Should I Rent Out My Memphis Home or Sell It?

Should I rent out my Memphis house or sell it?

Before any of the math matters, there is one question worth answering honestly: why are you considering renting it at all? The answer changes everything that comes after it.

People almost never ask me this question in a vacuum. They ask it in the middle of something else. There’s a job in Nashville starting in six weeks, or a parent in another state who needs help. The timeline is real, and the house has turned into a problem that has to be solved by a certain date.

The reflex is to sell. That makes sense. Most homeowners are not real estate investors, and their investing happens somewhere else, in a 401(k), a college fund, an IRA. The house has always been the place they live. When it stops being that, selling feels like the only way to close the chapter.

Renting is the option most people skip past without ever pricing it out. Sometimes selling really is the right call. But in the market Memphis has had for the past two years, holding the house is the better answer more often than owners expect, and the reason usually has nothing to do with wanting to be a landlord.

Here is the order I work through it with an owner.

Start with why you’re asking

When somebody tells me they are weighing renting against selling, I do not open with numbers. I ask what put the idea in their head in the first place.

In my experience the answers tend to fall into a few groups. Some owners got curious from something they read or watched and want to know whether there’s anything to it. Some had a parent who owned rental property and always assumed they would do the same thing eventually. And a lot of people are asking under real pressure, because the house has been listed for months and nothing is moving.

Those are different conversations. A curious owner needs a clear picture of what managing a rental actually involves before committing to anything, while somebody who grew up around rental property usually thinks in decades already and just needs the numbers to hold up. The owner carrying a listed house has a more urgent problem: renting can stop the monthly bleeding while keeping the sale available.

That last group is worth being specific about. Renting out a house that’s currently listed is a timing decision you and your agent make together, and it’s reversible. The lease has an end date. When the market is where you need it to be, your agent lists the house again and finishes the job.

The financing belief that stops most people before they start

The most common misunderstanding I run into has nothing to do with tenants or repairs. It is the belief that you cannot get a mortgage on a new house until you sell the one you already own.

That is not how conventional financing works. Fannie Mae allows a borrower to carry up to 10 financed properties at one time, including the home you live in. Qualifying does get stricter past the fourth one, with higher reserve requirements and tighter credit standards, but the door stays open well past house number two.

Most of the Memphis owners I sit down with have a conventional 30-year fixed loan on their house, which is exactly the product this applies to. If that describes you, keeping this house and financing the next one is a normal transaction. Ask a lender before you assume otherwise. That single assumption pushes more owners into selling a property they would have been better off keeping than anything else I see.

Your interest rate is the next thing to look at

Once financing is off the table as a blocker, the first number I want is the interest rate on the current mortgage.

If you are under 6%, and especially if you are under 4%, you are holding something you will probably never be offered again. Redfin’s analysis of the FHFA National Mortgage Database put 82.8% of mortgaged American homeowners below 6%, 55.2% below 4%, and 21.3% below 3%. Freddie Mac had the 30-year fixed at 6.69% during the first week of August 2026, an eleven-month high.

That gap is real money. On a $160,000 balance, a 3.5% loan costs $718 a month in principal and interest. The same balance at 6.69% costs $1,031. Sell the house and that loan is retired. You cannot carry it over to your next purchase, and nobody is going to write you another one at that rate.

A low rate doesn’t automatically mean hold, though. If you owe $800,000 and the payment is $8,000 a month, there’s very little chance the rent covers it, and no interest rate fixes that. Your rate tells you whether the question is worth asking. What the house will actually rent for tells you the answer.

What the numbers look like on an actual Memphis house

Take a house somebody bought in 2021 for $200,000 with 20% down, so a $160,000 loan at 3.5%. Five years in, the balance is around $143,500 and the payment is still $718. Call the house worth $250,000 today.

Rented at $1,750 a month, here is where the money goes. Principal and interest takes $718. Memphis city and Shelby County property taxes on a $250,000 appraisal run roughly $3,300 a year, which is $274 a month. Landlord insurance, call it $150. Management at 10% is $175. Then reserves: 8% held back for maintenance and 5% for vacancy, $228 between them.

