Shelbyville, TN Cap Rate 4.30%
Shelbyville is a mid-range market in the South with a small but investable metro of 50,000. At a 4.30% estimated cap rate, this is a moderate market where rents of $1,650/mo lag behind home prices. With a median home price of $325,000 and steady population growth supports long-term rental demand, Shelbyville 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: Shelbyville
Shelbyville's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $325,000, the $1,650/mo rent produces only $1,163/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 ($65K at 7%) would result in approximately $-566/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, Shelbyville offers a rare combination of current cash flow and future equity upside. The 16.4x gross rent multiplier suggests the market hasn't fully priced in this growth trajectory.
Deal Modeling & Scenarios for Shelbyville
All figures below are computed from Shelbyville'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 $325,000 median price, the annual tax bill is $2,113 — 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 Shelbyville 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 | $325K | $1,650 | 4.3% |
| Year 1 | $335K | $1,700 | 4.3% |
| Year 2 | $345K | $1,750 | 4.3% |
| Year 3 | $356K | $1,803 | 4.3% |
| Year 4 | $367K | $1,857 | 4.3% |
| Year 5 | $379K | $1,913 | 4.3% |
Three Financing Scenarios
Same median-priced Shelbyville 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 | $325K | $1,163 | $13,959 | 4.3% |
| 20% down conventional @ 7% | $75K | $-566 | $-6,789 | -9.1% |
| 25% down DSCR @ 8.5% | $94K | $-711 | $-8,534 | -9.1% |
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) | $244K | $1,403 | $10,623 | 4.4% | $885 |
| At median | $325K | $1,650 | $12,091 | 3.7% | $1,008 |
| Above median (~125% price) | $406K | $1,897 | $13,559 | 3.3% | $1,130 |
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 Shelbyville's historical appreciation rate of 3.1%:
On a $65K down payment, that's a 60.2% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Shelbyville
Automated checks against the underlying data — surface only the risks that actually apply to Shelbyville, not generic boilerplate:
Cap Rate Calculator — Shelbyville
Pre-filled with Shelbyville medians. Adjust to match a specific property.
Cash-on-Cash Return — Shelbyville
Factor in financing to see your actual return on invested capital in Shelbyville.
Is Shelbyville a Good Place to Invest in Rental Property?
Shelbyville, 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 $325,000 paired with median rents of $1,650/mo produces an estimated cap rate of 4.30%.
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 6.0x, homes cost about 6.0 times the local median income of $53,744. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. 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: Shelbyville presents moderate opportunities. Cap rates near 4.30% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.