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House hacking part of local robust multi-family demand

BY DON FENLEY

TRI-CITIES, Tenn. – House hacking isn’t just a big-city trend. It’s alive in the NE TN and SW VA region. Much of its effect is below the radar. It’s overlooked because the public perception when you say multi-family is large apartment communities, but it’s much more than that.

At the end of July, there had been 94 multi-family transactions from listing on both local listing services. Most (60) were from the Flex system, according to the Northeast Tennessee Association of Realtors (NETAR). The total is down 34% from last year, but inventory is running at almost the same volume as last year. So, there’s still robust demand.

Drivers of that demand is region’s rental market is as congested with contract workers, newcomers looking for longer-term solutions and those pushed out of the market by higher prices and mortgage rates maneuver for the best deals.

House hacking simply means finding ways to create income from a home. At one time, buying a multi-family property and living in it while rending out units was the established model. It’s one of the basic investment models that gives the owner tax advantages and equity while tenants pay the mortgage.

Social influencers are working social media hard with articles about how the purchase of a small multifamily property like a duplex, tri-plex or four-plex is a way to beat the housing inventory crunch while build equity wealth.

And with the push to create more “middle-housing” from properties owned by local governments, it’s getting more attention. If local practices fall in line with the national model, a big swath of local landlords are already house hackers.

According to the Census Bureau, 70% of the 49.5 million rental units with one to four units are owned by individual investors.

According to the Research Department at the National Association of Realtors (NAR) there are a little over 13,000 multi-family housing units in the region’s two metro areas. And the most recent Attom analysis cites almost 60,000 Tri-Cities area single-family investment properties.

Local building permits from Jan. to Man list 73 permits for multi-family structures with two to five units. During the same period last year, there were 180 permits.



Categories: REAL ESTATE