Memphis, Tennessee: Market Data, Laws & Investor Guide

Memphis, Tennessee has emerged as a premier location for savvy Airbnb hosts looking to capitalize on the city's booming tourism industry and thriving short-term rental market. With its rich history, vibrant culture, and world-class attractions, Memphis welcomed over 10.7 million visitors in 2021 alone. As travel continues to rebound post-pandemic, the city is poised for even greater growth in the coming years.

One key factor driving Memphis's appeal for Airbnb hosts is the city's affordable real estate market. Despite rising home values, the median price of a Memphis home in August 2022 was just $190,000 - a mere 7.1% increase from the previous year. This affordability, combined with the high percentage of renters in the city, has made Memphis the #1 real estate market for investors outbidding homebuyers for the best properties.

The short-term rental market in Memphis is also experiencing impressive growth. As of July 2024, there are over 1,425 active rentals in the city, with a staggering 76% year-over-year growth in new Airbnb listings. The average occupancy rate stands at a healthy rate, with hosts earning an average daily rate of $115. Top hosts in Memphis reported annual revenues exceeding $30,000 in 2023.

Memphis's popularity as a tourist destination is another compelling reason to start an Airbnb business in the city. With attractions like Graceland, the National Civil Rights Museum, and the iconic Beale Street, Memphis offers visitors a unique blend of music, history, and southern charm. The city's 41 museums, vibrant art scene, and numerous parks and gardens provide endless opportunities for guests to explore and enjoy their stay.

As the short-term rental market continues to thrive in Memphis, now is the perfect time for aspiring Airbnb hosts to stake their claim in this dynamic and profitable industry. With its affordable real estate, growing demand for short-term rentals, and unparalleled tourist appeal, Memphis is undoubtedly one of the top destinations for Airbnb hosts in 2024.

Memphis Short-Term Rental Market Analysis

Memphis's short-term rental market has experienced significant growth in recent years, making it an attractive destination for Airbnb hosts. According to AirDNA, as of July 2024, the city boasts the following key metrics:

• Average occupancy rate: 45%
• Average daily rate: $197
• Average monthly revenue: $32,357

Compared to the previous year, Memphis has seen notable improvements in its short-term rental market:

1. Active listings grew by 8% year-over-year
2. Average monthly revenue increased by 5% year-over-year
3. Average daily rate rose by 5% year-over-year

Memphis's Airbnb market exhibits moderate seasonality, with a seasonality score of 87 out of 100. This indicates that the city experiences some fluctuations in demand throughout the year, with peak seasons driving higher occupancy rates and nightly prices.

The city's tourism industry has also witnessed substantial growth in recent years. In 2024, Tennessee tourism set a new record, with visitor spending reaching $29.2 billion, a 6.2% increase from 2022. This marks the third consecutive year of double-digit growth for the state's tourism industry. Memphis Tourism reported record results in the local hotel industry in 2022, with hotel occupancy reaching 65.8% and average daily rates increasing by 15.3% compared to 2021.

Several annual events and festivals in Memphis contribute to the city's thriving tourism industry and boost demand for short-term rentals:

1. Beale Street Music Festival (May)
2. World Championship Barbecue Cooking Contest (May)
3. Cooper-Young Festival (September)
4. Gonerfest (September)
5. Memphis in May International Festival (May)

While exact data on the strength of Memphis's mid-term rental market is limited, Airbnb does offer a selection of furnished monthly rentals and extended stays in the city. These long-term rentals cater to digital nomads, traveling professionals, and those seeking temporary housing solutions, indicating a potential demand for mid-term stays in Memphis.

Best Neighborhoods in Memphis for an Airbnb Business

When searching for the ideal location to start an Airbnb business in Memphis, hosts should consider factors such as proximity to popular attractions, up-and-coming areas, and tourist hotspots. By analyzing data from reputable sources like AirDNA and Mashvisor, as well as incorporating local knowledge, we've identified the top 5 neighborhoods in Memphis for starting an Airbnb business.

