{"id":1067,"date":"2026-09-03T01:03:31","date_gmt":"2026-09-03T05:03:31","guid":{"rendered":"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/"},"modified":"2026-09-03T01:03:31","modified_gmt":"2026-09-03T05:03:31","slug":"tennessee-rental-property-investment","status":"publish","type":"post","link":"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/","title":{"rendered":"Tennessee Rental Property Investment: Complete Guide (2026)"},"content":{"rendered":"<p>Tennessee rental property investment combines the best of both worlds: Memphis delivers cash flow at $155K median price and $1,200\/month rent (0.77% ratio), while Nashville delivers appreciation at $380K with strong tenant demand from healthcare and tech. The state charges <strong>zero income tax<\/strong> on rental profits \u2014 joining Texas and Florida as the only major investment states with this advantage. Property tax is 0.56% effective (lowest among top investment states), though insurance runs $2,200\/year due to tornado and hail risk in middle Tennessee. Here is what the numbers look like across five Tennessee metros with worked examples.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Why_Tennessee_for_Rental_Property_in_2026\" >Why Tennessee for Rental Property in 2026<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Tennessee_Rental_Property_Markets_5_Metros_Compared\" >Tennessee Rental Property Markets: 5 Metros Compared<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Worked_Example_Memphis_SFR_155K\" >Worked Example: Memphis SFR ($155K)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Worked_Example_Clarksville_Duplex_230K\" >Worked Example: Clarksville Duplex ($230K)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Tennessee_Tax_Advantages_for_Investors\" >Tennessee Tax Advantages for Investors<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#No_State_Income_Tax\" >No State Income Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Low_Property_Tax_056\" >Low Property Tax (0.56%)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Transfer_Tax_037100\" >Transfer Tax ($0.37\/$100)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#5_Mistakes_Investing_in_Tennessee_Rental_Property\" >5 Mistakes Investing in Tennessee Rental Property<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#1_Treating_Memphis_Like_a_Passive_Investment\" >1. Treating Memphis Like a Passive Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#2_Buying_Nashville_at_Market_Price_for_Cash_Flow\" >2. Buying Nashville at Market Price for Cash Flow<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#3_Ignoring_Tornado_and_Hail_Risk\" >3. Ignoring Tornado and Hail Risk<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#4_Assuming_All_Military_Tenants_Are_Reliable\" >4. Assuming All Military Tenants Are Reliable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#5_Not_Factoring_Transfer_Tax_Into_Flip_Returns\" >5. Not Factoring Transfer Tax Into Flip Returns<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Is_Tennessee_a_good_state_for_rental_property_investment\" >Is Tennessee a good state for rental property investment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Does_Tennessee_have_state_income_tax_on_rental_income\" >Does Tennessee have state income tax on rental income?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Which_Tennessee_city_is_best_for_rental_property\" >Which Tennessee city is best for rental property?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#How_much_is_property_tax_in_Tennessee\" >How much is property tax in Tennessee?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Is_Memphis_or_Nashville_better_for_rental_investment\" >Is Memphis or Nashville better for rental investment?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-rental-property-investment\/#Related_Calculators_and_Guides\" >Related Calculators and Guides<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Why_Tennessee_for_Rental_Property_in_2026\"><\/span>Why Tennessee for Rental Property in 2026<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Tennessee consistently ranks in the top 5 states for rental property investment. Four factors drive this:<\/p>\n<ul>\n<li><strong>No state income tax<\/strong> \u2014 Tennessee repealed the Hall Tax in 2021. Zero tax on wages, rental income, and capital gains at the state level. Per <a href=\"https:\/\/www.tn.gov\/revenue.html\" target=\"_blank\" rel=\"noopener noreferrer\">Tennessee Department of Revenue<\/a>, the state has no personal income tax of any kind. Compared to Georgia (4.99%), Ohio (2.75%), or Indiana (3.05% + county), Tennessee investors keep 3-5% more of net rental income.