Memphis is home to the best residential real estate investment market in Tennessee.
The 38105 zip code in Memphis presents the greatest opportunity for the best real estate investments among the 3,144 individual real estate markets in Tennessee we evaluated. We looked at property values, population trends, and six other metrics for each market. We used that data to calculate each market's InvestScore.
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Data sources
Most of the data in this article comes from the Zillow Home Value Index and the U.S. Census American Community Survey.
We update our data when the original sources update their data, usually monthly. Sometimes we'll update data more frequently.
Clever also performs regular quality checks to identify outdated data, broken data connections, and other data issues that may arise.
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5 best places to invest in Tennessee
| Rank | City | InvestScore | Affordability | Property value appreciation |
|---|---|---|---|---|
| 1 | Memphis | 100 | 3.1 | 66% |
| 2 | Waynesboro | 89.2 | 3.1 | 52% |
| 3 | Strawberry Plains | 84.5 | 4.1 | 55% |
| 4 | Martin | 82.6 | 4.0 | 54% |
| 5 | Lake City | 82.3 | 3.9 | 54% |
🚨 This article is for informational purposes only. It isn't intended to convey financial or legal advice. We recommend you talk to a real estate agent or real estate attorney when buying a home in Tennessee.
1. Memphis
We've identified the 38105 zip code in Memphis as Tennessee's best real estate investment market. Here's why.
🔎 Key data about Memphis (38105)
| Data point | Value | Rank in state (of 3,144 markets) |
|---|---|---|
| InvestScore | 100 | Highest |
| Typical property value | $106,588[1] | 7th lowest |
| Five-year appreciation | 66%[2] | 5th highest |
| Household income | $34,015[3] | 291st highest |
| Affordability ratio | 3.1 | 30th most affordable |
| Five-year population growth | 7.4%[4] | 15th highest |
| Unemployment rate | 4%[5] | 8th lowest |
| Property taxes | $889[6] | 61st lowest |
| Educational attainment | 26%[7] | 114th highest |
Memphis (zip code 38105) is the best residential real estate investment market in Tennessee. It has the 5th highest property value appreciation among markets we evaluated, with a 66% appreciation of the typical property over the last five years.
Memphis is the 30th most affordable market among the 3,144 Tennessee markets we evaluated, with an affordability ratio of 3.1.
2. Waynesboro
The 38485 zip code in Waynesboro is the runner-up spot for the best real estate investments in Tennessee.
🔎 Key data about Waynesboro (38485)
| Data point | Value | Rank in state (of 3,144 markets) |
|---|---|---|
| InvestScore | 89.2 | 2nd highest |
| Typical property value | $164,291[1] | 28th lowest |
| Five-year appreciation | 52%[2] | 49th highest |
| Household income | $52,933[3] | 236th highest |
| Affordability ratio | 3.1 | 28th most affordable |
| Five-year population growth | 0.7%[4] | 156th highest |
| Unemployment rate | 2.8%[5] | lowest |
| Property taxes | $580[6] | 4th lowest |
| Educational attainment | 21%[7] | 143rd highest |
The 38485 zip code in Waynesboro features a typical property value of $164,291, the 28th lowest in the state.
Property values have appreciated 52% over the past five years, the 49th highest increase among evaluated markets in the state. Waynesboro homes have an affordability ratio of 3.1, the 28th most affordable in the state.
3. Strawberry Plains
The 37871 zip code in Strawberry Plains comes in at No. 3 in our ranking of the best residential real estate investment markets in Tennessee.
🔎 Key data about Strawberry Plains (37871)
| Data point | Value | Rank in state (of 3,144 markets) |
|---|---|---|
| InvestScore | 84.5 | 3rd highest |
| Typical property value | $291,619[1] | 147th lowest |
| Five-year appreciation | 55%[2] | 32nd highest |
| Household income | $70,938[3] | 124th highest |
| Affordability ratio | 4.1 | 102nd most affordable |
| Five-year population growth | 16%[4] | highest |
| Unemployment rate | 2.9%[5] | 2nd lowest |
| Property taxes | $679[6] | 16th lowest |
| Educational attainment | 18%[7] | 162nd highest |
With a typical property value of $291,619, Strawberry Plains's 37871 zip code features the 147th lowest property values in the state.
Strawberry Plains homes have an affordability ratio of 4.1, the 102nd most affordable among the markets we evaluated.
4. Martin
The 38237 zip code in Martin ranks No. 4 among Tennessee's residential real estate investment markets.
