Realtor · Nashville, TN · Member since 2019 · 144 posts · 22 votes
Trying to find a good market for rentals. I live in Nashville. Great flip market but not great for rentals. I bought one property in Memphis but even there competition is now fierce and for me as a person using financing it’s almost to find even off market properties. Then there’s East TN. Too hot! Higher price point than I’m looking for! Where are you guys investing that has a lower price point, a place where those using community banks are successful? Preferably in TN or a neighboring state! Also if you can suggest community banks that finance rehab as well in the area you suggest that would be great! Thanks much
@Marco Morkous - have you considered house hacking in Nashville? The house hack in a hot market is definitely best bang for your investment buck in terms of monthly net worth gain - for a variety of reasons (appreciation, leverage, interest rate, out of pocket $)
Understand that the cash flow might not be there - but it's very unlikely that you'll increase your net worth 6 figures from a cash flowing property in meh market in a couple of years. I'll bet you could do that in Nashville if you bought right with and FHA loan. Just something to think about.
I took that approach in Austin in 2017 and it has worked out very well. And if I wanted to I could sell and buy 3-4 cash flowing properties today. Not bad for $10K out of pocket to start out with.
An investor I have a lot of respect for once told me that Memphis is an equity trap. I looked at the market for myself anyway, but ended up not finding a compelling reason to disagree with him.
Have you looked at Huntsville, Louisville, Lexington, Birmingham, etc? Just to name a few well-reputed markets in a similar radius from you as Memphis. As a general matter most markets have been 'hot' for a few years now. Covid has slowed things down a little bit, but prices are mostly remaining strong. We may see a slight dip but overall with interest rates remaining at 0% for the foreseeable future I doubt we will see a massive drop in real estate prices generally.
@Marco Morkous Little Rock is a solid rental market. Very stable prices, some appreciation, and fair rents. If you were interested in Memphis, you should definitely look here at LR.
I love Memphis, finding the deals might be the problem, I might be able to help depending on the area in Memphis your looking for, I have also heard Little Rock is booming, but that’s ill I have heard
Trying to find a good market for rentals. I live in Nashville. Great flip market but not great for rentals. I bought one property in Memphis but even there competition is now fierce and for me as a person using financing it’s almost to find even off market properties. Then there’s East TN. Too hot! Higher price point than I’m looking for! Where are you guys investing that has a lower price point, a place where those using community banks are successful? Preferably in TN or a neighboring state! Also if you can suggest community banks that finance rehab as well in the area you suggest that would be great! Thanks much
Many investors have started looking at the Midwest for investments. You can get great deals on SFRs and MFRs there. Best of luck to you!
@Marco Morkous Have you looked at Murfreesboro? I've found quite a few 1% deals there, as well as Columbia and Clarksville. If you're looking to do some rehab on the project you should look into hard money lending to get you started and throughout the rehab and then refinance into a traditional loan. You'll have more luck with off market properties if you're using hard money. This would be considered the BRRRR method. Buy, Rehab, Refinance, Rent, Repeat.
@Marco Morkous - have you considered house hacking in Nashville? The house hack in a hot market is definitely best bang for your investment buck in terms of monthly net worth gain - for a variety of reasons (appreciation, leverage, interest rate, out of pocket $)
Understand that the cash flow might not be there - but it's very unlikely that you'll increase your net worth 6 figures from a cash flowing property in meh market in a couple of years. I'll bet you could do that in Nashville if you bought right with and FHA loan. Just something to think about.
I took that approach in Austin in 2017 and it has worked out very well. And if I wanted to I could sell and buy 3-4 cash flowing properties today. Not bad for $10K out of pocket to start out with.
@Courtney Trahan are you using hard money? I think longhorn is a popular HML in middle TN. Yea I've looked in Clarksville, it's a bit Saturdated as well
Huntsville is grossly over saturated with investors - prices have gotten ridiculous, and deals are now incredibly hard to find. Wholesale deals are now essentially retail/MLS pricing.
If you are looking in Alabama, you may have better luck in Birmingham and Montgomery.
I like what @Michael S. had to say. Montgomery has two large military bases and lots of potential. They are revitalizing their downtown area and are experiencing appreciation.
When investing in new markets, it's good to consider the following:
1. Job growth and employment diversity
2. Population growth
3. Infrastructure development/city plans
4. Affordability
Do your homework, and if you find a great market before others, you'll be set for life.
@Dustin Turner how’s deal flow? Lot of opportunities? Not many good deals left in Memphis way too oversaturdated
Good question. It can be competitive for the smokin' hot deals but there still seems to be inventory available for my investor clients. That class of inventory isn't getting bid up like the higher quality, owner occupant homes.
Wait till march of 2021. let the forbearance period run out. we should get some deals in memphis again. Market has run up in the last 2 years and finally exceeds 2006 levels.