Questions on buying a multifamily home

[Luke G.]

Looking at a split level family home in Nashville to live in and rent out. Planning on living in the top unit for five years, moving to a single family home, and continuing to rent both top and bottom units. 190k is the asking price. The bottom unit rented two or three years ago for $650. From the decorating I'm guessing the owner was elderly and was tired of tenants and let the bottom unit go vacant, but that's just a guess as to why the unit was unrented. I figure it would rent now for between 700 and 850. Upstairs is much nicer and would rent between 1000 and 1250. The top unit has 1100 sq. ft. three bedrooms; the downstairs unit has 1100 sq. ft. 2 bedrooms. 3 wall heaters and a wall mounted window AC unit downstairs. There is HVAC upstairs. The house is really close to a busy road. There is an acoustic tile drop ceiling in half of the downstairs unit, loud conversation upstairs is heard downstairs, but is unintelligible, yelling can be understood. Foot noise from upstairs is fairly loud downstairs. The creaking floor is less noticeable when someone overhead is walking in the carpeted areas upstairs. The downstairs is tiled and a little dumpy, but fifteen minutes from 3 universities and a lot of musicians in Nashville are looking for cheaper rentals.

I was hoping someone could speak to these concerns:

• 1.)Lack of heat in the lower unit.
• 2.)Ability to hear upstairs in the lower unit.
• 3.)Road noise.
• 4.)Rentability of downstairs unit.

[Nathan Emmert]

Being a down stairs unit will always make it harder to rent as people always assume the noise from upstairs will be worst case.

Being near the road is convenient but noise comes with that... I think it balances out from a rental point of view.  Are there any safety concerns that would keep renters with kids away?

Dumpy units attract dumpy tenants... if you want good tenants, the place needs to look the part.  Good people don't generally rent bad units.

The heat situation is strange but could be priced in.

My feeling is if you can't fix the noise issue, it won't effect getting people into the units (show it during the day when upstairs isn't occupied) but you'll likely have tons of turnover as people will grow tired of it and leave.  Fix the issue and maybe require the upstairs tenant to have 80% floor coverage with area rugs to reduce the noise further.

Musicians and others may look for cheap places but the rents you're talking about don't sound cheap (and frankly it's too large to be "cheap").

Is a 1% dumpy rental the best you can do in the Nashville market?  I don't know the market but doesn't sound like a great deal.  Getting in cheap at a low interest rate is nice and makes the numbers work a bit better but this sounds like a hit batter at best... I'd aim for a single or a double for your first intro to investing.