The average rent in Memphis is $1,285 (Zillow, as of June 20, 2026). This is 34 percent lower than the national average, with apartments averaging $1,000 and single-family homes at $1,395. For investors reviewing rental listings for the first time, it's important to understand what these numbers mean. Properties in lower purchase price areas tend to align with the 1 percent rule, meaning that if the monthly rent is more than 1 percent of the purchase price, there's a good chance of positive cash flow.

However, it's premature to make decisions based solely on this number. Property taxes must also be considered. The tax rate for Shelby County, where Memphis is located, is $2.69 per $100 of assessed value (according to the Shelby County Trustee). Tennessee assesses residential properties at only 25 percent of their appraised value, so the actual burden is calculated to be lower than the nominal tax rate. It's safer to verify the exact amount by checking the appraised value and assessment method on the county website for the specific address.

Tennessee law prohibits rent control. No city or county can create ordinances that set rent limits. For landlords, this structure makes it easier to adjust rents, but they cannot raise rents arbitrarily during the lease term, and if it's a month-to-month lease, a 30-day notice is required. Most large counties are subject to the Uniform Residential Landlord and Tenant Act, which applies to about 75 percent of the state's population.

Let's also look at loan conditions in numerical terms. Investment loans require a down payment of 15 to 25 percent, and a credit score of at least 620 is needed for approval, but a score above 740 is preferable for better rates. Interest rates are set 0.5 to 0.75 percentage points higher than for owner-occupied properties. Rental income is only counted as 75 percent of the expected rent by the lending institution for qualification purposes, so it's advisable to prepare the lease agreement or appraisal rent schedule in advance.

It's also important to outline operating expenses in numbers. If you hire a management company, 8 to 12 percent of the rent will go to fees. It's common in the industry to estimate maintenance costs at about 1 percent of the property value annually. Landlord insurance, which covers rental loss and tenant liability in addition to standard homeowners insurance, also tends to have higher premiums that should be factored in.

Areas preferred by Korean families in Memphis often include Collierville and Germantown. You can refer to ratings from GreatSchools or Niche, but school district boundaries change frequently, so it's advisable to check the assigned school for the specific address before purchasing. These areas tend to have steady rental demand, resulting in relatively low vacancy burdens for investment properties.

Recent market trends show that Memphis maintains steady rental demand, primarily driven by logistics and manufacturing jobs. For out-of-state investors, the low purchase prices and rents may seem attractive, but it's important to consider that the potential for rent increases may also be limited.

Before purchasing, a home inspection is also a crucial item to consider. In areas with lower purchase prices, there may be a higher proportion of older homes, so checking the condition of plumbing and roofing in advance can help predict maintenance costs. Including these initial repair costs in the cap rate calculation will bring you closer to the actual yield.

By comparing properties using the cap rate, which is the net operating income divided by the purchase price, you can get a clearer picture during the initial property review stage. It's also worth noting that when it comes time to sell, you can defer capital gains tax through a 1031 exchange. While the yields created by low rents and low purchase prices may seem attractive, it's essential to also consider vacancy rates and regional variations to accurately read the current market. This article is not investment advice, and consulting a professional before making any agreements is recommended.