Johnson City, TN Cap Rate: 4.27% — Rental Property Analysis
Johnson City is a mid-range market in the South with a smaller market with 72,000 residents. At a 4.27% estimated cap rate, this is a moderate market where rents of $1,330/mo lag behind home prices. With a median home price of $270,000 and steady population growth supports long-term rental demand, Johnson City offers opportunities for investors who source deals carefully.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
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Moderate — source deals carefully
Based on $270,000 median price and $1,330/mo median rent
Est. Cap Rate
4.27%
1% Rule
0.49%
Fails
GRM
16.9x
Price / Income
6.3x
Market Data
Median Home Price$270,000
Median Monthly Rent$1,330
Property Tax Rate0.52%
Population72,000
Population Growth1% / yr
Median Household Income$42,800
Vacancy Rate5.4%
Annual Appreciation3%
2026 Market Update: Johnson City
Johnson City's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $270,000, the $1,330/mo rent produces only $961/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($54K at 7%) would result in approximately $-475/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
The 16.9x gross rent multiplier and 5.4% vacancy rate position Johnson City as a balanced market. With annual appreciation at 3%, total returns (cash flow + equity growth) run approximately 7.3% before financing leverage.
Cap Rate Calculator — Johnson City
Pre-filled with Johnson City medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.52% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.61%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$9,746
net operating income
Gross Rent Multiplier
16.9x
High (>15)
1% Rule
0.49%
✗ Fails
Monthly Cash Flow
$812
before debt service
Annual Breakdown
Gross Rental Income$15,960
Less Vacancy−$862
Effective Income$15,098
Less Operating Expenses−$5,352
Net Operating Income$9,746
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Factor in financing to see your actual return on invested capital in Johnson City.
$
$67,500
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-8.72%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
$-549
after all expenses
Annual Cash Flow
$-6,590
before taxes
Cash Flow Breakdown
Monthly Rent$1,330
Less Expenses−$559
Less Mortgage−$1,320
Monthly Cash Flow$-549
Is Johnson City a Good Place to Invest in Rental Property?
Johnson City, TN has a population of 72,000 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 $1,330/mo produces an estimated cap rate of 4.27%.
Property taxes at 0.52% 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 6.3x, homes cost about 6.3 times the local median income of $42,800. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. Home values have appreciated at roughly 3% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Johnson City presents moderate opportunities. Cap rates near 4.27% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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