Morristown, TN Cap Rate 4.40%
Morristown is a mid-range market in the South with a small but investable metro of 50,000. At a 4.40% estimated cap rate, this is a moderate market where rents of $1,500/mo lag behind home prices. With a median home price of $290,000 and steady population growth supports long-term rental demand, Morristown 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
Market Data
2026 Market Update: Morristown
Morristown's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $290,000, the $1,500/mo rent produces only $1,064/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 ($58K at 7%) would result in approximately $-479/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.
With 1.6% annual population growth paired with 3.1% home appreciation, Morristown offers a rare combination of current cash flow and future equity upside. The 16.1x gross rent multiplier suggests the market hasn't fully priced in this growth trajectory.
Deal Modeling & Scenarios for Morristown
All figures below are computed from Morristown's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.65% effective rate on the $290,000 median price, the annual tax bill is $1,885 — that's below national average (-39% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
5-Year Cap Rate Trajectory
If Morristown continues appreciating at 3.1%/yr while rents grow at a conservative 3%/yr, cap rate compresses as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $290K | $1,500 | 4.4% |
| Year 1 | $299K | $1,545 | 4.4% |
| Year 2 | $308K | $1,591 | 4.4% |
| Year 3 | $318K | $1,639 | 4.4% |
| Year 4 | $328K | $1,688 | 4.4% |
| Year 5 | $338K | $1,739 | 4.4% |
Three Financing Scenarios
Same median-priced Morristown property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $290K | $1,064 | $12,769 | 4.4% |
| 20% down conventional @ 7% | $67K | $-479 | $-5,745 | -8.6% |
| 25% down DSCR @ 8.5% | $84K | $-608 | $-7,302 | -8.7% |
Three Price Tiers: Below, At, and Above the Median
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $218K | $1,275 | $9,696 | 4.5% | $808 |
| At median | $290K | $1,500 | $11,049 | 3.8% | $921 |
| Above median (~125% price) | $363K | $1,725 | $12,402 | 3.4% | $1,033 |
Total Return Over a 5-Year Hold
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Morristown's historical appreciation rate of 3.1%:
On a $58K down payment, that's a 62.9% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Morristown
Automated checks against the underlying data — surface only the risks that actually apply to Morristown, not generic boilerplate:
Cap Rate Calculator — Morristown
Pre-filled with Morristown medians. Adjust to match a specific property.
Cash-on-Cash Return — Morristown
Factor in financing to see your actual return on invested capital in Morristown.
Is Morristown a Good Place to Invest in Rental Property?
Morristown, TN has a population of 50,000 and has been growing at 1.6% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $290,000 paired with median rents of $1,500/mo produces an estimated cap rate of 4.40%.
Property taxes at 0.65% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 5.7% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.4x, homes cost about 5.4 times the local median income of $53,744. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 3.1% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Morristown presents moderate opportunities. Cap rates near 4.40% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.