Memphis? Memphis. Memphis!

65 Replies

Nashville for appreciation.

Memphis for cashflow.

Knoxville and Gatlinburg for Airbnb.

I'm also interested in Memphis. Grew up not to far from there and prices still seem reasonable there.

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!

@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!

@David T. ,

I would start with what Terrance Branley stated, add Trulia as they have a few other options and then pay someone on the ground $25 to take exterior/street photos of the homes you are serious about.  If you are working with others there then you may be able to get them to drive by and check out the area and take photos.  Most people on the ground know the zip codes pretty well but there are good and bad pockets in the zip codes there.

David

Thank you for the response @Terrence Branley and @David Hutson ! When looking at a neighborhood, what do you considered as "good"? I'm having a hard time figuring out what's the norm in the area vs what I think is bad/good.  The area I'm looking at is a low-income neighborhood with high percentage of folks renting vs owning. 

@David T. - Personally, I use the google street view to get a feel for the neighborhood.  Do neighbors take care of their homes?  What types of cars are in the driveway?   Condition of street and sidewalks.  However, I really lean on my property manager as they know far more about the areas and can either confirm my research or give me some additional feedback.  

@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.

Street view is useless in Memphis. Some terrible streets look amazing. Get local advice on what streets are ok You cant rely on zips you need local knowledge.  We have bought over 500 home sin Memphis and one block on the same street can go from high B to low C. So use a local you can trust and avoid turnkey providers you will pay far too much.

Originally posted by @Dean Letfus :

Street view is useless in Memphis. Some terrible streets look amazing. Get local advice on what streets are ok You cant rely on zips you need local knowledge.  We have bought over 500 home sin Memphis and one block on the same street can go from high B to low C. So use a local you can trust and avoid turnkey providers you will pay far too much.

 I agree with that. It also works in places like Cleveland! So much development over the years, the Google Maps photos from 2011 no longer apply! 

I guess I'll play devil's advocate here and say... I've never been a Memphis fan. I know I'm in the minority for that stance, but I just have never seen anything impressive about the market. There's easily higher cash flow in other markets, there's not enough industry diversification for my tastes, the city is 55% renters which makes for a large renter pool but not necessarily the highest quality of one, and I've just never seen it as a "desirable" market outside of 1-time casual vacations there. I spent a lot of time around Memphis growing up in Atlanta and going to school in Nashville. There's also a dynamic there now of a lot of the hedge funds who bought up the city a few years ago now selling back their inventory. Or at least that was happening more recently, if not now.

All said...it's personal opinion and I'm not fighting anyone on it. It's just not a market I've personally ever been interested in. I think there are way more desirable markets out there.

@Ali Boone, what cities would you recommend for newbie out of state turnkey? I am thinking about turnkey properties with good cash flow and good chance of appreciation? Price range maybe $100k-$200k. Thanks

@Li Tolentino For turnkey, even more important than the market is the team/provider.  A really good team is actually harder to come by than a good market.

I have a few places I own in Memphis and so far so good. I am looking for additional wholesalers to feed me deals as they come along. Please message me on here if anyone has anything they are looking to unload.

I'm looking for some boots on the ground in Memphis.  Let me know if anyone has recommendations.

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How can I find out the current market value of my houses in Memphis in the internet from far away? Zip codes are  38141 and 38138. 

Hello @Marc Lunau I am a licensed realtor in Memphis and have sold dozens of houses in those zip codes I would be happy to give you a valuation on your properties with supported comparable sales nearby. 

Originally posted by @Marc Lunau :

How can I find out the current market value of my houses in Memphis in the internet from far away? Zip codes are  38141 and 38138. 

Zillow will give you a estimate.

Originally posted by @Kon Zel :

I'm looking for some boots on the ground in Memphis.  Let me know if anyone has recommendations.

Do you have an agent and a PM?  A "decent" agent will give you answers about neighborhood and a PM will give you rental estimates.

I was told Zillow is a very unreliable tool. Not so? Can't re,membert why. I think It was because it lists these super low auction advertised strating prices which totally screws up the data.

Originally posted by @Marc Lunau :

I was told Zillow is a very unreliable tool. Not so? Can't re,membert why. I think It was because it lists these super low auction advertised strating prices which totally screws up the data.

Unreliable might be too harsh... not accurate might be more realistic.  But they do give estimates on properties.  You can also switch your filter to "sold" and look at recently sold homes in your area.  Of course look at homes similar to yours in square footage and bedrooms and bath.

Welcome, @Chad Baird ! As you can see there are a lot of companies and agents that are investor friendly in the Memphis metro area. If you need some referrals I can help you as well as I'm an out of state investor as well, so I definitely have an idea how is it to invest in a new market.

Memphis is a bit tricky than other markets:

You can get a ridiculously cheap house with over 20% ROI, but, as an out of state investor, I would recommend you to go a little bit lower with the ROI and purchase properties that are in the B area.

I would recommend you to focus and ask yourself a few questions:

1. B Areas, better tenants: 
These areas are:
Bartlett (38134, 38133)
Cordova (38018, 38016)
East Memphis (38117)
South East Memphis (38125)
A little bit of a lower class would be: 38122, 38111, 38116, 38141, 38115

Of course, these, in my opinion, are the TOP areas for investments purposes, but there are a lot more areas that you can find great properties.
I would definitely look for Desoto, county, MS - Southaven, Olive Branch and Horn Lake. Better tenants than Memphis in overall.

2. Rent rate:
A good indication, especially in Memphis for a higher quality tenants, would be a rent rate of $1,000 and above.

3. Year Built:
My third recommendation would be to focus on some newer houses, about 1990 and above. Most of these houses 

4. Turnkey properties vs. wholesaling companies:
There are a lot of good ones out there, I can definitely mention @James Wachob , @Curt Davis , and Memphis Invest, that will take care of you. 
Yes, you will pay more and probably top price, but you can be sure that you will avoid a lot of maintenance. They have a good process of screening tenants as well.

If you'd like a cheaper option, but need some people in the field that you trust, you can take the cheaper direction and buy a "wholesale deal", a lot more discounted, but you will need to take care of repairs if needed and the tenant. There are a lot of shady guys as in every market so I would recommend you to get to know wholesalers before.

The last route would be to buy properties in C areas and lower income (38127, 38128, 38106, 38109) for about $15,000 - $25,000 and get them rented for $550 - $700 per month.

Hope this helps!

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