Real Estate Investing Experience in Memphis, TN
I have been investing in the Memphis, TN market for four years now. It has been a journey and I have been cash flow positive but nothing too crazy to boast about. It's been up and down with expected repairs coming up (HVAC, plumbing, misc. repairs) that has shaken my cash flow over that time span. How has everyone else been doing in this market?
I am thinking of moving into a different market as it has been pretty stagnant for me especially due to high interest rates not making the numbers make sense in this market in my opinion. I plan to still keep the few rentals I have here in my rental portfolio, but will be doing more research in other markets such as St. Louis, the OH-state cities, and Detroit. I am thinking of changing my exit strategy from my typical BRRRR to a little fix and flip to generate some side income.
It's like I am thinking of hitting the reset button to find better results elsewhere. I even created my first LLC to start the fix and flip business, funding it with enough skin in the game, elsewhere hoping to use OPM rather than my own capital to fund these projects as it has been difficult finding a lender who is comfortable with loaning to me solely without an LLC.
My goal has always been to match my W2 income and eventually double it and more so I can work as a hobby rather than relying on it to live. I thought I would be near this place since I started, but haven't quite reached it so I am at a point of restructuring my strategy to make it more effective. Basically doing some review here to see what worked and what needs to be improved. Humbly speaking, I would've thought within 5 years something would've clicked to reach my goal. Especially looking to hear from anyone that has successfully attained this sort of goal and able to share their input.
Hey Arron, how many doors do you have in Memphis? It takes some time for the cash flow to build to anything significant and you'll need more doors in these lower cost markets.
I was actually living in Walnut Creek until 2017 when we relocated to Detroit Metro. My wife started investing in real estate there (in Detroit proper) in 2019, built a 12-door portfolio, and then moved back to CA in 2022. I'm in the Central Coast now.
The cash flow is significant for us at ~$16,000 gross rents/mo and about half of that profit. But I was strategic about where we purchased and did BRRRR's.
I'm still investing in Detroit (picking up a duplex this wee) but also building an ADU here at my primary.
Happy to discuss what you've been doing and where there might be holes in your plan, ways to improve, or if you just need to stay the course.
I don't love the fix-and-flip model in these kinds of markets. There's just not a ton of margin, and IMO not worth the hassle. Shoot me a DM if you want to talk more.
Quote from @Travis Biziorek:
Hey Arron, how many doors do you have in Memphis? It takes some time for the cash flow to build to anything significant and you'll need more doors in these lower cost markets.
I was actually living in Walnut Creek until 2017 when we relocated to Detroit Metro. My wife started investing in real estate there (in Detroit proper) in 2019, built a 12-door portfolio, and then moved back to CA in 2022. I'm in the Central Coast now.
The cash flow is significant for us at ~$16,000 gross rents/mo and about half of that profit. But I was strategic about where we purchased and did BRRRR's.
I'm still investing in Detroit (picking up a duplex this wee) but also building an ADU here at my primary.
Happy to discuss what you've been doing and where there might be holes in your plan, ways to improve, or if you just need to stay the course.
I don't love the fix-and-flip model in these kinds of markets. There's just not a ton of margin, and IMO not worth the hassle. Shoot me a DM if you want to talk more.
Hey Travis! I currently have eight doors in Memphis. I will liquidating two of them, possibly three, to regain capital to venture into another market. I agree and I'm thinking I'll need at least double my doors to see some significance.
Your "hometown" is not too far from me! I am actually interested in investing in the Detroit area and would like to learn more. I'll send you a message and get connected.
That's the goal I'd like to get to as well in terms of rent per month. I'll be reaching out!
Quote from @Arron Paulino:
Quote from @Travis Biziorek:
Hey Arron, how many doors do you have in Memphis? It takes some time for the cash flow to build to anything significant and you'll need more doors in these lower cost markets.
I was actually living in Walnut Creek until 2017 when we relocated to Detroit Metro. My wife started investing in real estate there (in Detroit proper) in 2019, built a 12-door portfolio, and then moved back to CA in 2022. I'm in the Central Coast now.
The cash flow is significant for us at ~$16,000 gross rents/mo and about half of that profit. But I was strategic about where we purchased and did BRRRR's.
I'm still investing in Detroit (picking up a duplex this wee) but also building an ADU here at my primary.
Happy to discuss what you've been doing and where there might be holes in your plan, ways to improve, or if you just need to stay the course.
I don't love the fix-and-flip model in these kinds of markets. There's just not a ton of margin, and IMO not worth the hassle. Shoot me a DM if you want to talk more.
Hey Travis! I currently have eight doors in Memphis. I will liquidating two of them, possibly three, to regain capital to venture into another market. I agree and I'm thinking I'll need at least double my doors to see some significance.
Your "hometown" is not too far from me! I am actually interested in investing in the Detroit area and would like to learn more. I'll send you a message and get connected.
That's the goal I'd like to get to as well in terms of rent per month. I'll be reaching out!
Sounds good, man! If you're ever in this neck of the woods, happy to get together too.
Quote from @Travis Biziorek:
Quote from @Arron Paulino:
Quote from @Travis Biziorek:
Hey Arron, how many doors do you have in Memphis? It takes some time for the cash flow to build to anything significant and you'll need more doors in these lower cost markets.
