Top Nashville Neighborhoods with High Cap Rates

2020 forecasts for the Nashville real estate market are all generally positive. So if you were considering buying a rental property in Nashville, now would be a good time as:

• The large population is growing, with around 49% renting out their homes rather than buying one, driving demand for Nashville rental properties. The local price to rent ratio currently stands at 22.
• The local economy is diverse and growing quickly. Such a trend contributes to the health of the Nashville housing market.
• Nashville house prices will appreciate. However, they will remain affordable compared to other major US cities. The median property price in the Nashville real estate market is $458,300 according to Mashvisor’s real estate market data.
• The Nashville real estate market is not too competitive. Redfin gives it a Compete Score of 65 (somewhat competitive) and estimates that houses for sale get one offer on average and sell 2% below listing price.
• Mashvisor’s data also shows that Nashville investment properties generate a good return on investment:

• • Traditional Rental Income: $1,758
  • Traditional Cap Rate: 1.7%

However, in order to ensure that you invest in the best investment property for sale, you need to know where the top-performing Nashville neighborhoods are. These would be areas where a real estate investor can find high cap rate properties for sale in Nashville. Using Mashvisor’s real estate market analysis tools, we have found the top 10 Nashville neighborhoods with high cap rates. 

The 10 Best Places to Invest in Nashville in 2020

The following are the best Neighborhoods in Nashville to invest in long-term rental properties. Although Mashvisor’s real estate database has Airbnb Nashville data by neighborhood, short-term rental properties are strictly regulated in the market. Therefore, buying Airbnb property to rent out is not a viable Nashville real estate investment strategy unless you were to live on site. If you’re looking to invest in Airbnb, check out this list of the 20 Cities with No Airbnb Legal Issues in 2020.

#1. Buena Vista

• Median Property Price: $373,659
• Price per Square Foot: $201
• Price to Rent Ratio: 8
• Walk Score: 78
• Traditional Rental Income: $3,812
• Traditional Cap Rate: 5.4%

#2. Belair

• Median Property Price: $175,000
• Price per Square Foot: $184
• Price to Rent Ratio: 10
• Walk Score: 32
• Traditional Rental Income: $1,504
• Traditional Cap Rate: 4.6%

#3. East Hill

• Median Property Price: $399,700
• Price per Square Foot: $202
• Price to Rent Ratio: 14
• Walk Score: 62
• Traditional Rental Income: $2,437
• Traditional Cap Rate: 3.0%

#4. Terragon Trails

• Median Property Price: $221,950
• Price per Square Foot: $164
• Price to Rent Ratio: 12
• Walk Score: 12
• Traditional Rental Income: $1,490
• Traditional Cap Rate: 2.9%

#5. Boon Trace

• Median Property Price: $323,300
• Price per Square Foot: $164
• Price to Rent Ratio: 14
• Walk Score: 0
• Traditional Rental Income: $1,907
• Traditional Cap Rate: 2.8%

Find and analyze high cap rate properties for sale in Nashville neighborhoods using Mashvisor’s Rental Property Finder. Using this tool, you can find Nashville investment properties for sale with cap rates as high as 9%.

#6. Oakwood Terrace

• Median Property Price: $230,900
• Price per Square Foot: $174
• Price to Rent Ratio: 14
• Walk Score: 13
• Traditional Rental Income: $1,328
• Traditional Cap Rate: 2.5%

#7. Villages of Larchwood

• Median Property Price: $245,909
• Price per Square Foot: $181
• Price to Rent Ratio: 15
• Walk Score: 17
• Traditional Rental Income: $1,392
• Traditional Cap Rate: 2.4%

#8. Green Hills

• Median Property Price: $168,000
• Price per Square Foot: $ 287
• Price to Rent Ratio: 13
• Walk Score: 25
• Traditional Rental Income: $1,118
• Traditional Cap Rate: 2.2%

#9. Germantown

• Median Property Price: $337,686
• Price per Square Foot: $389
• Price to Rent Ratio: 16
• Walk Score: 75
• Traditional Rental Income: $1,734
• Traditional Cap Rate: 2.0%

#10. Cumberland Gardens

• Median Property Price: $265,000
• Price per Square Foot: $260
• Price to Rent Ratio: 17
• Walk Score: 53
• Traditional Rental Income: $1,278
• Traditional Cap Rate: 1.9%

Sign up for Mashvisor now to find and analyze the best Nashville rental property for sale.

