Cap rate, real cash flow, and return on the cash you put in — including the expenses most analyses leave out. Estimate only, not investment advice.
Estimates only — not investment, tax, or legal advice. How we calculate every figure
Estimated all-in monthly payment for a home price you have in mind.
What homeowners insurance costs in your state, and whether what you pay is out of line.
Income, savings, and debts in — max home price and qualification signal out.
A rental bought for $300,000 and sold seven years later for $394,780 nets $158,925 at closing — and owes about $24,753 of federal tax, $15,273 of it on depreciation you were required to take. Here is the math, why a sale with zero appreciation still owes tax, and the three clocks a fourth-quarter sale starts.
A leveraged rental makes money three ways and cash flow is only one of them. Here is what the other two are worth — and why the structure that maximises them is a bet, not a plan.
How to verify one specific rental deal: audit the seller's pro-forma line by line, comp a real rent, reassess the tax, age the systems, and price the offer the numbers actually support.
Set up basis correctly, claim the depreciation you are owed, survive the passive-loss rules, and know what the sale will cost — with every figure tied to the statute.
Tennessee guide
Tennessee has no state income tax, and unlike Texas it did not replace it with a high property tax. The statewide effective property tax rate is 0.52%, among the lowest in the country. Tennessee funds itself largely through sales tax instead — among the highest combined state and local rates in the nation, which matters to a landlord buying appliances, materials, and contractor labor, and which is invisible in every rental spreadsheet.
Two other Tennessee facts belong at the top, because neither shows up in a premium comparison and both change what "shop around" means here.
Tennessee has real tornado and severe-convective-storm exposure, heaviest in West Tennessee and the Nashville corridor, and a separate percentage wind and hail deductible has become common as a result. Unlike a coastal named-storm deductible, this one triggers on an ordinary severe thunderstorm.
And Tennessee has no insurer of last resort at all. No FAIR Plan. No windstorm pool. It is one of roughly 17 states that never established a residual property insurance market, and having no coast it has no beach plan either. A Tennessee landlord who cannot get coverage from an admitted carrier — typically because of roof age, prior hail or wind claims, or a rural protection-class rating — has nowhere state-backed to go, and must buy from the excess and surplus lines market, which is not rate- or form-regulated and generally costs more for narrower coverage.
That changes the honest advice. In most states "shop around" is real advice. In Tennessee it is real advice only while an admitted carrier will still quote you, because there is no backstop behind the private market.
A note before you start: this is general educational information about how rental property arithmetic works in Tennessee. It is not investment, tax, insurance, or legal advice, and it is not a recommendation about any property. Property tax is administered county by county with assessment ratios and reappraisal cycles that vary; insurance is priced per structure. Talk to a Tennessee CPA about tax treatment, a licensed Tennessee insurance agent about a real quote, and a Tennessee real estate attorney about anything contractual.
Read the full Tennessee guide →19 min read · Updated 2026-08-28