BEST ZIPCODES IN MEMPHIS,TN!!
Memphis, TN · Member since 2014 · 32 posts · 5 votes
BEST ZIPCODES IN MEMPHIS,TN!!
Most Popular Reply
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votesI know this is an old thread that got revived, but I want to make sure that anyone reading this gets a view point from a local investor.
Out of state investors must be very, very careful no matter where they are investing, but they also have to be very careful not to get ahead of themselves, especially as it relates to knowledge of an out of state market. I say this regardless of how often an investor is in an area and I'm certainly not knocking anyone commenting.
Memphis has a number of areas of town that struggle to keep up with the rest of the city. Frayser is one of those areas. At one time, this was a thriving area, but with the 1971 Supreme Court decision to re-route Interstate 40 around the city of Memphis, the area was cut off un-naturally from the rest of the city. A buffer was built and growth, funding, jobs transportation, etc. were all funneled away from North Memphis, Frayser in particular. To be clear, the same thing happened to south Memphis. It is called the Loop here in Memphis, but both North and South of Downtown Memphis were cut off from the city. This is an over-simplified explanation, but maps cannot show what is really happening on the ground.
The growth in pricing is fueled primarily by investors. The average value of homes in this area is still below $50K and the percentage of vacant properties continues to hover close to 10%. At its low point only 1 out of every 10 homes sold in this area were owner-occupant and a major effort including grants and intervention from different groups has only pushed this up slightly. So, as it relates to getting a little over our skis, my point is that every 10-12 years or so real estate markets can reset. Some more often, some less often. Every time this market resets, foreclosures skyrocket, values plummet, vacancies go way up and rents go in the opposite direction. It takes major capital and a super long-term horizon to be successful as a buy and hold investor in this zip code. Every time this market resets, the values will cut by more than half and when the market peaks again they reach the same values. It is a cycle and unfortunately they never get higher because the market itself has so many issues to overcome before values can actually re-establish and stick.
Thinking that these areas listed as zip codes to avoid are the only areas new investors can find returns that work is unfortunate to read. These areas are extremely challenging and any paper returns investors see here will be hard to materialize for long periods of time. These are challenged areas that are in need of basics. Grocery stores, doctors offices, dentists, locally owned shops, higher paying jobs but also just more jobs themselves, restaurants, etc... These areas are rife with poverty and when measuring average incomes, home values, access to services - no matter the metric - these zip codes are in the lower half.
There is so much more needed to bring these zip codes up. And in case you think I'm peddling something other than advice, I have personally invested millions into these zip codes in the past and lost. I thought I could change things and I was trying to be a steward for my city. Im not going to fluff this. I also thought I was smarter than everyone else and was going to make a lot of money by buying lower cost housing and making huge rental profits. I was wrong on all accounts. My investment in these zip codes almost crushed me economically during the last housing downturn. The next one is coming. The market cannot continue to go up and up. At some point it resets and pulls back and then begins growing again. Zip codes and areas like the ones in the recent posts are the ones that pay the heaviest prices over the last 4-5 cycles.
There are not very many Turnkey companies that are buying up everything they can. Those that are, promptly resell them getting them off their long-term books. That is the business model so you can't blame them. However, as the investor left holding the property, make sure you are well equipped to deal with the ups and downs too.
25 Replies
- Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes8y
Originally posted by @Takeshia Martin:
I'm currently starting up a new direct mail campaign and I'm from Memphis,TN and I need to know. What are the best zipcodes in Memphis, TN to add on my direct mail campaign that are recommend for wholesalers in the City of Memphis.Any suggestions would be greatly appreciated..!!
Good to meet you..
I am going to forward you a chart that will help you answer that question.
It is a compiling of
- total cash absentee purchases
- number of units
- number of pre-foreclosures
- number of REOs
- median days on market
- median sales price
- number of units with equity median or below
- number in the bottom 1/3rd
- middle 1/3rd and top 1/3rd
It will help
- Memphis, TN · Member since 2014 · 32 posts · 5 votes7y
thanks @Michael Quarles sorry about the late response.
- Rental Property Investor · Memphis, TN · Member since 2013 · 48 posts · 18 votes7y
@Michael Quarles a breakdown for each Zip Code in the Memphis area? If so, could you send that to me as well?
Thanks!
