Are you looking for information on how to house hack Nashville? The city sometimes nicknamed Music City USA and the Birthplace of Country Music is a vibrant city with a lot to offer residents and visitors alike, making it an intriguing real estate market.
Nashville expects well over 10 million visiting tourists a year, often hitting 14+ million in a good year according to their own hospitality studies. This is in addition to the yearly stream of new music artists looking for short and long-term rental options in Nashville as they strike out to make it in the music business.
Nashville offers some very interesting opportunities when it comes to house hacking both with conventional methods and via short-term rental options like Airbnb.
Let’s dive in!
Note: Because of the interesting ways the local government is set up when you look for government data and demographic information, you may see the city referred to as Nashville-Davidson. Don’t be alarmed, for all intents and purposes this is the same area, the same location.
Nashville: Tenant Friendly, or Landlord Friendly?
Tennessee is generally considered a bit more landlord-friendly versus being tenant-friendly, and in some ways that plays out very strongly. In some regards, Tennessee is even more friendly to landlords than the state of Texas, which is often seen as the benchmark for a landlord-friendly state.
However, this also depends on the specific tenant-landlord issue as tenants also have additional rights beyond the norm depending on the conflict.
Overall Tennessee is landlord friendly and Nashville hasn’t added any notable regulations to shift that position on a city level.
Perhaps most importantly for some investors, there are no state provisions for rent control. Once a contract is up the landlord has full authority to shift rent prices as they see fit.
A more thorough breakdown of the specific laws regarding tenant rights vs landlord rights can be found here.
Nashville is a city that has a lot to offer real estate investors, not to mention a thriving music and art scene that means there’s always a lot to see and do.
Nashville Demographic Data Analysis
As we always state in a house hacking article, we focus on 6 demographic data points for house hacking that we’ve learned to use when analyzing a market are population growth, income growth, property value growth, crime level, crime change, and job growth.
Based on these metrics we can see whether a city has serious house hacking potential, a concerning wart, or is a no-go.
When it comes to these six metrics, this is how Nashville compares to our benchmarks:
|Data Point||Benchmark (since 2000)||Nashville|
|Property Value Growth||40%||156.9%|
|Crime Change||0% or declining||-4.3%|
|Job Growth||> 1%||6.06%|
Five of the six benchmarks look good. Population growth, income growth, property value growth, crime change, and job growth all look good. In fact, job growth and property value growth look excellent. However, the crime level is higher than we want to see.
However, a deeper look into this poses and interesting problem. The usual data source of city-data doesn’t have all the data provided for other cities. This could be due in part to confusion of how to report crime data for Davidson County versus parts of Nashville outside of Davidson versus other communities in Davidson.
This means tacking down the exact crime level number can be harder, and the most recent numbers available had it come in around 517, but crime is on the decline year-on-year which is a good sign thought the high starting rate is undeniably concerning.
Overall, a Nashville house hack might still be in the cards, but this means that more research needs to be done on individual properties as well as neighborhoods during the due diligence process to make absolutely sure the property is in a neighborhood you are satisfied with living in and that provides likely positive cash flow and/or equity.
So let’s dive into the strategies, tips, and resources needed to effectively house hack Nashville!
4 Strategies for House Hacking Nashville
There are several great ways to successfully house hack the city of Nashville to make the most of the many great deals that Music City USA has to offer. Understanding these house hacking strategies and how to implement them is crucial to being able to find and finance the best deals that fit your specific needs in the local real estate space.
House Hacking Nashville with Conventional Bank Loans
A conventional loan is always an option, especially if you have average to good credit and 10-20% down payment of the total price of the property saved up. The key here is to identify a good real estate deal early on a multi-bedroom house and work to quickly make an offer and close the deal.
Talking with a bank before buying is the way to go as they can help run your numbers and let you know what size loan you would be able to qualify and get approved for so you understand what the upper most price range is.
Speak with multiple banks. What Wells Fargo is willing to provide might be different than US Bank or vice-versa. If you can go with a local bank you can often work out better deals or options than from national branches, especially when starting out.
House Hacking Nashville with Specialty Loans
There are multiple specialty loans and programs that can help with purchasing a house. Each one is going to have certain requirements, but they can provide a clear route to making your Nashville house hack affordable when it otherwise wouldn’t be.
Two of the classic examples: FHA home loans and VA loans for veterans.
The FHA loans are there to allow first-time home buyers to get a house with only 3% down as opposed to a common 20% down. For a $287,000 house (median price in Nashville) that’s the difference between an $8,610 down payment versus and $57,400 down. That’s a huge difference.
VA loans are there specifically for veterans and those who served in the armed forces. These are loans that are generally given at a great rate and give some backing of repayment. Using VA loans for house hacking is an excellent strategy for veterans to get started with real estate.
House Hacking Nashville with Multi-Unit Properties
While the multi-bedroom family house is what most people think of when buying a first house or doing a conventional house hack but that’s not the only option in Nashville!
This city has many different types of multi-unit properties including:
- Multi-Unit Homes
- Homes with standalone basement or garage apartments
These properties can sometimes be more affordable than a conventional family home while also offering more privacy than simply renting out a room. The collected rent could cover a good portion of the cost as the average rent in Nashville ($1,191/mo) would be the majority of monthly payment expected on a $200,000 property.
If there are three, four, or even more rent checks coming in around that amount that covers the full rent for a property even in the $400,000 range, well above the average property cost in the city.
