Newbie in Nashville - Long Term Rental CoC Benchmark?

Question

We are looking to invest in Nashville or the surrounding area rental properties (long term rentals) The objective is to hold and create cash flow.  We can either pay cash 100% for the rental or finance it, looking to keep purchase price under $300k.

What range of CoC return do those of you doing Long Term Rentals in Nashville typically see? Any areas of town I should be gravitating toward? Tips? :)

Luka Milicevic · Answer

@Crystal Hadaway

I'm quite active in the area and can help you out with specific questions if you have them.

The biggest issue right now is that rents have not kept up with the incredible appreciation Nashville has had. Rent to value and COC returns have dropped as a result of the appreciation in the market.

I wouldn't bother much with Williamson county. It's mostly class A residential, owner occupied. There are some pockets of homes you can get for your price range, but you are better off looking somewhere else.

In terms of Davidson, look at 37218, 37216, areas of Madison, certain pockets of 37207, further west towards Dickson.

Nashville is an appreciation play right now. If you're looking to park money then by all means it's a good market, but for pure cash flow it's not the best play.

If you can pay 100% cash, then do it. It will put your offer further ahead in this market

Eli Ziegler · Answer

@Quinton Sanicola You're right. In the difficult market like this, it takes some creativity to find the great deals! But it still can be done.

Quinton Sanicola · Answer

@Eli Ziegler I’ve found adding square foot or Rent to own seems to be the best way as of now with how fast prices have risen. I know many people don’t like rent to own or work for equity but honest with the increase in jobs I’ve found it’s helped people find a home with a not so bad commute t o their respective office.

Janelle Calhoun · Answer

Hey Crystal. I agree with the other comments.  Nashville is not the best place to invest buy and holds, the cash flow just isn't that great right now. I would suggest going a little further outside the city like Clarksville, Dickson, Antioch, Cookville areas. Also I believe someone mentioned zip code 37218 you may have some luck there or 37214. I'm a wholesaler in the area so if you need help finding a property I'm glad to assist. Hope this helps!

Eli Ziegler · Answer

Hi Crystal, like others said it's difficult to see good returns in Nashville right now for cash flow. If you push out from Nashville in all different directions, you can still find properties with 10% cash on cash return, but it is difficult to find them, especially with today's market. If you get creative you can find better returns (short term, rent by room, add sq. footage).

Crystal H. · Answer

@Luka Milicevic Thank you for the tip on zip codes and the context on rent vs sales price. We decided to go with a duplex in 37216 and it's just as you said - the cash flow isn't life changing but we believe the appreciation will be there and our goal really was to park some money in real estate since we're over leveraged in stocks at the moment. The appraisal came back at $17k over asking, so hoping this is the first of many deals we can find in the area :)

@Eli Ziegler That's helpful and aligns with what we were finding as well. In the end, we decided to use an IRR calculation to make our decision so we could incorporate sales price down the road and modest appreciation into our decision making process.

Quinton Sanicola · Answer

@Janelle Calhoun same here for myself and I couldn’t agree more! Nashville has really turned into the Wild West unfortunately.

Quinton Sanicola · Answer

@Crystal H. Williamson crime is much lower and it’s a much safer county. Even though they are connected. Building, septic, and zoning are much more difficult to work with in Williamson to be honest though.

Eli Ziegler · Answer

Hi Crystal, like others said it's difficult to see good returns in Nashville right now for cash flow. If you push out from Nashville in all different directions, you can still find properties with 10% cash on cash return, but it is difficult to find them, especially with today's market. If you get creative you can find better returns (short term, rent by room, add sq. footage).

Taylor Sanford · Answer

I'm an investment real estate agent here in Nashville. If you have any questions or need help finding properties let me know!

Newbie in Nashville - Long Term Rental CoC Benchmark?

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