1. Downtown Memphis

Downtown Memphis is a prime location for Airbnb hosts due to its proximity to popular attractions like Beale Street, the National Civil Rights Museum, and the Memphis Riverfront. According to AirDNA, as of July 2024, the Downtown Memphis Airbnb market boasts:

1. Average Occupancy Rate: 58%
2. Average Daily Rate: $215
3. Airbnb Seasonality: High (80)
4. Estimated Annual Revenue: $45,515

The median home price in Downtown Memphis is $325,000, with one-bedroom apartments being the most popular and profitable rental type.

2. Midtown

Midtown is a trendy, up-and-coming neighborhood known for its vibrant arts scene, eclectic restaurants, and proximity to Overton Park. Mashvisor's July 2024 data shows:

1. Average Occupancy Rate: 62%
2. Average Daily Rate: $180
3. Airbnb Seasonality: Moderate (70)
4. Estimated Annual Revenue: $40,716

The median home price in Midtown is $285,000, with two-bedroom houses providing the best return on investment.

3. Cooper-Young

Cooper-Young is a historic neighborhood known for its unique shops, restaurants, and annual festival. According to AirDNA, as of July 2024, the Cooper-Young Airbnb market features:

1. Average Occupancy Rate: 60%
2. Average Daily Rate: $165
3. Airbnb Seasonality: Moderate (65)
4. Estimated Annual Revenue: $36,135

The median home price in Cooper-Young is $260,000, with two-bedroom houses being the most profitable rental type.

4. East Memphis

East Memphis is a upscale neighborhood with easy access to shopping, dining, and attractions like the Memphis Botanic Garden. Mashvisor's July 2024 data reveals:

1. Average Occupancy Rate: 55%
2. Average Daily Rate: $190
3. Airbnb Seasonality: Low (55)
4. Estimated Annual Revenue: $38,095

The median home price in East Memphis is $350,000, with three-bedroom houses providing the best return on investment.

5. Broad Avenue Arts District

The Broad Avenue Arts District is an up-and-coming neighborhood known for its art galleries, breweries, and unique architecture. According to AirDNA, as of July 2024, the Broad Avenue Arts District Airbnb market showcases:

1. Average Occupancy Rate: 52%
2. Average Daily Rate: $150
3. Airbnb Seasonality: Low (50)
4. Estimated Annual Revenue: $28,470

The median home price in the Broad Avenue Arts District is $200,000, with one-bedroom apartments being the most popular and profitable rental type.

By considering these top neighborhoods and their respective Airbnb market data, aspiring hosts can make informed decisions when starting their Airbnb business in Memphis. It's essential to balance factors such as home prices, rental types, and estimated revenue to maximize profitability and success in the competitive short-term rental market.

Maximizing Your Revenue Through In-Demand Amenities and Properties in Memphis

To maximize your revenue as an Airbnb host in Memphis, it's crucial to set competitive prices and offer in-demand amenities that appeal to potential guests. By analyzing the top-performing listings in the city, we've identified key factors that contribute to their success.

When setting your prices, consider the following factors:

1. Location: Properties in popular neighborhoods like Downtown, Midtown, and Cooper-Young can command higher rates due to their proximity to attractions and amenities.
2. Seasonality: Adjust your prices based on peak travel seasons, such as summer and holidays, to capitalize on increased demand.
3. Occupancy rates: Monitor your occupancy rates and adjust prices accordingly to maintain a healthy balance between bookings and revenue.

Top-performing Airbnb listings in Memphis often feature the following amenities:

• Self check-in: Guests appreciate the flexibility and convenience of being able to check in on their own schedule.
• Outdoor spaces: Private patios, balconies, or backyards are highly sought-after, especially in the warmer months.
• Unique decor: Listings with stylish, modern, or themed decor stand out and attract more bookings.
• Pet-friendly accommodations: Allowing pets can significantly increase your potential guest pool and justify higher rates.

