Hello! Hope everyone is staying healthy and sane.

I am exploring Chattanooga and want to find a good cash flow rental property (buy & hold) in this market. I am trying to find more information on the specific regions to invest in. I've heard great stuff about East Ridge, Hixson, and Red Bank, and I have found some properties that I am personally interested in in East Ridge, but the crime rate in the zip codes associated with these regions seems really high. I know there probably are some nuances in the neighborhood, so I am looking for tips from people who are more familiar with the area!

Any insight will be very much appreciated!

Yinglu

Hi, @Yinglu Wang - have you considered getting involved with some Chattanooga area REIA groups? That's your best bet for finding locals who know the area. You can often participate remotely - especially now when so many groups can't meet in person and are doing Zoom meetups instead. At a minimum, I'd look up members from that REIA and reach out to some individually to see if they have any advice for you.

@Bonnie Low Thanks for the advice, Bonnie!

@Yinglu Wang It may be a little different than you're used to there in NYC... I've had bullet holes in 2 of my houses in Chattanooga. One went right through the siding and into the mechanical closet, another one right through the master bedroom window! Pretty sketchy. Is there some crime in some of these neighborhoods? Yes. But overall my experience with tenants has been great in Chattanooga, properties have appreciated a ton, and cash flow like crazy. 

If you want to stick to nice areas with lower crime, try ooltewah / collegedale area, or anywhere on the north shore. Best of luck! 

@Dan Beaulieu Hi Dan! Really appreciate the information! I looked up Ooltewah and Collegedale, the two areas look really nice but low rent to sales ratio. How do you think of East Ridge?

Originally posted by @Yinglu Wang :

@Dan Beaulieu Hi Dan! Really appreciate the information! I looked up Ooltewah and Collegedale, the two areas look really nice but low rent to sales ratio. How do you think of East Ridge?

 See that's the thing...a low crime area with better schools / nicer properties will have much lower cash flow than higher crime areas, but a better chance for appreciation. It will be very difficult to get both. East Ridge is a great area for rentals...one of my favorites actually next to Brainerd, East Brainerd, and Redbank

Does anyone have a contact for a good wholesaler for the Chattanooga and surrounding areas?

@Yinglu Wang I am a local Real Estate Agent and investor in Chattanooga. I have lived here for 26 years and can tell you that the areas you have mentioned are usually pretty safe. There used to be an interactive map that broke down crime rates by type, but the city took it down when they took down the Right2Know website. @Dan Beaulieu may be able to tell you more about the areas he has invested in where he experienced bullet holes in properties. I think East Ridge is one of the best investments right now just because of the Border Region District tax incentives that were put into place for commercial developers. So the area seems to be growing pretty rapidly as far as price per square is concerned. If you can get a good deal there, I would definitely jump on it because I have had a lot of first-time homebuyers getting priced out of the market out there (which has been the mostly predominant market for that area) or get into bidding wars. Red Bank values have been going up because they have latched onto the whole North Shore living/culture of being in close proximity to the river, so this is a highly desirable area and should be easy to get a renter into quickly. Hixson has its own little pockets, but there are some decent schools there and it is a healthy rental market for young families. Hope this helps!

Hi @Yinglu Wang ! My wife and I own a duplex in East Ridge. The tenants have been great! There are some great areas of East Ridge and some not so great. The south side of East Ridge toward the East is up and coming. It is expanding with new restaurants, businesses and soccer complex coming soon. The north end by the ridge/tunnels is nice. That is where our duplex is. In the middle of east ridge there are some flood areas to look out for. There's a lot of water around the area. A sub contractor I spoke with recently told me that some homes have issues with moisture from the ground. Such was the case with our duplex. There was never a vapor barrier put in place under the home or gutters along the roof. We didn't realize it would be a problem. Half of the sub-floor needed to be replaced about two years after we purchased it. When we purchased, the reputable inspector told us that everything was good under the house. So it must have deteriorated quickly. We put about 10,000 in floor replacement and renovations this year. Many of the homes in East Ridge are older so I would recommend making sure that the property has good drainage and a vapor barrier. We love Chattanooga! It is a great area to invest. 

East Ridge seems to be improving the last several years is there some crime? Sure but it's not a bad area. Most areas in East Ridge are fairly safe. Neighborhood by neighborhood analysis is possible if you find someone with a lot of local knowledge.

Originally posted by @Heidi Rau :

@Yinglu Wang I am a local Real Estate Agent and investor in Chattanooga. I have lived here for 26 years and can tell you that the areas you have mentioned are usually pretty safe. There used to be an interactive map that broke down crime rates by type, but the city took it down when they took down the Right2Know website. @Dan Beaulieu may be able to tell you more about the areas he has invested in where he experienced bullet holes in properties. I think East Ridge is one of the best investments right now just because of the Border Region District tax incentives that were put into place for commercial developers. So the area seems to be growing pretty rapidly as far as price per square is concerned. If you can get a good deal there, I would definitely jump on it because I have had a lot of first-time homebuyers getting priced out of the market out there (which has been the mostly predominant market for that area) or get into bidding wars. Red Bank values have been going up because they have latched onto the whole North Shore living/culture of being in close proximity to the river, so this is a highly desirable area and should be easy to get a renter into quickly. Hixson has its own little pockets, but there are some decent schools there and it is a healthy rental market for young families. Hope this helps!