An Important Note on the Cap Rate for a Real Estate Market

We know at this point a lot of readers will start to think that the title of “Nashville Neighborhoods with High Cap Rates” is misleading now that you’ve seen the data. That’s because it has become common knowledge that a good cap rate for rental property is typically a high one- one between 8% and 12%. At the same time, a high cap rate isn’t always better. This is because, sometimes, the high value comes from the fact that you’re looking at a very cheap investment property for sale which may carry significant risks like:

• Being located in a bad neighborhood
• Requiring a ton of repairs to make it rent-ready

So even then, low cap rate properties can sometimes make for the best real estate investments. That’s if they are in your budget and produce a good rental income that leads to positive cash flow.

But what about the cap rate for a real estate market? Generally, cap rates by city are quite low. Mashvisor’s cap rate data, specifically, is based on a massive supply of real estate comps– the good and the bad investment properties. So taking into consideration that the data looks at really high cap rate properties along with very low cap rate properties, it’s normal to see the best average cap rates for cities ranging between 1%-5%. 

The same applies to cap rates by neighborhood. Because there are many real estate comps taken into consideration, average cap rates for a neighborhood are typically low. That is why we can consider the previously listed Nashville neighborhoods as high cap rate neighborhoods. When we look at the neighborhood data for all of the Nashville neighborhoods that currently have investment properties for sale at the time of this writing, the 10 listed above do, in fact, have the highest cap rates.

Related: Forget Everything You’ve Heard About What Is a Good Cap Rate

How You Can Find the Top Nashville Neighborhoods

Remember, real estate markets are dynamic. Today, these are the 10 best Nashville neighborhoods for buying investment property. A few months into 2020 and this list can look completely different. That’s why Nashville real estate investors need a way to always be able to identify the best neighborhoods in Nashville. So how can you quickly and easily conduct a neighborhood analysis of the Nashville real estate market? By using Mashvisor’s Real Estate Heatmap.

The Real Estate Heatmap Analysis Tool allows rental property investors to pull up a Nashville neighborhood map. You’ll be able to select a few filters that represent metrics that are crucial to analyze when buying a rental property such as:

• Listing Price
• Airbnb Cash on Cash Return
• Traditional Cash on Cash Return
• Airbnb Rental Income
• Traditional Rental Income
• Airbnb Occupancy Rate

Note: Cash on cash return and cap rate are equal until you take into account your investment property financing. In this way, the Real Estate Heatmap allows you to find high cap rate neighborhoods in Nashville and any other US housing market. Click here to factor your financing into your investment property search.

Set the filters one by one and the Nashville neighborhoods will take on a color that represents a value range for the filter. Because we are interested in finding high cap rate Nashville income properties for sale, we would set the Traditional Cash on Cash Return filter and look for neighborhoods that are subsequently highlighted in green. Take a look:

The Real Estate Heatmap is the best way to quickly identify up and coming neighborhoods in Nashville that would make for the best places to buy a rental property.

And in the right bar of Mashvisor’s Investment Property Search App, you can see the available long-term rental properties for sale in Nashville. What you’ll notice is the first few have a cash on cash return that is very close to ideal. Check out one of these Nashville investment properties for sale for yourself now.

Related: Finding Income Properties Using a Heatmap

How to Find Really High Cap Rate Nashville Investment Properties

If you want to skip the Nashville neighborhood analysis (for now) and jump right to viewing the high cap rate properties for sale in the real estate market, Mashvisor has another tool you can use- the Rental Property Finder.

With this tool, you can set the location as the Nashville housing market. You have a few other investment property search filters you can set like the property type (say you want to find multi family homes for sale in Nashville) and your budget. From there, this real estate investment tool will show you the Nashville houses for sale with the highest cap rates. Take a look:

Select a few and then use the Investment Property Calculator to factor in your rental property financing. That way, you can make sure you found a Nashville investment property with a high cap rate and a high cash on cash return.

Now You Know Where to Invest in Nashville

Whether you decide to start your search for rental property in one of the best Nashville neighborhoods listed above or choose to conduct your own neighborhood analysis with the Heatmap, you now know where to invest in real estate in the city. Don’t wait for another real estate investor to snatch up your potential deal. Start Your 7-Day Free Trial with Mashvisor Now to find and analyze the best investment properties in any city and neighborhood of your choice.