Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
11y
Binghampton, Orange Mound, almost all of 105 through 109. Most of North West Memphis and South West and a lot of stuff downtown. It's not easy to be generic in Memphis many areas have good and bad pockets.
But a basic rule is the further East you are the better.
7 Reply
Bryan L.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
11y
I tend to keep my investing about 280 miles east of Memphis.
11 Reply
Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
11y
Very wise Bryan :-)
0 Reply
Derrick Craig
Memphis, TN · Member since 2013 · 969 posts · 524 votes
11y
LOL!! Good one @Bryan L.
@Christian T.
There are pockets in most zip codes of Memphis that are not so called "war zones"
I understand my perception of a war zone is different from everyone that will commit on this forum post which is fine. For instance my perception of a great deal is not going to be same as any of the well known investors or turnkey providers here on BP.
Here is why!!
I am Local... I was raised in those so called "War Zones"... I really want to revitalize these communities any way that I can. I am not saying it doesn't get tough sometimes in this area but it get's just as tough in some of my East Memphis investment properties I own and manage for investors.
11 Reply
Christian T.
OP
Wholesaler · San Diego, CA · Member since 2012 · 32 posts · 4 votes
11y
so do you guys usually stay out of this area.
2 Reply
Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
11y
Midtown and Cooper Young are fine but they are expensive for investors. As Derrick pointed out as did I it is not that simple in Memphis. But in general terms yes I havent bought anything in that square except for cooper young and on teh bartlett side in teh north east parts of raleigh are great.
But bigger picture it depends on what you are doing. If you want to flip to anybody then between Derrick and myself we buy almost anything. he likes lower end I like higher end.
So it depends on why you are asking and what you want to achieve!
2 Reply
Christian T.
OP
Wholesaler · San Diego, CA · Member since 2012 · 32 posts · 4 votes
11y
got it. I have a good idea now i think?.
I'm mainly looking at wholesaling and maybe keeping a few as cheap rentals
for myself.
0 Reply
Derrick Craig
Memphis, TN · Member since 2013 · 969 posts · 524 votes
11y
@Dean Letfus
Would you consider 38116 or 38118 War zones? I have noticed that these 2 zip codes were once called war zones by a few investors, but now all of sudden they are some of the better areas to invest in?
The reason I ask this is because 38116 touches 38109 and 38106 and I know for a fact everyone says 38109/38106 ( ie South Memphis) are war zones "I DON'T" but my point is shouldn't investors be aware of the distance of less than 1 mile or 2 most times across the street of how close these homes are in relation to the stigma or preconceive notion that we state about different areas of Memphis.
Also 38118 touches 38114 and 38111 (ie Orange Mound) and everyone has stated that Orange Mound is a war zone. I don't consider Orange Mound a war zone either.
I just wanted to give @Christian T. some idea of proximity these so called war zones are from the so called great investment areas of Memphis..
2 Reply
Account Closed
Investor · Saint Louis, MO · Member since 2014 · 113 posts · 43 votes
11y
I've sold several war zone properties in Memphis over the years and surprisingly they usually turned out to be great rentals because you can get them super cheap and put a minimum amount of work in them. If you can find a good tenant, like an elderly person on a fixed income, you'll get your rent like clock work and make great returns.
I know a guy in St. Louis who invest in war zones too, but he buys the house and sells them with owner financing to owner occupants with out doing any kind of work to them at all. He'll buy something for say $3k and owner finance it to an occupant for say $6k, but the new owner has to do all the work to it go get it livable.
I tried to sell one in a war zone in St. Louis too, to an owner occupant. She loved the house and we agreed to meet the following Monday to sign the papers. As we were both walking to our cars, 3 gun shoots rang out. Needless to say, she did not proceed with the purchase.
