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, while also checking specific zoning restrictions in your target neighborhood since some residential areas may prohibit short-term rentals. Obtain necessary permits including a Memphis business license ($15-50 annually), Tennessee sales tax permit for collecting state and local taxes (currently 9.75% in Memphis), and ensure compliance with fire safety codes which may require smoke detectors, carbon monoxide detectors, and fire extinguishers depending on property size. Find a suitable property by analyzing Memphis neighborhoods like Cooper-Young, Overton Park, or Downtown for tourist appeal, considering proximity to attractions like Beale Street, Graceland, and the National Civil Rights Museum, while evaluating properties for profitability using tools like AirDNA to assess local occupancy rates and average daily rates which typically range $75-150 in Memphis. Furnish the property with essential amenities including comfortable bedding, fully equipped kitchen, reliable Wi-Fi, smart TV, air conditioning (crucial for Memphis summers), and local guidebooks highlighting Memphis attractions, while ensuring the space reflects local character with blues or music-themed décor. List your property on Airbnb and other platforms like VRBO, creating compelling descriptions that highlight proximity to Memphis attractions, include professional photography, set competitive pricing based on local market analysis, and implement dynamic pricing strategies for peak periods like Memphis in May festival or Elvis Week. Manage operations by establishing efficient check-in/check-out procedures using smart locks or lockboxes, hiring reliable cleaning services familiar with short-term rental turnovers, maintaining prompt guest communication, collecting and remitting required taxes to Tennessee Department of Revenue quarterly, and keeping detailed records for tax purposes while monitoring reviews and adjusting services accordingly to maintain high ratings in Memphis's competitive short-term rental market.

To identify profitable short-term rental properties in Memphis, Tennessee, focus on location criteria including proximity to Beale Street, downtown entertainment districts, medical centers like St. Jude Children's Research Hospital, and major attractions such as Graceland and Sun Studio, while targeting neighborhoods like Cooper-Young, Overton Park, and South Main that attract both tourists and business travelers. Seek properties with 2-4 bedrooms, parking availability, outdoor spaces, updated kitchens and bathrooms, and unique character features that photograph well, as Memphis visitors often prefer authentic experiences over generic accommodations. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by at least 40-60%, targeting purchase prices between $80,000-$200,000 in emerging neighborhoods with strong walkability scores. Research competition by analyzing existing Airbnb and VRBO listings within a 1-mile radius, identifying gaps in amenities or property types, and monitoring occupancy rates and seasonal pricing trends, particularly during peak tourism months of April-October and major events like Memphis in May. Utilize Memphis-specific resources including the Greater Memphis Chamber of Commerce market reports, Shelby County property records, local real estate agents specializing in investment properties, and tools like Rabbu and Awning for market analysis, while staying informed about local STR regulations and permit requirements through the City of Memphis planning department.

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, certificate of occupancy, general liability insurance policy with minimum $500,000 coverage, floor plan of the rental unit, and valid Tennessee state and local business licenses. The registration fee is approximately $200 annually, with additional inspection fees of around $100. You must also obtain a Certificate of Compliance from Memphis Light, Gas & Water (MLGW) and pass a city safety inspection covering smoke detectors, carbon monoxide detectors, fire extinguishers, and emergency exit signage. Memphis requires STR properties to maintain a 24/7 local contact person within 30 miles, display the registration number in all advertisements, collect and remit local occupancy taxes of 6.75%, and comply with zoning restrictions that limit STRs in certain residential areas. The entire process typically takes 4-6 weeks from application submission to permit approval, assuming all inspections pass and documentation is complete. Properties must be re-inspected annually and registration renewed each year by December 31st to maintain compliance with Memphis STR regulations.

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 signage and commercial activities at STR locations.

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 International Paper; Midtown/Cooper-Young, popular for its vibrant arts scene, proximity to Overton Park and the Memphis Zoo, and appeal to younger travelers seeking authentic local experiences; East Memphis near Graceland, capitalizing on the 600,000+ annual visitors to Elvis Presley's mansion and related attractions; the Medical District near University of Tennessee Health Science Center, attracting medical professionals, students, and patients' families; Germantown and surrounding upscale suburbs, appealing to business travelers preferring quieter, safer accommodations with easy highway access; and the Crosstown/Evergreen Historic District, benefiting from urban revitalization projects and proximity to major hospitals like Methodist and Baptist Memorial, making it attractive for medical tourism and extended-stay guests visiting patients or attending medical conferences.

