Memphis TN Multifamily Market
I am new to Memphis, TN. Interested in multifamily properties - If you have done real estate business in Memphis, especially in multifamily - please share your experience.
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Unfortunately, Memphis has a bad reputation and a lot of investors do not even want to consider this market:
Yes, Memphis, TN is not a market with double digit population and job growth, it is not a primary market like NYC or Atlanta, and some neighborhoods are rough and prone to crime.
But… Let's look at some positive characteristics:
1. Memphis is a large stable market: MSA is 1.3 million people. Population did not change much through recessions.
2. Employers are diverse: logistics (FedEx, Amazon), healthcare (Baptist Memorial, St Jude), other industries (Technicolor, International Paper). There is not a single primary employer in a single industry.
3. Companies are investing: Spending on new downtown Memphis development projects are projected to surpass $2.9 billion in the next several years. Over 250 revitalization projects, valued at $13 billion (C&W) have been completed in the last 4 years. FedEx has pledged $1 billion to modernize its Memphis SuperHub. St. Jude’s Children’s Research Hospital has announced plans for a $412 million research center, part of its $1 billion downtown expansion.
4. Landlord friendly laws: termination notice for nonpayment of rent is 14 days.
5. Cost per unit for B/C class asset is affordable due to high cap rates: $30-$50K/unit.
6. There are thriving class A neighborhoods: Downtown, Cooper-Young, Overton Square, University District, East Memphis, Crosstown, Germantown. And more quiet residential solid class B neighborhoods like Raleigh and Southeast Memphis.
I am co-sponsor in several commercial multifamily deals in Memphis along with operators/sponsors who own large portfolios including thousands of units in Memphis.
Not all deals are home-runs, but all deals make money.
If you select the right area (ex. class B neighborhoods), the right property size (ex. 100+ units) and the right property management company, Memphis is a solid market to invest in. We have many cases where the business plan we anticipated is matched with actual results, if not improved upon.