New Investor House Hacking Question

[Jason Hill]

New Investor here in Nashville TN and have been looking into House Hacking for my first property so I can use a FHA loan. I have found some decent houses ranging from $280k to $370K and wanted to ask if I should lean more towards a newer house that is more expensive so I can avoid more frequent repair costs, or to go one the lower end and find the cheapest livable house to try to maximize cash flow after I move out a year in? I have read that new homes tend to eat cash-flow but the market is growing so fast in Nashville that I'm not sure if that would even out in appreciation. Any input would be greatly appreciated!

[Luka Milicevic]

@Jason Hill

Your biggest problem in this entire situation, that I haven't seen anyone mention is that you are trying to buy a house in America's hottest market, during the hottest seller's market in history while using an FHA loan. You are also in the most competitive price point possible.

As a very active agent in the Nashville market I can tell you that an FHA loan is, for the most part, not going to happen. I am putting in offers almost daily for all of the buyers I represent here and so I have a very good idea of what is happening right now. We are in a housing crisis. My buyers are putting in either cash or conventional offers WELL over asking price and still not getting offers accepted. An FHA loan is going to put you at the bottom of the stack of 15 other offers.

I did just close a VA loan last week for an out of state buyer, basically about as difficult as an FHA loan. The only way I see an FHA loan possible in the current market is in the surrounding cities of Nashville on new construction housing. That's how I closed this last VA loan.

This is not meant to be discouraging, just letting you know the current situation. It's extremely frustrating right now trying to buy a house. 

To answer your question....new construction doesn't always amount to less frequent repairs. it SHOULD, but doesn't always. Your biggest thing will be that you won't have to spend on capex for quite a while. 

If you ask me, what I would advise is that you look for a new construction home in the surrounding cities of Nashville. I think that is going to be the most possible scenario for your situation. 

Let me know if you have any other questions.