Is Memphis The Next Boom Town?
I recently moved back to Memphis 14 months ago from Atlanta. I was a wholesaler in Atlanta and I'm just now getting back into the game. I did two deals but had over 7 more under contract that fell through for one reason or another. So getting the contract isn't a problem.
I noticed in Atlanta that hedge Funds were going in buying blocks at a time instead of one house at a time. I also noticed that in certain areas they were buying lots or houses and tearing them down and building New. I am seeing this trend in Memphis within a year of being back. This is really picking up in the downtown and midtown area.
The housing projects near the FEDEX Forum have ALL been replaced with brand new housing and downtown is busting with Apartment and business combos.
I was told several years ago that everything 5 miles east of the FedEx forum was slated for renewal and my mom's neighborhood is in that slotted area. She has been getting the "Do You Want To Sale' phone calls.
I have been asked by several investors to be the boots on the ground for them once they found out I was moving back. Memphis is my hometown.
One of the trends I noticed was that there where these yellow for rent signs popping up in my mom's neighborhood. These were houses that had belonged to people that I grew up knowing and the parents started passing away. The kids had moved on and didn't want anything to do with the house. So this company was buying 1 or 2 houses per month and renting them out within 2 weeks of the sign being put in the yard.
Since I was getting back into the game I started checking to see what they were renting the houses for and what the values were. For the last 6years that I've checked my mom's house value and others in this area, the range was $22k-32k. These are basically 2beds 1 bath or 3 beds 1 bath. The rent in the area ranged from $550-$650.
All of this time my mom's house was running between $23k-$28k. Now on sites like Redfin, Realtor.com and Zillow have it ranging from $49k-$79K.
I looked up the sold prices of the homes that were bought by the hedge fund and I noticed that they are ALL ranging from $62-$65k. I'm sure this is how they are manipulating the higher prices in the area. I am also sure that this is the beginning of something similar to what happened in Atlanta years ago. So is this the beginning of the transition?
If this is the beginning of the trend what strategy would you use if you where in my shoes? I am negotiating a contract on a two-house deal in that area tomorrow.