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VOL. 46 | NO. 39 | Friday, September 30, 2022

Room enough for two: This NOOSTR has it all

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5501A New York Ave

Rates hit 6.99% this week, Mike Garretson of Wesley Mortgage reports. While the name Wesley Mortgage is familiar mainly through their sponsorship on Titans Radio, the faces are those that have dominated the Nashville market for years through Franklin American Mortgage.

The veteran Garretson has weathered many an interest rate skirmish over the years and he says the normalcy of the market now lends itself to sellers paying some of the buyers’ costs.

In the not-so-distant past, sellers had become accustomed to paying buyers’ closing costs. Now, for two discount points, meaning 2% of the loan amount, buyers can get a seven-year adjustable-rate mortgage.

That gives Putin time to do whatever he is going to do and Federal Reserve to have all the fun it can stand.

Sale of the Week

One of the driving forces in the Nashville real estate market is the existence of NOOSTRs, or non-owner-occupied short-term rentals. With bachelorette parties, country music and its honky-tonks, professional sports teams and conventions driving tourism, the notion of having a property that can rent for as much on a certain weekend as long-term rentals may charge in a month makes some investors giddy.

Tim Bartlett with Parks is one area real estate agent who has gained expertise in this market. He recently sold a home located at 5501B New York Avenue for $1.035 million.

It is, in fact, not a home, although it is set among residential properties. It is a commercial opportunity for the buyer on two levels.

The parts of this property are zoned MUN (mixed-use neighborhood), says Bartlett, who notes the property is “an incredible Airbnb investment opportunity.” He need not have written much more since the mere mention of Airbnb has investors slobbering like rabid dogs.

And with this property, the mad-dog NOOSTR hunters have even another option, that being to build yet another NOOSTR in the backyard. Listing agent Bartlett is quick to point out that 5501A collected more than $9,000 in income in May and has 80-plus five-star reviews.

“A savvy investor can build a second, non-owner-occupied STR-eligible facing 55th Avenue with approximately 2,400 square feet,” Bartlett added. “This corner lot is zoned MUN and can accommodate residential, retail or commercial uses.” He also boasted the site is near Bridle’s Smokin’ Oasis.

Not that it has anything to do with anything on this property, but the house has 1,656 square feet with three bedrooms and two bathrooms. The buyer, who is no doubt savvy, was represented by none other than Babloo Chacko, the best name in the history of Nashville real estate. Chacko is with Coldwell Banker Barnes. The property sold in 24 days, as many were unable to digest the various uses for the land.

Included in the listing information was a recap of the income generated by the property. The gross receipts were $61,711.88, and there was $2,569.30 in “host channel fees” netting $59,142.58 and annual taxes of $6,136 and insurance in that range, resulting in an approximate net of $46,870.58, which equals $3,905 per month.

That alone is not a bad return assuming there is no debt, so the buyer was the beneficiary of one or two lots that could be argued were free. However, lest the buyer wants to build another NOOSTR or commercial space, they have no value.

Another expense incurred in the Airbnb situation is units have to be furnished and cleaned between uses.

In short, it is a business, and many are faring quite well and will continue to do well as long as there is not another Prohibition. Since Jesus drank some wine on occasion and had a propensity to make his own occasionally, the city is most likely safe from that.

There is an argument from some as to whether Airbnb and the NOOSTR, in particular, is better than the old-fashioned long-term rental. Some Airbnb management companies charge as much as 28%. They earn their keep by understanding the market and raising the rates during Titans home games, CMA week and other big weekends.

The long-term proponents feel they have less wear and tear and more stability as they know what the income generate each month will be and do not have to rely on the Titans or the Predators to field good teams and reach the playoffs.

Regardless of the duration of the lease, Nashville real estate has proven to be a good investment over the long term. Having a third party pay for the property always works.

Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty and can be reached at richard@richardcourtney.com .

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PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0