diff --git a/dvc/remote/local.py b/dvc/remote/local.py
--- a/dvc/remote/local.py
+++ b/dvc/remote/local.py
@@ -92,6 +92,12 @@ def already_cached(self, path_info):
 
         return not self.changed_cache(current_md5)
 
+    def _verify_link(self, path_info, link_type):
+        if link_type == "hardlink" and self.getsize(path_info) == 0:
+            return
+
+        super()._verify_link(path_info, link_type)
+
     def is_empty(self, path_info):
         path = path_info.fspath
 

Found the root cause of this. This happens because of the optimization that we do if the file is empty (i.e. 0 bytes size). We never create a hardlink for the file with 0 bytes size and therefore it fails when we try to verify if the hardlink was created.

https://github.com/iterative/dvc/blob/a9bc65ee1f0446de766db59ad1b149de064c5360/dvc/remote/local.py#L170-L182

I think, [`is_hardlink()`](https://github.com/iterative/dvc/blob/a9bc65ee1f0446de766db59ad1b149de064c5360/dvc/remote/local.py#L196) function should be aware of this optimization as well. I'll make a fix tomorrow. 

P.S. This only failed if the file was empty (not even a newline). So:
```sh
echo > foo && dvc add foo # works because of extra-newline character added by `echo`
touch bar && dvc add bar # does not work as the file is empty
```

Also, subsequent runs would not fail because before this error is thrown out, the file gets cached (however, deletes file from workspace), i.e.
```sh
dvc init --no-scm
dvc config cache.type hardlink
touch foo && dvc add foo  # fails and deletes foo from workspace
touch foo && dvc add foo  # passes
```
@skshetry Great investigation! :pray: 
diff --git a/tests/func/test_add.py b/tests/func/test_add.py
--- a/tests/func/test_add.py
+++ b/tests/func/test_add.py
@@ -7,7 +7,7 @@
 
 import colorama
 import pytest
-from mock import patch
+from mock import patch, call
 
 import dvc as dvc_module
 from dvc.cache import Cache
@@ -662,3 +662,36 @@ def test_not_raises_on_re_add(tmp_dir, dvc):
 
     tmp_dir.gen({"file2": "file2 content", "file": "modified file"})
     dvc.add(["file2", "file"])
+
+
+@pytest.mark.parametrize("link", ["hardlink", "symlink", "copy"])
+def test_add_empty_files(tmp_dir, dvc, link):
+    file = "foo"
+    dvc.cache.local.cache_types = [link]
+    stages = tmp_dir.dvc_gen(file, "")
+
+    assert (tmp_dir / file).exists()
+    assert (tmp_dir / (file + Stage.STAGE_FILE_SUFFIX)).exists()
+    assert os.path.exists(stages[0].outs[0].cache_path)
+
+
+def test_add_optimization_for_hardlink_on_empty_files(tmp_dir, dvc, mocker):
+    dvc.cache.local.cache_types = ["hardlink"]
+    tmp_dir.gen({"foo": "", "bar": "", "lorem": "lorem", "ipsum": "ipsum"})
+    m = mocker.spy(RemoteLOCAL, "is_hardlink")
+    stages = dvc.add(["foo", "bar", "lorem", "ipsum"])
+
+    assert m.call_count == 1
+    assert m.call_args != call(tmp_dir / "foo")
+    assert m.call_args != call(tmp_dir / "bar")
+
+    for stage in stages[:2]:
+        # hardlinks are not created for empty files
+        assert not System.is_hardlink(stage.outs[0].path_info)
+
+    for stage in stages[2:]:
+        assert System.is_hardlink(stage.outs[0].path_info)
+
+    for stage in stages:
+        assert os.path.exists(stage.path)
+        assert os.path.exists(stage.outs[0].cache_path)

add: empty files add broken when cache mode is hardlinks
## DVC Version


```
DVC version: 0.86.5+f67314.mod
Python version: 3.7.6
Platform: Darwin-18.2.0-x86_64-i386-64bit
Binary: False
Package: None
Cache: reflink - supported, hardlink - supported, symlink - supported
Filesystem type (cache directory): ('apfs', '/dev/disk1s1')
Filesystem type (workspace): ('apfs', '/dev/disk1s1')
```

## Reproduce

```
dvc config cache.type hardlink
touch foo
dvc add foo
```

outputs:

```
ERROR: no possible cache types left to try out.
```


tests/func/test_add.py::test_add_empty_files[hardlink] tests/func/test_add.py::test_add_optimization_for_hardlink_on_empty_files
tests/func/test_add.py::test_add tests/func/test_add.py::test_add_unicode tests/func/test_add.py::test_add_unsupported_file tests/func/test_add.py::test_add_directory tests/func/test_add.py::TestAddDirectoryRecursive::test tests/func/test_add.py::TestAddCmdDirectoryRecursive::test tests/func/test_add.py::TestAddCmdDirectoryRecursive::test_warn_about_large_directories tests/func/test_add.py::TestAddDirectoryWithForwardSlash::test tests/func/test_add.py::test_add_tracked_file tests/func/test_add.py::TestAddDirWithExistingCache::test tests/func/test_add.py::TestAddModifiedDir::test tests/func/test_add.py::test_add_file_in_dir tests/func/test_add.py::TestAddExternalLocalFile::test tests/func/test_add.py::TestAddLocalRemoteFile::test tests/func/test_add.py::TestCmdAdd::test tests/func/test_add.py::TestDoubleAddUnchanged::test_dir tests/func/test_add.py::TestDoubleAddUnchanged::test_file tests/func/test_add.py::test_should_update_state_entry_for_file_after_add tests/func/test_add.py::test_should_update_state_entry_for_directory_after_add tests/func/test_add.py::TestAddCommit::test tests/func/test_add.py::test_should_collect_dir_cache_only_once tests/func/test_add.py::TestShouldAddDataFromExternalSymlink::test tests/func/test_add.py::TestShouldAddDataFromInternalSymlink::test tests/func/test_add.py::TestShouldPlaceStageInDataDirIfRepositoryBelowSymlink::test tests/func/test_add.py::TestShouldThrowProperExceptionOnCorruptedStageFile::test tests/func/test_add.py::TestAddFilename::test tests/func/test_add.py::test_failed_add_cleanup tests/func/test_add.py::test_should_not_track_git_internal_files tests/func/test_add.py::test_readding_dir_should_not_unprotect_all tests/func/test_add.py::test_should_not_checkout_when_adding_cached_copy tests/func/test_add.py::test_should_relink_on_repeated_add[hardlink-copy-<lambda>] tests/func/test_add.py::test_should_relink_on_repeated_add[symlink-copy-<lambda>] tests/func/test_add.py::test_should_relink_on_repeated_add[copy-hardlink-is_hardlink] tests/func/test_add.py::test_should_relink_on_repeated_add[copy-symlink-is_symlink] tests/func/test_add.py::test_escape_gitignore_entries tests/func/test_add.py::test_add_from_data_dir tests/func/test_add.py::test_not_raises_on_re_add tests/func/test_add.py::test_add_empty_files[symlink] tests/func/test_add.py::test_add_empty_files[copy]