Shelbyville, TN Cap Rate: 4.30% — Rental Property Analysis
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
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Moderate — source deals carefully
Based on $325,000 median price and $1,650/mo median rent
Est. Cap Rate
4.30%
1% Rule
0.51%
Fails
GRM
16.4x
Price / Income
6.0x
Market Data
Median Home Price$325,000
Median Monthly Rent$1,650
Property Tax Rate0.65%
Population50,000
Population Growth1.6% / yr
Median Household Income$53,744
Vacancy Rate5.7%
Annual Appreciation3.1%
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.
Cap Rate Calculator — Shelbyville
Pre-filled with Shelbyville medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.65% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.60%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$11,699
net operating income
Gross Rent Multiplier
16.4x
High (>15)
1% Rule
0.51%
✗ Fails
Monthly Cash Flow
$975
before debt service
Annual Breakdown
Gross Rental Income$19,800
Less Vacancy−$1,129
Effective Income$18,671
Less Operating Expenses−$6,972
Net Operating Income$11,699
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Factor in financing to see your actual return on invested capital in Shelbyville.
$
$81,250
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-8.33%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$91,000
$81,250 down + $9,750 closing
Monthly Mortgage
$1,589
on $244K loan
Monthly Cash Flow
$-632
after all expenses
Annual Cash Flow
$-7,585
before taxes
Cash Flow Breakdown
Monthly Rent$1,650
Less Expenses−$693
Less Mortgage−$1,589
Monthly Cash Flow$-632
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.
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