Nashville has experienced a surge in population growth in recent years, leading to a thriving rental market. As an investor, it helps to understand the current trends and demands in the industry to make informed decisions about renting in Nashville.
This guide for homeowners will help you navigate the Nashville rental market. We’ll cover topics such as knowing the rental market, preparing your unit, setting rental terms, and navigating tenant issues. Our goal is to help you maximize your investment potential while ensuring full compliance with local, state, and federal laws.
Understanding the rental market in Nashville
Current trends in the rental market
The rental market in Nashville continues to be highly competitive, with a growing demand for rental properties. There has been a significant increase in both the number of renters and the average rental prices in recent years. According to Zillow, the median rent price in Nashville sits at $2,200, showing a 12.8% increase year-over-year.
A strong job market and economic growth also contribute to high rental demand in the city. In fact, Nashville has the lowest unemployment rate compared to any metropolitan area with more than one million residents. Industries like health care, music, education, leisure, construction, and technology drive job opportunities in Nashville. More financial companies are also moving to town, offering additional jobs to hundreds of residents.
As job hunters opt to relocate to Music City, rental demand soars. This makes Nashville an attractive market for homeowners to venture into renting.
Demographics of renters in Nashville
The rental market in Nashville caters to a diverse demographic of renters, including young professionals, families, and students. The median age in Music City is 34.2, which is relatively lower than the national average of 38.5 years. Due to a strong job market and a younger population, Nashville is expected to maintain high rental demand and low vacancy rates in the coming years.
Factors affecting rental prices
Various factors influence rental prices in Nashville. These include location, property size and features, and supply and demand. But with the city’s high demand for rental properties, Nashville has a more expensive rental market compared to other cities in the region. For example, Memphis (Tennessee’s second largest city) only has a median rental price of $1,063. This reflects a whopping 69.7% percentage difference from Nashville’s $2,200 average rent price.
Now, as a homeowner, it’s essential to regularly review market data and adjust your rental prices accordingly. This will ensure your property stays competitive and maximizes your return on investment (ROI). Additionally, local laws and regulations can also impact rental costs. So, it’s a must to understand the rules and regulations governing the rental market in Nashville.
Preparing your property for rent
Preparing the property for viewing
Before putting your property on the market, thoroughly clean the rental and make necessary repairs. Consider making cosmetic upgrades, such as fresh paint, new fixtures, and updated appliances. Stage the property to showcase its best features and create a positive impression on prospective tenants. These make-ready tips will help your property become appealing to potential renters.
Marketing your property
Once your property is ready, it’s time to market it to prospective tenants. There are several ways to reach potential renters, including online listings, social media, and real estate websites. You can also consider using a property management company to handle the marketing and advertising of your property, like Poplar Homes. Doing so will help create a detailed and accurate listing that highlights the features and benefits of your property.
Legal requirements when renting in Nashville
It’s vital to comply with local, state, and federal laws when renting your property. In Nashville, this includes obtaining necessary licenses, conducting credit and background checks, and adhering to fair housing laws. You should also familiarize yourself with the landlord-tenant laws in Nashville. That includes the security deposit laws, eviction procedures, and the requirements for returning the security deposit to the tenant. Failure to comply with the legal requirements can result in significant fines and legal repercussions. So, if you’re planning to invest in Music City, do thorough research and understand the regulations before renting out your property.
Setting rental terms
Setting rental prices
Next, we’ll cover setting your rental price just right for the market in Nashville. This is more important than you might think. Aside from helping you maximize your ROI, it also helps in attracting tenants.
Now, in finalizing the rental price, do research on the current market trends and location. Identify the best features not only of your property but also of the community. This will help you gauge how much your rental is worth. It’s also recommended to conduct market research and compare rental prices of similar properties in the area to ensure you are charging a fair and competitive price.
Establishing rental agreements
A lease is a legally binding contract between the landlord and tenant that outlines the terms and conditions of the tenancy. It’s essential to clearly define the terms of the contract, including the rental price, security deposit, payment due date, and any other specific terms or restrictions. The rental agreement should also detail the responsibilities of the landlord and the tenant, such as who is responsible for maintenance and repairs. Don’t forget to also mention procedures for renewing or ending the lease.
Handling security deposits
A security deposit is an amount of money paid by the tenant at the beginning of the tenancy to cover any damages or unpaid rent at the end of the tenancy. It’s important to clearly define the security deposit terms in the rental agreement, including the amount, purpose, and procedures for returning the deposit.
In Tennessee, the amount homeowners can collect for a security deposit is not limited. But we recommend you keep it at a reasonable amount. The usual security deposit is equivalent to one month’s rent. Anything beyond that might turn off prospective tenants. Note also that homeowners are required to return the tenant’s security deposit within 30 days of the tenant vacating.
Dealing with tenant issues
In Nashville, the most common grounds for eviction include non-payment of rent, violating the lease agreement, and engaging in illegal activity on the property. Although it is your legal right to evict a delinquent tenant, the process can be lengthy and complex. Therefore, it is crucial to know all the requirements and follow all the legal procedures to protect yourself from legal disputes.
There are three legal procedures set by the Uniform Residential Landlord and Tenant Act a homeowner should observe in evicting a tenant: (1) Give the tenant a written notice; (2) take out a detainer warrant against the tenant; and (3) win a court order against the tenant.
During the process, remember that it is illegal to lock out a tenant, throw him out of your property, or cut off heat, electricity, gas, or water to drive him out of the unit. If the homeowner violates any of these, tenants should call the police.
Handling delinquent rent
If a tenant is behind on rent, it’s important to take prompt and decisive action to collect the delinquent rent and avoid financial losses. This may involve sending a written notice, negotiating a payment plan, or beginning the eviction process.
As should be stated in your rental agreement, rent is due on a specific date every month. If the tenant fails to meet the due date, homeowners can charge a late fee. However, according to Tennessee law, a late fee must be charged only if the rent is late by five days or more. The due date must count as the first day. But, if day five falls on a Sunday or legal holiday, tenants are allowed to pay rent on the next business day without a late fee. Lastly, a late fee should not exceed 10% of the rent past due.
Resolving disputes with tenants
Disputes between landlords and tenants can arise for various reasons, including maintenance and repair issues, noise complaints, or disputes over the security deposit. Remember to handle these disputes promptly and professionally to minimize the impact on the tenancy and prevent any legal issues. Try resolving disputes through negotiation or mediation before taking any legal action. If a resolution cannot be reached, it may be necessary to seek the assistance of a mediator or take the dispute to court.
This guide for homeowners on renting in Nashville has provided a comprehensive overview of the city’s rental market. We also covered the necessary steps property owners must take in preparing and renting their properties successfully.
Venturing into the Nashville rental business can be a rewarding experience. But it’s essential to research, understand the local market and laws, and prepare your property for rent. It’s also important to have a clear and well-defined rental agreement, establish fair and competitive rental terms, and handle tenant issues professionally and promptly. With the right approach and attention to detail, property owners can take advantage of renting in Nashville and achieve their investment goals.