🔎 Key data about Martin (38237)
| Data point | Value | Rank in state (of 3,144 markets) |
|---|---|---|
| InvestScore | 82.6 | 4th highest |
| Typical property value | $208,473[1] | 50th lowest |
| Five-year appreciation | 54%[2] | 35th highest |
| Household income | $51,670[3] | 35th highest |
| Affordability ratio | 4.0 | 95th most affordable |
| Five-year population growth | 2.3%[4] | 108th highest |
| Unemployment rate | 2.8%[5] | lowest |
| Property taxes | $844[6] | 49th lowest |
| Educational attainment | 29%[7] | 99th highest |
Property values in Martin's 38237 zip code have seen the 35th highest increase among evaluated markets in the state, with an appreciation of 54% over the past five years.
Martin's affordability ratio of 4.0 makes it the 95th most affordable among the 3,144 markets we evaluated.
5. Lake City
The 37769 zip code in Lake City rounds out our top five residential real estate investment markets in Tennessee.
🔎 Key data about Lake City (37769)
| Data point | Value | Rank in state (of 3,144 markets) |
|---|---|---|
| InvestScore | 82.3 | 5th highest |
| Typical property value | $236,464[1] | 78th lowest |
| Five-year appreciation | 54%[2] | 37th highest |
| Household income | $61,250[3] | 37th highest |
| Affordability ratio | 3.9 | 76th most affordable |
| Five-year population growth | 3.1%[4] | 88th highest |
| Unemployment rate | 2.9%[5] | 2nd lowest |
| Property taxes | $839[6] | 47th lowest |
| Educational attainment | 11%[7] | 207th highest |
Property values in Lake City's 37769 zip code rose 54% over the last five years, ranking the city 37th highest among evaluated markets in Tennessee.
Lake City homes have an affordability ratio of 3.9, the 76th most affordable among the markets we evaluated.
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Frequently asked questions
See our article Steps to Buying Your First Rental Property to learn the basics of real estate investing for beginners.
You'll learn the importance of setting goals, picking the right market, and more.
Cash investors often use what's called the 70% rule, which suggests they should pay around 70% of a house's after-repair value minus the cost of renovations.
By buying for about 70% of the after-repair value, they're positioning themselves to pay for repairs and other costs, and to lock in a profit.
The 70% rule isn’t a hard-and-fast formula, but a quick guideline investors use to evaluate potential deals.
Investing in residential real estate can be one of the best passive real estate investments in Tennessee.
Residential real estate offers accessible passive income and the potential to compound your original investment.
Renting out residential units is the top way to invest in real estate. House hacking also offers a great opportunity for passive real estate investment income.
How we rank residential real estate markets in Tennessee
To determine the best real estate investments in Tennessee we evaluated 3,144 markets on eight metrics, and then assigned an InvestScore based on a proprietary weighting framework. Each market corresponds to a specific zip code in Tennessee.
What is InvestScore?
InvestScore is a score on a scale of 0 (worst in state) to 100 (best in state) that estimates the residential real estate investment potential of a given market. It takes into account a suite of key data points for each city.
- Typical property value: This measures the typical home value in this zip code, according to the Zillow Home Value Index. It reflects the typical value for homes in the 35th to 65th percentile range, including all homes, with the numbers smoothed and seasonally adjusted. We prefer lower property values, which indicate both more room for growth and a greater ease of purchase.
- Property value appreciation: This measures how much property values have increased in the area over the past five years, according to the Zillow Home Value Index. We prefer a higher appreciation, as it indicates better returns on housing. However, past performance isn't indicative of future results.
- Median household income: This is the inflation-adjusted median household income in the zip code, according to U.S. Census American Community Survey data. We prefer a higher household income, as it indicates local residents have more income to spend on housing.
- Affordability ratio: This is the ratio of the typical home value to the median household income in the area. A lower ratio is better because it means more households can afford a home, which indicates higher demand.
- Population growth: This is how much the area's population has grown over the past five years, according to U.S. Census estimates. Higher is better, as it indicates residents are moving into the area at a rapid clip.
- Unemployment rate: This is the unemployment rate in the area, according to U.S. Census data. We prefer a lower rate, as it indicates the availability of steady employment in the area, meaning residents will find it much easier to afford homes.
- Property tax: This is the median real estate property tax paid in the area, according to U.S. Census estimates.
- Educational attainment: This is the percentage of residents in the area that have obtained a bachelor's degree or better, according to U.S. Census estimates. We prefer a higher rate because it indicates local residents who have higher earning potential and thus should be able to afford homes.
