Thoughts on the market?

31 Replies

Hello, I'm a new investor looking into buying cash flowing real estate. I have been exploring different markets. I wanted to know what are peoples thoughts in the Memphis area? Looking into SFH, or multi units. I'm still building capital but look to buy within 6 months.

You will get a lot of feedback as many on Bigger Pockets are active in Memphis. Personally, I continue to add to my portfolio and should be at 25 homes by the end of the year.

@Henry Tse

If you're serious about Memphis, go out and visit. There are many opportunities. Just understand it is a heavy investor market and the exit side will be different because of it. Also, @Alex Craig has a wealth of knowledge of the place, regardless how you want to invest out there. 

@Henry Tse Memphis has some areas that are really investor heavy and others that might have retail opportunities. If you plan on buying and holding you will do alright if it is bought right, managed well and held for a long term i.e greater than 5 years. I have not hit this time frame yet, nor am I close nor am I an expert on Memphis. 

My two buys out there are long term holds and in heavy investor markets, so if I wanted to sell them, it would be hard to sell retail. I would have to sell to another investor. That can put a hamper on what you can sell your property for if you need to get out. I don't need to or want to get out so I am ok at the moment. I did recently visit Memphis and met with many players out there who helped me learn more and identify areas where there are potentials for a retail option out of the investment. 

Talk about exit strategies with whoever you work with.

Also, a point I see hammered on here all the time for us out of state folks is management. Find the people who communicate well and work for you and with you. @Alex Craig can probably help you here. He is highly recommended by many.

Hope this helps. 

Henry - my 2 cents. My first experience in Memphis has not been positive so far. I closed on a rental on Jan 10 and it's still not rented despite being in very good condition and having dropped the price. I will need to reevaluate my strategy for investment in Memphis if this continues. I wish you the best but do not be tempted reading only positive experiences in this forum. Evaluate if sticking to more liquid investments like stocks, bonds and mutual funds is a better alternative. Most of the posts in the forums are from a provider perspective. So try to establish contact with actual out of state investors in the market to get a more realistic perspective. I believe one of the posters who goes by Diane said she was an out of state investor who got out of the market after losing $120k. So not all is as rosy as you hear in the forums. Good luck. PM me if you want to talk more.

Originally posted by @Henry Tse :

Hello, I'm a new investor looking into buying cash flowing real estate. I have been exploring different markets. I wanted to know what are peoples thoughts in the Memphis area? Looking into SFH, or multi units. I'm still building capital but look to buy within 6 months.

Ask current investors who operate in that area. Not just providers, but actual investors. See what they say.

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Hello and welcome to BP!  First I need to tell you a little bit about me before I say anything about your question so you know about me and understand about my opinion.  I am 60 years old, cannot walk yet from my medical condition.  I joined BP about 19 months ago.  I thougt I could find something that it be a little more flexibile and since I have not recovered I spent about 10 to 15 hours per day on learning because I am still in my bed for about 22 hours per day (7 days per week).  The main part here is learning how much learning I have done plus my college degree was in business with a domination in real estate and I held an active real estate broker license for about 30 years eventhough. I did not ever used it full time.

Now I have covered a little bit on past I would say that it is a seller's market and most deals are made with cash and not long term financing because.they can close in about 7 days.  Now that does not be any good deals out there. I would recommend try to wait for this part of the cycle and real estate has a cycle and timing determines some people get in and out at the right time.  I was born and raised in the city of Dallas.  I still live in Dallas County.

Since nobody can predict the future and nobody knows when the seller will be more "friendly)" to buyers.  So what I would recommend hold off, if you can and take more advantages when the tides turn.  Learn as much as you can before starting unless you are depending on money to help your family.  If you do not really have the time to put off your investing and have more hustle to compete on your market.

So far the President is helping us to do better in a small business.  Let's just hope these protesters get over it quickly and back up Mr Trump.  I could go on with more personal and business to explain to you but keep it up and hustle.  One of the best ways is by paying cash right now.  You might have to advance your ability to offer cash.  Some lenders are helping investors by doing that.

Concentrate on the things that will help you put food on the table if need be but I would either hustle more and make more offers to make you look better.  Try to find a Mentor to teach you the finer details that will make you a better business person. Just keep it simple and just do the average improvements of that particular market neighberhood that you plan on working on properties to improve, if necessary.  Do not try to do everything yourself.  A Team is what will make you successful.

Good luck to you!

I would add @James Wachob to your list of people to meet with.   Of the 4 vendors that I visited in Memphis his operation was the most impressive.  I was not aware of Alex when I visited Memphis.

I am from Dallas so the Memphis market is very different from Dallas.   I agree that Memphis is a stable linear market for long term hold properties.  I am just used to having great appreciation as well.  Although I come across a very few deal is the Dallas market these days, hence I started looking in Memphis.

Ultimately I chose to go in a different direction than a switch in markets.  I choose to go passively into multifamily deals this year. 

@Michael Lee thank you very much for your perspective! I too feel that the market has "peaked" so to speak so truly finding good deals is extremely important. I am definitely in the research/accumulating capital phase so I appreciate the feedback given. Hope you recover from you medical condition! Thank you @David Veeder and @James Wachob I will be sure to visit when I go to Memphis. Thanks!

@Henry Tse in Memphis it's easy to be mesmerized by high returns, especially if you are looking from California...  In California, you can invest by zip code, in Memphis you can find mansions a couple of blocks from boarded up shacks.  You need to see your prospective investment and drive the neighborhood.

When you come to Memphis, I strongly recommend that you schedule a lunch at the Butcher Shop Restaurant in Germantown. That's where the Memphis Investors Group holds an informal networking lunch at noon every Friday.  You get to meet fellow investors and pick their brains.  No RSVP needed, just show up and buy your own lunch.

Happy Investing!

Erik

@Abdul Azeez it sounds as if you have a property management problem.  How are you managing your property?  Do you use a property manager?

I'm not selling anything and I'm in a different space from you, I rehab class C apartments.  Once we have completed an apartment rehab and it's ready for occupancy, it may sit on the market for a week or two, but not much longer.  This time of year, when people get their tax refunds, we usually have our apartments rented before the rehab is finished.

One adjustment I had to make in the transition from San Diego to Memphis was to lower my tenant requirements.  The tenant pool for class C apartments is at a much lower grade here in Memphis, not sure if it carries over to single family tenants as well.

Bottom line, unless there's a problem with the house or neighborhood, there's no reason for it being vacant during the prime rental season here in Memphis.

Happy investing!

Erik

@Erik Nowacki I am using one of the best PMs who come with a lot of references in BP. That's why I am surprised as to how long this is taking. Rentometer rents were around $1200. I am at $1050 because its an attached unit. I am awaiting for some f/b from my PM on what needs to be done. 

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