Is townhome worth a deal in Memphis 38118 ?

Question

Is townhome worth a deal in 38118. its located by Winchester Road.

3 Bed 2 Bath - with HOA 75$ ( all exterior covered ).

Looking for PM in this area and also how is the tenant base at this locality?

I personally don't like carpet and this home has one, not sure If I should rehab this to another flooring ? or carpet is more common in this area?

AJ Singh · Answer

@Saurabh Kukreja

make sure that HOA allows rentals.. I ran into a situation where the seller was approved by Hoa to rent the unit but i was denied after closing the transaction. Thankfully it was a wholesale deal with enough juice for a quick flip..

Have a local PM check the neighborhood before committing on the deal.

Reed Rickenbach · Answer

Hey Saurabh, I am an investor/agent here in Memphis. 38118 historically has great cashflow - it can be a C+ or B area depending on location. Carpet is common in this area especially with townhomes, but may be worth the switch to LVP if you're buying as a LTR. PM with any specific questions!

Saurabh Kukreja · Answer

@Jason Rhodewalt Appreciation wise on one side I am ok. But Neighbour issues mean a high vacancy rate and it would kill ROI in the long run?

In regards to appreciation, I am ok because on paper this property seems to be doing 1.3%. I am not sure if this is the case of “too good to be true” and still it was vacant for 2 months although the seller did not lower the price. Any thoughts. these are some things going on in my mind. And this is going to be my first rental.

Cherie Ganesh · Answer

My first concern is the low monthly charge.  You definitely need to get Financials from the Property manager showing reserves for roofs, exterior of buildings, etc.  Also need to know what utilities are included in the monthly fee.  To me townhouses/condos are pretty risky since you could get hit at anytime with a special assessment.  If planning to renovate and flip, check to see who a buyer can get a loan from.  Many condo developments don't qualify for anything other than traditional 20% down loans.  Where it is on Winchester is critical also.

Jackson Long · Answer

Unless you buy the whole development I am against townhomes/condos/etc

Jason Rhodewalt · Answer

Personally I’m not a fan of town homes because they don’t appreciate as much. Also for renting you may have neighbor issues. Just my two cents