*Sweet Home Knoxville*: Brand New Construction Mid Term Furnished Rental House

[Jennie Berger]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $240,000
Cash invested: $90,000

Purchased a brand new construction single family home to hold onto as a mid term furnished rental. Located in up and coming South Knoxville, just 2 miles from downtown and UT Medical Center, proximity to Great Smoky Mountains National Park, Pigeon Forge, Gatlinburg, Dollywood, TN River, UT Knoxville, and all that is fun about the Scruffy City!

What made you interested in investing in this type of deal?

Having lived in Knoxville for 10 years, I felt very comfortable investing out of state. I've been studying the mid term rental strategy for the last year or so--and started by house hacking in my own apartment in Chicago. Then transitioned to an out of state purchase in Knoxville where I had seen a large demand for quality furnished housing (especially pet friendly) and a vast under supply. I love Knoxville because it's still affordable and not overbuilt / overpopulated. Yet, there are SO many wonderful reasons people move (or travel) here. (Shhhhhhh :)

How did you find this deal and how did you negotiate it?

On the MLS. I bought it through my buyers agent / licensed Realtor.

How did you finance this deal?

Conventional 30 year fixed rate loan from a bank. My own cash (from savings) for the down payment and furnishing expenses. I chose to put 30% down to help buy down my rate as rates were pretty high at the time. 

How did you add value to the deal?

Since it was new construction, I didn't really add much 'value' from a traditional perspective. However, I curated a mid century, modern inspired home using themed furnishings and a unique accent wall in the living room to give it that extra oomph. The real value with this strategy is to find special and thoughtful ways to differentiate ourselves from other furnished rental homes.

What was the outcome?

Secured a 3.5 month rental 5 days after listing it on Airbnb (long term) by a traveling nurse and his 2 dogs. Currently booking my 2nd tenant--2 traveling nurse friends (along with their 2 dogs)--for another 3.5 month stint.

Lessons learned? Challenges?

Having local resources (boots on the ground) is KEY. Though I had lived in Knoxville for 10 years, I didn't know a ton of people in the real estate (and related) industry. I joined a few local real estate investor meetup groups on Facebook and asked them--as well as my Realtor--for recommendations for handymen and cleaning crews.

BIG LESSON--even though Wayfair & Overstock are more budget friendly for furnishing--it might behoove me to furnish from a local store and have them assemble. :)

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

A real estate agent who is my friend from many years ago helped me purchase this property. She was a great resource and went above and beyond to make sure my mind was at ease, and I had everything I needed along the way to make the closing and furnishing process smooth.