Memphis Investing Advice

[Matt Rosenbohm]

Hey Everyone.

I am considering starting a rental portfolio in Memphis. I currently have a quite a few units in Colorado (and live in CO) so I would be investing out of state. I would probably be looking to acquire 30-50 units. What kind of returns are you getting or seeing now? I know what I see online but would love input from some of you actually doing it? Also, what would you consider the downside of investing in Memphis?

 Would love to get input from those of you with buy and holds or active in Memphis, as well as some recommendations for a good investor agents.

Thanks in advance!

Matt

[Shawn Ackerman]

Hi @Matt Rosenbohm are you currently considering other markets?  I currently invest in Milwaukee WI which is where I hold my portfolio.  It is a great cash flow market for a guy living in New York.  Best of luck to you on your journey into a new market.

[Matt Rosenbohm]

@Shawn Ackerman

Thanks for reaching out. I am definitely open to other markets. I am in position where buying in Colorado just doesn't work for me right now with the skyrocketing prices cash flow is almost non existent. So I am looking for another market to find some stronger cash flow opportunities. 

What kind of return are you getting ie...

  1.Cash on Cash with 25-30% down 

  2. Cap Rates?

[Dean Harris]

@Matt Rosenbohm

Hey Matt!

I'm an agent in Memphis and I manage national investors in acquiring rental properties. We are seeing annual returns in the mid-teens on all of our properties. 

I would make sure you source your properties from a trustworthy source and stay away from things that are "too good to be true" because they usually are. 

Good Luck and welcome to Memphis!

[Shawn Ackerman]

@Matt Rosenbohm What I'm seeing in Milwaukee is 14% - 18% 100% leveraged in 6-8 months. So I guess that would make the COCR return infinite. Milwaukee is a landlord friendly city with great purchase to rent ratio's 2.5 - 4%. My strategy and what I'd recommend to all of the investors I work with is to purchase cash then immediately refinance with a conventional lender. However it appears that you have more than ten loans so I'm sure you very familiar with this strategy. If your leaving 25-30% into a property then that just tells me that your paying at or close to market. That's not something I'd suggest. That model will dry up your purchasing power unless you have a war chest and or looking just to park your money.

[Jennifer Slaughter]

Hey @Matt Rosenbohm, small world, I invest in Greeley and Memphis as well! I experienced the same thing with skyrocketing prices in Greeley and I researched several different markets before I settled on Memphis.  My cash flow in Memphis is about the same as it is in Greeley-for about 1/4 of the purchase price.  There isn't appreciation in Memphis like there is in Greeley, however, with my first rental in Memphis I forced appreciation with a renovation.  I picked Memphis for several reasons and I'm sure you've done your research. I remember connecting with you about a year ago when I was trying to lock down a rental in Greeley, and it seemed like so was everyone else at that time.  Feel free to reach out if you want more info!

[Sean Tagge]

Hello @Matt Rosenbohm  my best advice is having a good team that is on your side and being you eyes and ears for you. 

[Shawn Ackerman]

@Sean Tagge It's all about the team.  much agreed to your point.

[Douglas Skipworth]

Hi, @Matt Rosenbohm.

The most active local investor agents on BP right now are @James Wachob, @Tina Sandoval, @Dean Harris, and @Jason Hopkins.  You should definitely reach out to all of them.

[James Wachob]

@Douglas Skipworth thanks for the shout out! @Matt Rosenbohm  The key is to find a great team! Ideally you would find a company that has everything under one roof. Acquisitions team, renovation crews (fully licensed and insured), Property Management, and a Real Estate Investment Brokerage in case you ever decide to sell.

By teaming up with a solid firm you can mitigate your risk and have some "boots on the ground" that have your best interest in mind. 

[Jason Hopkins]

@Douglas Skipworth thanks so much for the positive shout out.  @Matt Rosenbohm  everyone on this post has it right.  The best thing that you can do is to find a team that can do it all for you and has your best interest at heart.  If your looking for appreciation gains then Memphis is not for you. However, if you are looking for solid monthly cash flow then Memphis is your town.

[Alex Craig]

You have heard from a few providers in Memphis telling you the good. Well, I will shed some light on the bad. If you own property here, you will likely travel here and eat great food, but food that is really bad for you.  Some weight gain may happen. As I turned 40, each time I eat a BBQ sandwich, I have to practically fast for 3 days so that I don't gain weight.  The sports scene here will also tear your heart out.

[Derrick Craig]

@Matt Rosenbohm

Memphis is great for cash flow only with the right due diligence... Returns vary based on the PM/ team and area of the properties you decide to invest in.

The downside I see is in investing in Memphis is you are going to have to keep the property for several years before you see any appreciation, it is nothing like the West/East coast where you buy a property today and next year it has gone up in value $10-$15k 

[Ralph R.]

Matt Rosenbohm What's the matter Matt?? Can't find any houses locally?? LOL. I'm from Estes Park. Even been around D square a few times back in my youth!! In later years I owned a meat shop. I bought sides of beef from stevings meats in Kearney. Even though I live in Alaska all my properties are in Colorado. I've been scouring the state and can't find much in the way of rentals. Ironically Greeley and Evans used to be a go to place to pick up rentals I even had one in Loveland. (Wish I had that one back!). I can't help you with investing in Memphis but I can help you with investing out of state. The key instrument is the property manager. They will have the keys to the car so to speak. Vet them well. I own houses I've never seen but that doesn't scare me as bad as having somebody manage them I don't know anything about. Get references and go meet them once you have found one. Check out their book keeping system. They should have an online service that will allow you to see what's going on with your property throughout the month. It's been my experience that the ones that have a penalty or charge for breaking the contract with them are not the ones you want managing your property's. I'm sure Memphis will be different from Greeley. In smaller towns like Greeley it's easier to vet people as everybody knows everybody else. Might be harder in Memphis. RR.

[Chris Moore]

I have nothing to add other than how funny that we are (were) all in Greeley! I live in CA and have given up finding anything in Greeley. I somehow turned my sights to Mississippi. Not sure how I got there, but so far its working! haha

[Matthew Lee]

I've lived in Memphis 20+ years now.  I've not done much investing, but I can tell you that Memphis has lots of pockets in real estate.  You will find $500K houses just one block from $30K houses.  Definitely get a realtor that knows the market well.....  

[James Wachob]

@Matthew Lee I agree. My neighborhood is a perfect example. Two streets over, homes are 1/2 the price!

[Jay Hinrichs]

@Alex Craig  BBQ is over done and Passe'  its all about Fried Chicken at your Chicken joint.. hands down best fried Chicken on the planet.. and you only have to fast 4 days with that great meal.

[James Wachob]

@Jay Hinrichs have you eaten Gus' Fried chicken?

[Jay Hinrichs]

@James Wachob  that's the one I am thinking of Alex Craig took me there absolute hands down best Fried Chicken I have ever ate  .. especially for a causal restaurant.. we get some pretty good stuff out here at our high end gormond resturants but Gus's well that is special