there any evidence of that 5,000 population growing? Builders tend to follow population growth and in my city most of the building permits are headed towards the suburbs. Cities tend to get landlocked. And a lot of population growth is connected to the MSA, not just the main city. If that’s true in your area, then maybe that makes this area something that could be a cool sub market in 5 years. 

 Yes I looked it up and it's experiencing about a 1% annual growth rate. Lots of new builds going up everywhere around that area as well. Great point! Really appreciate you taking the time to respond! 

[Brandon Combs]

Quote from @Nate Sanow:

Quote from @Nate Sanow:

Sounds like a fair deal and a decent price in a generally good area… but having said that, is there any evidence of that 5,000 population growing? Builders tend to follow population growth and in my city most of the building permits are headed towards the suburbs. Cities tend to get landlocked. And a lot of population growth is connected to the MSA, not just the main city. If that’s true in your area, then maybe that makes this area something that could be a cool sub market in 5 years. 

 Oh and also. Is there another opportunity with similar upside to weigh it against? If you pass up on this, does it feel like “opportunity cost “ and as if you won’t get a similar opportunity for a long time? Or can you explore with your agent something closer to the city and find out if that much closing costs etc can be paid for? Just a thought, and if weigh out your options with opportunity cost in mind it may lead you to the right decision.

Yeah definitely in the middle of all that. Main opportunity cost here would be the possibility of passing up on something closer to the city (Nashville), however, deals in Nashville tend to hit and leave the market really fast and usually require a fair amount of TLC. Being not the most "handy" person in the world and not feeling quite ready for a BRRR strategy just yet, a newer construction such as the one in Ashland City I'm looking at seems like a perfect way to get started househacking, at a fair price and in way less competitive market.

[Nate Sanow]

Quote from @Brandon Combs:

Quote from @Nate Sanow:

Sounds like a fair deal and a decent price in a generally good area… but having said that, is there any evidence of that 5,000 population growing? Builders tend to follow population growth and in my city most of the building permits are headed towards the suburbs. Cities tend to get landlocked. And a lot of population growth is connected to the MSA, not just the main city. If that’s true in your area, then maybe that makes this area something that could be a cool sub market in 5 years. 

 Yes I looked it up and it's experiencing about a 1% annual growth rate. Lots of new builds going up everywhere around that area as well. Great point! Really appreciate you taking the time to respond! 

 Hey no worries happy to help root for you from afar. I just drove through that area to see a friend in Indy, and it seemed like lots of new builds everywhere. Developers are smarter than me. Following them is not the worst thing to do. 

Sounds like your opportunity cost VS rewards might point you back to the opportunity at hand. It is for you to decide… but hopefully you do pull a trigger soon. It is my only regret in investing that I didn’t start sooner. 

Good luck 

[Anthony Phillips]

Not sure of the budget but I would say the closer to Nashville you find the more appreciation you might have in the future. As you have stated things in metro Nashville do move very quickly. Sounds like you do have a solid plan that cashflows and if you do want to move out after the year and find somewhere else to house hack you will be more familiar with the areas.

[Brandon Combs]

That's definitely a great point. Really appreciate you for sharing. And yes as you can imagine, it's tough trying to snag something good in the Nashville Metro area with an FHA loan….more competition with conventional buyers.

[Luka Milicevic]

@Brandon Combs

If you're talking about Ashland City, I would not consider that a rural area at all. 

Several mentions of Metro Nashville.....

The past 2 years I had to turn down any buyer clients that were trying to buy a house in Nashville using an FHA loan. I could barely get my all cash buyers a deal, let alone an FHA loan. Times are different now and FHA loans can get accepted.

I would reconsider the metro area if you are interested. You're not going to ge a new construction for 265k, but you will be closer to the city. 

I have a fixer/upper right now at 275k if you are interested in East Nash. Would need to get a GC as it's a large renovation nad you said you're not a handy guy. 

[Brandon Combs]

Hey! Thanks for the extra info on Ashland City. I think maybe I might’ve mixed up my definition of rural after watching a BiggerPockets rookie YouTube episode where they define rural as a town of around 5000 population. Really like the Area though. Just did an inspection, and beginning to finalize things. I think it will be a good first step for me. 

And yes due to my lack of comfort with any major rehabs at the moment, I’ll have to pass on your east property. Thanks though! Please feel free to keep me in mind though for any future off market deals w/ 3bd/2b & basement. 

[Brandon Combs]

Quote from @Anthony Phillips:

Not sure of the budget but I would say the closer to Nashville you find the more appreciation you might have in the future. As you have stated things in metro Nashville do move very quickly. Sounds like you do have a solid plan that cashflows and if you do want to move out after the year and find somewhere else to house hack you will be more familiar with the areas.

 Really appreciate the extra info.
curious to get your thoughts on some other things I’m considering at the moment as I get closer to finalizing this deal…. 

For context, I’m a touring/session musician. My income isn’t always as steady and predictable as a normal W-2, So starting out with a house Hackable property that also includes a basement where I can record/practice out of is an extremely ideal entry point for me to get into real estate investing, especially if it doesn’t require any major rehabs.

(Trying to keep the budget conservative in the mid 200s.)

That being said, I just found out from my lender that apparently it’s illegal to buy down your interest rate past 4%? Lol. Was definitely planning on being a savage buying it down as much as I can, But given what I know now it seems that the traditional long-term rental strategy with my first property won’t be lucrative after factoring in vacancy/maintenance/Capital expenditures. (currently locked in @ 5 percent). Adding on the fact that similar properties closer to Nashville tend to go off the market really fast, this ashland City property seems like my best bet for just getting started. 

(My lender made note that refinancing is also an option down the road as well 🤷🏾‍♂️)

To combat that, i took on the Sarah Weaver approach & listed the Zillow listing pictures and posted them on furnished finder, to get Some feel of midterm/short term rental leads… turns out my property is in the middle of about five different hospitals out there, And it shows some promise for being able to be rented out that way, both After I move out and while living there. given that the property is also attractive with new amenities and such, I think it should work well in that STR/MTR space.


But yeah, that’s where I’m at. Appreciate you taking the time to read. Feel free to share any extra thoughts, thanks.