Areas to avoid in Memphis?

Question

Looking to make an out of state investment by purchasing a rental property in memphis.  I want to stay out of areas that are going to attract poor tenants.  So far from my limited research is easy memphis is ideal and to stay away from the Frayser area.

I don't need the property to be in a hip or posh area.  My biggest concern is poor tenants and high tenant turn over.  What areas should I avoid investing in?

Thomas Grove · Answer

@Dean Harris . I'm trying to stay in 60-80k range and meet the 1% rule.  Here are some properties I'm looking at.

The seller is telling me this is a c+ neighborhood but I've been told my locals to stay away from Frayser.

https://www.google.com/maps/place/3249+Baskin+St,+Memphis,+TN+38127,+USA/@35.2143052,-90.0241532,17z/data=!3m1!4b1!4m5!3m4!1s0x87d57f8a724bb0ef:0xc8743e35bbdc46e8!8m2!3d35.2143052!4d-90.0219645

This is another one I'm looking at.  The seller rates it as a B-  Thoughts?

https://www.google.com/maps/place/5181+Alford+St,+Memphis,+TN+38109/@35.0385219,-90.0410853,13z/data=!4m5!3m4!1s0x87d56311ed330a1b:0xc03505e953f781f2!8m2!3d35.0071147!4d-90.0506498

Andrew Akins · Answer

@Thomas Grove I think with Memphis you almost need to break it down by neighborhood and even blocks instead of just a zip code.  The unique thing about Memphis is almost every zip code can provide you with the returns you are desiring and good tenant stability.  I think partnering with a company that knows the local market is vital in putting you in a good situation to succeed.  I have been investing in Memphis for years and from here so let me know if I can help out in any way.

Dean Harris · Answer

@Thomas Grove I do think you can be a better place in Memphis for that price range. Like I said, you are generally going to be ok if you are east of Highway 51 but it can still be dicey. I dont personally own anything in 38127 but I do have investor clients that buy there and as long as they stay east of Highway 51, they typically do fine. There are just several other zip codes that would better for you

Derrick Craig · Answer

@Thomas Grove

Both of those homes are C- to C+ homes in my opinion, I would lean more towards the home in 38109 zip code due to it is close and considered to the Whitehaven area. This area is much more stable than the Frayser area.... $60k will not get you a B grade or higher home here in Memphis unless you purchase a foreclosure and rehab it.

Curt Davis · Answer

Grading houses/neighborhoods are all one's opinion so I don't classify something as B until we get to around $85-90k and above. There might be other TK providers who call $70-80k homes B areas, to me they are fooling you if they do.

You might be able to find a TK provider to do a lower quality renovation which would save them some money to get you into a B area for $80k but then you might not get the 1% you are also looking for. Once you get to around $90k or higher you fall short of the 1% at least from what I have seen.

Good luck!

Thomas Grove · Answer

@Curt Davis Definitely not investing only on the 1% rule hence this thread.  Is it practical for me to get in a B neighborhood with 60-80K turnkey or are my goals loftey?

Jordan Hardin · Answer

I agree with Curt, there are a handful of nicer areas you could get to for your dollar IMO. Best of luck and welcome to the city.

Curt Davis · Answer

These two homes are in my opinion C quality at best. You can certainly get 1% in the range you described but also k ow you are not normally in that great of areas. I hope you are not investing simply on the 1% rule alone.  You are doing financing you could easily go for a higher price to get into better areas.

Dean Harris · Answer

@Thomas Grove East of Highway 51 isn’t too bad. I have some clients not doing too bad but you can’t go west of Highway 51. There are much better areas for sure. If you like that price range, I can share with you where I invest. I’m happy to answer any questions about my personal experiences.

Best of luck and welcome to Memphis!