Memphis, TN — Rental Investment Analysis
🟢STRONG— excellent cash flow marketData: HUD FMR FY2024 + Zillow ZHVI April 2026 + Freddie Mac rates. Last updated June 2026.
Investment Summary
As of 2026, Memphis, TN has a median cap rate of 9.2%, making it one of the top cash-flowing rental markets in the United States.
Memphis is one of the strongest cash flow markets in the data. At $154,593 median home price, Memphis is affordable by national standards and within reach for most conventional loans. With 3-bedroom rents around $1,600/month, the 9.2% cap rate tells the story. A typical rental here cash flows +$371/month after all expenses — strong passive income from day one.
The market passes the 1% rule (1.11%), which is increasingly rare and signals strong rent-to-price fundamentals. DSCR of 1.44 means the property's income comfortably covers debt service — DSCR loans should be easy to qualify for here.
Bottom line: Buy here if you want reliable monthly income. Memphis is a cash flow market — don't expect rapid appreciation, but the checks come in every month.
Data sources: HUD Fair Market Rents (FY2024), Zillow Home Value Index (April 2026), Freddie Mac Primary Mortgage Market Survey.
Cap Rate
9.2%
Above average
Monthly Cash Flow
+$371
After all expenses
Price-to-Rent
7.6
Investor-friendly
DSCR
1.44
Passes lender test
Key Metrics
- Median Home Price
- $154,593
- Average Rent (3BR)
- $1,600/mo
- Price-to-Rent Ratio
- 7.6(good)
- 1% Rule
- 1.11%(passes)
- Cash-on-Cash Return
- 12.4%
- Vacancy Rate
- 8.0%
Market Strength
- Unemployment Rate
- 3.6%(-0.7% vs national)
- Rent Growth (YoY)
- +2.9%(national avg)
- Population Growth
- +3.3% YoY
Property Tax Rate
0.56%
of assessed value (TN avg)
Median Income
$59,695
household (TN avg)
Rent-to-Income
32.2%
Moderate
Section 8 Max Rent
$1,600/mo
3BR voucher payment
TN Investor Climate
Landlord Friendly
8/10
State Income Tax
None
Property Tax
0.56% effective
Population Trend
+3.3% (3yr)
Population Movement (Tax Year 2021→2022)
Net Migration
-2,696 households
SHRINKING
Total Inflow
7,121
households moved in
Avg Income (New Residents)
$61,074
per household
Where they're coming from:
Where residents are leaving to:
Net outflow may indicate weakening demand — but can mean lower prices and higher cap rates.
Best Zip Codes in Memphis for Investors
All Zip Codes in Memphis
| Zip | Cap Rate | Cash Flow | Home Price | Rent (3BR) | DSCR |
|---|---|---|---|---|---|
| 38106 | 22.7% | +$801 | $58,797 | $1,460/mo | 3.56 |
| 38114 | 16.8% | +$664 | $76,761 | $1,440/mo | 2.62 |
| 38108 | 16.7% | +$616 | $71,667 | $1,340/mo | 2.61 |
| 38127 | 14.7% | +$637 | $91,608 | $1,530/mo | 2.31 |
| 38126 | 14.0% | +$490 | $77,020 | $1,230/mo | 2.19 |
| 38109 | 12.9% | +$511 | $94,539 | $1,400/mo | 2.02 |
| 38122 | 11.3% | +$516 | $126,616 | $1,670/mo | 1.77 |
| 38107 | 11.0% | +$437 | $112,789 | $1,460/mo | 1.73 |
| 38105 | 10.8% | +$426 | $114,493 | $1,460/mo | 1.70 |
| 38118 | 10.4% | +$416 | $125,683 | $1,540/mo | 1.62 |
| 38111 | 9.8% | +$391 | $136,597 | $1,600/mo | 1.54 |
| 38112 | 9.7% | +$357 | $129,512 | $1,500/mo | 1.52 |
| 38128 | 9.4% | +$385 | $150,967 | $1,710/mo | 1.48 |
| 38141 | 9.0% | +$423 | $192,811 | $2,100/mo | 1.41 |
| 38115 | 8.6% | +$307 | $167,421 | $1,750/mo | 1.34 |
| 38116 | 8.3% | +$246 | $158,219 | $1,600/mo | 1.29 |
| 38018 | 6.2% | -$54 | $291,503 | $2,330/mo | 0.97 |
| 38103 | 6.1% | -$85 | $325,379 | $2,570/mo | 0.95 |
| 38134 | 5.8% | -$115 | $228,839 | $1,740/mo | 0.91 |
| 38125 | 5.7% | -$156 | $279,865 | $2,110/mo | 0.90 |
| 38117 | 5.6% | -$186 | $269,676 | $1,990/mo | 0.87 |
| 38104 | 5.4% | -$217 | $257,277 | $1,850/mo | 0.84 |
| 38119 | 4.8% | -$398 | $295,067 | $1,940/mo | 0.75 |
| 38049 | 4.3% | -$400 | $229,658 | $1,400/mo | 0.67 |
| 38120 | 3.1% | -$1,185 | $427,662 | $2,070/mo | 0.48 |
| 38066 | 0.6% | -$2,531 | $525,302 | $1,230/mo | 0.09 |