What’s left is about $205 a month in cash flow. Thin, and I’d never sell somebody on that number by itself. The one underneath it does more work. At this point in the amortization schedule, roughly $300 of that $718 payment goes to principal every single month. Your resident is paying down your loan by about $3,600 a year, before the house does anything at all on value.

Self-managing or hiring somebody

If you are only going to own one rental, this is a fair question, and the honest answer is that it depends on how active you want to be.

What a manager takes off your plate is the operational side. A resident calls at five o’clock on a Friday because the plumbing is backing up and somebody has to be there. Plenty of owners work hard all week and have zero interest in taking that call. Plenty of others enjoy the work, want to be hands-on, and run one or two houses well for years. Both are legitimate.

The part owners underestimate is compliance. Fair housing rules apply to a person renting out one house exactly the way they apply to a company renting out four thousand. If you'd rather hand it off, a Memphis property management company takes both the operational load and the compliance risk off your plate. Tennessee’s notice requirements and eviction procedures are specific, and getting one of them wrong costs more than a year of management fees. Before you decide, read what the job actually is, whether you plan to do it yourself or hand it to someone.

How long you should plan to hold it

This depends on why you kept it. If the plan is to wait out the market and then sell, understand that nobody can tell you when that window opens. The 30-year fixed has been stuck in the mid-to-high sixes for the better part of two years, and it went up rather than down this summer. Anyone who tells you confidently what Memphis values will do in five years is guessing.

I take the long view on real estate, and I do it specifically because a long hold can absorb the fluctuations that a short one cannot. While the property is under management, the resident is covering the mortgage and the operating expenses. I am cash flowing a little every month. The loan balance goes down and the equity goes up, and the longer that spread runs, the more the eventual sale is worth.

I have never sold a property that was under my own management umbrella. The only real estate I have ever sold was flips, and I regret every one of them. Those houses are worth roughly double today what I let them go for eight years ago. Flipping is a fine business if you are doing volume and you want short-term gains. For the owner who ended up with a rental because life moved them somewhere else, patience is worth more.

Where this sits in the 2026 Memphis market

Memphis has not fallen apart. It has slowed. Redfin’s numbers for the Memphis metro through the first half of 2026 show a median sale price of $297,659, up 3.8% year over year, with homes taking a median 45.2 days to sell and 4.6 months of supply on the market. Both of those are up from a year ago.

The figure I watch most in that same Redfin data is delistings. In the first half of 2026, 9.2% of Memphis-area listings came off the market without selling, up 3.2 points from the same period in 2025. Those are owners who carried a house for months and got nothing back for it.

On the rental side, Rentometer’s mid-year 2026 report put the median three-bedroom single-family rent in Memphis at $1,395 against a national median of $2,100. Memphis rents low by national standards, and it buys low in the same proportion, which is why the rent-to-price ratios here still work when they’ve stopped working in a lot of other metros.

One of the first owners we took on when Collaborate Real Estate Group opened was living this exact scenario. Their house had been listed about nine months. They and their agent had brought the price down roughly $75,000 chasing a buyer who simply was not in that market that year. There was still solid equity in the house and not much left on the mortgage. We placed a qualified resident, and the property went from costing them money every month to producing it. That resident has paid on time ever since. The house is still theirs, and when the market comes back around, their agent lists it again.

“They went nine months with that house sitting on the market without collecting a dollar on it. We put a resident in place, and now they get paid every month while they wait for the market to come back to them.” — Scott King, Founder & CEO, Collaborate Real Estate Group

The order to do this in

Call a lender and find out whether you can finance your next house without selling this one. Pull your rate off your mortgage statement. Get a rent number for your specific address from somebody who works that street, because an algorithm’s guess for your ZIP code will be off in one direction or the other. Then set that rent against the full carrying cost, taxes and insurance included, plus money held back for the things that eventually break. If you want a framework for judging whether the resulting number is any good, we published the standard we use.

That sequence takes about an afternoon. The owner I described above spent nine months finding out the hard way, and they still had the house at the end of it.

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