Memphis Airbnb market - What areas to invest in?

Question

Newbie investor here. My husband and I recently relocated to Memphis, TN and are planning to invest in rental properties. We want to ride the Airbnb gravy train for as long as we can. What areas would you recommend investing in for Airbnb? Our top priority is obviously cash flow but we also want to make sure the property would work as a traditional rental in case of future regulations.

Here are my general thoughts on a few popular areas...

1) Cooper Young, Downtown - over saturated, a bit too pricey

2) Vollintine Evergreen, Binghampton, Crosstown - Affordable, convenient location for visitors, less saturated, some streets are better than others...

3) High Point Terrace, Waynoka, Chickasaw - Great location, less saturated, somewhat affordable.

4) Berclair - Super affordable, very street x street... probably too risky for our first purchase.

Anything I'm missing? Any hidden gems I am overlooking?

Also FYI... If you go to https://www.airdna.co/ you can access a demo version of their "Investment Explorer" program for free. You can see performance metrics for all Airbnbs in state of TN. It's a great way to "spy" on other Airbnb rentals.

Cherie Ganesh · Answer

I would probably bite the bullet and either get something downtown or midtown. You'll need to patiently look to find the right opportunity. Since you're new in Memphis I highly recommend you driving around a lot at night and picture yourself as a tourist looking for things to do at night. I wouldn't do Cooper-Young myself. I think I'd be looking between Peabody and North Parkway and west of East Parkway. That pocket has lots of restaurants, nightlife and close enough to downtown nightlife, etc to take a quick shared ride. That area could also be of great interest to people who may have family in one of the midtown hospitals and want somewhere other than a hotel to stay in. Also all of the sports activities downtown should generate potential AirBNB lodgers. Be sure to research recent local ordinances and permit requirements for an AirBNB.

I live in Berclair area and don't see what would draw a visitor to an AirBNB in this area. We do a lot of AirBNBs around the world and we always want to be in the heart of historical section or where there are lots of things to do. We typically don't rent a car so usually walk a lot or take cabs or shared transportation. We're seniors so carefully research new areas where we've never been to understand which location we want to rent an AirBNB based on our lifestyle and things we enjoy doing.

I live in Berclair area and don't see what would draw a visitor to an AirBNB in this area. We do a lot of AirBNBs around the world and we always want to be in the heart of historical section or where there are lots of things to do. We typically don't rent a car so usually walk a lot or take cabs or shared transportation.  We're seniors so carefully research new areas where we've never been to understand which location we want to rent an AirBNB based on our lifestyle and things we enjoy doing.

Richard Smith · Answer

@Rachel Hughes are you already an AirBnb host? I have some long term rentals (in Bartlett), and based on my AirBnb experience as a guest and host, I doubt I could make those work as Airbnb better than long term. (Not trying time be a skeptic by the way, looking to learn).

Paul Son · Answer

Hey @Rachel Hughes I'm also in a similar boat. I'm was looking for some investment property to buy in Nashville to list on Airbnb but the city seems to really be cracking down on it. I also just start looking into AirDna in general TN seems like a great market if you can avoid any issues with the regulation. How did the data for Memphis come out?

Rachel Hughes · Answer

@Paul Son Nice to meet you! Yes it's definitely too late to get in on Airbnb in Nashville. Memphis is a different story although I imagine there will be stricter regulations at some point. We considered several cities (Saint Louis, Knoxville, Chattanooga, Indianapolis...) and ultimately decided on Memphis. The numbers look great... hosts that take it seriously have occupancy rates well over 70% (according to Airdna) and average daily rates for entire homes are over $100 in most areas. We actually put in an offer on a duplex last week and we are hoping to put both units on Airbnb. Feel free to stay in touch with me. I am happy to share information.

James Martin · Answer

Welcome to Memphis!

Wesley Read · Answer

Welcome to Memphis! I actually just closed on my first two deals in Cordova for buy and hold rentals. I would think the best area for AirBNB would likely be downtown from what I have heard about those type of rentals. I am by no means an expert but I would think your biggest weekend is going to be during the festivals. BBQ Fest, Music Fest, etc. I know you are new to Memphis so want to make sure you price appropriately to make the most out of your investment.

Alex M. · Answer

@Rachel Hughes  I am good friends with the top guy for airbnb in Memphis.  Let me know if you'd like an intro.  He owns a massive building and 50% of it is for short term rentals.  I think you could easily slip right into his building and onto his STR program if you wanted.  Otherwise I have some other ideas for Memphis as I looked at that market myself last year.

Deborah Razo · Answer

Great information.  Have a duplex in midtown I'm looking at possibly turning into a short term rental. Need to get the units ready.  Any referrals for painters, handymen are welcome.  And where do I get furnishing and goods at a reasonable price.  Thanks.

Paul Son · Answer

Thanks @Tony Cai I'm considering both options. I'm just looking for anything will produce good cash flows, I'm willing to put more work into if needed as long as the return is there. In both options I would still buy and hold. The question would be btw regular tenants or Airbnb. At this point I might be leaning towards regular tenants since there's so much uncertainty around STRs right now, but that may change.

Paul Son · Answer

Hey @Luka Milicevic yeah I did read about that as well. The ban was only for certain residentially zoned areas. What zones does allow for STRs? Do you have any more detailed insight on this?

Memphis Airbnb market - What areas to invest in?

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