825 Donna St

Morristown, TN 37814

$725,000C+

None bd · 7.0 ba · 4,983 sqft · Built 1985 · MultiFamily · Active · 28 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $8,594/mo
• Mortgage (P&I): −$3,802
• Tax + insurance: −$576
• HOA: −$0
• Vac / Maint / Mgmt: −$1,805
• Net cashflow: $2,411/mo
• Annual: $28,933/yr
• Cap rate: 10.28%
• Cash-on-cash: 14.25%
• DSCR: 1.63
• 1% rule: 1.19%
• Cash to close: $203,000

Investor read

• This is a 9 × 1-bed/1-bath units multifamily listed at $725k. Condition is rated good.
• At list price, monthly cash flow is $2k ($29k/yr) — positive. Per door: $268/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($9k rent vs $725k).
• It's been on market 28 days — a 2% lower offer ($714k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $714k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $5k of loan paydown is wiped out by about $22k of value loss. Plan a longer hold.
• Location reads 64/100 on livability (#175 in TN) — a middle-class / working-renter tenant base. Strengths: cost of living A+, health & safety A+, housing A-; Watch: schools D-, crime F, amenities F.
• Hamblen County (urban): math 31% / reading 30% proficiency, ranked #57 of 139 in TN (top 41%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 330 active listings in the ZIP; 298 units permitted in Hamblen County in 2024 (48 in 5+ unit buildings).
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $203k cash investment doubles in ~9 years — after that, you're playing with house money.
• Climate carrying-cost: extreme-heat days projected 6→17/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 10.3% vs local median 2.9% in Morristown — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• At $8,594/mo this rent would consume 185% of the median local household income ($56k/yr) (locally 1001% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.