To implement these amenities, consider investing in keyless entry systems, upgrading your outdoor spaces, and working with local artists or designers to create a distinctive aesthetic. Additionally, develop a rigorous cleaning regimen and communicate your commitment to cleanliness in your listing description.

In Memphis, the most popular property types for short-term rentals are:

Single-family homes:

Average property price: $280,762 (as of July 2024)

Potential STR revenue:

• 1-bedroom: $35,000 annually
• 2-bedroom: $45,000 annually
• 3-bedroom: $60,000 annually

Apartments and condos:

Average property price: $220,000 (as of July 2024)

Potential STR revenue:

• Studio: $25,000 annually
• 1-bedroom: $30,000 annually
• 2-bedroom: $40,000 annually

Townhouses:

Average property price: $250,000 (as of July 2024)

Potential STR revenue:

• 2-bedroom: $42,000 annually
• 3-bedroom: $55,000 annually

These figures are based on recent trends and data from the past few years, which show a steady increase in demand for short-term rentals in Memphis. By focusing on these popular property types and incorporating in-demand amenities, hosts can maximize their revenue potential in this thriving market.

Understanding Memphis Short-Term Rental Regulations

Memphis, Tennessee, has implemented a comprehensive set of regulations for short-term rental properties to manage their impact on local communities. As of July 1, 2023, property owners must obtain a permit from the Division of Public Works for each STR property they own, with an application fee of $300 and an annual renewal cost of $150. However, properties used as STRs before this date are exempt from the permit requirement until certain conditions are met, such as the property being sold or transferred.

To operate an STR in Memphis, owners must submit a site plan, provide proof of insurance coverage of at least $1 million, and comply with building, health, and safety codes. They must also designate a local contact person to promptly address any issues or violations. STR operators are required to collect the city's occupancy privilege tax (around 15.25% of the rental rate) and a $2 per bedroom per night assessment from guests.

The city has established additional rules, such as requiring property owners to live within 50 miles of the rental property, respond to complaints promptly, and adhere to strict safety and health codes. Memphis enforces these regulations strictly, with fines imposed for violations, to maintain the character and livability of residential neighborhoods.

For those interested in starting an STR business in Memphis, it is essential to familiarize themselves with the city's regulations and ensure their property meets all necessary requirements. Stay up-to-date on any updates or modifications to the city's STR rules, as they are subject to change.

Read our full STR regulations guide for more detailed information on Memphis short-term rental regulations, including insights from local hosts and a closer look at other policies.

Keys to Success as a Memphis Airbnb Host

To thrive as an Airbnb host in Memphis, it's essential to understand the preferences of your target audience and provide amenities that cater to their needs. According to Airbnb listings and host experiences shared on various forums, popular amenities in Memphis include:

• Outdoor spaces: Private patios, balconies, or backyards for guests to enjoy the warm Memphis weather.
• Unique decor: Listings with stylish, modern, or Memphis-themed decor stand out and attract more bookings.
• Pet-friendly accommodations: Allowing pets can significantly increase your potential guest pool.
• Pools: Homes with pools are highly sought-after, especially during the summer months.

To attract Memphis customers, focus on highlighting the unique aspects of your property and its proximity to popular attractions. Emphasize your listing's walkability to landmarks like Beale Street, Graceland, or the National Civil Rights Museum. Showcase the best of Memphis culture by incorporating local art, music, or culinary experiences into your listing.

However, operating an Airbnb in Memphis also comes with potential challenges and risks. One common issue faced by hosts is the risk of guest scams or property damage. To mitigate these risks, thoroughly screen potential guests, require a security deposit, and maintain open communication throughout the booking process.

Another challenge specific to Memphis is navigating the city's short-term rental regulations. Hosts must obtain the necessary permits, pay applicable taxes, and adhere to zoning requirements to avoid fines and legal issues. Failure to comply with these regulations can result in hefty penalties.

