I own a vacant parcel of land in East Nashville that I am attempting to make “buildable.” It was included in a deal that I purchased last year. The seller had a two bedroom cottage on one lot that received the majority of attention, and almost as an afterthought, the listing agent mentioned that the adjacent parcel was also included in the sale. At first glance, the house appeared to simply have an extra large side and back yard, so I’m not certain that all potential buyers realized that there were two separate lots. The listing received plenty of interest from buyers, eliciting nine offers in about 36 hours. I wrote about my reasoning for paying $15,000 over the list price, and one of the reasons was for the potential use of the vacant lot. Before making our “highest and best offer,” I called the fine folks of the Metro Nashville Government to see if the unused lot could be built upon. I was hoping for a simple answer. Now, over a year later, it has become quite clear that the answer is anything but simple.
The difficulty with this lot, and probably the reason that no house exists on it, is due to a large “wet weather conveyance” (aka a creek) that runs right through it. The creek varies between widths of 20-25 feet across and runs the full length of the parcel. It is large enough that the road stops on both sides of it, creating two dead ends, and one lot with basically no road frontage.
Although dry most of the year, this creek carries quite a bit of stormwater that runs off of Ellington Parkway and the surrounding neighborhood during the rainy seasons. The first step in seeing if this lot would be buildable was to file a “Community Water Determination Request.” Essentially, Metro Water Services storm water division had to assess the water quality and decide if this channel was a stream or not, which would impact the widths of the overlaying easement. In short, if there were fish and crawdads playing in the water, the easements would be larger, and there would be no building envelope available.
East Nashville, TN is the location of the featured house of the week, where 909 S. 14th St. was just listed for sale for $359,900. A “custom” renovation was completed on this two story home that has three bedrooms, two and a half baths, and 1,580 square feet of living space. The listing agents Chad Sain and Matt Read, both with PARKS, call it a, “One of a Kind Charmer,” and instruct potential buyers to, “Stroll on Over to have All Your Dreams Come True.” Apparently the agents are fans of excessive capital letters and hyperbole. But their asking price of $227 a square foot is no exaggeration.
“Before” condition, when I briefly owned the house.
I was very interested to see the final photos of this listing, as I sold this house in July, 2014 to the investors who renovated it. They had a great idea to add a second story on top of the existing cottage, doubling the total square footage. When the sales price per a square foot has a hefty margin over the cost to build per square foot, it is smart to add on as much as the neighborhood comps can support. Interestingly, the back corner of this property is in Metro Nashville’s flood overlay zoning designation, which means Metro will not allow an increase to the building footprint, meaning the structure cannot be expanded outwardly in a horizontal direction. When that is the case, building up is the best option.
“After” condition, with a new 2nd story.
I had purchased this property at a foreclosure auction two months before I sold it to the renovators. It was a sad, dirty, single-story house that had been vacant for years. I toyed with the idea of conducting the renovation myself, but elected to clean out the trash and have my realtor put it on the MLS instead. It sold in about two weeks for $95,000, which was the cheapest priced home in the 37206 zip code at the time. The investors
It is 2015, nearly eight years since the beginning of the end of the nationwide housing bubble that grew in the mid 2000’s. Different parts of the country were impacted more severely than others, and some areas still haven’t recovered completely. Meanwhile, enough time has passed that a few cities such as Austin, Miami, San Francisco, and Los Angeles are experiencing rapid price increases and heavy demand. Are the real estate prices in some cities becoming overvalued again? What does a housing bubble look like? And how can you tell if you are in the middle of one? It seems like it would be easily recognizable, but history has told us otherwise. Investopedia smartly defines a housing bubble as:
A run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand (a shift to the right in the demand curve), in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, believing that profits can be made through short-term buying and selling. This further drives demand. At some point, demand decreases (a shift to the left in the demand curve), or stagnates at the same time supply increases, resulting in a sharp drop in prices – and the bubble bursts.
I received a phone call yesterday from a wholesaler in Nashville, TN who said he had just gotten a house under contract and asked if I was interested in buying it. He told me the address, price, and a few facts about the property. The location in East Nashville is close to two other rentals that I own, so I was very familiar with the particular street and the surrounding area. It seemed like it could be a good deal, depending on the condition. I knew he had other investors that he was talking to, so I didn’t hesitate to check it out. Within fifteen minutes of the phone call, I was knocking on the front door.
The quick purchase, wholesale house
Harpeth Development LLC is about to begin a 130 unit affordable condominium project at the corner of Litton Ave. and Gallatin Pike in East Nashville, TN. The one and two bedroom units, sized between 750-975 square feet, will be priced in the $150,000-170,000 range.
