Anyone currently investing in Knoxville?

20 Replies

Hi BP, I'm an out-of-state investor from Denver exploring TN markets. It seems like Nashville and Middle TN get most of the attention, but I have business connections in Knoxville and am wondering what the investing landscape is like there. I'd love to hear the inside scoop from fellow investors or agents about the rental market, major industries, and strategies that are working for you in Knoxville. Thanks!

Hey @Madigan Tumilowicz . I specialize in the Nashville market but I lived in Knoxville for 3 years. If you're looking to buy close to campus you're not going to have to do any work to the properties for them to be rental ready and you'll be able to charge on a more "by room" lease. But with that said, your tenants may be questionable with the obvious campus lifestyle. In the Turkey Creek area of Knoxville you will be working with more families. 

@Madigan Tumilowicz Have you looked into Murfreesboro TN? Murfreesboro was named 2019’s 4th Best Small Real-Estate Market. Murfreesboro ranks 11th overall and 4th among small cities. They also have less restrictions on AirBNB's if you're ever thinking about doing short term rentals.

I live in Murfreesboro, TN and I find a deal here every now and then, but they tend, like Nashville, to be flip (decent rehab) to retail type scenarios. The current market in Middle TN primary cities is so hot that prices are too high to meet anything near a 1% rule for a rental. That said, you can venture a short distance out of the Nashville area on the map and find more plausible buy and hold deals in the surrounding areas. Most are bedroom communities for Nashville. We have one house in Memphis (for years) that has been solid. We have 3 in the Nashville area as rentals but bought them back before the boom here. The rest of our properties are in Cleveland, Indianapolis, and now Huntsville. We had to invest outside our area to find good buy and hold cash flowing deals. The trick is to find an area like Middle TN before it becomes as hot as Middle TN is now, right?

@Courtney Trahan Yes, I'm looking into Murfreesboro. Do you think it's still possible to find good deals there, or has it already become too hot? I'm also exploring Clarksville, Columbia, and Franklin.

@Jeremy F. Cleveland and Indianapolis are also on my radar. I'm interested to hear that even someone who's local to Middle TN is now venturing out of state! Finding the next boom town is the magic trick, certainly.  

@Madigan Tumilowicz I am in Clarksvill and deals can be difficult to find now. My last 3 were off market finds. A lot of investors looking. I have seen offers way below 1% rule. It also appears there are new flippers that are giving 80-85% of ARV just to get in game. If you start looking in Clarksville, I can give you help on rents for certain areas of town. Some areas much higher than others.

Madigan,

1st off, you have a really cool name! Anyways, I'm from East Tennessee, and a market that gets overlooked by out-of-state investors is Cleveland, Tennessee. It's just north of Chattanooga, Tennessee which is also booming right now. Volkswagen and Little Debbie have built giant factories in the area that have jobs/people flooding in. 

There is also a large data center Facebook is building in the region that will have a lot of people from Chattanooga commuting. 

Housing is cheap around there, especially for someone who lives in Colorado. You should check it out, happy hunting!

Hey Madigan! I'm a Realtor in Chattanooga and was actually going to say what @Luke Davis has already said! Chattanooga has an extremely diverse job market and has showed steady growth, but I see tons of potential in the Cleveland area which is only about 40 or so minutes away from Chattanooga. You can get way more for your money there, and same goes for Ringgold, GA which is about 30 minutes south!

Originally posted by @Andrew Coulter :

@Charles Jabaley

Do you know of any reputable Turnkey providers in the Cleveland area? Thanks!

Connect with @Alex Craig .  I believe he is operating in Knoxville(?) and so may have reach down into the Cleveland area.  I would start there.  Best, Chris 

I live in Knoxville and visit family in Nashville often.  I like Nashville, but it's gotten way too crowded. Knoxville is more affordable, has good employment rates (big industries within 30 minutes are ORNL, Denso, Arconic, Pilot, the University of Tennessee, and the hospitals to name a few), and low property taxes. The UT students are a little snobby on what they will live in so the student rentals are pricey near campus. My son paid $515 for a bedroom and bathroom in a 4 bedroom apartment in a student community behind the university hospital, which is full of students. A four bedroom house a bit further off campus would cost the student less, but they wouldn't have sand volleyball and a pool. Within 15 minutes of downtown you can find a wide range of property prices, but some are not good rental areas. I looked at buying one near campus that was cheap and to quote my son, "You would only live there if you're cooking meth". I guess my living standards were lower as a student!

