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Cap Rate Analysis: Chattanooga, TN

Investment metrics, interactive calculators, and data-driven analysis for Chattanooga rental properties.

Moderate — source deals carefully
Based on $270,000 median price and $1,340/mo median rent
Est. Cap Rate
4.29%
1% Rule
0.50%
Fails
GRM
16.8x
Price / Income
5.6x

Market Data

Median Home Price$270,000
Median Monthly Rent$1,340
Property Tax Rate0.54%
Population185,881
Population Growth1% / yr
Median Household Income$48,200
Vacancy Rate5.4%
Annual Appreciation3.3%

Cap Rate Calculator — Chattanooga

Pre-filled with Chattanooga medians. Adjust to match a specific property.

Property Details
$
$
3–8% typical
%
Monthly Expenses
0.54% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.62%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$9,776
net operating income
Gross Rent Multiplier
16.8x
High (>15)
1% Rule
0.50%
✗ Fails
Monthly Cash Flow
$815
before debt service
Annual Breakdown
Gross Rental Income$16,080
Less Vacancy−$868
Effective Income$15,212
Less Operating Expenses−$5,436
Net Operating Income$9,776

Cash-on-Cash Return — Chattanooga

Factor in financing to see your actual return on invested capital in Chattanooga.

$
$67,500
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-8.62%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$75,600
$67,500 down + $8,100 closing
Monthly Mortgage
$1,320
on $203K loan
Monthly Cash Flow
$-543
after all expenses
Annual Cash Flow
$-6,518
before taxes
Cash Flow Breakdown
Monthly Rent$1,340
Less Expenses−$563
Less Mortgage−$1,320
Monthly Cash Flow$-543

Is Chattanooga a Good Place to Invest in Rental Property?

Chattanooga, TN has a population of 185,881 and has been growing at 1% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $270,000 paired with median rents of $1,340/mo produces an estimated cap rate of 4.29%.

Property taxes at 0.54% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 5.4% is moderate and within normal parameters for a healthy rental market.

At a price-to-income ratio of 5.6x, homes cost about 5.6 times the local median income of $48,200. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 3.3% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.

Bottom line: Chattanooga presents moderate opportunities. Cap rates near 4.29% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.

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