Rendering of Solo East, a 130 unit condo project in East Nashville. Image source: bizjournals.com
President of Harpeth Development, Bruce McNeilage said, “”My goal is to have Solo East occupied 100 percent by the workforce – single mothers, nurses, cops, firefighters and musicians. I don’t have to tear anything down, we’re not displacing anybody. I think the minute I do it, others will copy it.”
The difficulty of copying the project is finding a sizable parcel of land that is cheap enough to
Many aspiring real estate investors want to have a plan for how to succeed and build a strong portfolio. They want to build wealth and have heard stories about other investors making lots of money through flips or rentals. But what is the best first step? There can be so many “voices of wisdom” and so much “advice” that it can become paralyzing. New investors want to know how to get started on solid footing and make a strong first purchase. I know I did. So what is the best way to begin on the real estate road to riches? Is there a strategy or formula to follow? How do you start with a winner?
My real estate story started pretty simply, and I think that my approach is the easiest way to begin to build wealth through property. I believe that buying a well-appreciating primary residence is the best first investment. In 2002, when I was buying my first home in Nashville, TN, I took time to understand the real estate market. I learned how to look at every property with an eye toward its potential profit. I was searching for a good deal, for a property that already had some equity in it and one in which I could also increase its value through improvements. The more I looked at properties on the computer and in person, the more I started to grasp the characteristics of the different neighborhoods around town. I learned which neighborhoods were out of my price range, which ones were stagnant or declining, and which ones were improving. I soon narrowed my searching to two zip codes, with my focus being about 80% on the zip code that I thought had the most upside.
The rapid growth, increased media attention, and overall hype of East Nashville in the past few years elicits differing opinions from its residents. An interesting article titled, “After the Gold Rush” featured in The East Nashvillian discusses some locals’ views about the frenzy of positive attention. One concerned resident, Joshua Hedley shares his thoughts:
“I’m happy the city is growing. There are so many great things I want people to get a chance to experience. But with growth comes change, and some of those great things are taking a backseat to some not so great things. The little mom and pop organizations that made the area special are fading away. The chicken fried steaks and mashed potatoes are turing into gluten free braised tofu salads and pan-fried, raspberry-infused kale chips. So whats wrong with that?
In the fall of 2010, I was looking for a house to flip. I viewed several different options and settled on a cottage in East Nashville. It was a bank owned foreclosure that needed cosmetic updates on every surface and a re-imagined floor plan. But it had a lot of profit potential, so I closed the purchase in November, 2010 for $67,500. I was optimistic while preparing to embark on a four month renovation. Even though the real estate market was struggling all across the country, I liked the location of the property a lot and thought it would have sufficient demand that would result in above average appreciation. Little did I know, the house would sell for nearly five times that amount three and a half years later.
S. 11th Street. Nashville, TN 37206
The single digit temperatures didn’t keep potential buyers away from the foreclosure auction in Nashville, TN last Thursday, January 8, 2015. There were three properties I was interested in and one I was planning on buying, so I wasn’t going to miss it. Here is my account of the events as they unfolded.
Over fifty people are gathered on the second floor of the Davidson County Courthouse lobby. They are still bundled in coats and hats, warming from the frigid morning. I see ten or eleven guys that are the same cast of characters I spot at nearly every foreclosure auction in Nashville, TN. They have their binders, notebooks, and laptops tucked under their arms. I nod at a couple of them, acknowledging that we recognize each other, and even exchange pleasantries with one of them. But I’m not too friendly. After all, they are the regular competition for getting the property that I want.
The ever-expanding East Nashville renewal continues, as multiple large development projects carry momentum into 2015. Renovations, new construction infill, and small commercial openings are barely newsworthy, due to the sheer volume that this area of town has experienced over the past decade. In the past two years the pace has accelerated even more, as the inflow of investor dollars has raised the bar, and announcements of major projects has become the norm.
Aerial Development broke ground this fall on East Greenway Park, a 62 single family home project on ten acres near the corner of Eastland Ave. and Rosebank Ave. The houses will range from 1,200-2,500 square feet, with price tags from $225,000 to $375,000 and up. Aerial purchased the land in May, 2013 for $600,000, and received SP (Specific Plan) zoning for the site, allowing higher density for a cottage development. The growing company has already completed dozens of new construction infill throughout East Nashville, and over 100 new houses in all of Nashville. This will be their largest project so far.