These other property types can be ideal for starting a profitable Nashville house hack and a very good dal might even provide both appreciation and positive cash flow.
House Hacking Nashville with Short-Term Rentals
Short-term rentals are a powerful option for a city like Nashville that have universities, a huge music scene, and tourism. The most common method to take advantage of this will be house hacking via Airbnb, though Vrbo is another viable option.
A lot of the success of this strategy will depend on the neighborhood the property is located in. The closer to popular destinations, tourist spots, or universities the property is, the more likely you are to consistently find renters willing to pay to rent the property.
Other options include looking at semester-length or 9-month leases aimed at college students in the area. This would open up some interesting opportunities and many students are used to per room pricing in nearby apartments or housing, increasing the cash flow potential of a property you could house hack.
Nashville House Hacking Tips
There are many properties that offer some serious house hacking potential whether you’re considering short-term or long-term rentals.
House Hacking Tips
- Focus on neighborhoods you’re willing to live in first
- Keep an open mind looking at different types of properties
- Know your budget going in so you don’t waste time vetting properties that are out of reach
- Don’t ignore red flags
- Don’t stretch just to make a deal
- Check on all your funding options like FHA, VA, HUD, or others
- Look at the Nashville MLS listings in addition to other online resources
Conventional house hacking might not be as “sexy” as the short-term rentals on Airbnb, but there are still very good reasons to look at this as a viable long-term option, not the least of which is the strong desire of many people to live in certain properties like a family home, condo, or duplex instead of apartment.
- Long-term rents give a more stable cash flow
- Less time and maintenance investment versus short-term rentals
- Ability to cover most or all of mortgage
- Landlord-friendly city
- Might be leaving a lot of money on the table by not doing short-term rentals
- Will have limited privacy due to full-time renters, depending on the property type
Nashville Short-Term House Hacking Tips
Because of the many popular tourist attractions and thriving music scene Nashville offers some prime opportunities for short-term rentals like house hacking Airbnb or offering semester-long leases to college students (or visiting professors).
This mix of short-term rental options shows just how open Nashville is for various styles of rentals. This also opens up the number of properties that can be used in Nashville for short-term rentals while house hacking.
An important first step: make sure you can be permitted for short-term rentals. To do everything legally and above board, you will need to get a short-term leasing permit from the City of Nashville.
When you confirm the property can be used for short-term leasing and the permit is paid for (it must be renewed annually, but for a cheaper price than the original payment) then getting the short-term rental income follows.
The number one strategy is to look at location. Because Nashville has both many neighborhoods with bad crime numbers and safety issues, as well as popular trendy neighborhoods with tons of attractions to draw in visitors, the location of your rental is crucial for getting the most out of it.
The Airbnb strategy may be most successful because Nashville has so much to offer as a popular vacation destination. The additional cash flow from Airbnb can help offset the higher purchase prices in Nashville, particularly the better and more desirable neighborhoods.
- Nashville sees steady tourist numbers throughout the entire year
- High demand means a much higher per-night rental rate than you could expect from many other locations
- A good short-term rental in Nashville is likely also in a highly desirable neighborhood meaning appreciation is also likely
- More hard work and upkeep to keep things clean, repaired, and get those coveted 5-star ratings
- Finding a good property you can short-term lease in a wanted neighborhood is a challenge
- Prices for the ideal property for Airbnb rental will likely be very high
Nashville Real Estate Challenges
One major consideration is going to be crime. While Nashville still made our list of cities worth looking at, it’s hovering around that maximum crime rate and depending on which numbers you look at, is going over.
While the crime rate dropping is definitely a major positive, but there’s even bad news within this which is that violent crimes have actually gone up notably while property crimes have plummeted.
Only certain Nashville neighborhoods are going to be appropriate to most investors and the demand for real estate will be higher in those places.
Know Your Nashville Neighborhoods
Nashville is one of those cities where there are some very nice neighborhoods, and some very rough ones. It’s very important to know which are which. Obviously safer neighborhoods will often have much more valuable properties with more rental options and less headaches.
Not to mention the fact that you’ll be living there if house hacking, so you want to make sure you’re comfortable with the safety of that neighborhood.
According to The Culture Trip six neighborhoods that all visitors should look at visiting and/or staying in while visiting Nashville are:
- Downtown Franklin
- East Nashville
- Hillsboro Village
- Green Hills
- 12 South
Finding a good property in these neighborhoods or close by could open up major short-term rental house hacking options.
It’s also important in a higher crime city like Nashville to know which neighborhoods are safe and which are not. Some of the best suburbs near Nashville will be Brentwood, Franklin, Hendersonville, Thompson’s Station, and Nolensville.
There are others, but this is a good start.
If you’re not used to rougher neighborhoods or want to stay away from those neighborhoods with more potential problems and less upside, then be wary of the most dangerous Nashville neighborhoods like West Meade, Salemtown, Heron Walk, Talbot’s Corner, and others as laid out by Area Vibes.
Understanding what parts of Nashville have crime issues versus those areas that are safer is important.
Should You House Hack Nashville?
This is going to vary from investor to investor. The crime numbers are going to be a major concern, and while knowing the ins and outs of specific neighborhoods is always important when entering a real estate market, it’s even more so for a city like Nashville.
While there are understandable concerns, it’s worth noting that overall, Nashville is a very interesting city that offers plenty of things to do, plenty of investment opportunities, and a good setup for house hacking into a profitable deal.