First Investment Property in Memphis TN

[Rax Gupta]

Hi All, 

I am considering to buy my first investment property in Memphis, TN. I am totally new bee and my friend suggested me a Property Management Company. They take care from buying a foreclosure, renovating till renting out for me. This sounds really awesome and only thing looks like I am left is with downpayment but to me its too good to be truth. I have couple of doubts 

1) Is Memphis still a good area for a cashflow? 

2) I am in California, if I am getting 300 cashflow, what are the TAX implications ?

3) I do understand that there is a possibility of having a bad renter but what the probability of getting them more often?

4) I also understand that the property will be need repairs or minor repairs every time renter moves out but can I claim those in the TAX ? What are the chances that it would exceed my total cashflow? Lets say if my Cashflow is 300 per month so yearly  $3600 but if a bad renter would cost me $4000 then I see no point in such investment. Am I getting to worried?

5) I also heard that If I do such kind of investments, then I should create a trust and put my investment property under it. I am not sure how its is going to help me and do I really need it ?

[Curt Davis]

Memphis is still one of the top markets. You can easily get $300 in monthly gross cash flow fairly easily. There is always a risk with tenants. If your home receives a good renovation and the tenants do not destroy the home your turn over cost should be minimized. I do not think you need to form an entity for your home. Just purchase a separate umbrella policy to provide even more coverage. 

Good luck