Summary

Did you know?

Franklin is among the fastest-growing real estate markets in the state. The median value of homes for sale in Franklin, Tennessee, is around $385,500. Compared with the median home value throughout the state, it’s almost at a surplus of $200,000, while the United States indicator is around $204,900.

Similarly, the rental market in Franklin suggests a median rent of $1,428, compared to $841 throughout the state. These numbers prove that Franklin has great potential, especially if you’re considering the region as an investment opportunity.

However, just knowing your numbers isn’t enough!

Before investing in a home for sale in Franklin, Nashville, or elsewhere, you must consider several factors. Therefore, this blog will look at the city’s different aspects of real estate investing. Continue reading as we learn more about the strategies, investment plan, and marketplace options, among other factors, in the following sections.

Real Estate Investment Highlights in Franklin, Tennessee

Before we discuss strategies and investment plans, let’s examine the current market trends in real estate investment in Franklin.

Current Indicators	Franklin Average	National Average
Price-to-rent Ratio	24	17
Property Tax	$2,516	$2,421

Change in Trends	Franklin Average	National Average
Population Growth	3.15%	0.68%
Rental Price Growth	4.33%	2.76%
Home Appreciation	0.36%	0.2%

Tabular representation of the current market stats

Essential Strategies to Start Your Investment Journey in Franklin

To determine whether a real estate market is suitable for investing, you must develop a strategy that guides your approach. Let’s understand some essential strategies that give us an idea of the factors to consider for different investors.

Franklin Real Estate Investing Strategy 1: Buy & Hold

The buy-and-hold approach in the real estate market includes purchasing and holding an asset for an extended time. Once purchased, the property generates consistent cash flow over time, increasing the owner’s profit.

Additionally, once the asset’s value rises, the investor can sell the property with a reasonable profit. They could also invest the difference in a new property while buying another one at a similar value to the one they purchased in the existing property.

Property Appreciation Rate

The appreciation rate is an essential indicator of how stable and flourishing a property market is. Look for consistent property value rises each year. A constantly rising investment property can add to your returns. On the other hand, a declining property will ruin the buy-and-hold strategy.

Population Growth

A market without strong population growth will not provide enough tenants or purchasers to sustain your investment program. Slow population growth adds to falling real estate market values and rent levels, reducing the price of your property. It’s best to avoid such areas.

Property Taxes

Property tax levies are an expense you cannot avoid. These tariffs are hardly decreased. Areas with high real property taxes indicate a market that won’t go higher and will fail to retain present inhabitants or attract new ones.

Price-to-rent Ratio

The price-to-rent ratio (p/r) is determined by dividing the median property price by the annual gross rent. For instance, if you buy condos for sale in the Gulch, Nashville, TN, you get low lease rates with a higher p/r, allowing your investment to return its costs within a reasonable time.

Franklin Real Estate Investing Strategy 2: Long-Term Rental

The BRRRR abbreviation represents a long-term leasing strategy: buy, rehab, rent, refinance, repeat. This approach is smart if you want to appreciate the value of your investment.

Here, investors are required to remodel the property. Once done, its value increases, the asset is refinanced, and the rest, or equity, is paid to you in cash. This money is transferred to the following investment asset, and so on. However, you must be eligible for a “cash-out” refinancing loan to make the plan work.

Population Growth

Population growth or decline indicates whether you can rely on consistent returns from long-term real estate investments. If a community’s population grows rapidly, more tenants will move in. Companies and workers are drawn to the region to relocate, find jobs, and expand their homes.

Median Population Age

The median population age in the area you plan to invest should be similar to the age of employed persons. If individuals move into the area, the median age will be able to remain within the employment base. A high median age indicates that the current population is aging out without being replaced by younger workers moving in. That is not an acceptable long-term financial picture.

Property Taxes

If you plan to invest long-term, consider property taxes, insurance, and maintenance expenses. Calculating expenses lets you predict whether and how the investment will pay off.

Median Gross Rents

Median gross rents accurately indicate the likeness of a leasing market. Look for a reasonable increase in median rents over a few years. Remember, you won’t be able to meet your investment goals in an area with negative gross rental rates.

Franklin Real Estate Investing Strategy 3: Short Term Rentals

Short-term rentals are residential properties where renters stay in furnished spaces for less than a month. They typically charge higher nightly fees than long-term rentals. Due to the high turnover of residents, short-term rentals need more regular maintenance and cleaning.

The most common short-term renters are tourists, house sellers migrating, and business visitors who want something better than a hotel room. House-sharing services such as VRBO and Airbnb have enabled many property owners to participate in the short-term rental market.

Short-Term Rental Income

You should evaluate the rental revenue required to make your investment profitable. Learning about the typical rent rate paid in the neighborhood for short-term rentals can help you decide where to invest.

Median Property Prices

Calculate the budget you can spare for new investment assets. Knowing the median price of the property will indicate if you can engage in that market. You may also utilize median prices in certain market parts to choose where to invest.

Price Per Square Foot

When comparing identical properties, such as two or three Nashville condos for sale, calculate the price per square foot to get a practical idea of market rates. A residence with open doors and high ceilings cannot be compared to a traditional-style residential unit with more square footage. Calculating the price per square foot may be a simple way to compare different communities or residential units.

