Is Nashville Still Ripe for the Flipping?

Is Nashville Still Ripe for the Flipping?

The short answer is, “Yes.” The longer, more accurate answer is more like, “Yes, if you really, really know what you’re doing.” Flipping houses in Nashville is not for the faint of heart or short of capital.

Investing in real estate has long been a storied part of the American dream, and in an economy as hot as Nashville’s, flipping houses can sound like a pretty attractive option. There’s no denying it, house flipping, as seen on shows like HGTV’s Nashville Flipped, appeals to the inner DIY carpenter, interior designer, and investor in all of us.

This summer, WalletHub’s researchers looked at 150 of the largest cities in the country and ranked them on key metrics such as median purchase price, average full home remodeling costs, and housing-market health index to determine which cities are good fit for the flip. Nashville achieved an overall ranking of 13, which bodes well for investors throughout the region. Achieving high marks in market potential and enjoying a relatively low-cost of renovation and remodeling, Nashville continues to be a flipper’s paradise. Assuming, that is, housing prices continue to rise and demand remains high.

In response to WalletHub’s research, the Nashville Business Journal noted, “For house flippers who can deal with the headaches of rising purchase prices, remodeling delays and fickle home buyers, Nashville is a good place to turn a profit.”

One of the reasons Nashville looks so good to investors is that so-called “second-tier” cities like Austin and Music City are the latest “It” cities. In contrast to 24-hour cities like New York and San Francisco, where cost of living is prohibitive and square footage is tight, Nashville’s lower cost of living, slower pace, thriving nightlife, and its diverse cultural and burgeoning food scenes make the city one of the country’s hottest go-to destinations for tourists and recent transplants alike.

In an addendum to WalletHub’s report, Philip A. Seagraves, Assistant Professor of Real Estate at Middle Tennessee State University, cautions, “The most common mistake is assuming that flipping a house will be easy and fast. Complications often arise, repairs take longer, buyers disappear, permits are delayed, and partners disagree...House flipping is one of the riskier avenues for real estate investing where your entire profit is geared toward one event, the sale of the house, rather than a steady stream of rent payments...If you work your fingers to the bone making repairs, painting, landscaping, and more and don’t ‘pay yourself’ you have really overestimated the return on the investment.”

In an article published this spring in The Tennessee Ledger, chief economist for Trulia, an online residential real estate site, commented, “Whether or not flipping a house is a safe bet really depends upon the experience of those who are doing the investing, so for a professional or experienced investor who has a track record of flipping homes, it’s probably not a terrible time to flip.”

Those with limited or negligible experience in real estate and house flipping, however, would be well served to proceed with caution. The Nashville market is hot, but it’s a place where professionals have staked a very firm claim.

If the harsh realities of ROI, loans, permits, and hidden structural damage are more than you’re prepared for, but you’re eager to get in the action, consider investing in the Nashville real estate market with Canopy South Capital Management. Contact us for more information today.

Horton Admin