Is Memphis, Tennessee Good for Airbnb Investment?

To start an Airbnb in Memphis, Tennessee, begin by researching local regulations as Memphis requires short-term rental operators to obtain a business license from the City Clerk's office and register with the Tennessee Department of Revenue for state tax collection. Contact Memphis Code Enforcement at 901-636-6000 to verify zoning compliance, as some residential areas restrict short-term rentals, and obtain necessary permits including a Certificate of Compliance which costs approximately $100-200. Find a suitable property by analyzing high-demand neighborhoods like Cooper-Young, Overton Park, or Downtown Memphis using AirDNA or similar platforms to assess occupancy rates and pricing, ensuring the property meets safety requirements including smoke detectors, carbon monoxide detectors, and proper egress windows. Furnish the space with quality basics including comfortable bedding, essential kitchen appliances, WiFi, and local Memphis-themed touches while ensuring compliance with Americans with Disabilities Act requirements where applicable. Create your Airbnb listing with professional photography highlighting unique Memphis attractions nearby, set competitive pricing based on local market analysis typically ranging $75-150 per night depending on location and amenities, and write compelling descriptions emphasizing proximity to Beale Street, Graceland, or the National Civil Rights Museum. Manage your property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges or installing smart locks, maintaining the property regularly, collecting and remitting the required 9.75% Tennessee state sales tax plus local hotel occupancy taxes, and keeping detailed records for tax purposes while monitoring guest reviews to maintain high ratings and visibility on the platform.

To identify profitable short-term rental properties in Memphis, Tennessee, focus on location criteria including proximity to Beale Street, downtown entertainment district, Graceland (within 10-15 minutes), medical district near major hospitals, and emerging neighborhoods like Cooper-Young, Overton Park, and South Main Arts District. Target property features such as 2-4 bedroom homes or condos with parking, outdoor spaces, historic charm typical of Memphis architecture, and properties built after 1978 to avoid lead paint issues common in older Memphis housing stock. Conduct pricing analysis by researching comparable STRs earning $100-200 per night for quality properties, with annual revenue potential of $25,000-50,000 depending on size and location, while factoring in Memphis property taxes averaging 1.3% and insurance costs that may be higher due to weather risks. Research competition using AirDNA and STRData to analyze occupancy rates in target zip codes like 38103, 38104, and 38105, noting that Memphis has moderate STR saturation compared to Nashville, creating opportunities for well-positioned properties. Utilize Memphis-specific resources including the Greater Memphis Association of Realtors MLS, Memphis tourism data from Memphis Travel showing 12+ million annual visitors, local property management companies like RedAwning or Vacasa for market insights, and monitor Memphis city regulations as STR rules have evolved since 2019 with permit requirements and zoning restrictions in certain residential areas.

To obtain an Airbnb/STR permit in Memphis, Tennessee, you must first register with the City of Memphis Revenue Division by visiting their office at 125 N. Main Street or applying online through the city's business portal. Required documents include a completed short-term rental registration application, proof of property ownership or lease agreement with landlord consent, certificate of occupancy, fire safety inspection certificate from the Memphis Fire Department, general liability insurance policy with minimum $500,000 coverage naming the city as additional insured, floor plan showing maximum occupancy, and contact information for a local responsible party available 24/7. The registration fee is approximately $250 annually, with additional inspection fees of around $100. You must also obtain a business license through the Tennessee Secretary of State and register for local taxes with the Memphis Revenue Division. The process typically takes 4-6 weeks from application submission to approval, provided all inspections pass and documentation is complete. Memphis requires STRs to maintain occupancy limits based on property size (generally 2 people per bedroom plus 2 additional), provide adequate parking, maintain noise ordinance compliance, and ensure the property meets all building and fire codes. Properties in certain historic districts or residential zones may have additional restrictions or require special zoning approval, so check with Memphis Development Services for zone-specific requirements before applying.

Short-term rentals (STRs) are legal in Memphis, Tennessee, but operate under specific regulations established by the city. Memphis requires STR operators to obtain a business license and comply with zoning restrictions that generally allow STRs in residential areas with certain limitations on the number of properties per owner and occupancy limits. The city prohibits STRs in some historic districts and requires operators to maintain liability insurance, provide emergency contact information, and ensure properties meet safety standards. Recent changes around 2019-2020 included stricter enforcement mechanisms and clearer permitting processes, with the city implementing a registration system to better track and regulate STR operations. Properties must also comply with parking requirements and noise ordinances, and there are restrictions on advertising unlicensed properties, with violations subject to fines and potential license revocation.

The best Airbnb investment areas in Memphis include Downtown/South Main District, which attracts tourists visiting Beale Street, FedExForum events, and business travelers to major corporations like FedEx and AutoZone headquarters. The Cooper-Young neighborhood offers strong potential due to its trendy restaurants, nightlife, and proximity to Overton Park, appealing to younger travelers and festival-goers. Midtown near the Medical District presents opportunities for medical tourism and visitors to St. Jude Children's Research Hospital, Methodist Le Bonheur Healthcare, and University of Tennessee Health Science Center. The Victorian Village/Uptown area provides historic charm near downtown attractions while offering more affordable property prices. East Memphis, particularly near Graceland and the airport, captures Elvis tourism year-round and benefits from convenient airport access for business travelers. The Crosstown/Evergreen Historic District has emerged as a hip area with the Crosstown Concourse development, attracting visitors interested in arts, dining, and unique accommodations in a revitalized neighborhood.