5 Reply
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
11y
@Christian T. - I think looking at zip codes is too simplistic, but in your case, it makes sense to ask that first. @Dean Letfus and @Derrick Craig have both given you some ideas and things to think about here in Memphis. One more thing to think about. A company like mine will give specific area codes that we buy property. It is not because the other areas are war zones or necessarily bad zip codes. For me, my business has been concentrated in certain areas for a few years and we now manage a little over 2100 properties. It does not make sense for us to buy all over town and especially not in areas that we do not understand and manage today. So an easy, quick answer is to list zips that we do or do not invest in, but it is not necessarily because they are all good or all bad. We just concentrate resources as a business into areas that we have built the portfolio. As an example.
There are parts of 38141, which is primarily located on the east and south of Memphis and has always been listed as a good zip code, that we will not purchase a property in. War zone? Nope. Area not to drive in or walk at night? Nope. Just not an area we want to invest in. Home values are lower and rental rates are lower than what we have built our company managing so we do not buy there.
We do not manage or invest in Orange Mound, but I'll grab lunch at the Orange Mound Grill anytime. Soulsville is an area that we do not buy or manage, but I am over at the boys and girls club there and the people that live in the area are great. Same goes for the Broad Street district and even parts of Frayser. There are historic parts of these areas with authentic culture and people and then there are pockets that you want to avoid.
My point is that painting with broad strokes what is good and bad based on zip code is difficult. Most of us invest where we know well and have built our businesses. You said you want to wholesale and I can promise you that you will make mistakes if you try and run a wholesaling business based on broad ideas like a good or bad zip code. You need to connect with guys like Dean and Derrick and others like Alex Craig and just find out what they want to buy and where. It may be tough for you to do, but certainly not impossible, but I would concentrate on the people you want to sell to instead of the areas you think you want to buy. They will direct you to what they want instead of you trying to get properties and then figure out who to sell them to. Hopefully that made sense. Good luck to you -
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3 Reply
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
11y
One more example - most avoid 38112 simply because of the zip code. It is not one of the more "popular" zip codes and even we as a company do not buy there. Individually I do. And here is why:
http://www.broadavearts.com.php53-5.dfw1-2.website...
Stuff like this is what makes taking these rougher areas of cities and digging in and start trying to make a difference redeveloping. That being said, I don't think anyone trying to wholesale from out of town should be trying to wholesale in this area without connecting with the buyers who are investing in this area. But, it should open eyes a bit to what both Dean and Derrick were saying and Memphis is not unique in this. People have different definitions of what makes a good or bad investment location and if an area is a War Zone or not. Zip codes and hard lines of what is good and what is bad are often hard to define, you just need to develop relationships and buyers.
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2 Reply
Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
11y
The farthest point you can be from any place on earth is 12,500 miles before you start getting closer again. That should about do it for Memphis:) ......just teasing my TN friends..thanks, matt
2 Reply
Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
11y
And 3816 and 38118 are both going downhill, especially 38118. There is more inventory there because the larger players won't buy there now. It used to be good but has more and more gang activity. It turned a big corner about the time JP got murdered and is best avoided in the main.
3 Reply
Joel Kelly
Investor · Memphis, TN · Member since 2015 · 1 post · 0 votes
10y
Who pray tell is JP?
0 Reply
Mark S.Pro Member
Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
9y
Would you invest in 38111 today as an out-of-state turnkey investor?
0 Reply
Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
9y
Need an address @Mark S., like many zips some of 38111 is bad but not all.
0 Reply
Mark S.Pro Member
Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
9y
2471 Brewster Ave. @Dean Letfus
0 Reply
Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
9y
You'll get a range of answers I think. As I supply homes to out of state and non resident investors my comments are:
Area is not terrible but not great. We have a couple in the immediate area.
It is a small house and only has 1 bathroom so is NOT good for a long distance investor. You have higher risk of vacancy and turnover than a larger home with at least an extra half bath.
Median rent in that street is $650, that's way too low. You will have high risk of ongoing problems with tenants.
So my advice is go to a better zip, and look for a 3 bed 2 bath home. Minimum rent $795 or more.
Also just a rule of thumb for me. Check the addresses on zillow. If the zestimate is below 60 to 65K don't consider it. Lower end in Memphis is very, very difficult to get to perform, unless you are Derrick Craig of course :-).
