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Chattanooga is a growing city in population, job opportunity, and development. It is the second quickest growing city in Tennessee. Chattanooga's economy is growing at about 6 percent annually and still has one of the lowest median prices for homes in the U.S. Realtor.com ranked Chattanooga number four for best real estate markets in 2020.
In the Spring of 2019, the median price of homes sold by realtors in Chattanooga rose 5.8 percent from 2018. The average price for a home is still 30 percent less than the national average. Homes are appreciating 3-5 percent a year, which is more than inflation at 1.2 percent, and population growth in Chattanooga at .98 percent annually.
(Graph from zillow.com)
There is plenty of rental potential. 50 percent of people rent homes in Chattanooga. Nationwide an average of 36 percent of people rent homes. Tennessee is ideal for owning or renting because it has low property taxes at .75 percent. The median home for sale in Tennessee is $139,900, so the taxes owed on that annually are $1,314. The average home rents for $1,031 in Chattanooga but can go for much more depending on the location and condition.
TOP TEN APPRECIATING NEIGHBORHOODS
North Chattanooga
Barton Ave./Mississippi Ave.
Dallas Heights
Broad Street/West 20th
Orchard Knob/Richmont Graduate U
Tennessee Temple U/Bailey Ave.
Saint Elmo
The University of Tennessee at Chattanooga/Mccallie
Glenwood
Highland Park
WHAT TO CONSIDER BEFORE YOU BUY
Initially, a rental property will not turn a profit since your rental income will go to paying the mortgage, expenses, and property taxes. You also need to factor in the possibility of vacancy when looking at how long it will take to pay off the mortgage. In 2019, Chattanooga only had 5.8 percent vacancy in rental properties. There are plenty of ways to reduce vacancy. You'll need a list of repair persons or be one yourself. Make repairs as quickly as possible and communicate that to your tenants. Be friendly to your tenants. It is harder to leave a friendly landlord than one who is unkind. Remember you can always hire a trustworthy property manager if it seems too much to handle. Keep up to date with blogs like mine or a local realtor to find the best properties to turn you the best profit.
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