21 Tennessee cities ranked by estimated cap rate. The average cap rate across Tennessee markets is 4.1%, with median home prices averaging $297K and rents averaging $1,419/mo. Jackson leads with a 6.3% cap rate at a $200K median price. Tennessee's low average property tax rate of 0.65% gives investors a significant cash flow advantage.
Tennessee offers 21 investable rental markets tracked by CapRateCity. The state average cap rate of 4.1% is above the 3.81% national average, making Tennessee an attractive state for cash flow investors. No cities pass the 1% rule at median prices, so value-add strategies are essential.
Prices and rents: Tennessee home prices average $297K, which is 11% below the national average of $333K. Rents average $1,419/mo. The most affordable entry point is Dyersburg at $165K, while Jackson offers the highest cap rate at 6.3%.
Taxes and costs: Property taxes average 0.65% across Tennessee, below the 1.08% national average — a meaningful cash flow advantage that adds roughly $1,271 per year to NOI on an average-priced property. Johnson City has the lowest rate at 0.52%.Vacancy averages 5.7%, in line with national norms.
Growth outlook: Population growth across Tennessee averages 1.60% per year, led by Spring Hill at 4.5%. Home values are appreciating at 3.1% annually on average. Strong population growth is driving housing demand and supporting both rent increases and price appreciation across the state.
Bottom line: Tennessee offers moderate opportunities for rental investors. The best deals are in cities at the top of the ranking — use the calculators on each city page to model specific properties.