<\/li>\n<li><strong>Lowest property tax among investment states<\/strong> \u2014 0.56% effective rate per <a href=\"https:\/\/taxfoundation.org\/data\/all\/state\/property-taxes-by-state-county-2026\/\" target=\"_blank\" rel=\"noopener noreferrer\">Tax Foundation<\/a>. On a $200K property: $1,120\/year. Ohio charges $2,720. Texas charges $3,200. That $1,600-$2,080 annual savings goes directly to NOI and cash flow.<\/li>\n<li><strong>Two distinct investment strategies<\/strong> \u2014 Memphis for cash flow ($155K entry, 0.77% ratio). Nashville for appreciation ($380K, strong population growth). Most states force you into one strategy. Tennessee lets you choose.<\/li>\n<li><strong>Population growth<\/strong> \u2014 Nashville metro grew 14% from 2020 to 2025, the 4th fastest major metro in the US. Per <a href=\"https:\/\/www.census.gov\/programs-surveys\/popest.html\" target=\"_blank\" rel=\"noopener noreferrer\">US Census estimates<\/a>, Clarksville and Chattanooga are also growing above the national average. Population growth drives tenant demand and appreciation.<\/li>\n<\/ul>\n<p>The trade-off: Tennessee insurance averages $2,200\/year \u2014 higher than Indiana ($1,800) or Ohio ($2,100) \u2014 due to tornado, hail, and severe storm risk in middle and west Tennessee. Memphis properties face additional flood risk along the Mississippi. And Tennessee charges a transfer tax of $0.37 per $100 of sale price. Model your deal with Tennessee-specific defaults in the <a href=\"\/states\/tennessee\/rental-property-calculator\">Tennessee rental property calculator<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tennessee_Rental_Property_Markets_5_Metros_Compared\"><\/span>Tennessee Rental Property Markets: 5 Metros Compared<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Metro<\/th>\n<th>Median Price<\/th>\n<th>Median Rent (3BR)<\/th>\n<th>Rent\/Price<\/th>\n<th>Vacancy<\/th>\n<th>Property Tax<\/th>\n<th>Insurance<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Memphis<\/strong><\/td>\n<td>$155,000<\/td>\n<td>$1,200<\/td>\n<td>0.77%<\/td>\n<td>7.2%<\/td>\n<td>0.71%<\/td>\n<td>$2,400<\/td>\n<\/tr>\n<tr>\n<td><strong>Nashville<\/strong><\/td>\n<td>$380,000<\/td>\n<td>$2,100<\/td>\n<td>0.55%<\/td>\n<td>5.5%<\/td>\n<td>0.52%<\/td>\n<td>$2,200<\/td>\n<\/tr>\n<tr>\n<td><strong>Chattanooga<\/strong><\/td>\n<td>$250,000<\/td>\n<td>$1,500<\/td>\n<td>0.60%<\/td>\n<td>5.8%<\/td>\n<td>0.48%<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<tr>\n<td><strong>Knoxville<\/strong><\/td>\n<td>$270,000<\/td>\n<td>$1,600<\/td>\n<td>0.59%<\/td>\n<td>5.5%<\/td>\n<td>0.50%<\/td>\n<td>$2,100<\/td>\n<\/tr>\n<tr>\n<td><strong>Clarksville<\/strong><\/td>\n<td>$230,000<\/td>\n<td>$1,400<\/td>\n<td>0.61%<\/td>\n<td>6.0%<\/td>\n<td>0.55%<\/td>\n<td>$1,900<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p><strong>Memphis<\/strong> is the cash flow capital of Tennessee. $155K median entry, $1,200 rent, 0.77% ratio \u2014 one of the best in the entire US. The catch: 7.2% vacancy and higher tenant turnover. Budget conservatively. Best for: experienced investors, property management required.<\/p>\n<p><strong>Nashville<\/strong> is a pure appreciation play at current prices. $380K entry with $2,100 rent = 0.55% ratio \u2014 negative cash flow at 7% rates. But population growth, healthcare (HCA), and tech (Oracle, Amazon) support 4-5% annual appreciation. Best for: deep pockets, long-term hold.<\/p>\n<p><strong>Chattanooga<\/strong> is the balanced option. $250K entry, growing tech scene (EPB fiber optic network attracted remote workers), outdoor recreation economy. Best for: investors wanting both moderate cash flow and appreciation.<\/p>\n<p><strong>Knoxville<\/strong> benefits from University of Tennessee creating consistent rental demand. $270K entry is moderate. Best for: stable tenant pool, moderate appreciation.<\/p>\n<p><strong>Clarksville<\/strong> is a military town (Fort Campbell). $230K entry with $1,400 rent. Military tenants are reliable (BAH covers rent) but deploy frequently. Best for: consistent occupancy, military housing allowance income.