Tennessee’s hottest real estate markets are booming, offering some of the highest returns in the country. With its strong job market, no state income tax, and affordable housing, the state attracts property investors and house flippers seeking high ROI opportunities. Flipsquad, a trusted resource for real estate investors, has compiled the most detailed guide to Tennessee’s best cities and neighborhoods for investment in 2025.
Why Tennessee is a Prime Market for Real Estate Investors
- No State Income Tax – Tennessee is one of nine states with no income tax, which benefits investors by increasing their net rental income.
- Fast-Growing Population – Tennessee’s population is expected to grow to 7.87 million by 2040, driving up housing demand (source).
- High Rental Demand – As of 2023, 34% of Tennessee residents rent rather than own, making it a landlord-friendly state (Census Bureau).
- Strong Job Market – Cities like Nashville, Knoxville, and Memphis continue to attract new residents due to expanding industries in healthcare, tech, and logistics, with major employers including Vanderbilt University Medical Center (healthcare), Oracle (tech), and FedEx (logistics).
Top Tennessee Real Estate Investment Cities
Key investment metrics determine profitability, including annual home value appreciation, rental yield percentages, median rent growth, and demand indicators such as job market strength and population increase. These cities have been ranked based on data from reputable sources, including ATTOM Data, the U.S. Census Bureau, and market trends from real estate investment reports.
1. Nashville – The Fastest-Growing Real Estate Market
Nashville is one of Tennessee’s hottest real estate markets for investors due to its job growth, tourism industry, and rising home values. Home appreciation in Nashville has increased by 18% year-over-year.
Best Neighborhoods to Invest In:
- East Nashville – A trendy, artsy neighborhood with a fast-growing real estate market. Flippers can benefit from rapid appreciation, with home values rising 15% annually. High rental demand makes it a strong candidate for long-term holds. Average home price: $520,000 | Median rent: $2,200/month
- The Nations – A rapidly developing area with modern townhomes and new builds. Investors see strong ROI as home values surge 14% year-over-year. Ideal for flips or buy-and-hold strategies. Average home price: $450,000 | Median rent: $2,100/month
- Germantown – A high-end neighborhood with historic charm and a booming real estate market. Investors can expect strong appreciation, with home values climbing 12% year-over-year. The area attracts affluent renters, making it ideal for high-end flips. Average home price: $670,000 | Median rent: $2,500/month
Nashville’s job market is booming, with over 50,000 new jobs added in 2023 (Bureau of Labor Statistics). Due to its vibrant tourism industry, short-term rental properties perform exceptionally well in Nashville.
2. Memphis Real Estate – High Cash Flow Market
Memphis is one of Tennessee’s hottest real estate markets for rental property investors due to its affordability and strong rental demand. 58% of Memphis residents rent rather than own, making it an ideal city for buy-and-hold investors (Memphis Business Journal).
Best Neighborhoods to Invest In:
- Midtown – A prime location for rental investors with stable demand from students and professionals. Rental yields average 7%, making it a cash-flow powerhouse. Average home price: $275,000 | Median rent: $1,500/month
- Cooper-Young – A walkable, historic district that attracts young professionals and families. Home values have increased 10% annually, offering great flip potential. Average home price: $310,000 | Median rent: $1,600/month
- Germantown – A high-end Memphis suburb known for its excellent schools and stable appreciation. There is a strong demand for luxury flips and long-term rentals. Average home price: $520,000 | Median rent: $2,300/month
Memphis also ranks as one of the top U.S. cities for affordable real estate investing, with median home prices 50% below the national average (Forbes).
3. Chattanooga Real Estate – Emerging Tech and Tourism Hub
Chattanooga has experienced significant economic revitalization, transforming into a vibrant tech and tourism center. The city’s downtown revitalization, including attractions like the Tennessee Aquarium, has spurred private investments exceeding $5 billion.
Best Neighborhoods to Invest In:
- Northshore – Known for its eclectic shops and eateries, Northshore attracts young professionals and families. Home values have appreciated by 12% annually, offering promising returns for investors.
- St. Elmo – This historic district at the base of Lookout Mountain has seen a resurgence, with property values increasing by 10% year-over-year. Its charm and proximity to outdoor activities appeal to renters and buyers alike.
- Southside – A rapidly developing area with new mixed-use developments, Southside offers opportunities for both flips and long-term rentals, with home prices rising 15% in the past year.
4. Knoxville Property Market – Hidden Gem for House Flipping
Knoxville is part of Tennessee’s hottest real estate markets, offering excellent affordability with strong appreciation potential. The city has seen a 15% increase in home values in the past year.
