Buying a Rental Property in Tennessee: Run These Numbers

A rental property is a math problem first and a house second. The house still matters, but the numbers decide whether an offer makes sense.

Here is what I would run before writing an offer on a first rental in Middle Tennessee. I am a REALTOR®, not a lender, accountant or attorney, so use this as a list of questions for the right professionals.

Start with monthly cash flow

Photo by Edar on Pixabay

Cash flow is what is left each month after the rent covers the property’s costs. Before you look at a single listing, write down every cost you would carry:

• Mortgage principal and interest
• Property taxes
• Homeowner’s insurance
• Private mortgage insurance, which is typically required on conventional loans when the down payment is under 20 percent
• Maintenance and repairs
• Months the home sits empty between tenants
• HOA dues and any utilities you would pay

Rent is an estimate until a tenant signs a lease. I would use a cautious rent figure and generous cost figures, so a surprise works in your favor instead of against you.

The loan rate drives the payment. The 30-year fixed mortgage rate was 7.40% for the week of October 15, 2026, according to Freddie Mac via FRED. Nobody can reliably predict where rates go from here, so run your numbers at the rate you are actually quoted. You can check the latest weekly figure on the Freddie Mac 30-year rate page and test payments with the Mortgage calculator.

Property taxes and insurance depend on the address

These two lines are easy to guess wrong. Taxes depend on the exact address, so verify them with the county for any property you are serious about. For Williamson County, the Williamson County property search is the place to start.

County lines matter more than people expect. Spring Hill includes parts of both Williamson and Maury counties, so county services, schools and taxes can differ by address. Murfreesboro is in Rutherford County and Columbia is in Maury County. Neither is in Williamson County, so a search of Williamson records will not cover them.

For insurance, I do not have a number to give you, and a made-up one would not help. Ask an insurance professional for a quote on the specific home before you offer. Age, condition and location can all change what a policy costs.

How rental income is treated for taxes is a question for a tax professional. The Tennessee Department of Revenue is the official state source for Tennessee tax rules.

Count the cash you need up front

Photo by OleksandrPidvalnyi on Pixabay

The down payment is only part of it. Closing costs typically run 2 to 4 percent of the purchase price, plus earnest money. Then add whatever the home needs before a tenant moves in, such as paint, repairs or a deep clean.

A few steps that apply to any purchase apply here too:

1. Get pre-approved, not just pre-qualified. Pre-approval means a lender has reviewed your documents. A pre-approval letter is still not a final loan commitment.
2. Ask each lender how their loan programs apply to a property you will not live in. Program rules differ, and a lender has to confirm what is allowed.
3. Compare Loan Estimates. A lender must send one within three business days of your application, and it is a standard three-page form, so you can compare offers side by side. The CFPB encourages getting estimates from more than one lender.
4. Compare the Closing Disclosure with your Loan Estimate. A lender must send it at least 3 business days before closing.

You choose your own lender. Your agent can share names of lenders they have seen do good work, but the decision is yours.

Also keep cash in reserve after closing. A water heater or a vacant month does not wait for a convenient time. And on wire fraud: verify wire instructions by phone using a number you already trust, and never rely on emailed instructions.

Read local data, not national headlines

Conditions differ a lot between cities, so look at numbers for the city you are considering. Here is a snapshot, all from Redfin on a rolling 3-month basis, with data as of September 30, 2026:

• Spring Hill: median sale price $499,752, down 5.7% from a year earlier, with 4.1 months of supply and 66 median days on market.
• Franklin: median sale price $863,089, up 12.8% from a year earlier, with 4.0 months of supply and 55 median days on market.
• Nashville: median sale price $464,779, down 1.1% from a year earlier, with 6.0 months of supply and 66 median days on market.

Months of supply is how long it would take to sell every active listing at the current pace of sales. Under 4 months favors sellers, 4 to 6 is balanced, and over 6 favors buyers.

A median is a midpoint for a whole city. It does not tell you what one property will sell for or rent for. Use it to see how a market is behaving, then price the specific home. You can see more on the Market data for the I-65 corridor page or look at Spring Hill home prices.

Let the inspection feed your numbers

A home inspection is where a rental’s repair costs show up. Radon testing, a sewer scope and a termite inspection are common add-ons to a standard inspection. Termite and wood-destroying organism inspections are commonly requested by buyers and lenders in Tennessee.

Tennessee sellers complete the residential property condition disclosure or an exemption. The lead-based paint disclosure applies to homes built before 1978. Read both closely, then update your maintenance estimate based on what you learn.

If the numbers only work when everything goes perfectly, that is useful information. You can negotiate, ask about seller-paid closing costs where the lender allows it, or walk away.

Next step

If you want help sorting out which Middle Tennessee areas to run numbers on, fill out the Get matched with homes form. I will schedule a call, and we will be talking within the next 48 hours. If you would rather start with a question, you can contact Scott directly.