<\/p>\n<p>Compare all five in the <a href=\"\/states\/tennessee\/cap-rate-calculator\">Tennessee cap rate calculator<\/a>. For DSCR loan qualification, use the <a href=\"\/states\/tennessee\/dscr-calculator\">Tennessee DSCR calculator<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Worked_Example_Memphis_SFR_155K\"><\/span>Worked Example: Memphis SFR ($155K)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<pre><code>Purchase Price:         $155,000\nDown Payment (25%):     $38,750\nLoan Amount:            $116,250\nInterest Rate:          7.0% \/ 30yr\nMonthly P&I:            $774\n\nMonthly Income:\n  Gross Rent:            $1,200\n  Vacancy (7.2%):        \u2212$86\n  Effective Rent:        $1,114\n\nMonthly Expenses:\n  Property Tax (0.71%):  \u2212$92\n  Insurance:             \u2212$200\n  Management (10%):      \u2212$111\n  Maintenance (8%):      \u2212$89\n  CapEx (5%):            \u2212$56\n  Total Expenses:        \u2212$548\n\nNOI:                     $566\/mo ($6,792\/yr)\nCash Flow:               $566 \u2212 $774 = \u2212$208\/mo\n\nCap Rate:                $6,792 \/ $155,000 = 4.38%\nCash-on-Cash:            \u2212$2,496 \/ $38,750 = \u22126.4%<\/code><\/pre>\n<p><strong>Surprise: Memphis is cash flow negative at market price with professional management.<\/strong> The 0.77% rent-to-price ratio is strong, but 7.2% vacancy and $200\/month insurance eat the margin. To cash flow positive: self-manage (saves $111\/month \u2192 CF = \u2212$97) or buy at $130K (saves $166\/month in P&#038;I \u2192 CF near breakeven).<\/p>\n<p>The real Memphis play: buy distressed at $100-120K, rehab for $25-35K, rent at $1,200, refinance at $155K ARV. BRRRR recovers 80-90% of capital and the forced equity makes the deal work. Model this in the <a href=\"\/states\/tennessee\/brrrr-calculator\">Tennessee BRRRR calculator<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Worked_Example_Clarksville_Duplex_230K\"><\/span>Worked Example: Clarksville Duplex ($230K)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<pre><code>Purchase Price:         $230,000\nDown Payment (25%):     $57,500\nLoan:                   $172,500 at 7.0%\nMonthly P&I:            $1,148\n\nRent (2 \u00d7 $700):        $1,400\/mo\nVacancy (6.0%):         \u2212$84\nEffective Rent:          $1,316\n\nExpenses:\n  Property Tax (0.55%):  \u2212$105\n  Insurance:             \u2212$158\n  Management (9%):       \u2212$118\n  Maintenance (8%):      \u2212$105\n  CapEx (5%):            \u2212$66\n  Total:                 \u2212$552\n\nNOI:                     $764\/mo ($9,168\/yr)\nCash Flow:               $764 \u2212 $1,148 = \u2212$384\/mo<\/code><\/pre>\n<p><strong>Clarksville duplex is deeply negative<\/strong> \u2014 $230K is too high for $1,400 rent. The 0.61% ratio cannot support 7% financing. To make Clarksville work: target properties under $180K or find duplexes renting $800+\/unit ($1,600 total). Military housing allowance (BAH) for Fort Campbell E-5 with dependents is approximately $1,400\/month \u2014 matching your total rent, but only if you find the right unit.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tennessee_Tax_Advantages_for_Investors\"><\/span>Tennessee Tax Advantages for Investors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"No_State_Income_Tax\"><\/span>No State Income Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Tennessee charges zero state income tax on rental income, capital gains, and all other personal income. This is a permanent structural advantage over states like Georgia (4.99%), Ohio (2.75%), North Carolina (4.50%), and Indiana (3.05% + county). On $10,000\/year net rental profit, you save $275-$499 annually compared to those states. Over a 10-year hold: $2,750-$4,990 in cumulative tax savings.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Low_Property_Tax_056\"><\/span>Low Property Tax (0.56%)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Tennessee&#8217;s effective property tax rate is the lowest among the top 10 investment states. Comparison on a $200K property:<\/p>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>State<\/th>\n<th>Effective Rate<\/th>\n<th>Annual Tax<\/th>\n<th>vs Tennessee<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Tennessee<\/strong><\/td>\n<td><strong>0.56%<\/strong><\/td>\n<td><strong>$1,120<\/strong><\/td>\n<td>\u2014<\/td>\n<\/tr>\n<tr>\n<td>Florida<\/td>\n<td>0.89%<\/td>\n<td>$1,780<\/td>\n<td>+$660<\/td>\n<\/tr>\n<tr>\n<td>Indiana<\/td>\n<td>0.85%<\/td>\n<td>$1,700<\/td>\n<td>+$580<\/td>\n<\/tr>\n<tr>\n<td>Georgia<\/td>\n<td>0.92%<\/td>\n<td>$1,840<\/td>\n<td>+$720<\/td>\n<\/tr>\n<tr>\n<td>Ohio<\/td>\n<td>1.36%<\/td>\n<td>$2,720<\/td>\n<td>+$1,600<\/td>\n<\/tr>\n<tr>\n<td>Texas<\/td>\n<td>1.60%<\/td>\n<td>$3,200<\/td>\n<td>+$2,080<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<h3><span