I was actually living in Walnut Creek until 2017 when we relocated to Detroit Metro. My wife started investing in real estate there (in Detroit proper) in 2019, built a 12-door portfolio, and then moved back to CA in 2022. I'm in the Central Coast now.
The cash flow is significant for us at ~$16,000 gross rents/mo and about half of that profit. But I was strategic about where we purchased and did BRRRR's.
I'm still investing in Detroit (picking up a duplex this wee) but also building an ADU here at my primary.
Happy to discuss what you've been doing and where there might be holes in your plan, ways to improve, or if you just need to stay the course.
I don't love the fix-and-flip model in these kinds of markets. There's just not a ton of margin, and IMO not worth the hassle. Shoot me a DM if you want to talk more.
Hey Travis! I currently have eight doors in Memphis. I will liquidating two of them, possibly three, to regain capital to venture into another market. I agree and I'm thinking I'll need at least double my doors to see some significance.
Your "hometown" is not too far from me! I am actually interested in investing in the Detroit area and would like to learn more. I'll send you a message and get connected.
That's the goal I'd like to get to as well in terms of rent per month. I'll be reaching out!
Sounds good, man! If you're ever in this neck of the woods, happy to get together too.
That sounds great. I sent you a message!
@Arron Paulino I am of course very biased as I live and invest in Memphis. @Travis Biziorek is absolutely right. If you are trying to get cashflow, you will need scale. It also is important how you are buying. If you have 8 doors in Memphis and you purchased them all turnkey, then it's no surprise to me that the cash flow isn't where you hoped. If you are buying properties here and doing minimal repairs, just enough to get them rented, then the maintenance will eat all the potential cash flow. I am not making any snap judgements here, but how you purchase is a pretty significant piece of the puzzle. All of my rentals were distressed assets that I completely and throughly renovated. We don't leave any differed maintenance. For the first 4-5 years I really don't experience much maintenance on my properties.
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@Arron Paulino if you want to fix & flip remotely, it seems the most sense would be to try it in a market you already know - Memphis.
The learning curve in other markets may COST you a lot of money!
Regarding rentals, as @Stephen Akindona mentioned, buying turnkey doesn't net you a lot of cashflow or equity. Buying a property in Memphis to flip, may actually show you a better way to buy rentals.
Like @Travis Biziorek, we help investors in the Detroit market do it the right way. Neither of us over-hypes to cover up realities!
We don't recommend turnkey here as not aware of any Detroit area trustworthy turnkey providers.
What we prefer is helping our clients acquire properties that need work, and then we get them RentReady and rent them out. You then know what's been done and what hasn't.
Let us know what else we can help with.
Quote from @Stephen Akindona:
@Arron Paulino I am of course very biased as I live and invest in Memphis. @Travis Biziorek is absolutely right. If you are trying to get cashflow, you will need scale. It also is important how you are buying. If you have 8 doors in Memphis and you purchased them all turnkey, then it's no surprise to me that the cash flow isn't where you hoped. If you are buying properties here and doing minimal repairs, just enough to get them rented, then the maintenance will eat all the potential cash flow. I am not making any snap judgements here, but how you purchase is a pretty significant piece of the puzzle. All of my rentals were distressed assets that I completely and throughly renovated. We don't leave any differed maintenance. For the first 4-5 years I really don't experience much maintenance on my properties.
I think I am in scale mode and am wondering how to effectively go about doing this. Right now, I've just been handling things financially on my own without any other lenders aside from the refinance part of the BRRRR. By doing this exit strategy, I was able to get these distressed properties to rent ready condition. I think the expected maintenance issues (plumbing, HVAC, and the like) really ate into cash flow that I developed over time and has kept me at a plateau-like position. Any tips on improving the game plan?
Quote from @Michael Smythe:
@Arron Paulino if you want to fix & flip remotely, it seems the most sense would be to try it in a market you already know - Memphis.
The learning curve in other markets may COST you a lot of money!
Regarding rentals, as @Stephen Akindona mentioned, buying turnkey doesn't net you a lot of cashflow or equity. Buying a property in Memphis to flip, may actually show you a better way to buy rentals.
Like @Travis Biziorek, we help investors in the Detroit market do it the right way. Neither of us over-hypes to cover up realities!
We don't recommend turnkey here as not aware of any Detroit area trustworthy turnkey providers.
What we prefer is helping our clients acquire properties that need work, and then we get them RentReady and rent them out. You then know what's been done and what hasn't.
Let us know what else we can help with.
Thanks Mike! I've been doing the BRRRR strategy and it's worked. Just when the expected capex comes up it eats into the gains I had so it's almost like I said a neutral effect in obtaining and maintaining positive cash flow. Not to mention when I cash out, the interest rate isn't the same as a few years back where it has almost doubled to where I barely breakeven on these newly attained properties.
It seems to be that I need a higher number of units to make it more likely to get the numbers I'd like to see in terms of my goal of ~$5,000/month net cash flow. Maybe I should start diving into multifamily, but not sure if Memphis is the market for it although it can be. I just have seen more success with single family in my opinion.