@Ralph Noyes
I’m a bit late to this post, but hope I can add some value here….
I’ve placed many investors…mostly out of state into local house hacks and here are a few things I would mention that have worked well.
Before I get into that…Nashville is no longer a “cheap” market. Not sure that it ever was, but especially now as more and more people start to discover it’s awesomeness.
Your house hack is also going to largely depend on your current life circumstances – and you should be thinking about near future circumstances as well. (Work situation, Children – school zones, etc).
The house hack I did personally was a single family home with an upstairs bonus room. This was married with no children. Tenant stayed upstairs in the bonus room and had access to his own bathroom downstairs and our kitchen. I now have 2 children so that situation no longer works for me.
The next step up is going to be having a separate entrance to a section of the house that can be used as a separate living space. Think finished basement or mother in law suite. These properties will typically not have a full kitchen in the separate living space. You’re looking at a kitchenette – fridge, microwave, maybe a dishwasher. They will also not have their own laundry. If you want to add a full kitchen, this is where you can hit a snag with the codes department. A full kitchen, just means adding an oven (range). This gets into fire code because you’re adding an oven and technically a duplex. Depending on the type of tenant you are trying to attract, a full kitchen with laundry might not be needed. If you go with an unfinished basement, keep in mind that any renovations you make will probably need to be out of pocket expenses after purchasing. Right now, that is not a big deal to me because I think everyone buying today is going to be refinancing anyway in 2 years time.
The next step up from that is going to be looking for homes in Nashville’s DADU overlay. You’re looking for properties that fall under ordinance BL2007-1426 or similar. These allow the construction of a DADU (Detached accessory dwelling unit). Most homes will not already have them built, unless you’re in the HIGH price points. Think $1m plus. You’ll just need to be willing to do the construction of the property and make sure the house you are buying is eligible and meets fire code for rear property construction.
Finally, the best way to do a house hack is going to be the HPR STR strategy that is unique to Nashville. This is my favorite house hack strategy but it will require a large amount of capital and can be management intensive. Alternatively, you could do this strategy by building it yourself. You'd be looking at about an 18 month timeline right now.
Let me know if you have any questions