1 Reply
Stephen Akindona
Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
9y
I love this conversation about areas in Memphis. There are so many different personality types and honestly that plays a role in whether you can invest in a rougher area of town. Personally I like to buy in areas where the rent comes in there is an ease of management because of the class of tenant the property attracts. Lower income stuff can do well but the management is more intense. My favorite areas personally are the following:
38128- East of Austin Pea
38133- almost everything in this zip only a few areas to avoid areas that are all duplex, I personally avoid
38134
38135
38117- East Memphis, I try to stay North of Willow
38115- Fox Meadows area
38141
Just me personally, I am sure several will agree and disagree but money can be made in lower income areas it is just that in most cases the management is more intense!
5 Reply
Suzane Ivas
Investor · Saint Petersburg, FL · Member since 2016 · 29 posts · 14 votes
9y
Can anyone please tell me what the current situation is with regards to tenants, investing and selling in these zip codes? 38116, 38118, 38128 . I seem to have no issues getting tenants at over $1000 per month and I seem to be getting paid each month, but they always leave a mess when they leave. My current cleanup bill is over $4000. Trash, extermination, car left behind, couple of broken doors, a window. Is my property manager letting me down or is this what I should expect from tenants in these areas and get the hell out?
0 Reply
James WachobBusiness Member
Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 888 votes
9y
Lets define A, B, and C
There are many definitions floating around attempting to define investment properties.
I like to start with the community in which the properties is located.
A neighborhood = 95% homeowner or better
B neighborhood = 65% homeowner or better
C neighborhood = All renters
These neighborhoods could also be defined by the land value, on which the subject property is located. In an A community the land value is high enough that if the subject property were to burn down, it would make sense to rebuild a bigger and better property.
In a B community the land value should be substantial enough to rebuild the same property, in square footage and included features.
In a C community the land does not support rebuilding, and the lot will remain vacant for years to come.
Then I look at the condition of the property
A = Brand new construction
B = 1975 and newer homes with a FULL renovation (Roof, HVAC, Appliances, All hard-surface floors, Exterior and Interior cosmetic repairs and paint, Hardware replaced, New light fixtures, Fenced in Backyard, and more!) my average FULL renovation cost between $25,000 - $35,000 in Memphis
C = Rent ready. Just livable
Memphis is neighborhood by neighborhood! Meaning that one block may be a great rental area and another is not.
3 Reply
DJ Rogers
Memphis, TN · Member since 2016 · 11 posts · 8 votes
9y
@Dean Letfus @James Wachob @Stephen Akindona @Derrick Craig As a beginning investor in Memphis, I appreciate and enjoy hearing all of your opinions on the good and bad areas of Memphis. I plan to start wholesaling in the coming months. I would love to be able to network with any of you guys so that I can get a better understanding of these areas myself to see what areas to target. Are there any networking opportunities such as meetups and such that you guys do where I could pick your brains possibly? Thanks for the Info!
1 Reply
Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
9y
@DJ Rogers I live in Fiji so not easy to meet up. The others you have mentioned are locals so would be easier. I am always happy to answer any questions or chat anytime. PM me!
0 Reply
Stephen Akindona
Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
9y
I am always looking to connect with guys who want to get busy in real estate, feel free to hit me up anytime!
3 Reply
Stephen Akindona
Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
9y
@Suzane Ivas, you should definitely not be paying that much for you rent readies every turnover. If the tenants are staying 4 or more years you might expect to pay that much or more but if these are 1 or 2 year turn cost you will not be able to sustain this long term. I own rentals in these same areas and typically I have found when I buy properties that rent for $800 or more I usually get a great tenant. The problem could be the tenant screening on the front end. How intense is your PM's screening process? Also with a $1000 rental it is typically here in Memphis for the deposit to be equal to the rent, if a tenant leaves a property trashed that deposit should be helping to offset that make ready cost. Then the last thing to look at would just be if you are being overcharged by the PM. $4000 for turnover in areas where you are renting for $1000 a month is very high! You said it yourself the tenants pay every month with no problem collecting, in my experience that's typically not the type of person that will leave the unit trashed. Do some digging on this!
2 Reply

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