Hello Heidi, thank you so much for your insights! Super helpful. I have been looking at both SFH and Duplex. Is there a rental market difference in these two types of properties? I have seen a couple good duplex in Hixson but no tour is allowed till under contract... Is this a normal situation? Also - do you have good PM recommendations?

Thank you!

Originally posted by @Steven Chavers :

Hi @Yinglu Wang! My wife and I own a duplex in East Ridge. The tenants have been great! There are some great areas of East Ridge and some not so great. The south side of East Ridge toward the East is up and coming. It is expanding with new restaurants, businesses and soccer complex coming soon. The north end by the ridge/tunnels is nice. That is where our duplex is. In the middle of east ridge there are some flood areas to look out for. There's a lot of water around the area. A sub contractor I spoke with recently told me that some homes have issues with moisture from the ground. Such was the case with our duplex. There was never a vapor barrier put in place under the home or gutters along the roof. We didn't realize it would be a problem. Half of the sub-floor needed to be replaced about two years after we purchased it. When we purchased, the reputable inspector told us that everything was good under the house. So it must have deteriorated quickly. We put about 10,000 in floor replacement and renovations this year. Many of the homes in East Ridge are older so I would recommend making sure that the property has good drainage and a vapor barrier. We love Chattanooga! It is a great area to invest. 

That's fantastic that you've had good experience so far. My boyfriend and I are planning to make a trip down there later this year.
Being aware of the flooding area is great insights thank you! With that being said, do you have recommendations for flood insurance and/or recommendations for vapor barrier and such?

Thanks!

Yinglu

@Yinglu Wang on any properties in our area (and especially East Ridge, Brainerd, and Lookout Valley) I always check the tax records for flood zone info prior to making any offer. I use Zach White with Northshore Insurance when I am working with clients dealing with flood zones, because he has consistently been able to get them flood insurance for far less than the standard FEMA plans. Let me know via PM if you would like his contact info (moderation wouldn't allow me to post it here).

Duplex price per square is generally better value than SFH, but it really depends on what your long-term strategy is with the property. You just have to keep in mind that if you plan on flipping it years down the road, you are going to be looking at residential home buyers with SFH that will pay more per square vs investors with MF that will want to pay as low as possible per square. Cash flow is generally better with the MFs from what I have seen though, and you eliminate a portion of the risk as far as vacancy factor is concerned - so that is a good consideration to think about.

Pretty standard practice I have seen these days amidst Covid is for the tenant occupied properties to require contract before showing, just to eliminate a lot of in-and-out out of respect for the tenants and their families. You just have to make sure to add the contingency in that the offer is contingent upon the Buyer's (your) physical inspection and approval of the property.

Heidi

What are some of the "anchor" industries/businesses that attract folks to the Chattanooga area? I know tourism is still be there because of the Smokies, but are there other things that have been contributing to the home value growth over the last 10 years or so?

I am also exploring investment opportunities (SFH, small MFH) in both Chattanooga and Huntsville.

Originally posted by @Brad Fisher :

What are some of the "anchor" industries/businesses that attract folks to the Chattanooga area? I know tourism is still be there because of the Smokies, but are there other things that have been contributing to the home value growth over the last 10 years or so?

I am also exploring investment opportunities (SFH, small MFH) in both Chattanooga and Huntsville.

 In Collegedale/Ooltewah area there is McKee Foods (little debbie snacks), a Volkswagen plant, an Amazon warehouse, a FedEx warehouse, and many more companies. 

Originally posted by @Brad Fisher :

What are some of the "anchor" industries/businesses that attract folks to the Chattanooga area? I know tourism is still be there because of the Smokies, but are there other things that have been contributing to the home value growth over the last 10 years or so?

I am also exploring investment opportunities (SFH, small MFH) in both Chattanooga and Huntsville.

Healthcare and logistics/manufacturing are some anchor industries.  BlueCross BlueShield of Tennessee, Unum, Erlanger, TVA, Covenant Transport and U.S. Xpress are some companies.  Its a central city within a short drive of Nashville, Knoxville, Atlanta. 

There is an abundance of outdoor activities; mountain biking, trails, Ocoee river, etc. We have found there is a consistent rental pool for both, blue and white-collar tenants. Its one of our favorite areas to invest in! 

Hey Yinglu, Chattanooga is a great market! I've got connections for property management and investor friendly realtors that I'd be happy to connect you with. 

@Yinglu Wang a couple of resources to follow the Chattanooga news and learn more about the area arewww.chattanoogan.com and NoogaToday (https://subscribe.noogatoday.c...).

Here's a pretty cool crime map: https://cityinsider.chattanoog....