Memphis TN Real Estate Cash Flow: The Real Numbers

Here is the straight answer: as of late August 2026, a median-priced Memphis, TN house bought with 25% down does not cash flow on average market rent. Work through it with real Shelby County, TN property taxes, real vacancy and real maintenance and you land roughly $436 a month in the red. Cash flow in this market is still very real, but it lives at a lower price point than most out-of-state buyers expect, and I would rather show you the arithmetic than sell you a pro forma.

I am a third-generation Memphis-area real estate guy, and I also own a property management company here in Shelby County. That means I see both documents: the spreadsheet an investor is handed before closing, and the owner statement twelve months later. They are very often not the same document, and the gap is almost always in the line items nobody wanted to fund.

What does Memphis TN real estate cash flow look like right now?

Start with the two numbers that set the ceiling and the floor. Redfin, calculating from MLS and public records, put the median sale price in Memphis, TN at $208,886 over the three months ending June 2026, up 4.7% year over year, with a median 39 days on market. On the income side, Zillow Rentals data last updated August 21, 2026 showed an average asking rent of $1,259 across all property types in Memphis, TN, and $1,350 for a three-bedroom. Those rent figures are asking rents on active listings, not signed leases, so treat them as the optimistic end.

Now underwrite it. Take a $200,000 Memphis house renting at $1,350, financed with 25% down on a 30-year loan. Freddie Mac's survey released August 20, 2026 put the 30-year fixed at 6.65% and the 15-year at 5.95%, but that survey assumes 20% down, excellent credit and an owner-occupied purchase, so it is a benchmark and not a quote. Investment-property loans price above it. I have modeled 7.4% below purely as an illustration; get a real quote before you trust any of this.

• Principal and interest on a $150,000 loan at 7.4%: $1,038.57
• Property taxes: $219.62 a month, or $2,635.41 a year
• Insurance: $150 a month (an assumption - shop it)
• Management at 10%: $135
• Vacancy at 8%: $108
• Maintenance and capital reserves at 10%: $135
• Total monthly outflow: $1,786.19 against $1,350 of rent.

That is negative $436 a month, every month, before the first water heater fails.

Why are Shelby County property taxes such a big line item?

Because Memphis property owners inside the city limits pay two levies, and most out-of-state pro formas only budget for one. Tennessee assesses residential property at 25% of appraised value, per the Shelby County Trustee. For tax year 2026 the Shelby County rate is $2.69 per $100 of assessed value and the City of Memphis rate is $2.58081, for a combined $5.27081 inside the city. On a $200,000 house that is $50,000 assessed and $2,635 a year.

It is also moving. On June 30, 2026, the Shelby County Commission voted 8-5 to approve a $1.6 billion budget and set the tax year 2027 county rate at $2.702382, up from $2.69, as reported by WMC Action News 5. That is a small increase, but if your underwriting has no room for it, your underwriting has no room for anything.

What price point actually cash flows in Memphis, TN?

The old rule of thumb is that monthly rent should be about 1% of purchase price. At $1,350 of rent, a $200,000 house is at 0.68% - not close. Get the same rent on a $135,000 house and you are at exactly 1.00%, and the picture changes: principal and interest drop to $701.03, taxes to $148.24, and total outflow to $1,377.28. That is still negative $27 a month.

Push the down payment to 30% and you finally clear it, at about $19 a month positive. That is the honest headline. In Shelby County, TN at today's rates and today's tax levies, hitting the 1% rule gets you to roughly breakeven, not to income. Anyone promising you $300 a month of cash flow on a turnkey Memphis rental is either quoting a rate you cannot get, ignoring vacancy and capital reserves, or both. If you want the fuller version of this underwriting, I keep it in my Memphis rental property guide.

Do the Shelby County suburbs cash flow any better?

Generally no, and the rent numbers show why. That same Zillow Rentals pull from August 21, 2026 put average asking rent at $2,750 in Germantown, TN and $2,073 in Bartlett, TN - meaningfully higher than Memphis. But purchase prices in those Shelby County suburbs run higher by a wider margin than the rents do, so the rent-to-price ratio usually gets worse, not better, as you move east. Suburban Shelby County rentals can be excellent appreciation and tenant-quality plays. They are rarely the cash flow play.

That is a real strategic fork, and it is worth deciding deliberately rather than by accident. I walk through both approaches on my Memphis investment page, and there are free underwriting worksheets over in the guides section.

How should I underwrite a Memphis rental before I make an offer?

Three habits separate the investors who are still here in five years from the ones who quietly sell at a loss.

• Underwrite the actual rent, not the asking rent. Zillow's $1,350 is what landlords are asking. Ask what comparable houses on that specific street actually leased for, and how long they sat.
• Fund vacancy and capital reserves as real line items. Memphis had 3,347 rentals available on Zillow as of August 21, 2026, and average asking rent was down $41 year over year. That is a renter's market, and a renter's market shows up as vacancy days.
• Pull the actual tax bill for that parcel from the Shelby County Trustee before you write the offer. Do not estimate it, and do not assume the seller's number is current.

If you want a second set of eyes on a deal, the number is (901) 590-5787. I will run the same math for you that I just ran here, and if it does not work I will tell you it does not work. I would rather lose a commission than put someone into a house that bleeds. When it does pencil, I can help you buy it and manage it with one team - which brings me to a disclosure I owe you.

Disclosure: I am a REALTOR(R) with Reid Realtors, LLC and I also own Homefront Property Management, LLC. If you hire Homefront to manage a property you buy through me, I am compensated on both the sale and the management. You are never required to use Homefront, and I will give you the same underwriting numbers either way.

Market and rate figures as of August 26, 2026; rates change constantly — contact me for current numbers.