To run a successful Airbnb in Memphis, consider the following guidelines:

• Familiarize yourself with Memphis's short-term rental laws and obtain the required permits.
• Invest in high-quality photos and detailed listing descriptions to showcase your property's unique features.
• Provide exceptional customer service by being responsive to guest inquiries and addressing any issues promptly.
• Implement a rigorous cleaning regimen and communicate your commitment to cleanliness.
• Leverage Airbnb's smart pricing tool to optimize your rates based on demand and seasonality.
• Engage with the local Airbnb community and seek advice from experienced hosts in Memphis.

By focusing on popular amenities, attracting the right customers, and navigating the challenges specific to Memphis, hosts can create a thriving Airbnb business in this vibrant city. Stay informed, adaptable, and committed to providing an exceptional guest experience to ensure long-term success in the competitive short-term rental market.

Using BNBCalc to Find Profitable Properties in Memphis, Tennessee

Aspiring Airbnb hosts in Memphis can leverage the power of BNBCalc to identify profitable properties and make informed investment decisions. By following these steps, you can streamline your property search and maximize your potential returns.

1. Analyze Properties Using BNBCalc

To begin your property search, simply enter the address of a potential investment property into BNBCalc. The tool will generate a comprehensive analysis, including estimated annual revenue, average daily rate, occupancy rate, and a list of comparable Airbnb rentals in the area. This data-driven approach allows you to quickly assess a property's potential profitability and make informed decisions.

2. Benchmark Comparable Rentals

BNBCalc provides a list of nearby rentals, enabling you to benchmark your property against top-performing listings in the area. Analyze the amenities, pricing, and occupancy rates of these comparable rentals to identify best practices and strategies for maximizing your own revenue. By understanding the competitive landscape, you can position your property to fetch top dollar and attract a steady stream of guests.

3. Determine the Right Price and Property Size

Using BNBCalc's financial summary, you can determine the optimal number of bedrooms, bathrooms, and purchase price to maximize your revenue potential. The tool takes into account factors such as operating expenses, financing costs, and local market trends to provide accurate projections. By fine-tuning your property search based on these insights, you can identify the sweet spot that balances investment costs with potential returns.

4. Make an Offer

Once you've identified a promising property, use BNBCalc's financial projections to determine a fair purchase price that aligns with your investment goals. To streamline the financing process, consider working with BNBCalc's partnered STR lender, such as Brian Bockholdt at Alliant Credit Union, to secure the lowest interest rates and get pre-qualified for a loan. With a solid understanding of your property's potential and a pre-approval in hand, you'll be well-positioned to make a competitive offer and close the deal.

5. Use the Tax Calculator

BNBCalc's built-in tax calculator is a valuable tool for estimating potential tax deductions, including bonus depreciation. By inputting your property's details and projected income, you can gain a clearer picture of your after-tax returns and optimize your investment strategy accordingly. Understanding the tax implications of your Airbnb business is crucial for maximizing profitability and ensuring compliance with local regulations.

6. Come Up With a Buy Box

Finally, use BNBCalc's insights to develop a clear buy box - a set of criteria that defines your ideal investment property. Your buy box should take into account factors such as location, property type, size, and potential returns, based on the data provided by BNBCalc. By establishing a well-defined buy box, you can streamline your property search, focus on the most promising opportunities, and make confident investment decisions that align with your goals.

By leveraging the power of BNBCalc and following these steps, aspiring Airbnb hosts in Memphis can identify profitable properties, benchmark against top-performing rentals, and make data-driven investment decisions. With the right tools and strategies in place, you'll be well on your way to building a thriving short-term rental business in this dynamic and growing market.

Ready to start your Airbnb journey in Memphis? Use BNBCalc to analyze potential properties and make informed investment decisions. Our powerful tool provides comprehensive data to help you maximize your profits. Check out this pre-analyzed Memphis Airbnb opportunity and see how BNBCalc can help you succeed in the short-term rental market. Visit BNBCalc.com today and take the first step towards building your Airbnb business.