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Cap Rate Analysis: Memphis, TN

Investment metrics, interactive calculators, and data-driven analysis for Memphis rental properties.

Moderate — source deals carefully
Based on $195,000 median price and $1,180/mo median rent
Est. Cap Rate
4.42%
1% Rule
0.61%
Fails
GRM
13.8x
Price / Income
4.5x

Market Data

Median Home Price$195,000
Median Monthly Rent$1,180
Property Tax Rate1.48%
Population633,104
Population Growth0.3% / yr
Median Household Income$43,200
Vacancy Rate7.8%
Annual Appreciation2.2%

Cap Rate Calculator — Memphis

Pre-filled with Memphis medians. Adjust to match a specific property.

Property Details
$
$
3–8% typical
%
Monthly Expenses
1.48% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.51%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$6,840
net operating income
Gross Rent Multiplier
13.8x
Good (<15)
1% Rule
0.61%
✗ Fails
Monthly Cash Flow
$570
before debt service
Annual Breakdown
Gross Rental Income$14,160
Less Vacancy−$1,104
Effective Income$13,056
Less Operating Expenses−$6,216
Net Operating Income$6,840

Cash-on-Cash Return — Memphis

Factor in financing to see your actual return on invested capital in Memphis.

$
$48,750
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-5.92%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$54,600
$48,750 down + $5,850 closing
Monthly Mortgage
$953
on $146K loan
Monthly Cash Flow
$-269
after all expenses
Annual Cash Flow
$-3,233
before taxes
Cash Flow Breakdown
Monthly Rent$1,180
Less Expenses−$496
Less Mortgage−$953
Monthly Cash Flow$-269

Is Memphis a Good Place to Invest in Rental Property?

Memphis, TN has a population of 633,104 and has been growing at 0.3% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $195,000 paired with median rents of $1,180/mo produces an estimated cap rate of 4.42%.

Property taxes at 1.48% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 7.8% runs above average, which increases cash flow volatility and warrants conservative underwriting.

At a price-to-income ratio of 4.5x, homes cost about 4.5 times the local median income of $43,200. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.2% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.

Bottom line: Memphis presents moderate opportunities. Cap rates near 4.42% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.

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