Memphis Versus North Mississippi?

27 Replies

Hey there Memphis area BP Friends!

Can anyone tell me what they're seeing on the ground with the North Mississippi SFH rental market (Olive Branch, Horn Lake, Southhaven, etc.)? What are the pro's/con's of N. Miss versus investing in the Memphis area ? Are there any unique market characteristics that make N. Miss a more desirable investment locale than the Memphis area? What's the rental demand in N. MIss.?

Thanks a ton,

Paul

We avoid Memphis (which we consider to include N Miss) at all costs. Oxford is hot. Jackson is pretty good. The Mississippi Coast is also making a comeback. Good luck.

Values definitely higher north of the border and quality of tenants higher.  We could never make the yields workable but plenty of eastern areas of Memphis similar quality but better returns.

I found a value add MF deal that is worth looking into on the NE side of Memphis, but after research, I realize people say Memphis is a run down, high crime area. I know it's rated as one of the top crime cities in America. Are there any good areas in Memphis?

Many, many good areas @Tony Banawa the whole crime thing is a large misnomer.  The crime is very concentrated in certain areas you simply avoid, unless you are Derrick Craig who seems to make the hood profitable.

Originally posted by @Dean Letfus :

Many, many good areas @Tony Banawa the whole crime thing is a large misnomer.  The crime is very concentrated in certain areas you simply avoid, unless you are Derrick Craig who seems to make the hood profitable.

 Good to know, Thanks Dean!

@Dean Letfus

 Thanks, Dean!    Always appreciate your insight into the Memphis market!

Like @Dean Letfus stated, crime is typically concentrated  but as you know if can happen anywhere.  Some people have been able to figure out a niche is selling low income homes and then others sell medium range and a few sell higher end rental homes.  

Make sure to also get your information from a reputable source.  I have been living and selling in Memphis since 2007 and I can tell you the rental market has been strong and I have not seen and dip in rental prices.  This market has stayed strong and relevant when others have come and gone.

As everyone else said, the crime is concentrated in Memphis.  Just a couple of zip codes you may want to look into are 38116, 38118, 38117, 38141, 38125, 38115, 38122, 38134 and areas close by.  Again these are just a few.  In general most investors I talk to like these areas and the rental market is indeed very stable. 

I'm no expert on the area, but what's unique about NM is that there is PLENTY of building going on.  New retail stores, businesses, etc.  Very busy area.  Has to be good for the market.  May be an area I would personally look into in the future, but there's just something about Memphis!  Great market.

a lot of 116 and most of 118 is terrible now.  As @Curt Davis  said talk to a local who knows their stuff.

@Dean Letfus I'll have to agree to disagree on that one.  I grew up in 38116 and am in the area almost daily.  Investors who I work with love 38116.  Worked with Curt on a deal out that way not too long ago.  38118 isn't as great as 38116, but there is money to be made in the area.  Just have to be selective.

A significant part of the Memphis Metropolitan Area is in North Mississippi, specifically in Desoto County (about 200k residents).  Southaven, Olive Branch and Hernando are very good investment opportunities with multiple exit strategies, including wholesaling, buy and hold and retail flips.  Very middle class and growing quickly.  I consider it a much better play for appreciation than Memphis proper and rents tend to be higher.

@Stephen Marshall I'm anxious to see how the new outlet mall will turn out in Desoto.  Its definitely growing quickly out there! 

@Paul Burke

 @Al Wilson

@Dean Letfus

@Tony Banawa

@Michael Hayes

As far a crime in Memphis you are all right it is all over Memphis... I beg to differ it is just in concentrated areas... I see Cordova, Germantown, and Hacks Cross just to name a few of the so called great not hood areas on the news every day..... Anything can happen anywhere just because I live, lived, and invest in areas that others would consider hood or war zones give me any address that some of the other turnkey providers are selling and I can send you a long list of crime report that has happen in that zip code or less than 5 miles away from the home they are selling.

Let's all just call a spade a spade Memphis is not the safest place to live regardless of where you claim to stay and that's the truth from a person who has lived in Memphis 34 years and I have invested here for the last 11years. Yes I can do things others can't do which is invest in so called hoods... which I feel is the highest degree of stereotypes not surprising just sad!!

Happy Investing to all,

Derrick

@Derrick Craig you make a good point.  I live in the 38125 area near Hacks Cross and most would consider this a great area.  Sadly, I've witnessed crime on my own street that had me jumping out of my sleep to see what happened.  Would I invest here though?  Without a doubt.  My current home is actually a live in flip that I'm looking forward to making some great cash on.  Not the safest place to live by any means but I have a lot of love for this city.  And still without a doubt a great place to invest.

