Chattanooga too good to be true?

Chattanooga too good to be true?

Lebanon, OR · Member since 2016 · 21 posts · 7 votes

I am from Oregon, and have been looking to get started with buy and hold investing here. It's been pretty hard finding cash flow properties here, so my wife and I have been discussing the prospect of investing out of state. My brother in law lives in Chattanooga, so I started looking ok Zillow, rentometer, and Craigslist just to get a feel for the market. 

At a glance so far, it looks like Chattanooga blows my area out of the water in terms of rent/purchase price ratio. I'm seeing dozens of properties in the 2-4% range on the MLS. In Oregon, we are really struggling to even find 1%, so this area seems like a gold mine. I would have boots on the ground with my BIL to help as well.

My question is basically, what's the catch? Taxes and prices seem low, rents fairly high. Is there something I'm not aware of that I should be? Bad neighborhoods? Unfair tenant laws? I don't know, something? This seems too good to be true.

Also are there any recommendations for Realtors, property managers, contractors, etc in the Chattanooga area?

Thanks!

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Investor · Chattanooga, TN · Member since 2013 · 12 posts · 14 votes
9y

The meanie side of me says, stay out of our market you out of towners! ;) But the other side says, yes, Chattanooga is a great market to invest in! There's lots of competition so off of market deals are the best. 

See this reply in the discussion

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  • Rental Property Investor · Chattanooga, TN · Member since 2011 · 82 posts · 51 votes
    9y
    I'd be glad to help. Pm me the areas you are looking at.
  • Lebanon, OR · Member since 2016 · 21 posts · 7 votes
    9y

    @Thomas DeMoss I haven't narrowed it down to specific neighborhoods yet, but I will certainly keep that in mind. Thank you.

    Here's a couple examples of the kind of properties catching my eye. I just don't know the neighborhoods yet.

    http://www.zillow.com/homedetails/41415796_zpid/

    http://www.zillow.com/homedetails/41422931_zpid/

    http://www.zillow.com/homedetails/2103313807_zpid/

  • Rental Property Investor · Chattanooga, TN · Member since 2011 · 82 posts · 51 votes
    9y

    Those areas are very challenging. Lots of gang activity. Would have to take it block by block. 

  • Lebanon, OR · Member since 2016 · 21 posts · 7 votes
    9y

    @Thomas DeMoss That's exactly what I was concerned about. Thank you. It's hard to tell from across the country what is a blue-collar neighborhood and what is dangerous.

  • Lebanon, OR · Member since 2016 · 21 posts · 7 votes
    9y

    @Thomas DeMoss Could you recommend any areas of Chattanooga with decent cash flow opportunities that don't come with the gang problem?

  • Investor / Wholesaler · Nashville, TN · Member since 2014 · 1k+ posts · 667 votes
    9y

    @Tyler Rodgers, I like the area as well.  I will be making a trip there in a few weeks to check it out.  

  • Lebanon, OR · Member since 2016 · 21 posts · 7 votes
    9y

    @William Allen I would be curious to know the results of your trip! I'll be heading out there in September for a wedding, but I could fly out sooner if we decide to purchase a property. I am going to send a colleague request if you don't mind.

  • Jimmy MoncriefPro Member
    Chattanooga, TN · Member since 2010 · 319 posts · 100 votes
    9y

    @Tyler Rodgers - Chattanooga is a great market!  I've lived here for 17 and invested here for 15.  

    Have you ever looked at Roseburg - a little south of you?

  • Lebanon, OR · Member since 2016 · 21 posts · 7 votes
    9y

    @Jimmy Moncrief Thank you. I honestly hadn't looked that much around the rest of Oregon. I guess I assumed my County was pretty typical. At a glance, I appear to be wrong about that. I'll look more into the Roseburg area as well. It's funny to have someone 2500 miles away point out something 90 miles away!

  • Jimmy MoncriefPro Member
    Chattanooga, TN · Member since 2010 · 319 posts · 100 votes
    9y

    I know them via the internets but Ben Settle and Trevor Mauch have moved there and are VERY positive about the place.  

  • Costa Mesa , CA · Member since 2016 · 3 posts · 1 vote
    9y

    I'm looking at Chattanooga as well. Hard to do from afar, but I've combed the internet and found enough info to start making some generalizations about certain areas. The homes you listed are all in Avondale, which is the most depressed/decrepit neighborhood in Chattanooga. Take a tour with Google and you'll see every block has one or two boarded-up homes. 

    I've come to the conclusion that I can't do any more research from afar, so booking a flight and touring the town is next on my agenda. 

  • Real Estate Agent · Augusta, GA · Member since 2016 · 50 posts · 28 votes
    9y

    I'll be in town this week. If there is anything in particular you guys are looking for, I'll scout it this weekend. 

