If the way to increase the selling value of a MFH is to increase NOI by increasing income or decreasing expenses; why are the majority of sellers putting their properties on the market with under market rent?  

Metro, the rising median household income and population growth in the D.C.

Neither of these properties is a median-type homes in Memphis, no matter how you measure. 

I'd recommend staying within 10-15% of the median priced home because that's where the most demand will be not only for renters but owner occupants as well. 

OOS investing is more expensive.

Where I live, we still have a severe shortage of homes--median time on market is still 7 days and it would likely be shorter if not for delayed negations being the norm. 

Median home price is the deviding line in every metro area.

Because median price of housing in any market has a direct connection and correlation to median income.

pid=2141Houston Real Estate Highlights for December and Full-Year 2024:-Following two consecutive years of declines, single-family home sales rebounded in 2024 with 85,163 single-family homes sold compared to 84,038 in 2023 an increase of 1.3 percent; -Total property sales for full-year 2024 were statistically flat at 101,864 units while the total dollar volume increased 3.1 percent to $41 billion;-December single-family home sales climbed 16.3 percent year-over-year with 7,162 units sold;-Total December property sales increased 13.6 percent to 8,478 units;-Total dollar volume for December rose 20.5 percent to $3.5 billion;-The single-family home median price edged up by 1.3 percent to $334,290 while the average price increased 5.0 percent to $425,150;-Single-family homes months of inventory expanded to a 4.0-months supply;-The townhome/condominium market experienced declining sales throughout 2024, and in December, volume declined 5.8 percent, with the average price up 2.5 percent to $268,152 and the median price statistically flat at $234,250;-Townhome/condominium inventory improved from a 3.5-months supply to 5.4 months.

I would hesitate to say 1-2 years to rotate out but closer to 5 years, and ideally I'd try to get the downpayment higher to at least 10%.I understand your areas though-- they're expensive.