Thanks for all of the great info.  Do you gentlemen see any rental demand difference between TN (Memphis area) and N. Mississippi due to TN not having an income tax and MS having an income tax? Relative to zip codes, it seems I've received a lot of mixed reviews about the market economics of 38127 (blue collar, crime ridden, too many 3/1's etc.).  Anyone care to enlighten me with the real info?  Thanks again for the great thread. 

@Stephen Marshall

  along with double taxation in Memphis proper... I have done quite a bit of stuff in Memphis and N M... in the lower value areas of  Memphis I find those to be untenable for out of state investors.. And true values are only what a wholesaler will pay for them.

In MS I see newer construction and single taxation.. much like you have WA and OR PDX share a state boarder both have the plus's and minus.. but all being equal if you tax's are half in MS compared to city of Memphis that is something that will always be with you.

Hi @Paul Burke

I have zero experience with the rental demand of Memphis compared to N Mississippi. The 38127 zip code is primarily the Frayser , Northhaven areas. I would stay far away from anything in or near Northhaven, but as far as rentals, crime, blue collar workers, 3bed 1's, I feel it is just as good of an area as 38109, 38106, 38115, 38116, and 38118 you just have to find the best streets in the areas and have people on the ground to help you achieve the results you desire. If you don't you WILL FAIL!!!

I grew up in Desoto County and graduated from Southaven High School. We currently have one rental home in Hernando. I consider it an executive home as it is 3250 sq. ft. and rents for $1950. It is not the typical rental in Desoto County. That being said, I think Desoto County is a good place to invest since it has an ever growing economy and the fact that mortgages are still challenging to obtain. Desoto County has a good school system and, as others have pointed out, less taxes than Memphis. I would personally focus on the Lewisburg School District (best in the county), Desoto Central school district, and Hernando. Hernando has grown exponentially in the last few years and with more businesses and community amenities coming soon it is going to continue to be a high-demand area. I know not everyone has kids, but many people that rent do. I noticed on the fb forums that people would often ask for rentals in Lewisburg district and there are just not many at all. Just my 2 cents. Hope it helps!

http://www.desototimes.com/business/kroger-set-to-break-ground-on-store/article_7653fffc-3a40-11e5-9d3d-471af8088962.html

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The number one mistake I see people making about Memphis is using a zip code to generalize an area. If you pull a police report on 2/3 zip codes in Memphis the crime report will be 20 pages long. I grew up in 38126 which many would consider a war zone. We never had a break in, mugging, shooting, ect on my street in my entire life. This was even true when LeMoyne Gardens, one of the biggest projects in the city was a block over. You have to take a street by street approach with Memphis, generalizing zip codes will leave a lot of money on the table. I do understand that most people are afraid of Memphis in general and will never venture into these "warzone" zip codes. I grew up in 38126, 38106, 38109 area so I know what really happens in these places.

Another caveat, one of my best friends lives in a pretty nice neighborhood in the 38018 zip code. He just had his car left on 4 bricks in his driveway a couple of months back. So as far as Memphis is concerned, the crime isn't concentrated in the inner city zip codes anymore. 15 years ago when I lived in 38018 as a kid, there was virtually 0 crime, same for Hickory Hill back in the early 90's when I lived there. Not the case for any of these places anymore.

Thanks @Derrick Craig! I appreciate the info. We have two SFH rentals in Memphis now that do very well for us, but like you said, it's all about the team on the ground. We'd like to acquire more but want to make sure we have a solid team in place before we do.

@Jay Hinrichs @Joy Hardin  Can you tell me the differences in taxes between the two states that you refer to?  I'm aware of the income tax differential but am unaware of any other differences.

@Joy Hardin Thank you for the info on the school districts!

@Paul Burke

  Income tax has no bearing on some one living on Folsom lake in CA... you pay your CA tax.. so that is a none issue.  And if there is a tax in another state you get a credit for what you pay in CA.. so you are not double taxed.

In Memphis if your in the city limits you pay city property tax AND county property tax.. If you buy out of the city of Memphis you only pay county tax... so everything being equal a rental home in Memphis one would save by being out of the city property and only in the county.... as ad valorum tax's are constant and will be with you for the life of the asset.

In Mississippi... you have one tax... but you also have owner occ... exemption in MS.. which lowers the tax's about in half... So you must be very careful when you buy there that your not looking at the tax rate of the last owner if it was an owner occ.. because once you close and you do not get that exemption your tax's will rise or just about double.

My stuff I have down in Madison Rankin and HInds county runs the gamut on tax's and you must appeal them.. some will be low and stay low some are sky high and you need to appeal.. and you can appeal based on lease rates.

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