  • Rental Property Investor · Chattanooga, TN · Member since 2011 · 82 posts · 51 votes
    9y

    I would start in the 37404 and 37411 zip codes. Also East Ridge, TN. 

  • Trevor MauchPro Member
    Investor · Roseburg, OR · Member since 2014 · 141 posts · 149 votes
    9y

    @Jimmy Moncrief Thanks for the shout out man! 

    Ya, we love Roseburg. It's an area that I see definitely heading in the right direction... the big growth in the wine industry here (more and more people are buying here), vacancy rates in all types of rental housing are crazy low... waiting lists here right now... housing prices are still low compared to many parts of Oregon... we have a Costco (haha, but seriously... they don't invest in places that they don't feel are heading the right direction), and we're doing a lot here to really change the landscape around entrepreneurship and attracting young people back here. 

    Great spot. @Tyler Rodgers hit me up anytime. I'd love to connect w/ you and if there's anything I can do for you let me know :-)

  • Investor · Orlando, FL · Member since 2016 · 355 posts · 380 votes
    9y

    @Tyler Rodgers  I have to agree with Thomas on taking the 37406 ZIP Code block by block. Just bought a duplex in that area on a street that I believe to be fairly stable. Currently renovating the vacant side myself. I would not have bought it if I did not feel good about the idea of renovating the property for hours at a time, sometimes in the evenings.  However, I did install a SimpliSafe security system immediately after purchasing it.  If you plan to do section 8 as I do, you can download an Excel spreadsheet showing all the currently listed rents, deposits, and numbers of bed and bath directly from the Chattanooga Housing Authority.  That's how I arrived at my rental rate and deposit amount, based on averages taken from that data. 

  • Lebanon, OR · Member since 2016 · 21 posts · 7 votes
    9y

    Great info everybody! Thank you!

  • Brian LevredgePro Member
    Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
    9y

    You'll generally want to avoid 37411 as well.  

  • Investor · Chattanooga, TN · Member since 2013 · 12 posts · 14 votes
    9y

    The meanie side of me says, stay out of our market you out of towners! ;) But the other side says, yes, Chattanooga is a great market to invest in! There's lots of competition so off of market deals are the best. 

  • Andrew SamplesPro Member
    Cleveland, TN · Member since 2016 · 22 posts · 3 votes
    9y

    Great information @Andrew Ashby, There doesn't seem to be a lot on the MLS that is a good deal thats for sure, and I have seen many FSBO signs, but none too motivated yet.

  • Investor · Chattanooga, TN · Member since 2013 · 12 posts · 14 votes
    9y

    Yeah @Andrew Samples, not a lot on the MLS now. Lots more properties are listed in the spring/summer. I hope you're able to find something then!

  • Andrew SamplesPro Member
    Cleveland, TN · Member since 2016 · 22 posts · 3 votes
    9y

    Thank you! 

  • Scottsdale, AZ · Member since 2016 · 7 posts · 2 votes
    9y

    Hi all,

    Very interesting thread. Chattanooga is my hometown, specifically the Ooltewah-Collegedale area. I understand it's the hottest part of Hamilton County right now and the MLS is not showing any multiplex type properties over there. Southern Adventist University, Amazon, VW and McKee are big economic drivers in the area that I don't see going away soon. Do you all know of any investment strategies that work well in that part of town?

    And do single family homes rent well around the colleges? SAU, Lee University up in Cleveland?

    Thanks in advance! 

    Sarah R.

  • El Mirage, AZ · Member since 2016 · 14 posts · 3 votes
    9y
    I'm actually going there Monday, I work for Covenant Transportation. I bought my first duplex in AZ and now looking to expand in the Chattanooga area. I know zip codes ending in 04 and 07 area not so good areas
  • Investor · Chattanooga, TN · Member since 2016 · 146 posts · 108 votes
    9y

    @Sarah Ruf Collegedale area is pretty small market so multi families only show up every so often. There is a Triplex that SAU is trying to sell but it is only being listed internally for the moment, if you know someone who works there you could ask them for the email about it.  The problem I see about investing in that area is that the property values are higher but the rents are not higher.  Expanding your search area to other nice areas around Chattanooga will allow you get a property for much less and yet gets the same amount or more in rent. The areas I recommend East ridge ( Has lower city taxes then the rest of Chattanooga), Harrison (some parts are in the county and dose not have any city taxes), Hixson, and Red bank. As for single families they rent well in any of these areas if you can get them for the right price. I haven't tried investing in the Cleveland area yet but I have noticed that rents there are significantly lower than in Chattanooga.

    You can always use Rentometer.com to see what things are renting for in the areas you are looking at.  

  • Wholesaler · Chattanooga, TN · Member since 2015 · 8 posts · 5 votes
    9y

    Hey @Tyler Rodgers, constantly pushing out great wholesale deals to investors all over Chattanooga. Feel free to PM me anytime.

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