Memphis? Memphis. Memphis!

Lender · Cardiff By The Sea, CA · Member since 2015 · 5 posts · 10 votes

What's up with Memphis? Hey BP a friend pointed me in the direction of Memphis and said that it is where I should be looking at my next round of investment properties. What should I expect in Memphis? What cap rates I should be shooting for, price points, appreciation and cashflow are expected?

I live in San Diego and my last round of properties I bought back around the 07-08 time frame were in NC, TX and CA. I'm looking for cash flow on this go around.

Any insight would be greatly appreciated.

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David Hutson

Rental Property Investor · Bartlett, TN · Member since 2013 · 404 posts · 421 votes

@David T.,

Many of the areas I invest in are probably what you would consider bad. I'm looking for a decent looking street with the 3-4 houses on each side of the prospect home kept up well. Yards cut, no parking on the grass, no garbage piled up everywhere. I like to see pride of ownership/rentorship. That won't guarantee the house will perform well because any neighbor can change and the next door neighbor can totally trash a house in the future. I feel if many of the neighbors keep their homes up it will spread and much of the time, not always, the other neighbors don't want to be the people with the bad looking house. Owners, if they see it, will not want their home to be the bad home on the block also. I'm fine with the low-income, high rental neighborhoods since everyone needs somewhere to live as long as the houses are in good shape. I don't focus as much on crime because criminals have cars to and drive to the good areas to steal ac condensers also. They don't only commit crime in the bad areas.

Here is what I'm doing with a wholesale house I'm in contract for today: I start with looking at photos on Google and Trulia, then any recent listing photos. Next I drive by or have someone there drive the area. If all of that is good I'll sign a contract and then have someone walk the house to see what needs to be done inside. If there is a tenant inside I can see how they live and if they are following the lease. This house I'm buying now has a dog in one of the photos. I read the lease and it states no pets so I know that will be one thing I will have to work out with the purchase and the PM company.

I had the person walking the house take photos. I received 149 good photos of the interior and exterior of the home. That gives me info on whether I want to continue with purchase or revoke my offer. From there I get a bid on what needs to be repaired. For a tenanted home I'll negotiate a credit for items that are worthy to be given at closing. Then close upon the agreed timeline and then either fix the immediate needs items or save the cosmetic issues for when the tenant leaves.

I don't treat any of the homes as personal or try to have homes as nice as I want to live in. It's a business and people need homes to live in. I keep my houses updated, fix broken items quickly and ensure I have great property management. I have fired a few property management companies. If they don't perform or don't want to ensure my homes perform I use another. I currently work with three PM companies in Memphis and just fired one. You need to watch them. Some try to be the cheapest and won't do all the needed repairs. So here is why you need to have someone watching over your PM's if you aren't sure they are taking good care of your homes. (short tangent below)

I recently had a house that had a window air conditioner in the wall to cool the dining room. We installed a whole house a/c system and when the a/c company completed the installation the maintenance people took the a/c unit out of the wall and patched the siding on the outside. When the tenant moved out it was vacant for two months. I couldn't figure out why. I took the home to another PM I use and when they did the walk through they told me their was a framed hole in the dining room.?.? I determined that they didn't patch the hole on the inside of the wall. The new company patched the hole and it rented within two weeks. This is the biggest problem I have found with the PM companies. They don't always do a quality job on the turn. If you have a home that is vacant for a month have someone walk the home and take video or photos or videochat with you. I have only had a few homes go vacant for more than a month and each time I have found the rehab was done poorly and that was the reason for it not renting. Once I fix the small issues, usually under a few hundred dollars, the homes rent within two weeks. Spend the money to get a quality turn completed. If you half *** the turn you will end up with a half *** tenant, if anyone at all.

