Short answer: In Memphis, TN, the median home value is $209,800 and the median 3-bedroom rents for $1,418/mo (Census ACS 2024). That's a rent-to-price ratio of 0.68%, so it misses the 1% rule and ranks #3 of the 50 largest US rental markets. With 20% down at 7.40%, FirstDoor scores a median-priced home Pass (−$320/mo cash flow).
Key numbers
The 1% rule in Memphis
The 1% rule says monthly rent should be at least 1% of the price. Here's how Memphis compares.
Across all rentals (not just 3-bedrooms) the ratio is 0.60%. A home renting for the median 3-bedroom rent would need to cost about $142,000 or less to pass.
A typical Memphis home, scored
We took a home at the median value, gave it the median 3-bedroom rent, and ran it through the same math as the FirstDoor calculator: 20% down, a 30-year loan at 7.40%, the city's median tax rate, and standard expense budgets.
| 3-bedroom rent (median) | $1,418 |
| Property tax ($1,947/yr, local median) | −$162 |
| Insurance ($1,050/yr, assumed) | −$88 |
| Vacancy 10% · Maintenance 5% · Management 8% | −$326 |
| Net operating income | $842 |
| Mortgage (P&I on $167,840 at 7.40%) | −$1,162 |
| Monthly cash flow | −$320 |
What price works in Memphis?
Price is the lever you control. Holding rent at the Memphis median, these are the price ceilings for each FirstDoor result.
Takeaways
- At 0.68%, Memphis is near the top of the list (#3 of 50) but still short of 1%. Deals here can work if you buy below the median.
- A median-priced home here would cost you about $320/mo out of pocket after the mortgage and every expense. To break even you'd need to pay about $160,000, 24% below the median.
- Rents are outrunning prices: the median 3-bedroom rent rose 7.7% from 2023 to 2024 while values rose 4.4%. That slowly improves the math for buyers.
- Rental vacancy is high at 10.1% (US: 5.7%), so we budgeted 10% vacancy instead of 5%. Price in a longer wait for tenants.
- Renters are the majority here (55% of households), so the tenant pool is deep.
Frequently asked questions
Does Memphis pass the 1% rule?
No, on typical numbers. The median 3-bedroom gross rent is $1,418/mo and the median home value is $209,800 (Census ACS 2024 1-year), a ratio of 0.68%. To pass at that rent, a home would need to cost about $142,000 or less.
What is the typical rent for a 3-bedroom in Memphis?
The median gross rent for a 3-bedroom in Memphis, TN is $1,418 a month, and $1,263 across all rentals (Census ACS 2024 1-year). Gross rent includes utilities the renter pays, so the landlord's share can be a bit lower. The 3-bedroom median rose 7.7% from 2023.
Can you cash flow a rental in Memphis?
At the median price, not easily. With 20% down at 7.40% and realistic expenses, a $209,800 home renting for $1,418 loses about $320/mo. It breaks even at roughly $160,000.
How much cash do you need to buy a typical rental in Memphis?
About $48,260: a 20% down payment of $41,960 plus closing costs we assume at 3% ($6,300). Lenders often also want several months of reserves. Investment loans commonly need 15–25% down.
Is Memphis a good place to buy a first rental?
FirstDoor scores a median-priced home in Memphis as Pass (0 of 8 points). That's a starting point, not a verdict on every listing: neighborhoods vary, and buying below the median changes the math. Run any listing through the free calculator.
Compare similar markets
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Sources
Data: U.S. Census Bureau, 2024 American Community Survey 1-year estimates (released September 2025); year-over-year changes compare with 2023. Mortgage rate: Freddie Mac PMMS, week of October 15, 2026. Retrieved October 15, 2026. Insurance ($1,050/yr), closing costs (3%), maintenance (5%) and management (8%) are FirstDoor assumptions, not local data. Investment-property loans often price above the PMMS average. Medians describe the whole city, not any one home. Educational content, not financial advice.