407 Colville St

Chattanooga, TN 37405

$574,000D+

15 bd · 9.0 ba · 2,218 sqft · Built 1920 · MultiFamily · Active · 252 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,926/mo
• Mortgage (P&I): −$3,010
• Tax + insurance: −$461
• HOA: −$0
• Vac / Maint / Mgmt: −$1,034
• Net cashflow: $421/mo
• Annual: $5,046/yr
• Cap rate: 7.17%
• Cash-on-cash: 3.14%
• DSCR: 1.14
• 1% rule: 0.86%
• Cash to close: $160,720

Investor read

• This is a 1×3bd/1.0ba + 2×1bd/1.0ba units multifamily listed at $574k.
• At list price, monthly cash flow is $421 ($5k/yr) — positive. Per door: $140/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $493k (14.2% below list).
• It's been on market 252 days — a 12% lower offer ($505k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $493k (14.2% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $4k of loan paydown is wiped out by about $17k 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: Normal Park Museum Magnet School (math 50% / reading 49%, grade D, #119 of 952 statewide, top 14%, 820 students, 0% FRL); Red Bank High School (math 8% / reading 37%, grade F, #156 of 332 statewide, top 49%, 824 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.
• Watch-outs: built in 1920 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+5.6%/yr); 309 active listings in the ZIP; solid renter incomes; 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.
• 9 sale attempts since 5y ago 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.
• 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 7.2% 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 $4,926/mo this rent would consume 73% of the median local household income ($81k/yr) (locally 875% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 252 days. Have you received any prior offers? Is the seller open to a 14% concession, seller financing, or rate buy-down credit?
• 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 1920 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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?