1015 Sherman Way

Morristown, TN 37877

$39,900B-

2 bd · 1.0 ba · 896 sqft · Built 1978 · Other · Pending · 56 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,163/mo
• Mortgage (P&I): −$209
• Tax + insurance: −$66
• HOA: −$0
• Vac / Maint / Mgmt: −$244
• Net cashflow: $643/mo
• Annual: $7,720/yr
• Cap rate: 25.64%
• Cash-on-cash: 69.10%
• DSCR: 4.07
• 1% rule: 2.92%
• Cash to close: $11,172

Investor read

• This is a 2-bed/1.0-bath other listed at $40k.
• At list price, monthly cash flow is $643 ($8k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $40k).
• It's been on market 56 days — a 3% lower offer ($39k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $39k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $276 of loan paydown is wiped out by about $1k 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.
• Jefferson County (rural): math 25% / reading 27% proficiency, ranked #80 of 139 in TN (top 58%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Market conditions: 70 active listings in the ZIP; 254 units permitted in Jefferson County in 2024 (0 in 5+ unit buildings).
• Jefferson County population projected at +6% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 3 sale attempts with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $26k; list at $40k implies a 56% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $11k cash investment doubles in ~2 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wildfire risk; extreme-heat days projected 7→22/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 25.6% 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.

Questions for listing agent

• It's been on market 56 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Built in 1978 — 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 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 for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.