Short-Term Rental Occupancy Rate

The short-term rental occupancy rate can be used to determine the market’s demand for new rentals. A location that demands more rental properties will have a higher occupancy rate. On the contrary, low rental occupancy rates indicate a declining market. It’s best not to invest in such properties.

Franklin Real Estate Investing Strategy 4: Fix and Flip

The fix-and-flip strategy involves purchasing a home that needs improvements or renovations. In this model, people generally invest in a property, enhance it, and sell it for its current market value.

The key to a successful fix-and-flip is paying less than the house’s current value and accurately calculating the cost of making it marketable. It’s also important to know the area’s average number of days on the market.

Property Appreciation Rate

Changes in a location’s real estate prices are an essential investment aspect. Look for areas with continuously growing local house market prices. Accelerated market value growth may suggest an unsustainable value bubble, and buying at the wrong time in a volatile market may be disastrous.

Average Renovation Costs

You will need to assess construction costs in any possible investment community. The process used by the municipality to approve your plans will also impact your project. If you have to provide a stamped suite of plans, you must include the architect’s expenses in your budget.

Unemployment Rate

When deciding where to invest, seek areas with low unemployment. A lower unemployment rate than the national average is recommended. Areas with lower unemployment rates than the state average indicate a healthy economy.

Hard Money Loan Rates

Investors who renovate, buy, and resell investment properties prefer hard money over typical real estate financing. This method allows investors to negotiate profitable deals without any hurdles.

Franklin Real Estate Investing Strategy 5: Wholesaling Properties

Wholesaling is a real estate investing strategy that involves discovering residences that investors are interested in and completing a sale and purchase agreement. Once the property is ready, an investor buys the contract from you.

The property under contract is sold to the investor rather than the real estate wholesaler. The real estate distributor does not sell the residential property itself; instead, they sell the right to acquire it.

Median Population Age

A strong housing market requires people to rent, buy, and finally move up in the residential market. To allow this to happen, there must be a consistent employment market of prospective tenants and homeowners. When the median population age matches the age of wage-earning inhabitants, it implies a stable real estate market.

Income Rates

In a robust real estate market, where real estate investors want to invest, median household and per capita incomes should rise. Improved salaries in the area will help to drive up lease and selling prices. That will be crucial for the real estate investors you need to attract.

Property Appreciation Rate

The property appreciation rate rounds out the median price statistics. Many investors, including buy-and-hold and long-term rental landlords, need to see that residential property values in the city are rising over time. A falling median house price indicates a sluggish rental and housing market, which will disappoint various real estate investors.

Number of New Jobs Created

The number of jobs created yearly is critical to the housing structure. New occupations provide an excess of people who need to rent or buy premises. Whether your purchaser pool consists of long-term or short-term investors, they will be drawn to an area with consistent job opening production.

Passive Real Estate Investing Strategies in Franklin, TN

Franklin Real Estate Investing Strategy 1: Syndications

A syndication is a group of investors who pool their resources and expertise to invest in real estate. One member arranges the business, and the other participants are presented with the opportunity.

The organizer of the syndication is known as the Sponsor or Syndicator. The syndicator oversees all real estate activities, including purchasing, constructing, and operating properties. They are also responsible for disbursing the promised revenue to the remaining investors.

Real Estate Market

The blueprint and syndication opportunity you choose will determine your locality for syndications. Next, consider incorporating active investing strategies to help you determine the right market for Brentwood Nashville houses for sale.

Sponsor/Syndicator

As a passive investor who trusts the Sponsor with money, you should get a first-hand idea of their reputation. Profitable real estate syndication requires a successful, experienced real estate professional as a Syndicator. However, in some cases, the syndicator does not invest in the project. So, ensure you have a clear idea of the project sponsor.

Ownership Interest

Under the syndication structure, each participant owns a portion of the firm. Investors in the firm should expect higher returns than those who don’t. Investors are typically given a certain percentage of return on investment. Therefore, transparency about the project’s structure and profit-sharing models should be ensured.

Franklin Real Estate Investing Strategy 2: REITs

Many real estate investment businesses are conceived as trusts known as Real Estate Investment Trusts (REITs). REITs were created to allow ordinary investors to get into real estate. REIT shares are reasonably priced for the majority of investors.

Shareholders in such corporations are entirely passive investors. REITs manage investors’ exposure to a diverse portfolio of real estate. Investors have the option to liquidate their REIT shares at any time. One thing you cannot do with REIT shares is identify investment real estate holdings. The REIT decides to acquire the properties in which you invest.

Franklin Real Estate Investing Strategy 3: Real Estate Investment Funds

Real estate investment funds (REITs) are mutual funds that concentrate on real estate enterprises, such as REITs. The investment assets are not owned by the fund but by the enterprises in which it invests.

This is an additional approach for passive investors to diversify their assets into real estate without incurring substantial upfront costs or hazards. Fund shareholders may not get regular payouts like REIT stockholders. A fund’s worth to an investor is determined by the projected appreciation in the price of its shares.

Franklin Real Estate Investment Journey with Expert Guidance!

Navigating the real estate market of Nashville can be a challenge, especially if you’re not equipped with the right strategies. In such cases, it’s best to connect with trusted realtors in Nashville, TN. Professionals like Zivak Realty help you streamline investment while ensuring a property that adds to your returns.