class=\"ez-toc-section\" id=\"Transfer_Tax_037100\"><\/span>Transfer Tax ($0.37\/$100)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Tennessee charges a state transfer tax of $0.37 per $100 of sale price. On a $200K purchase: $740. This is moderate \u2014 lower than Florida ($1,400) or Pennsylvania ($4,000) but higher than Indiana ($0) or Texas ($0). Factor into closing costs. Calculate in the <a href=\"\/states\/tennessee\/closing-costs-calculator\">Tennessee closing costs calculator<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"5_Mistakes_Investing_in_Tennessee_Rental_Property\"><\/span>5 Mistakes Investing in Tennessee Rental Property<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_Treating_Memphis_Like_a_Passive_Investment\"><\/span>1. Treating Memphis Like a Passive Investment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Memphis has the best numbers on paper but the highest management intensity. Tenant turnover is frequent (average lease 14 months vs 24 months nationally), eviction rates are above average, and property crime varies dramatically block by block. Memphis requires strong local property management \u2014 do not self-manage from out of state.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Buying_Nashville_at_Market_Price_for_Cash_Flow\"><\/span>2. Buying Nashville at Market Price for Cash Flow<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Nashville at $380K and $2,100 rent = 0.55% ratio. Cash flow is -$300+ per month at 7% rates. Nashville is an appreciation play, not a cash flow play. If you need cash flow, buy in Memphis or Clarksville, not Nashville.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Ignoring_Tornado_and_Hail_Risk\"><\/span>3. Ignoring Tornado and Hail Risk<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Middle Tennessee (Nashville corridor) is in tornado alley. The March 2020 Nashville tornado caused $2.2B in damage. Insurance premiums in this corridor run $2,200-$3,000\/year. Budget $200-$250\/month for insurance, not the $150\/month that national averages suggest.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Assuming_All_Military_Tenants_Are_Reliable\"><\/span>4. Assuming All Military Tenants Are Reliable<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Clarksville (Fort Campbell) has strong military demand, but deployment orders can trigger early lease termination under the Servicemembers Civil Relief Act (SCRA). Budget for one unexpected mid-lease vacancy every 2-3 years. The advantage: BAH payments are guaranteed income while the tenant is in place.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_Not_Factoring_Transfer_Tax_Into_Flip_Returns\"><\/span>5. Not Factoring Transfer Tax Into Flip Returns<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Tennessee&#8217;s $0.37\/$100 transfer tax applies to both purchase and sale. On a $200K flip: $740 at purchase + $740 at sale = $1,480 in transfer taxes. Not deal-breaking, but it reduces flip profit. Compare to Indiana ($0) or Texas ($0). Model in the <a href=\"\/fix-and-flip-calculator\">fix and flip calculator<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div itemscope itemtype=\"https:\/\/schema.org\/FAQPage\">\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Is_Tennessee_a_good_state_for_rental_property_investment\"><\/span>Is Tennessee a good state for rental property investment?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:block\">\n<p itemprop=\"text\">Yes \u2014 Tennessee ranks in the top 5 for rental property investment in 2026. Memphis offers 0.77% rent-to-price ratio for cash flow. Nashville offers strong appreciation. Zero state income tax + 0.56% property tax (lowest among investment states) give Tennessee a structural tax advantage. The main drawback is higher insurance ($2,200\/year) due to tornado risk. Use the <a href=\"\/states\/tennessee\/rental-property-calculator\">Tennessee rental property calculator<\/a> to model your deal.<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Does_Tennessee_have_state_income_tax_on_rental_income\"><\/span>Does Tennessee have state income tax on rental income?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">No. Tennessee has zero state income tax on any personal income including rental profits, capital gains, wages, and interest. The Hall Tax on investment income was fully repealed in 2021. This is a permanent structural advantage over states like Georgia (4.99%), Indiana (3.05%), Ohio (2.75%), and North Carolina (4.50%).