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Chris Williams
Memphis, TN · Member since 2016 · 11 posts · 10 votes
9y
Hey Chad. I'm new to the real estate myself but from what I've heard so far is that Memphis is a great cash flow town and not so much on the appreciation side of things. So it is a city that may very well be in line with your currents goals. As for cap rates, I've seen between 7-13% so far.
4 Reply
Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
9y
you will find that there are many companies here who would be willing to assist you. Make sure to check them out and narrow it down to the ones you feel comfortable with and who are in line with your goals.
Good luck
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2 Reply
Chad Baird
OP
Lender · Cardiff By The Sea, CA · Member since 2015 · 5 posts · 10 votes
9y
Thanks for the feedback guys. Any recommendations on who to connect with?
0 Reply
Account Closed
CA · Member since 2016 · 145 posts · 53 votes
9y
@Chad Baird I'm also in the Cardiff area. Been wholesaling in the Memphis area for a few years no rentals out there. I can send you some zip codes that we mainly have targeted in the past if you wish. Best, Michael
5 Reply
Tina Sandoval
Real Estate Broker · Memphis, TN · Member since 2015 · 95 posts · 77 votes
9y
@Chad Baird I am happy to assist. Will send you info IM.
4 Reply
James WachobBusiness Member
Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 887 votes
9y
@Chad Baird I'm a RE Investment Broker in Memphis, TN and my team would be happy to assist as your "boots on the ground" if you have a property you would like for us to help analyze.
9 Reply
Devin Davis
Rental Property Investor · Memphis, TN · Member since 2014 · 114 posts · 40 votes
9y
Michael Reilly are you wholesaling virtually?
1 Reply
Phillip Troutman
Lakewood, CA · Member since 2016 · 26 posts · 4 votes
9y
Chad Baird hi chad. I'm an newbie investor from LA, and like you, was turned on to Memphis as a potential area to invest in. It's been a couple months since this was posted. I'm curious as what you found out. Have you added anything to your portfolio from Memphis? I'm close to finding something but getting newbie cold feet as to whether it's a good deal.
0 Reply
Mark Allen
Real Estate Investor/Broker · Irving, TX · Member since 2015 · 520 posts · 263 votes
9y
I've got 350 homes in the pipeline that will most likely be broken down into sub-portfolios. These probably won't come to market until Q2. Let's stay in touch if you want to buy based on the income approach.
4 Reply
Brian Hester
Investor · Costa Mesa, CA · Member since 2016 · 24 posts · 3 votes
9y
@Account Closed I would like to get some insight on the market in Memphis. Live in OC and looking in TX and TN for buy and hold, cash flowing properties.
My partner and I are looking for Commercial Props...4-10 Units to start and then into larger props 10-24 units. Is this something you have a handle on and we could work together in the future or do you only deal with SF props.
Let me know.
1 Reply
Account Closed
CA · Member since 2016 · 145 posts · 53 votes
9y
@Brian Hester If you are ever in the San Diego area let me know grab coffee. To be honest we really have only been doing houses so I may not be the best contact for you. But I do know @Tina Sandoval and I have shared some deal flow with her in the passed and she and her partners are very knowledgeable and I would suggest you reach out to her !!
2 Reply
Ethan EdwardsPro Member
Rental Property Investor · Huntington Beach, CA · Member since 2014 · 20 posts · 9 votes
9y
@Chad Baird my business partner @Duran Villegas and I have had good opportunities in the Memphis area - we certainly have to do our homework, but there are some diamonds in the rough.
@Brian Hester we are also actively looking for commercial property in the Memphis area. So far, we've been successful with acquiring 1-3 unit properties with the help of @Tina Sandoval and team. We are building a network of local investors that are very interested in this market, and we're on the hunt for more 1-3's and larger multi's. Since you're in Orange County area - we should meet up sometime to see how we can collaborate. @Mark Allen @Account Closed please keep us posted!
6 Reply
Tina Sandoval
Real Estate Broker · Memphis, TN · Member since 2015 · 95 posts · 77 votes
9y
@Ethan Edwards I will! Thanks!
2 Reply
John VoychickPro Member
San Diego · Member since 2017 · 57 posts · 23 votes
8y
also living in San Diego and an looking in the memphis area. I've been looking at TK investors but thinking that they skim quite a bit off the top.
If anyone has connections with property management or zip codes I would really appreciate it.
Cheers!
1 Reply
Rashard Alomari
Investor · Memphis, TN · Member since 2016 · 215 posts · 128 votes
8y
Welcome! Memphis. Is. Amazing! Cash on cash returns are nearly unbeatable! Good luck!
3 Reply
Matt Peterson
Investor/Property Manager · Chattanooga, TN · Member since 2015 · 6 posts · 1 vote
8y
Welcome to Tennessee! It's a wonderful place to do business! Let me know if you have any questions.
1 Reply
Elizabeth Wilson
Real Estate Investor · Memphis, TN · Member since 2016 · 940 posts · 695 votes
8y
@Jacob Mariant - Obviously, I biased but I love the Memphis market for investing. "Good zip codes" are tricky to recommend. Even in the zip code where I live, there are pockets that I wouldn't own homes. Also all investors have a different idea of "good". Honestly your best bet is to work with a rockstar agent and come visit. I'll message you my agent recs.
Keep us posted, when you come visit!
7 Reply
Jonathan McGee
Rental Property Investor · Memphis, TN · Member since 2017 · 155 posts · 151 votes
8y
Originally posted by @Jacob Mariant:

