Rental Property Investment Tips for Nashville

Why keep money in banks when you can invest the smart way? Investing in rental property can be a good economic decision that can help you save more. It’s easy to find experts recommending rental property investment with the benefits including financial leverage, easy property management, and demand.

Are you thinking of stepping on the pedal too to save more money?

Property management in Nashville continues to look promising. According to the Nashville Business Journal, Nashville is a great real estate market to consider right now due to its popularity peak.

That said, rental property is a significant first-time investment, even if you’ve done it in another city already. Therefore, we’ve compiled several tips to make property management for Nashville easier.

Assess your finances before trying anything

Even Investopedia’s tip list mentions this within its first entries. You need to make sure your financial stability can support this investment. First, ensure you pay off all debts.

Then, evaluate your responsibilities as a landlord. That doesn’t mean just focusing on the right mindset and nothing else. You need to understand the expenses required for property management in Nashville, like CAM (common area maintenance) and HOA fees.

Identify your target investment

After you’re sure you can do it, you must recognize what to invest in. That means picking a neighborhood and the type of property you want to buy. Thinking about the kind of tenants you’d prefer is also useful.

However, it’s not just picking between apartments and houses. You should assess the entire space: number of rooms, construction materials, parking, size, and more.

Research the market to find opportunities

The most important part of making any investment is to assess trends and chances. Forecasts related to property management in Nashville are vital to help you make your final choice.

Right now, Nashville is expected to increase in home prices for over 5%, totalling more than 9% after last year’s rise.

Calculate your cap rate

Your capitalization rate is your possible profits from your property’s next income. The Balance defines it as the return rate you can make from a cash-bought house.

To calculate it, you must compare your renting price, expenses, and its purchase price. After subtracting your expenses from its rent, divide the result by your purchase price. The result is your cap rate percentage.

A word of caution though – there’s no “right or wrong” cap rate. It’s up to you to decide what makes an attractive return.

The 1% rule

As a side note, the same article from The Balance also mentions the 1% rule. It basically says that, if your monthly rent makes up (sans expenses) is at least 1% of its price, it’s worth looking more into it.

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