The Figures You Need to Know to Invest in Nashville Real Estate

EVERYTHING YOU NEED TO KNOW… Nashville is a hot spot—for everything. Food, music, business. Most importantly, it’s a hot spot for real estate investing. Nashville is showing numbers that are drawing investors from all over and we’ve put them together for you. Below, the figures you should know to invest in Nashville real estate.

NASHVILLE’S REAL ESTATE MARKET

In January, Nashville landed itself in the number one spot on Zillow’s predication for the the hottest real estate markets in 2017. The city contains a market with strong property value growth and some of the most quickly appreciating rent growth in the nation. The ranking system was based on property value, local income growth, and current unemployment rates. Recent growth in tourism, investment, and tech-startups have pushed Nashville’s economy into a steady rate of growth.

If you want to invest in Nashville real estate, it’s probably good to hear that the city’s market is predicted to grow nearly 24% over the next three years? What’s driving it? A surge in demand is pushing up annual home growth by 9%, annual job growth by 2.7%, and population growth by 6%. As one of the fastest growing cities in the country, Nashville’s current rate of unemployment is 4%, 1% lower than the national average. The city was ranked among the top places in the country to found a tech startup. That along with the affordable costs of living, and you’ve got young professionals moving to Nashville from all over, creating a strong market for traditional rental properties. The rising music and food culture has created a strong and continually growing tourism sector, making Nashville an Airbnb hotspot. Nashville offers the best of both worlds and it’s time to seriously consider investing.

RECENT TRENDS IN THE NASHVILLE REAL ESTATE MARKET

Nashville has seen a rise in the real estate market over the last ten years, the most rapid increases taking place over the last 5 years. Because of the increase in tourism and influx of new residents, Nashville’s development has been consistent and sustained. Most of the new homes being constructed are higher-end apartments and condominiums, perfect for Airbnb rentals and traditional rentals for young professionals. The historic districts of Nashville are also seeing investments as the demand for historic southern charm rises. These homes are great for families.

The projection for Nashville is continued growth in all areas—jobs, population, economy. So, with the variety of properties and the consistent trend of growth, now is the time to invest in Nashville real estate.

NASHVILLE REAL ESTATE MARKET FIGURES

Using Mashvisor’s investment property calculator, we’ve generated the numbers for properties in the Nashville real estate market:

• Median Property Price: $535,000
• Traditional Rental Income: $1,821.50
• Airbnb Rental Income: $2,857.48
• Traditional CoC Return: 35%
• Airbnb CoC Return: 68%
• Traditional Cap Rate: 42%
• Airbnb Cap Rate: 96%

LEGALITIES OF THE NASHVILLE REAL ESTATE MARKET

In Nashville, the returns on Airbnb are much greater than those on the traditional rental properties. Since you are more likely to consider investing in an Airbnb rental property, let’s make sure you’re investing and renting out legally. Here are the (briefly described) legalities you need to know to invest in Nashville real estate.

• Zoning Laws

Nashville’s zoning ordinance regulates how properties are used and what they are used for. Short term rental properties are allowed as accessory use in all residential zoning districts, meaning it cannot be the sole function or purpose of the property.

• Short Term Rental Property Ordinance

The city has an ordinance designed specifically for short-term rental properties. It’s a good idea to review and understand the ordinance so you don’t end up violating any laws and paying fines. One of the most important things to understand from this ordinance is that a permit must be obtained and renewed annually.

• Taxes

The city of Nashville and the state of Tennessee both levy a property tax as well as require property owners to obtain a business license. Without this license, your rentals are considered illegal and are subject to considerable fines. There is also a hotel/motel tax imposed by the city and state for Airbnb rentals.

Related: https://www.mashvisor.com/blog/2017-airbnb-legal-issues/ 

TOP NEIGHBORHOODS OF THE NASHVILLE REAL ESTATE MARKET

Now, as the city itself is ripe for investing, there are some areas that are more fruitful than others. Understanding and investing in the right neighborhood cam maximize your returns. Here are the numbers provided by Mashvisor’s investment property calculator:

Related: Why an Investment Property Calculator Is Better Than Spreadsheets

1. JSH Neighborhood Club

JSH Neighborhood Club is the top neighborhood to invest in Nashville real estate market. It offers the highest CoC return and cap rate. It is also features the most affordable property prices in the city. While very strong in both traditional and Airbnb rentals, the neighborhood is the best in the city for Airbnb rentals—featuring the highest number of any other neighborhood.

• Median Property Price: $125,000
• Traditional Rental Income: $984.13
• Airbnb Rental Income: $2,390.81
• Traditional CoC Return: 72%
• Airbnb CoC Return: 42%
• Traditional Cap Rate: 45%
• Airbnb Cap Rate: 95%
• Airbnb Occupancy Rate: 85%

Related: The Guide to Using an Airbnb Profit Calculator

2. Acklen Avenue Alliance

Another great neighborhood for investing in the Nashville real estate market is Acklen Avenue Alliance as it features one of the strongest markets for Airbnb. The CoC return and cap rates for Airbnb are particularly strong making it a great opportunity for anyone looking to invest in an Airbnb property rather than a traditional one. While the property prices might be higher, the investment may be well worth it with the average income.

• Median Property Price: $659,900
• Traditional Rental Income: $1,490
• Airbnb Rental Income: $7,292.70
• Traditional CoC Return: 15%
• Airbnb CoC Return: 06%
• Traditional Cap Rate: 71%
• Airbnb Cap Rate: 26%
• Airbnb Occupancy Rate: 05%

3. Inglewood (Riverwood)

For those interested in investing in traditional rental properties, another great neighborhood to consider is Inglewood (Riverwood). It has solid CoC return and cap rates and affordable property prices.

• Median Property Price: $292,450
• Traditional Rental Income: $1,622.68
• Airbnb Rental Income: $2,900.90
• Traditional CoC Return: 79%
• Airbnb CoC Return: 25%
• Traditional Cap Rate: 03%
• Airbnb Cap Rate: 77%
• Airbnb Occupancy Rate: 38%

With a growing and thriving economy, Nashville is the place to invest. Now that you’ve got everything you need to know about the city’s market, your next step is to start looking for properties.  Take advantage of Mashvisor’s property search and take the steps to invest in Nashville real estate.