Memphis Investment Property Market

Memphis Property Market Overview

Memphis, with an estimated population of 1.3 million1, is the economic center of the Tennessee, Mississippi, Arkansas area surrounding the Mississippi River. Because of its tremendous reach to many metropolitan areas via railroads, airports, highways and the Mississippi River, Memphis has earned a reputation as America's distribution center. Total freight (truck, air, rail, water, intermodal shipments) worth close to 83 billion dollars originates from Memphis every year which fuels the local economy and creates thousands of jobs in the logistics and transportation industries.2

Strong Yields and Favorable Market Fundamentals

The Single Family Rental market in Memphis currently has modest entry price point relative to other popular southeastern markets. Typical starter home costs $115K in comparison to homes in other markets such as Tampa at $143K, Atlanta at $170K, and Nashville at $180K.3 Memphis currently has high average gross rental yields of 11.7%4 particularly high when compared to the average gross rental yields in the largest Single Family Rental markets.5

Memphis home values are forecasted to grow by 3.75% within the next four years which is on par with national average.6 The underlying fundamentals that drive home value appreciation including employment growth of 0.83% and household growth of 1.1%, are expected to rise by rates similar with the forecasts for the top U.S. rental markets7.

Metropolitan-area specific highlights:
Memphis is home to FedEx headquarters and other major logistics operations run by companies like Nike and Target. The area is a growing market for medical device manufacturers that is expected to drive the job and income growth up in the region.8 While Memphis' 4-year annual average forecasted rent growth of 2.5% is lower than the national average of 3.4%, we believe it still supports strong yields for investment properties.9
  • Strong Gross Yields of 11.7%, compared to the national average of 9.2%10.
  • Modest entry price point at $115K relative to other popular southeastern markets11
  • Employment Growth: increasing at a steady rate of 1.28% annually over the past 5 years12
  • Above Average Negative Equity: 13.6% of homes have negative equity indicating the potential for local foreclosures13.
  • High Vacancy Rate: 88% occupancy can be an indicator of potential challenges finding and keeping tenants14.
  • FedEx utilizes the Memphis International Airport as its global transportation superhub which makes it the busiest cargo airport in the United States.
  • Home to St. Jude Children's Research Hospital, Nobel prize winning hospital with over 1,200 scientists.
  • The birthplace of Rock and Roll and Blues where many musicians such as Aretha Franklin and Elvis Presley launched their music careers.
  • 1 US Census Bureau; factfinder.census.gov
  • 2 Greater Memphis Chamber; memphischamber.com/Economic-Development/Industry/Logistics
  • 3 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 4 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 5 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 6 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 7 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 8 Greater Memphis Medical Device Council; www.gmmdc.org
  • 9 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 10 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 11 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 12 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017
  • 13 Zillow; www.zillow.com/research/local-market-reports/#top-50
  • 14 John Burns Consulting, Single-Family Rental Analysis and Forecast, March 2017

Real Estate Investment Insights

Investment Style: Balanced
While each property will differ, this market is likely to have properties that provide a blend of yield and appreciation.
Inventory:
Home Value *
$121,800
$201,900
National Avg
Home Value Growth (YoY)
6.7%
6.9%
National Avg
Rent **
$1,048
$1,430
National Avg
Source: Financial data from Zillow includes single family, condo & cooperative homes, updated on 08/31/2017
Job Growth (YoY)
1.5%
1.5%
National Avg
Household Growth (YoY)
0.5%
1.0%
National Avg
Estimated Months of Resale Supply
0.0%
4.2%
National Avg
Household Income
$52,700
$59,727
National Avg
Supply, Demand & Affordability data includes single family homes only, updated on 10/11/2017
  • Arrows indicate the directional change since the last update. No arrow indicates that there was no change in the data or no previous data is available.
  • * Home Value: includes all types of housing, including primary resident, condos, investment properties, etc.
  • ** Rent: includes all rental properties, including Single-Family Homes, multi family units, etc.