Sevier County next to Knoxville is amazing for short-term rentals and is next to the most visited national park in the county, though our beloved Smokies are not as grand as your Rockies.

@Chris Clothier

We have bought a couple in Knoxville, but only because a couple of deals fell in our lap due to the location of our restaurant on Sutherland Ave. While up there on restaurant business, I did go to their local REIA meeting and found it a solid group. I am certainly not an expert on the market, but I do think the area North of Sutherland has a ton of potential. We have already seen other restaurants open in the area and some construction too.

@Madigan Tumilowicz I’m a realtor here in Knoxville & houses are going like crazy here. People are moving here to Knoxville in the droves. We are very out of inventory here and can’t build houses quick enough. It’s a great place to invest especially for investors that don’t have $400,000+ to invest. I feel we need more beginner /smaller investors here to help develop the area.

Hey @Madigan Tumilowicz Congrats on your decision to invest out of state, been convincing my parents for the longest time and they finally trust me enough to start looking at Tennessee themselves! There's a few great markets in TN, I specifically am a fan of Knoxville and Chattanooga for their appreciating and cash flowing markets. 

The median price point in both markets still hovers around 200K-250K and there's huge growth in both markets for similar economic reasons. I would say you could still achieve both long term rentals, BRRRR's and purchase some high producing vacation rentals in both markets. One thing we've noticed as out of state investors is although there is a lot of attributes to both markets growth such as the college, tech industry, large international plants (like coca-cola and volkswagen) and then there's the tourism part to it for the nature activities, you have to be very specific as to which neighborhood you are investing in as the demographic and income level can vary significantly just street by street (school systems and education seems to be the dividing factor). Although we have mainly been working in the Chattanooga market I do have some insight as to the growing areas in Knoxville and seeing as you already have resources there and it may be easier for you to take a look into.

The counties I would look at are, Anderson County, Blount County, Knox County (City of Knoxville isn't particular in permits but County of Knoxville can be very difficult for permits) and Sevier County. Take a look at West Knoxville and Farragut (however higher prices, better returns and great school system), Maryville and Oakridge (Oak Ridge is home to two large government plants that employ over 10,000 people (Oak Ridge National Laboratory and Y-12 National Security Complex) but be careful with with city taxes there. There are little neighborhoods close to Downtown Knox that are "up and coming", however they are rougher areas but you can typically buy a little lower and still see a good return there. The city of Maryville and Alcoa seem to be booming and growing but be careful with certain parts of Alcoa. Lenoir City offers cheap property taxes, a lake, and quick access to Knoxville. Kingston offers a lake as well and "country" style living but with quick access to Knoxville as well. We had some leads in Louisville and Lafollete by the lake and those seem like great areas with high ARV's and good potential for VRBO's. Hamblen County and Jefferson County are seeing a lot of job growth over the next several years

A resource I like to refer to is the Knoxville Planning site https://knoxmpc.org/ as it's pretty informative and you can stay updated on the new plans and developments. It would be great if you could even get on an email blast that gets sent out with updates. For chattanooga I subscribed to timesfreepress.com and for the most part been I've able to stay up to date on the latest developments in Hamilton County and surrounding areas (super helpful on keying into upcoming markets). 

Always happy to chat further as well! Hope that helps a bit! Best of luck to you!

"There are little neighborhoods close to Downtown Knox that are "up and coming", however they are rougher areas but you can typically buy a little lower and still see a good return there." This is where have bought and hold- we are landlords in Knoxville. It is really tough to find great deals these days. We bought most of our properties 7-10 years ago.

@Alex Craig - Sutherland Ave to buy for rentals? hard pressed to find low prices in that area these days. That area is very rentable - UTK students and close to downtown. Most houses are small. Don't think you will get a great return unless you really luck on your purchase.