Getting Started and Sharing

[Fene Cartlidge]

I listened to the Podcast interview of Josh and felt the motivation to start sharing on this community that has given me so much.

I have an offer in on a duplex that will cash flow at around $500 per month.  That deal will close in 30 days.  But I just last night looked at a 3+2 in the downtown area that has me considering to pull the trigger again.  Too fast?  But Nashville is a busy market.

I am a little nervous about this new one because the neighborhood in pre-transition but is close to other areas that have been turning bad into good.  It is a 3+2 1200 square feet for $115,000.  The rent average is about $950 and that should cash flow out to about 200 per month with a 20% down conventional investor's loan.

The hesitation is the poor, working class neighborhood (no pitbulls or drug dealers though), that may or may not transition.  Possible section 8 tenants. There is a community church right across the street.  There is also a few boarded up homes in the neighborhood but I cannot see that lasting long in the booming Nashville market.  The rental market is very strong, especially this close to downtown - great 5 minute commute to downtown.

Any thoughts from other investors about this type of situation.  Do I just trust the numbers?  I completed the buy and hold rental calculator on BP.  The numbers seem to work without having to rely on appreciation but that would be a bonus in a few years if this neighborhood follows what has happened just 5 minutes away.

Thanks for your thoughts.

[Jeff Miller]

Hello fellow Nashvillian investors. This is a good discussion, and a problem I recently wrote about on theurbaninvestor.com in an article titled, "The Dwindling Supply of Cheap Houses in Nashville, TN." The reason it is harder to get a better return on investment right now in town is totally because purchase prices have appreciated dramatically. Rental rates have increased as well, but not enough to keep up and achieve this 2% goal. I don't think there are ANY properties on the market in Nashville proper where one can get that return unless it needs A LOT of work. Even then it is a stretch. I have some houses where I am getting those returns, but I bought them in 2009-2011. It is a completely different market now and for those of us who have been in Nashville awhile, it is hard to adjust. Houses used to sell in the $20-$30k range in North Nashville, and now there is nothing that cheap. It is inner Nashville's final frontier, but the shift is already taking place.