Introduction
As the short-term rental market continues to thrive across the United States, investors are seeking lucrative opportunities in various cities. Memphis, Tennessee, with its rich cultural heritage, vibrant music scene, and iconic attractions, presents an enticing prospect for short-term rental owners.
In this guide, we will explore the state of the (Airbnb) short-term rental market in Memphis, delving into key statistics, regulations, and potential returns. Additionally, we will answer some essential questions about Memphis, such as its climate, population, tourist attractions, and more. Let’s dive in!
Market Overview
To understand the dynamics of the short-term rental market in Memphis, let’s delve into some key statistics and figures.
Supply
AS of March 2025, the most popular homes are 1-bedroom homes, comprising 26.36% of inventory. This is followed by 2 and Studio bedroom homes at 20.60% and 20.32% of the total inventory, respectively.
Homes Appreciation
As of March 2025, according to Zillow, homes in Memphis experienced an depreciation of 0.77%. This data indicates a significant decrease in property values.
Median Home Value
As of January of 2025, Homes in Memphis have depreciated by 0.77%. The median home value in Memphis is $145,900 as reported by Zillow. This figure highlights the city’s robust real estate market and the potential for long-term property appreciation.
Active Short Term Rentals
As of March 2025, Nashville boasts a significant Airbnb rental market, with approximately 2,003 active rentals. This abundance of available properties provides ample opportunities for investors and homeowners looking to capitalize on the tourism demand.
Average Daily Rate
The median ADR for the market is $179. The Average Daily Rate is the highest for 4-bedroom homes $173, followed by 5-bedrooms and 3 bedrooms at $166 and $142 respectively.
Occupancy Rate
Chalet data reveals an occupancy rate of 57.46% for Airbnb rentals in Memphis. This high demand ensures a consistent stream of income for property owners and investors.
How Profitable is Airbnb in Memphis ?
As of March 2025, the average gross yield, which represents the annual income generated by a property as a percentage of its value, is 23.86% in Memphis. This figure suggests that short-term rentals in the city offer a favorable return on investment. Memphis is ranked #5 by return on investment on Airbnb rentals in the United States.
Annual Revenue
According to Chalet, short-term rentals in Memphis earn an average of $24,001 annually, highlighting the strong investment potential in the city’s market. You can evaluate your properties using our free Airbnb calculator.
Hosts
The market is not dominated by property management firms. The largest host is Andrew with 4.93% of the total inventory and an average review of 4.77⭐️s .
Property Tax
According to SmartAsset, the average property tax in Memphis is 1.25%. This relatively moderate tax rate is an important consideration for those looking to invest in short-term rental properties.
Guests
The majority of the guests in Memphis come from Tennessee and are within driving distance. 5.0% of all guests are from Nashville followed by Nashville with 3.0%.
Regulations
Memphis short-term rental regulations are somewhat investor-friendly, with different zoning regulations and limitations in place. Understanding these regulations is crucial for potential investors to ensure compliance and a smooth operation.
Top Places for Airbnb in Memphis
Memphis top submarkets for Airbnb investments include areas like ZIP code 38126, which has the highest gross yield at 43% and an annual revenue of $32,439. In contrast, ZIP code 38114 offers more extensive opportunities with 90 full-time listings, but a lower gross yield of 27%.
Home values also vary significantly, with properties ranging from $95.3K in 38109 to $60.3K in 38106, making each submarket unique in terms of investment potential and entry cost.
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Essential Information about Memphis, TN
To gain a comprehensive understanding of the short-term rental market in Memphis, it’s crucial to explore some key details about the city itself. Let’s answer a series of questions that shed light on the context surrounding Memphis.
Median Household Income
The median household income in Memphis, TN, is an essential economic indicator. According to the latest available data, the median household income in the city is $42,926. This figure helps assess the local residents’ economic capacity and their potential as short-term rental customers.
Climate
Memphis experiences a humid subtropical climate. Summers are hot and humid, with temperatures regularly exceeding 90°F (32°C). Winters are generally mild, with occasional cold spells but rarely dipping below freezing. Spring and fall seasons bring pleasant temperatures, making them ideal times for tourists to explore the city.
Population
As of the most recent data, the population of Memphis, TN, is approximately 651,073. This makes Memphis the largest city in Tennessee and one with a substantial potential customer base for short-term rentals.
Sports Teams
Memphis is home to several professional and college sports teams. The Memphis Grizzlies, an NBA basketball team, captivate local sports fans with their exhilarating games. Additionally, the Memphis Redbirds, a Triple-A affiliate of the St. Louis Cardinals, entertain baseball enthusiasts during the summer season.
Colleges and Universities
Memphis boasts several esteemed educational institutions, including the University of Memphis, a prominent public research university. Other notable colleges in the area include Rhodes College, Christian Brothers University, and the University of Tennessee Health Science Center. These institutions attract students, faculty, and visitors, potentially creating a consistent demand for short-term rentals.
Crime Rate
While Memphis offers abundant opportunities, it is important to acknowledge the city’s crime rate. According to recent statistics, Memphis has a higher crime rate compared to the national average. Investors should be mindful of selecting locations with lower crime rates when considering short-term rental properties.
Visitor Demographics and Attractions
Memphis draws visitors from various locations, both domestic and international. According to available data, the majority of visitors to Memphis come from within the United States, with notable interest from nearby states such as Mississippi, Arkansas, and Missouri. International visitors often come from Canada, the United Kingdom, Germany, and Australia.
Memphis is renowned for its iconic tourist attractions, with the following being among the most popular:
- Graceland: The former home of Elvis Presley, Graceland offers a captivating glimpse into the life of the legendary musician.
- Beale Street: Known as the “Home of the Blues,” Beale Street is a vibrant entertainment district lined with clubs, restaurants, and live music venues.
- National Civil Rights Museum: Housed in the Lorraine Motel, the site of Martin Luther King Jr.’s assassination, this museum chronicles the Civil Rights Movement’s history.
- Sun Studio: Often referred to as the “Birthplace of Rock ‘n’ Roll,” Sun Studio is where legendary musicians like Elvis Presley, Johnny Cash, and Jerry Lee Lewis recorded their first hits.
- Memphis Zoo: This family-friendly attraction is home to a wide array of animals and offers an engaging experience for visitors of all ages.
Peak Season
Memphis experiences peak tourist seasons during certain times of the year. The spring and fall seasons are generally considered the busiest periods, as the weather is pleasant and various events, such as music festivals and cultural celebrations, take place during these times. Visitors flock to the city to enjoy outdoor activities, live music, and explore its vibrant culture.
Conclusion
The Airbnb rental market in Memphis, TN, presents an appealing opportunity for investors. With its favorable property appreciation, affordable median home values, and substantial short-term rental demand, Memphis offers potential for attractive returns. Additionally, the city’s diverse attractions, rich cultural heritage, and robust visitor demographics contribute to its overall appeal.
However, investors should be mindful of factors such as property tax, short-term rental regulations, and the city’s crime rate. By staying informed and choosing their investment properties wisely, investors can leverage the thriving short-term rental market in Memphis to generate significant income. With the right approach, this southern gem can prove to be a profitable and rewarding investment destination.
