My wife and I are analyzing both the Knoxville and Chattanooga/North Georgia Markets, and are looking for some input from current investors. Just to give you an idea of our background, we are CPA's located in Austin, Tx and currently have one property in the DFW area which for our goals has performed pretty well and is close to being paid off. But, with an increase of prices in the area (which I know is occurring everywhere) it's getting hard for it to make sense. Which is why we are considering the Knoxville and Chattanooga areas, additionally I grew up in Knoxville and have a pretty good knowledge of the area.
We're looking for pretty simple single family homes (3bd/2ba, no more than 1,900 sqft., single story) that rent out around $1,100 - 1,500/mo. in decent school. Districts, is this reasonable given we're looking for homes all in cost of 110,000 - 160,000?
Just to give you a little more on us, we're looking to use our rental property investments for cash flow, as we have a pretty good chunk of our current net worth in Qualified Investment accounts (IRA/401Ks) and would like to keep these primarily invested in equities for the long haul (20-30 years). So if we do it right we can use cash flow from our properties to protect against downturns in the market. Saying all this appreciation isn't a big concern as we'll hopefully get that from our other investments and just need our properties to cash flow. So in summary here's what we need to know:
1. Is Knoxville and/or Chattanooga/North Georgia good for Cash Flow properties
2. What's the economy look like in the areas (I have a general idea, but nothing compared to a seasoned investor)
3. Are good deals still in the areas, don't need a home run, just some singles and doubles would do.
4. Anything peculiar about the areas that I should be considering.
Sorry for the long windedness of this post, but wanted to provide enough detail so someone could understand where we are coming from.
Thanks for any feedback in advance.
@Danny Matthews I can't speak for Chattanooga, although I hear it's doing well, but Knoxville has done very well over the last few years. Prices are up so your cash flow may be reduced, but it all depends on where and what you buy.
Economy wise, even the radio ads are blasting job fairs and employers complain about finding quality labor with help wanted signs everywhere, so jobs are plentiful at this point.
We have deals here, but they are becoming less frequent b/c homeowners/investors know they have an in-demand product. Knoxville does have a good supply of old inventory homes that could be flipped or rehabbed & rented. Let me know if you want more specific info and I'll try to oblige.
@Danny Matthews For the price point you mentioned, in Knoxville, you will probably find 2 bd / 1 ba in less desirable neighborhoods. You might have better luck with strategies to find off market deals. 3/2's in desirable neighborhoods in Knoxville are $200k and up.
@Danny Matthews - I love the Knoxville market! It's been the market I've focused on investing in these past couple of years. It has seen some nice appreciation and I was fortunate to get good cash flow with that since I bought over the past couple years. With that said, there is still a lot of opportunity in my opinion but deals are getting harder to come by. Also cash flow isn't as strong as it was a couple of years ago but still decent in my opinion. Overall I still think the market has great upside especially over the short term.
There's some areas that are seeing some great gentrification which provides some opportunity for value add plays (Rehab+Rent or Flips). But that isn't really close by the areas you're talking about. For what you're looking for, you're going to want to be closer to the west Knoxville area to be close to the good schools. You might be able to find some of the houses at the top of your budget ($150k-$160k) but if they're zoned for the best schools (8/10 or 9/10), the lowest you're likely going to find on the market will be more like $180k-190k (Pretty rare) with most being 200k and above.
Hello to you and your family! I'll be entering the investment game this spring in the Chattanooga/North GA area as well. Having lived 23 years in Chattanooga, I can give some feedback based on being on-location. I recommend caution in the Eastridge and adjacent areas due to new flood zones being added to the FEMA floodplain maps. Be aware of elevation if considering any properties near the area, as I watched many homeowners over the years take hits on their homes, being unable to afford newly required flood insurance and unable to sell their homes even at a loss, for this reason.
Beyond that, I recommend avoiding East Chatt, unless you are ok with D- properties, as inner-city Chattanooga has unfortunately developed some gang issues over the years...
There are great market areas in the suburbs however, focused around the thousands of jobs added by the Volkswagen plant, Amazon warehouse, and the Hamilton Place area, etc.
Cleveland, TN is also a quick freeway commute from the Amazon/VW plants, and many will commute to take advantage of the lower home prices in Cleveland, as well as the more rural areas there...
Best of luck!
Forgot to mention- your target price points are spot-on in the Ooltewah/East Brainerd & Harrisonareas, as well as many others around town, Cleveland as well.
Agreed with all on pricing. I do see a few below the 200k price point, but they usually have some issues ranging from cosmetic rehab to major fixes. When they do pop up, they're gone pretty quickly or have unique issues that slow down the sale (non-occupied buyers only, >$ rehab, title issues, etc).
@Danny Matthews My Clients are crushing it in Chattanooga and Knoxville both in terms of cash flow and appreciation. There is strong growth in Knoxville right now and some great things happening there especially with new manufacturing plants and engineering jobs opening up. If you are investing in Chattanooga, Brainerd, highland park, st elmo and anywhere north of the river are killing it. This is personally where I focus on my own BRRRs.
@Danny Matthews this can be achieved in Chattanooga and North Georgia. I'm a fan of Ringgold, Fort Oglethorpe in particular.
@Danny Matthews , I'm a wholesaler so may be biased a bit as we do business in Chattanooga but we see at lot of great rental deals there. Most of ours need work but we come across some deals from time to time that don't need much work at all. I think your numbers fit Chattanooga better than Knoxville but both markets are doing well. Good luck, I am a long distance investor as well holding properties in FL and TN.
@Danny Matthews There are plenty of deals to be had in the Chattanooga area, depending on what your looking for but you could definitely find some stuff in your price point. If you would like to speak further I think I might be able to help you get going. I offer a handful of services and would be happy to speak further.
Shoot me a message if your interested I'm always looking to connect.