Memphis TN rental market - high vacancy?

Question

Hi guys, I am thinking of investing in SFR in Memphis.  I have been doing my research and am so shocked to discover that average historical vacancy is 10-15%.  Is this true in your experience?

How hard is it to evict a non-paying tenant, find a new tenant?  What are the rentals that are in demand in this market?

Are there a lot of delinquencies due to covid?

What are good areas to invest in in Memphis?

Would a $100k house be an investment in a good area?

What has been your experience with the Reedy Investment Properties?

Thanks a lot for any info!

Stephen Akindona · Answer

@Diane Tycangco those vacancies rates are ridiculously high! I don’t experience that in my own personal portfolio and the 400 homes or so that we manage don’t have vacancy rates this high. We are at about 5%. It will depend largely on the area in which you invest.

I would say 100k would get you strong sold C+ properties in bread and butter rental areas. Try to buy properties that rent for $700 a month or more. I think as your rent starts to be below $700 you start to get into rougher more unstable areas which come with tougher and more unstable tenants!

AJ Singh · Answer

@Diane Tycangco

With five years of investing in memphis, i agree with @Stephen Akindona. Our vacancy is minimum and gets filled up quickly. It really depends on the neighborhood and what seasons does the lease start in. winters are a little slow in leasing.

If you have a good prop mgt co, its not hard to evict a non paying tenant. If the tenants are qualified right, you should not face the problem. Under the current moratorium, January is the earliest one can evict in the pandemic. Collections have been 100 percent in our portfolio since march and we have actually received rent bumps in some rentals due to low supply of rentals

B class neighborhoods are the best to start in but I dont think you can get a house under $125k nowadays. Unless you can buy off market from wholesalers but will involve rehab costs. This strategy will give you equity in your investment as opposed to buying from Turnkey/ MLS. Lot of turnkey activity is in specific zip codes/neighborhoods. Do your due diligence before committing to any contract.

Due to low interest rates, Bidding is fierce in entry level homes right now.

Dean Harris · Answer

10-15% vacancy is outrageously high. I own 20 houses and none of them are vacant and they dont take but a week or two to rent. Buy in the right areas and do a great job on your rehab and you wont have nay issues finding a good tenant!

Aigo Pyles · Answer

It depends on the neighborhood/area. Vacancy rate is 8.80 percent if you look at huduser data.

Aigo Pyles · Answer

Huge population in Memphis are renters. We fill our rentals fast.

Diane Tycangco · Answer

Thank you for the info!  I have decided to invest in Memphis.  Will tenants move in during the end of the year?  I think my timing is wrong.

Andrew Park · Answer

Area is definitely a huge factor in Memphis, I basically tell everyone it is street to street. $100k could potentially get you some good stuff here. On the PM side of things we have not seen high vacancy, if anything it is easy to fill a home here in Memphis as long as it is priced right.

Diane Tycangco · Answer

Yes, that is the information I get from the US Census and that scares me.  That is good advice to invest in places where rent is higher.  Can you suggest a good area where demand is high?  What is your outlook on the Memphis job market and economy? Do you think the Memphis market will continue to appreciate?

Aigo Pyles · Answer

But that depends on the area. Lets say the whole city has 8 percent vacancy rate, yet the area that the location of the rental property accessible and in a good location, so the the percentage of vacancy decreases.

Memphis TN rental market - high vacancy?

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