In Memphis, Tennessee, Airbnb hosts are subject to multiple lodging taxes including the state sales tax of 7%, Tennessee's state lodging tax of 7%, Shelby County's hotel/motel tax of 6.75%, and Memphis city lodging tax of 6.75%, resulting in a combined rate of approximately 27.5% on short-term rental stays. These taxes are typically collected by Airbnb directly from guests at the time of booking and remitted to the appropriate tax authorities on behalf of hosts, though hosts should verify their registration status with the Tennessee Department of Revenue and local tax offices. The state requires hosts to obtain a business license and register for sales tax collection, while Shelby County and Memphis may require separate registration for their respective lodging taxes. Remittance is generally done monthly or quarterly depending on volume, with Airbnb handling most of the collection and payment process automatically for registered properties. Exemptions may apply for stays exceeding 30 consecutive days, which are typically considered long-term rentals rather than short-term lodging, and certain government or non-profit related stays may qualify for exemptions, though hosts should consult with local tax authorities to confirm specific exemption criteria and ensure compliance with all applicable regulations.

Starting an Airbnb in Memphis, Tennessee requires approximately $180,000-220,000 in total initial investment. Property purchase costs average $150,000 based on Memphis median home prices as of 2023. Furnishing a 2-3 bedroom property typically costs $8,000-12,000 including beds, sofas, dining sets, appliances, linens, and decor. Initial setup expenses including professional photography, listing creation, and basic renovations run $2,000-3,000. Permits and fees vary by neighborhood but expect $500-1,500 for short-term rental permits, business licenses, and inspection fees. Insurance premiums for short-term rentals cost approximately $1,200-2,000 annually, with $600-1,000 needed upfront. Utility deposits and first month service for electricity, water, gas, internet, and cable total around $800-1,200. First six months operating costs including utilities ($150/month), cleaning services ($75 per turnover), maintenance reserves ($200/month), property management software ($50/month), and marketing expenses add approximately $3,500-5,000. Companies like Airbnb, VRBO, Furnishr, and local Memphis cleaning services are commonly utilized, with most successful properties launching between 2020-2024 as the short-term rental market expanded significantly.

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. Successful Memphis Airbnb operators like those near Beale Street and the University of Memphis achieve profit margins of 25-35% by targeting medical professionals visiting St. Jude Children's Research Hospital, tourists exploring Graceland and Sun Studio, and business travelers, with properties featuring modern amenities, professional photography, and strategic pricing during peak events like Memphis in May generating occupancy rates of 65-80%. Properties within 3 miles of major attractions or medical facilities consistently outperform suburban listings, with investors reporting ROI of 8-15% annually when factoring in property appreciation, though success heavily depends on initial property acquisition costs, renovation investments, and active management strategies including dynamic pricing and guest experience optimization.

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 Downtown, Cooper-Young, and near Graceland tend to achieve higher returns, with average daily rates of $85-120 and occupancy rates of 65-75%. Initial profitability usually occurs within 6-12 months for well-positioned properties, while full investment recovery typically takes 5-7 years. The Memphis market benefits from strong tourism driven by music heritage attractions, medical district visitors, and business travelers, with properties requiring initial investments of $80,000-150,000 for renovation and furnishing generating monthly gross revenues of $2,000-4,500 after reaching stabilized occupancy.

STRSearch is a leading national platform that helps investors identify profitable short-term rental properties in Memphis, Tennessee, providing market analytics and property recommendations. Local Memphis real estate agents specializing in Airbnb investments include Keller Williams Realty agents who focus on 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 offers Memphis-specific Airbnb analytics and property search tools, AirDNA for market data and revenue projections, Awning for full-service Airbnb property management and acquisition assistance, and RedAwning's investment property platform. Local Memphis companies such as Memphis Investment Properties, Bluff City Real Estate Investors, and Mid-South Property Solutions specialize in helping investors find cash-flowing rental properties. Additional national platforms include Roofstock, which occasionally features Memphis short-term rental properties, BiggerPockets for networking with local Memphis investors, and HostGPO for property management services. Local property management companies like Memphis Airbnb Management and River City STR Management also assist investors in both finding and operating profitable vacation rental properties in desirable Memphis neighborhoods near Beale Street, downtown, and medical districts.