3816 Cherwood Ln

Chattanooga, TN 37406

$220,000B-

4 bd · 4.0 ba · 1,856 sqft · Built 1972 · MultiFamily · Pending · 8 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,681/mo
• Mortgage (P&I): −$1,154
• Tax + insurance: −$213
• HOA: −$0
• Vac / Maint / Mgmt: −$563
• Net cashflow: $751/mo
• Annual: $9,016/yr
• Cap rate: 10.39%
• Cash-on-cash: 14.64%
• DSCR: 1.65
• 1% rule: 1.22%
• Cash to close: $61,600

Investor read

• This is a 2 × 2-bed/1.5-bath units multifamily listed at $220k.
• At list price, monthly cash flow is $751 ($9k/yr) — positive. Per door: $376/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $220k).
• Only 8 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#3 in TN, #2,582 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, cost of living A+; Watch: employment D+, crime F.
• Hamilton County (urban): math 31% / reading 31% proficiency, ranked #42 of 139 in TN (top 30%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Snow Hill Elementary (math 48% / reading 39%, grade F, #184 of 952 statewide, top 19%, 657 students, 0% FRL); Dalewood Middle School (math 7% / reading 7%, grade F, #278 of 333 statewide, top 85%, 258 students, 0% FRL); Brainerd High School (math 2% / reading 12%, grade F, #294 of 332 statewide, top 91%, 635 students, 0% FRL) — zoned schools average 0% FRL vs 52% district-wide (52 pts lower); this property's tenant base skews higher-income than the district average.
• Market conditions: Rents rising fast (+5.1%/yr); 127 active listings in the ZIP; lower-income renter base — watch delinquency; 2,133 units permitted in Hamilton County in 2024 (405 in 5+ unit buildings).
• Hamilton County population projected at +23% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $63k; list at $220k implies a 249% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 5.1% rent growth), your $62k cash investment doubles in ~7 years — after that, you're playing with house money.
• Climate carrying-cost: extreme-heat days projected 7→19/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 10.4% vs local median 3.4% in Chattanooga — 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 $2,681/mo this rent would consume 72% of the median local household income ($45k/yr) (locally 759% 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?
• Built in 1972 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-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.