Hi All! I am new to BP and have the same questions about Memphis area. I live in San Jose, CA, and I am looking at acquiring rental properties in Memphis. Can anyone recommend a few good zip codes or neighborhoods, either in Memphis or the suburbs? I have been doing quite a bit of homework and as of right now I am looking more towards the suburbs of Memphis, including Bartlett and Germantown, among others. I am mostly looking at single family, but considering multi-family.
I am also in need of a real estate agent in the Memphis area. Any recommendations on that front?
Thank you in advance!
Jacob
Welcome to BP Jacob and glad to know you are interested in the Memphis market! It is definitely a unique market here! It does require some knowledge of the city, streets and area. As Elizabeth stated, "good" zip codes can still have their streets that you may want to look further into before investing. I always recommend to out of state investors to use Google Street View to circle the block and check the streets on each side. One street may look nice, but the street behind it could be a questionable area or there may be an apartment complex directly behind it.
Some investors have great success in areas that others tend to steer clear of such as 38127 or 38109, both of have their merits.
The suburbs are indeed a safe bet, but the price ranges are considerably higher than what Memphis is known for. You also have to find the sweet spots as some suburban areas are too far out from the city in a rural area to be a solid rental.
If you have any questions, please feel free to reach out!
5 Reply
Tristan H.
Rental Property Investor · Memphis, TN · Member since 2013 · 56 posts · 29 votes
8y
Originally posted by @Elizabeth Wilson:

@Jacob Mariant - Obviously, I biased but I love the Memphis market for investing. "Good zip codes" are tricky to recommend. Even in the zip code where I live, there are pockets that I wouldn't own homes. Also all investors have a different idea of "good". Honestly your best bet is to work with a rockstar agent and come visit. I'll message you my agent recs.
Keep us posted, when you come visit!
I agree with Elizabeth re: spotty zipcodes. My wife and I found that the best indicator of a neighborhood's risk factor from an investor's point of view was copper theft. If someone felt that they could go through a house and remove all the copper without the neighbors noticing and get away with it, then that was a neighborhood we were not so interested. That being said, we love Berclair, and one of our best deals was a house there where someone helped themselves to half the electrical wiring after we closed. Huh, I wonder why the lights suddenly don't work on this side of the house, but worked during the walkthrough... life is a learning process.
5 Reply
Gil Flmeinga
Fresno, CA · Member since 2011 · 17 posts · 5 votes
8y
I am a Californian who thinks his state is overpriced! I am interesting in learning about investing in Memphis. How does Memphis compare to Nashville
0 Reply
Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
8y
Memphis does not compare to Nashville Bc they are completely different. You can not find the cash flow homes and price points in Nashville like you can here. Nashville is super hot and ppl are paying top dollar for more expensive rental homes.
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6 Reply
Wayne Woodson
Investor · Nashville, TN · Member since 2009 · 483 posts · 228 votes
8y
Nashville for appreciation.
Memphis for cashflow.
Knoxville and Gatlinburg for Airbnb.
8 Reply
Ian Turner
Newnan, GA · Member since 2017 · 3 posts · 1 vote
8y
I'm also interested in Memphis. Grew up not to far from there and prices still seem reasonable there.
1 Reply
David T.
Real Estate Investor · Orange County, CA · Member since 2013 · 39 posts · 4 votes
8y
Hi! I'm currently in the market to buy a TK property in Memphis. Being an out of state investor, does anybody have any other recommendation besides from using Google Street View to check out the neighborhood in Memphis? Is there any website or sites we can check out the neighborhoods that we're going to buy the property? Any help are greatly appreciated!
0 Reply
Terrence Branley
Investor · Huntington Beach, CA · Member since 2016 · 26 posts · 17 votes
8y
@David T. - I use Google street view to get the best "online" view of the neighborhoods and haven't found another platform that has a better or different viewpoint than what big G provides. Aside from leveraging my Memphis property management company for boots on the ground advice/input, I use a combination of Zillow, Realtor.com and Rentometer for property/neighborhood research. Good to see another OC guy investing out there!
3 Reply

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