I found some Residential General property that has been Zoned by the local town for 5 two story town homes. 

almost every nice home is above market value in our town. reason being is our sewage pond is to small for the growth we have encountered so there is no building permits for the next year and half roughly. the only option is to buy an already built home or have your own septic system which there isn't a lot of land for sale either. so the market here is very crazy. our realtor also hasnt sold in our town. so im very confused on our situation. thank you for the reply.

Are you buying in Chattanooga proper or finding your deals in the smaller towns outside the city?

I've come across a 2 unit town home, upper/lower units that was marketed at $195k.

I then can run totals for the ones I mentioned above and built a few charts. 

Don't know if there is a possibility in your town, but that could boost your ROI.Erwin

The main home was built in the 60's, so I understand that maybe it's not going to command the same price per square foot as a new(er) build, but in your opinion, is there any reason to consider refinancing and hoping to get a higher appraisal?

Obviously you need to check out the comps or get some type of appraisal on the house that was drawn up to be built.

You will increase your cash flow investing in multi unit purpose built properties and will likely be looking at a commercial mortgage.Purpose built multi unit rentals is you best option to grow your investments and your income. 

Brett is right though, that part of town has a ton of demand.