The Memphis rental market continues to stand out as one of the strongest in the nation, offering investors a winning combination of affordability, consistent demand, and dependable cash flow. Ranked by Rentometer as the #4 Best Large Metro for Rental Yield in the U.S., Memphis proves especially attractive with its favorable price-to-rent ratios and stable rental market.
These dynamics make it a top choice for real estate investing in 2025 for those seeking both short-term income and long-term value growth.
With RiverTown Realty’s deep local expertise as a trusted property management company, investors can confidently unlock the full potential of Memphis’s rental market. Continue reading to discover how this city delivers some of the highest yields in the country.
Key Takeaways
- Memphis offers some of the nation’s highest rental yields, often above 12 percent, with a median home price of just $144,131.
- A resilient economy, driven by employers like FedEx, Amazon, and St. Jude, plus steady in-migration and no state income tax, fuels strong rental demand.
- Occupancy rates exceed 95 percent, with low vacancy and limited new mid-range housing keeping investor cash flow stable.
- From Midtown and Binghampton to Horn Lake and Germantown, Memphis provides diverse neighborhoods and suburbs for long-term returns.
Economic and Market Drivers
Memphis continues to stand out as one of the strongest rental markets in the U.S., supported by strong job growth, population inflows, and investor-friendly conditions.
Job Market and Economic Growth
Major employers such as FedEx headquarters, Amazon, and St. Jude drive local stability. A mix of logistics, healthcare, manufacturing, and education keeps the economy resilient, while young professionals entering the city fuel rental demand.
This strength translates into yields often exceeding 12 percent in neighborhoods like Midtown, Cooper-Young, and Binghampton. Memphis has also avoided the steep property tax hikes and home price volatility seen in other metros, keeping property values steady.
In-Migration and Suburban Expansion
Attractive for households leaving states like California, Illinois, and New York, Memphis offers no state income tax, affordable housing, and a lower cost of living. The result is steady population growth and long-term demand for rentals.
With land available for development, suburban expansion and build-to-rent (BTR) communities are meeting increasing housing demand for flexible single-family living.
Market-Friendly Conditions
High mortgage rates and rising home prices push many would-be buyers into long-term rentals, strengthening occupancy across the city. Combined with fewer regulatory hurdles, faster permitting, and steady investor participation (25–30 percent market share), Memphis remains a top market for high rental yields.
Memphis Housing Market Fundamentals
Affordability & Market Access
One of the strongest advantages of the Memphis housing market is its affordability. With a median home price of $144,131, which is not only well below the national average but also showing steady growth at +3.19 percent year-over-year, investors gain access to low average home price points and favorable price-to-rent ratios.
This affordability has earned Memphis the title of Realtor.com's #1 Affordable City Where Investors Are Buying Big and a top-five ranking on Zillow’s list of best places to buy rental property.
For many residents, monthly ownership costs remain lower than rent, but rising mortgage rates are pushing more people toward renting, further fueling long-term rental demand.
Rental Market Demand
Memphis benefits from a rental market where occupancy rates exceed 95 percent, signaling a low rental vacancy rate and consistent housing demand. Affordable real estate attracts a wide mix of tenants, from young professionals starting their careers to families seeking stability, creating a diverse and reliable renter base that keeps the local housing market thriving.
Benefits for Real Estate Investors
High rental yields, especially compared to other major cities, give Memphis investors consistent opportunities for steady cash flow. Affordability further enhances profitability, allowing investors to maximize returns without overleveraging.
Tax Advantages
Another major advantage is Tennessee’s tax-friendly environment. With no state income tax, investors keep more of their earnings, making rental property investment in Memphis even more financially attractive. This adds a competitive edge over markets in states with heavier tax burdens.
Low Vacancy Rates
Vacancy rates in Memphis are impressively low, sitting 1–5 percent below last year’s figures. A lack of new construction in the mid-range and affordable housing segments keeps supply tight, while strong tenant demand reduces turnover risks. This creates a stable and predictable real estate investment environment.
Investor Confidence & Market Activity
Investor interest is at an all-time high, with nearly one-third of U.S. residential properties now being purchased by rental property investors. Memphis, in particular, has drawn mega investors who continue to buy rental properties aggressively, demonstrating the city’s resilience even in today’s high-interest-rate climate.
Neighborhoods with High Rental Yields
Core Urban Areas
Downtown, Midtown, and East Memphis consistently show strong performance in the city’s rental markets. Midtown and Binghampton stand out with affordable real estate stock and ongoing revitalization, creating some of the highest yields. Meanwhile, Cooper-Young adds cultural vibrancy and is especially popular with young professionals, boosting rent prices.
Suburban Growth Areas
In the Greater Memphis metro area, nearby suburbs like Horn Lake, Olive Branch, and Southaven face low inventory where demand consistently outpaces supply. These communities appeal to families looking for single-family homes with quality schools, job access, and overall affordability, while still staying connected to Memphis employment centers.
Rental Demand by Area
Rental pricing reflects the diversity of Memphis’s markets: Downtown one-bedroom units often exceed $1,500, Germantown two-bedrooms average $1,800, while Midtown one-bedrooms rent for about $1,300, attracting artists and young professionals alike and keeping average rent levels competitive.
Short-Term Rental Potential
With a strong tourism industry, Memphis also supports short-term vacation rentals and short-term rental market opportunities, giving investors flexibility across luxury, mid-market, and vacation-oriented strategies.
Investing Strategies & Practical Tips
Successful investing in the Memphis real estate market requires both smart strategies and consistent execution. Many investors choose buy-and-hold to build long-term cash flow, while others tap into the city’s growing tourism with short-term rentals. Property flips in revitalizing neighborhoods and REITs for diversified exposure also offer appealing opportunities.
To succeed, it’s essential to research market trends, work with local experts to manage properties, and diversify across property types for resilience. Keeping up with property maintenance helps protect your investment properties and reduces vacancy rates.
Importantly, partnering with professional property managers can further maximize returns by setting competitive rents, applying rigorous tenant screening, and ensuring preventive maintenance. On top of that, they're experts who can guide investors toward profitable rental opportunities and share a few tips to help avoid common pitfalls.
Memphis: A Smart Move for Long-Term Growth
Memphis combines affordable prices, a robust job market, and consistent rental demand, making it a solid investment choice for those seeking rental income, strong yields, and long-term growth potential. With a growing economy and continued growth in population and jobs, the city continues to stand out as a premier destination for real estate investors.
At RiverTown Realty, we combine local expertise with trusted property management to help investors maximize their returns. Contact us today to start building your portfolio in Memphis’s thriving rental market!
FAQs
1. Why does Memphis rank as a top market for rental yields in 2025?
Memphis offers high rental yields due to its affordability, favorable price-to-rent ratios, and strong demand, with yields often exceeding 12 percent in areas like Midtown, Cooper-Young, and Binghampton.
2. What economic factors drive rental demand in Memphis?
A resilient economy supported by employers like FedEx, Amazon, and St. Jude, combined with booming job market conditions, fuels consistent housing demand.
3. How affordable is the Memphis housing market for investors?
With a median home price of $144,131, well below the national average, Memphis provides low entry costs and reasonable prices with strong cash flow potential, making it one of the most affordable large metros for investors.
4. Which Memphis neighborhoods and suburbs offer strong investment opportunities?
Urban areas like Midtown, Binghampton, and Cooper-Young deliver some of the highest yields, while suburbs such as Horn Lake, Olive Branch, and Southaven face low inventory, high rental demand, and a steady influx of new residents.
