I visited Memphis last week ( 2/7 - 2/10 ) and was blessed to have wonderful weather to tour a wonderful city. My goal was to meet and greet as many of the people that have helped me assemble my portfolio of properties there as possible, plus meet more of the fine professionals active in Memphis real estate. I achieved about 35% of that goal and to those I missed I apologize and hope for a raincheck soon.

With the help of my team on the ground I toured extensively, viewing my properties, the fine city, and areas of future investment interests. Then I drove neighborhoods of interest again both day and night to attempt to get a feel for areas and talk to some local folks. I buy, rehab, and rent in C+ to B areas so my thoughts relate to these areas.

Inventory. Endless in my lifetime. A few years ago I was concerned about them all being bought up and missing out, probably not of concern now.

Activity. Wow I think anyone with ambition and a hammer is working a rehab of some sort in the Memphis area. I ran into a couple of crews that were down from Chicago because its " crazy busy here" I walked a couple of projects and overall quality of workmanship is a concern.

Tenants. I have been around west coast land lording all my life. This is a different world! In the areas of Memphis I invest in it will forever be difficult to have a stable tenant base. They for the most part are good people that need good housing but throw your 700 credit, first and last plus deposit, and abiding by lease terms ideas out the window. Probably a bit harsh but be prepared. They just have to many options.

Asset valuation. When the locals say block to block they mean block to block. Memphis, like many mid west cities, has thousands of vacant lots , burned out houses not cleaned up, and just plain depressing areas. Be very diligent picking properties as this affects the "true" value tremendously. Remember these burned out shells will probably eventually get cleaned up but I don't think banking on infill using up all the vacant lots is prudent. The appraised value of that house and the true value of that house could be two wildly different values.

Leverage. I'm anti debt as I get older so take this to heart. I never say never but please be careful borrowing to the hilt anywhere other than solid "A" properties. Odds are your not going to appreciate to equity and the less than stable tenant base and crazy cap ex are going to make ample reserves mandatory. Your only a fire next door that isn't going to get repaired away from " true equity loss "

Exit. Huge concern. This has been beat to death on BP so I'll be brief. I'm buy and hold hopefully forever. If I had to liquidate today I think an investor would jump at the package, I strive to have the nicest house on the block and the tours show I'm getting close. With the current credit market and the retail customer base in the area reality says retail would be a tough option.

Rant. I don't understand why the City of Memphis and Shelby county don't consider dropping the  tax rate on multi family. I might be shooting myself in the foot tenant wise but this would really help cleanup the depressed areas. Taxed at the single family rate I think investors would snap them up but the true net just gets killed as it is.

Closing. I had a great time and learned a hell of a lot from some great local folks. My biggest concern going forward I learned from a little old lady waiting for her dinner at Bill's BBQ. I don't remember what started the conversation but after explaining my situation and her knowing of two of my projects she asked a simple question. " what are you going to do when you rehab so many you run out of tenants" Food for thought, without serious economic growth in the region we could literally improve our way to lower returns.

Above is just my personal concerns and observations. I didn't want to come off negative but wanted to open some eyes including my own. I will continue to invest in Memphis

Wonderful opportunities await!!!

x