<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Which_Tennessee_city_is_best_for_rental_property\"><\/span>Which Tennessee city is best for rental property?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">For cash flow: Memphis ($155K median, $1,200 rent, 0.77% ratio). For appreciation: Nashville ($380K, 4-5% annual appreciation). For balance: Chattanooga ($250K, growing tech scene). For military tenants: Clarksville ($230K, Fort Campbell). Memphis has the best numbers but requires experienced management. Nashville requires deep reserves to carry negative cash flow. Compare all five in the <a href=\"\/states\/tennessee\/cap-rate-calculator\">Tennessee cap rate calculator<\/a>.<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"How_much_is_property_tax_in_Tennessee\"><\/span>How much is property tax in Tennessee?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">Tennessee effective property tax averages 0.56% \u2014 the lowest among top investment states. On a $200K property: $1,120\/year ($93\/month). Shelby County (Memphis) is higher at 0.71%, Davidson County (Nashville) is 0.52%. Compare: Ohio 1.36%, Texas 1.60%, Indiana 0.85%. The low tax directly boosts NOI and cash flow.<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Is_Memphis_or_Nashville_better_for_rental_investment\"><\/span>Is Memphis or Nashville better for rental investment?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">Different strategies. Memphis: $155K entry, 0.77% rent-to-price, near breakeven cash flow, higher management intensity. Nashville: $380K entry, 0.55% ratio, -$300\/month cash flow, strong 4-5% appreciation. Memphis wins on year-1 numbers. Nashville wins on 10-year total return including appreciation. Most investors start with Memphis for cash flow and add Nashville later for portfolio diversification.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"Related_Calculators_and_Guides\"><\/span>Related Calculators and Guides<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><a href=\"\/states\/tennessee\/rental-property-calculator\"><strong>Tennessee Rental Property Calculator<\/strong><\/a> \u2014 Full analysis with TN defaults<\/li>\n<li><a href=\"\/states\/tennessee\/cap-rate-calculator\"><strong>Tennessee Cap Rate Calculator<\/strong><\/a> \u2014 Compare metro cap rates<\/li>\n<li><a href=\"\/states\/tennessee\/closing-costs-calculator\"><strong>Tennessee Closing Costs Calculator<\/strong><\/a> \u2014 Buyer cost estimate<\/li>\n<li><a href=\"\/states\/tennessee\/dscr-calculator\"><strong>Tennessee DSCR Calculator<\/strong><\/a> \u2014 Loan qualification<\/li>\n<li><a href=\"\/states\/tennessee\/brrrr-calculator\"><strong>Tennessee BRRRR Calculator<\/strong><\/a> \u2014 Buy-rehab-rent-refinance<\/li>\n<li><a href=\"\/states\/tennessee\/\"><strong>All Tennessee Calculators<\/strong><\/a><\/li>\n<li><a href=\"\/calculators\"><strong>All 30+ Calculators<\/strong><\/a><\/li>\n<\/ul>\n<p>Other state guides:<\/p>\n<ul>\n<li><a href=\"\/blog\/indiana-rental-property-investment\/\">Indiana Rental Property<\/a><\/li>\n<li><a href=\"\/blog\/ohio-rental-property-investment\/\">Ohio Rental Property<\/a><\/li>\n<li><a href=\"\/blog\/georgia-rental-property-investment\/\">Georgia Rental Property<\/a><\/li>\n<li><a href=\"\/blog\/north-carolina-rental-property-investment\/\">North Carolina Rental Property<\/a><\/li>\n<li><a href=\"\/blog\/texas-rental-property-investment\/\">Texas Rental Property<\/a><\/li>\n<li><a href=\"\/blog\/florida-rental-property-investment\/\">Florida Rental Property<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Tennessee rental property investment combines the best of both worlds: Memphis delivers cash flow at $155K median price and $1,200\/month rent (0.77% ratio), while Nashville delivers appreciation at $380K with&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1067","post","type-post","status-publish","format-standard","hentry","category-1"],"_links":{"self":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/comments?post=1067"}],"version-history":[{"count":0,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1067\/revisions"}],"wp:attachment":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/media?parent=1067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/categories?post=1067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/tags?post=1067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}