Nashville investors market discussion

[Carrie Carlton]

I have my entire portfolio invested in the Nashville area. It is a mixture of single and multifamily.  I would like to start a discussion on the incredible increase in inventory of new build condos. I realize someone will respond that " if you buy at a good price and cash flow you will be fine" . I agree with this. My intent is to start a discussion on over supply. I feel the market is at a tipping point. I would like someone to offer their wisdom on how other markets have faired after over supply creeps in and meteoric rises in appreciation and rents have passed. One can make the arguement that we have a lot of people moving in, but eventually supply will catch up. There are many house and corners where one or two houses were and condos are going  in.  Infill one would say. This greatly affects supply. I am starting to see rent prices cooling a bit already. I am ambivalent about selling because I have no idea where I would reinvest, but have anxiety that the market will crash and I should have sold. What do ya'll experience?  Thanks community! 

[Sean Davidson]

Hey @Carrie Carlton 

My partner and I talk constantly about this. Here is the way I see it. Rental demand is still really strong for normal people. We just turned over tenants in a 2/1 in Hadley/Washington for 1200 and had 4 strong applicants in the first day. The higher end of the market, however, is seeing noticeable oversupply. There are only so many people who want to/can spend 2100 a month for a two bedroom in the gulch. You are definitely starting to see more and more move in specials and the like, a sure sign of a softening market. 

That being said, the rate at which we are delivering high end inventory is staggering. I'm part of the problem with the urban infill houses, as I've never built a spec that sold for less than 500k. The problem here is that poor people are being displaced and there just aren't any good options for places for them to go in town. We are actually talking to a councilman about developing affordable housing on a city lot because the government sees this as a huge problem. You have to compartmentalize demand between different income ranges to have an effective conversation. 

As a result, I would avoid high end apartments and condos as they are overbuilt, but I would be investing like crazy in anything affordable right now. The combination of people being pushed out of the city by infill with the massive inflow of people (not all of whom earn 200k+) means that the affordable suburbs are primed to boom. Single family also seems fine, except for East Nashville which has absurdly overdeveloped considering it is a difficult place to live with awful traffic, no jobs, and limited basic amenities like grocery stores and such.  We have almost completely written off East Nashville for now, but I'm bullish on most of the rest of the city.