Best Neighborhoods to Invest In:
- Fountain City – One of Knoxville’s top neighborhoods for affordability and appreciation. Investors benefit from steady price growth and a strong rental market. Average home price: $325,000 | Median rent: $1,800/month
- South Knoxville – A booming area with increasing property values and demand from young professionals. Perfect for fix-and-flip projects. Average home price: $280,000 | Median rent: $1,650/month
- Downtown Knoxville – A growing urban market with strong Airbnb potential. High demand from students and tourists makes short-term rentals lucrative. Average home price: $390,000 | Median rent: $2,200/month
Knoxville’s cost of living is 15% lower than the national average, making it an attractive market for investors and renters.
5. Murfreesboro Investment – Rapid Growth and Educational Influence
Murfreesboro, part of the Nashville metropolitan area, has been Tennessee’s fastest-growing major city, with a population reaching 165,430 in 2023. Home to Middle Tennessee State University (MTSU), the city’s growth is bolstered by a steady influx of students and professionals.
Best Neighborhoods to Invest In:
- Blackman – Featuring newer developments and proximity to I-840, Blackman has seen property values appreciate by 14% annually, attracting families and commuters.
- Downtown Murfreesboro—With ongoing revitalization efforts, the downtown area offers historic properties ideal for flipping, with home values increasing 12% year over year.
- Cason Lane – A suburban neighborhood with strong rental demand, especially from MTSU students and staff, offering rental yields averaging 7%.
6. Brentwood Real Estate – Affluent Suburb with Stable Returns
Brentwood, located south of Nashville, is known for its high median household income of $151,722 and a population of 45,265 as of 2023. The city’s affluence and quality amenities make luxury real estate investments attractive.
Best Neighborhoods to Invest In:
- Belle Rive – Featuring upscale homes with large lots, Belle Rive has seen property values appreciate by 8% annually, appealing to high-income buyers.
- Annandale—A gated community with luxury properties, Annandale offers stable returns, with home prices increasing 7% year over year.
- Brenthaven – Known for its established homes and proximity to top schools, Brenthaven attracts families, with property values rising 6% annually.
7. Collierville City Housing Appreciation
Collierville, part of the Memphis metropolitan area, boasts a median household income of $113,996 as of 2019 and has experienced a significant increase in housing values. Market listings estimate an average home value of approximately $433,000 in 2021.
Best Neighborhoods to Invest In:
- Shepherd’s Creek – Known for luxury homes and spacious lots, property values in this neighborhood have appreciated by 9% annually, attracting affluent buyers.
- Halle Plantation – A family-friendly community with amenities like golf courses and parks, offering stable appreciation, with home prices increasing 8% year-over-year.
- Windsor Park – Featuring mid-range homes with strong demand, Windsor Park has seen property values rise 7% annually, making it suitable for both flips and rentals.
Strategies for Success in Tennessee’s Hottest Real Estate Markets
1. House Flipping
Tennessee is ranked among the best states for house flipping, with an average gross profit of $66,000 per flip (ATTOM Data Solutions). Due to low property costs and strong resale demand, Memphis and Knoxville are the best markets for flipping.
2. Long-Term Rentals
With strong rental demand across Tennessee’s major cities, long-term rentals offer steady cash flow. Memphis has the highest rental yield at 8.2%, followed by Nashville at 6.7% (Roofstock).
3. Short-Term Rentals (STRs)
Nashville leads the short-term rental market with over 10 million annual visitors and an average Airbnb occupancy rate of 68% (AirDNA).
Tennessee Real Estate Investing FAQ
What makes Tennessee a strong state for real estate investing?
Tennessee offers no state income tax, low property costs, and strong rental demand—making it ideal for both flips and long-term rentals.
Where can I get the best ROI on rental properties in Tennessee?
Cities like Memphis and Knoxville have high rental yields, often exceeding 7–8%, with affordable entry prices for buy-and-hold investors.
Is Nashville still a good city for flipping houses?
Yes. Nashville’s fast appreciation, job growth, and tourism-driven demand make it one of the top markets in the U.S. for flipping homes.
Which Tennessee cities have the best short-term rental potential?
Nashville and Knoxville lead for Airbnb performance, thanks to tourism, music events, and year-round traveler demand.
How can I find profitable real estate deals in Tennessee?
Use FlipSquad’s investment software to uncover undervalued properties, analyze ROI, and find hidden deals before your competition.
Maximize Returns with Tennessee Investment Properties
Due to its economic growth, affordability, and rental demand, Tennessee’s hottest real estate markets continue to be highly profitable for property investors and flippers. Whether you’re interested in house flipping, long-term rentals, or short-term vacation rentals, Nashville, Memphis, and Knoxville offer some of the best investment opportunities in the state.
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