Cap Rate in Memphis, TN

2026 Market Overview for Real Estate Investors

Last updated: March 2026 • Sources: Census ACS, Zillow, Redfin, county assessor

Avg Cap Rate

9.2%

#3 of 50 markets

Median Home Price

$130,000

Purchase price

Median Monthly Rent

$1,200

$14,400/yr gross

Rent-to-Price Ratio

0.92%

Strong (1% rule range)

Cap Rate Rating

Very Good

Above average. Make sure the higher return is not masking higher risk or deferred maintenance.

Market Snapshot

Population	628,127
5-Year Population Growth	-1.5%
Median Household Income	$41,000
Vacancy Rate	10.2%
Property Tax Rate	1.45%($1,885/yr)

Investor Takeaway

Memphis is a proven turnkey rental market with strong property management infrastructure. The logistics hub economy (FedEx HQ) provides stable blue-collar employment supporting rental demand.

Top Neighborhoods for Investors

Where to focus your search in Memphis, TN:

Cooper-Young

Appreciation

Eclectic midtown neighborhood with walkable restaurants and shops. Higher-end rentals attract quality tenants. Appreciation play within a cash flow city.

Whitehaven

Cash Flow

South Memphis neighborhood near Graceland with affordable single-family rentals. Established turnkey market with reliable property management options.

Binghampton

BRRRR

Rapidly developing east Memphis neighborhood. Active renovation creates BRRRR opportunities with improving ARVs as the area transforms.

Frayser

Cash Flow

Lowest entry prices in Memphis with high cap rates. Requires experienced property management but delivers strong cash flow for investors comfortable with the area.

Quick Math

Estimated annual numbers for a median-priced property in Memphis, TN before financing:

Annual Gross Rent$14,400

Less Vacancy (10.2%)($1,469)

Less Property Tax (1.45%)($1,885)

Less Est. Insurance + Maintenance($2,600)

Estimated NOI$8,446

Implied Cap Rate6.5%

Estimates based on median values. Insurance + maintenance estimated at 2% of home value. Actual results vary by property condition, neighborhood, and management.