1st Advantage MortgageOut-of-state buyers dominate parts of the Memphis market, and the manager's track record matters more than the headline rent.
Buying Memphis from a distance
Interview managers about tenant screening, eviction timelines and maintenance response, and have an inspector walk the property before you commit. Keep reserves for vacancy and repairs, and ask the lender how it counts rent when a unit is vacant at closing.
Where to start looking
- Binghampton and Berclair. older stock with low entry prices
- Midtown and Cooper-Young. older bungalows and duplexes near Overton Square
The loan behind out-of-state investors
Remote buyers can close on investment property with a DSCR loan using mobile notaries, power of attorney where permitted, and electronic signing, depending on the title company and state.
Ask for the rent roll and leases directly from the seller or manager, and match them against bank deposits where the property is already leased. Local knowledge shows up in details such as school boundaries, flood zones and the streets where rents hold up, which a spreadsheet does not capture.
What is different in Memphis
The self-employed share of the workforce is 7.6%, and those owners tend to be exactly the buyers DSCR financing was built for. Other workforce markers: government workers are about 13% of employment, 28% of adults hold a bachelor's degree or higher and 5% of commuters travel 45 minutes or more.
Among the employers recorded for Memphis: The Commercial Appeal, Memphis Daily News, Memphis Flyer and Memphis Tri-State Defender. Those payrolls shape which neighborhoods lease fastest. University of Memphis are the named colleges for the Memphis area, a source of steady tenants but also of a lease cycle that follows the academic calendar. For getting around, Memphis has interstate access via I-40, I-55, I-69 and I-240 and air service through Memphis International Airport and Hong Kong International Airport, which matters to commuters and to out-of-town owners planning a visit.
On deposits, Tennessee law (Tenn. Code Ann. § 66-28-301) says: No statutory cap (Tenn. Code Ann. § 66-28-301 sets none). That figure belongs in your Memphis pro forma as cash you hold, never as rent. Expect to give 30 days written notice before the periodic rental date (10 days for week-to-week) of notice to end a month-to-month arrangement at a Memphis rental. As to caps on rent in Memphis: No; local governments may not control rent (Tenn. Code Ann. 66-35-102).
Gross yield of 8.4% puts Memphis in a comfortable range for DSCR math, so the questions shift from whether the rent covers the payment to how durable that rent is. Mid-aged stock (median built 1970) means many roofs and HVAC units are near the end of their lives, so ask for installation dates. Because 55% of households rent, vacancies tend to refill, and the pricing question is how much to charge relative to nearby units.
For Memphis, the latest five-year ACS shows a median gross rent of $1,181 (close to the Tennessee median of $1,189) and a median owner-occupied value of $169,000 (well below the Tennessee median of $286,700). By the simple measure of annual rent over home value, Memphis sits at 8.4%, a comparatively strong gross ratio for a metro area. Lenders do not underwrite a ratio like that, but investors use it to decide where to look first.
Memphis beside Tennessee peers
These are not neighboring towns, only other Tennessee markets with Census data on this site: Kingsport is lowest at $234,100, Murfreesboro highest at $402,100, and Memphis sits at $169,000.
| Market | Renter share | Tax bill | Home value | Residents | Rent |
|---|---|---|---|---|---|
| Murfreesboro | 48% | $2,323 | $402,100 | 161,445 | $1,481 |
| Cookeville | 59% | $1,590 | $305,400 | 36,088 | $917 |
| Kingsport | 40% | $1,645 | $234,100 | 56,262 | $907 |
| Memphis | 55% | $1,845 | $169,000 | 618,980 | $1,181 |
The Memphis math at the medians
Try the math at the medians. With rent at $1,181 and taxes near $154 a month, a 1.00 DSCR leaves $1,027 for everything else in the payment, a 1.20 ratio leaves $830, and a 1.25 ratio leaves $791. Any real property will differ, but the exercise shows how little room insurance and dues can take.
Planning notes
Review the lease form before the closing. Local landlord-tenant law governs deposits, notices and entry, and a manager's standard lease should reflect it.
Bring this to the first call
- Independent inspection ordered by you
- Local landlord insurance quote
- Accountant aware of out-of-state ownership
- Written property management agreement and fee schedule
- Mobile notary or remote closing arrangements
Go deeper
- DSCR loans in Memphis, TN
- Program guide for this strategy
- BRRRR Investors in Memphis
- Long-Term Rental Investors in Memphis
- All Tennessee DSCR loans
A Memphis purchase starts with the ratio. Run it in the calculator, then apply or get a quote.
Source links
- Background reading: Memphis, Tennessee
- Deposit statute: Tenn. Code Ann. § 66-28-301
- Tennessee tax source: Tennessee short-term rental tax manual
- Tennessee tax source: Tennessee local occupancy tax
- Census Bureau ACS 5-year 2020 to 2024 tables
Census figures are 2020 to 2024 ACS five-year estimates for Memphis and carry margins of error. Our check date is October 2026, so look for newer Memphis rules before you commit. Availability varies by property and program and is not an offer to lend. See disclosures.
Frequently asked questions
What should a remote Memphis investor check first?
The manager's screening and maintenance track record, an in-person inspection and the exact neighborhood's rent evidence.
Can I buy in Memphis without living nearby?
Many out-of-area investors do. Line up a manager, an inspector and a title company first.
Can I close a Memphis purchase remotely?
Often, since title companies use mobile notaries, electronic signing and, where allowed, powers of attorney.
When must a Memphis landlord return a deposit?
Landlords in Memphis follow Tenn. Code Ann. § 66-28-301. Limit: No statutory cap (Tenn. Code Ann. § 66-28-301 sets none).
How do LLC closings work for Memphis rentals?
Not required. An LLC borrower is routine for investor programs, with entity paperwork and a guaranty. Form the company before you go under contract in Memphis.
What should out-of-state investors bring to a Memphis DSCR application?
The usual set is the contract, rent evidence, insurance and tax estimates, bank statements and ID, with extra papers for LLCs, foreign nationals or properties with several units.
Will the lender question that I live outside Memphis?
Where you live is not the test. The lender checks credit, funds and the ratio, and you check that a manager and inspector in Memphis can act on your behalf.