In Memphis, Tennessee, Airbnb properties are subject to multiple lodging taxes including the Tennessee state sales tax of 7%, Davidson County hotel occupancy tax of 5%, and Memphis city hotel/motel tax of approximately 6.75%, resulting in a combined rate of around 18.75% on short-term rental stays. The Tennessee Department of Revenue requires hosts to register for a sales tax permit and collect state sales tax, while the Memphis Tourism Development Zone imposes additional occupancy taxes that must be collected from guests and remitted monthly to the city's finance department. Airbnb typically collects and remits these taxes automatically for hosts in Memphis through their platform since 2018, though individual hosts remain responsible for ensuring compliance and may need to file additional returns with local authorities. Properties rented for 30 days or longer are generally exempt from occupancy taxes, and some exemptions may apply for government employees or certain non-profit organizations, but standard short-term rentals under 30 days are subject to the full tax burden with remittance due by the 20th of each month following collection.

To start an Airbnb in Memphis, Tennessee, the total initial costs would be approximately $185,000-$220,000. Property purchase represents the largest expense at $140,000-$160,000 based on median home prices in desirable Memphis neighborhoods like Cooper-Young or Midtown. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom setup including furniture, appliances, linens, and décor to create an attractive rental space. Initial setup costs including professional photography, listing creation, welcome materials, and basic supplies total around $2,000-$3,000. Memphis requires short-term rental permits and business licenses costing approximately $500-$800 annually, plus potential HOA fees. Insurance for short-term rentals runs $1,500-$2,500 annually, significantly higher than standard homeowner's insurance. Utility setup and deposits for electricity, water, gas, internet, and cable average $500-$800 initially. First six months of operating costs including utilities ($200-$300 monthly), cleaning services ($75-$100 per turnover), maintenance reserves ($200-$400 monthly), property management software ($50-$100 monthly), and marketing expenses total approximately $4,000-$7,000, assuming 60-70% occupancy rates typical for Memphis Airbnb properties.

Airbnb properties in Memphis, Tennessee typically generate average annual revenues of $25,000-$45,000 for well-positioned properties, with downtown and medical district locations commanding premium rates of $80-$150 per night while suburban properties average $50-$90 nightly. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-$50 per turnover), property management (15-25% of revenue), utilities ($150-$300 monthly), insurance ($1,200-$2,500 annually), and maintenance costs averaging $2,000-$4,000 yearly. Properties near major attractions like Beale Street, Graceland, and the medical district consistently achieve 65-80% occupancy rates with profit margins of 25-40%, while a typical 3-bedroom home in Midtown purchased for $180,000 in 2019 generated $38,000 annual revenue with $22,000 in expenses, yielding a 9% cash-on-cash return. Success factors include proximity to tourist destinations, professional photography, responsive guest communication, and strategic pricing that adjusts for events like Memphis in May festival when rates can triple, though hosts must navigate Memphis's short-term rental regulations requiring permits and limiting rentals to owner-occupied properties or designated zones, with the most profitable operators typically managing 3-5 properties and leveraging economies of scale in cleaning and maintenance services.

Airbnb investments in Memphis, Tennessee typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15% depending on property location and management efficiency. Properties in popular areas like Cooper-Young, Overton Park, and downtown Memphis near Beale Street command higher nightly rates of $80-150, while suburban locations average $60-100 per night. Initial investment recovery and profitability usually occurs within 18-24 months for well-positioned properties, with gross rental yields averaging 15-22% annually. The Memphis market benefits from strong tourism driven by music heritage attractions, FedEx corporate presence, and medical district activity, supporting consistent occupancy rates of 65-75% for properly marketed properties. Cash-on-cash returns are enhanced by Memphis's relatively low property acquisition costs averaging $150,000-250,000 for suitable investment properties, though investors should factor in 25-35% operating expenses including cleaning, maintenance, utilities, and platform fees when calculating net returns.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors in Memphis, Tennessee. Local Memphis real estate agents who focus on Airbnb investment properties include Keller Williams Realty agents specializing in investment properties, RE/MAX agents with short-term rental expertise, and Crye-Leike Realtors who understand the Memphis vacation rental market. National services include Mashvisor, which provides Airbnb analytics and property recommendations for Memphis, BiggerPockets marketplace connecting investors with Memphis properties, Roofstock for turnkey rental properties, and AirDNA for market analysis and property performance data. Local Memphis-based companies such as Memphis Investment Properties, Bluff City Real Estate Investors, and Mid-South Property Solutions offer specialized services for Airbnb investors. Additional national platforms include Awning for short-term rental property management and investment guidance, RedfinNow for quick property acquisitions, and LoopNet for commercial and investment property listings in the Memphis area, all of which have been serving investors since the mid-2010s when the Airbnb investment market began expanding significantly.