- Investor · Paso Robles, CA · Member since 2016 · 106 posts · 31 votes7y
@Michael Quarles
Good day Michael, can you please forward that info to me as well? I’m looking at getting into the Memphis market as well
- Scarsdale, NY · Member since 2020 · 17 posts · 4 votes5y
Can I be added to your wholesaler list?
- Investor · UT · Member since 2020 · 84 posts · 91 votes5y
@Michael Quarles I would love to see your list as well. I'll connect with you as a fellow Memphis investor. Thanks, Cj
- Investor · Miami, FL · Member since 2013 · 377 posts · 258 votes5y
Hey @Takeshia Martin
I'm an out of state investor. I own a property up in Memphis and currently under contract for another. I created this list about a year ago so the quality of these areas have probably changed as Memphis is rapidly growing. Needless to say, it still will provide you a general idea of what areas to look at:
Good areas:- Raleigh 38128 (try to push as far east as you can)
- Bartlett- expensive, but solid
- Cordova - expensive, but strong. Still some unincorporated areas so those would be county only tax, very rare to find one
- East Memphis 38117, generally solid, drops off a bit south of Quince. E.
- East Memphis - 38111 -generally great, can get spotty when you go too west on the southern part of the zip code near the Orange Mound area. North of Southern Ave is $$ and University of Memphis. This is very street to street from 250k+ homes to shacks.
- Midtown/ Cooper young -38014, similar to 38111. Very complex area. Huge developments and improvements in this area. Really need to know your stuff if you're going to buy here.
- Whitehaven 38116, has its bad areas, but good investment areas. You'll find some rtv opportunities 1-1.5% here with less risk than Frayser. Working class neighborhoods
- Parkway Village and Hickory Hill -38118, 38115 similar to Whitehaven
- Westwood/west Whitehaven - 38109 - some good finds.
- Germantown - $$$, very few deals in general as it is similar to Collierville, maybe some on western edges, but those are very hard to find.
Areas to avoid:
- Frayser 38127
- Orange Mound 38114
- North Memphis - 38107
South Memphis - 38126, 38106
I hope this helps.
- Investor · UT · Member since 2020 · 84 posts · 91 votes5y
@Michael Quarles I would love to see your list as well. I'll connect with you as a fellow Memphis investor. Thanks!
@Timothy Lewis I'm curious about your opinions on 38127 and 38107? I have several homes in each of these zipcodes (as well as some others) and am looking at getting a few more there. I started investing in Memphis when I lived there (about 12 years ago) and now invest from Utah. I am actually surprised by the number of calls I get to sell my homes in 38127, 38107, 38109 and 38104. As I've been in these areas for a long time, maybe it is different - I know that the numbers are but I also have had long term tenants in most of my properties. Thanks!
@Dean Harris I LOVE your podcast - curious as to your opinion regarding different areas mentioned in the above post? Thanks!
- Scarsdale, NY · Member since 2020 · 17 posts · 4 votes5y
Thank you for the list of zipcodes. Are you a buy and hold investor or BRRRR investor in Memphis?
Originally posted by @Timothy Lewis:Hey @Takeshia Martin
I'm an out of state investor. I own a property up in Memphis and currently under contract for another. I created this list about a year ago so the quality of these areas have probably changed as Memphis is rapidly growing. Needless to say, it still will provide you a general idea of what areas to look at:
Good areas:- Raleigh 38128 (try to push as far east as you can)
- Bartlett- expensive, but solid
- Cordova - expensive, but strong. Still some unincorporated areas so those would be county only tax, very rare to find one
- East Memphis 38117, generally solid, drops off a bit south of Quince. E.
- East Memphis - 38111 -generally great, can get spotty when you go too west on the southern part of the zip code near the Orange Mound area. North of Southern Ave is $$ and University of Memphis. This is very street to street from 250k+ homes to shacks.
- Midtown/ Cooper young -38014, similar to 38111. Very complex area. Huge developments and improvements in this area. Really need to know your stuff if you're going to buy here.
- Whitehaven 38116, has its bad areas, but good investment areas. You'll find some rtv opportunities 1-1.5% here with less risk than Frayser. Working class neighborhoods
- Parkway Village and Hickory Hill -38118, 38115 similar to Whitehaven
- Westwood/west Whitehaven - 38109 - some good finds.
- Germantown - $$$, very few deals in general as it is similar to Collierville, maybe some on western edges, but those are very hard to find.
Areas to avoid:
- Frayser 38127
- Orange Mound 38114
- North Memphis - 38107
South Memphis - 38126, 38106
I hope this helps.
- Investor · Miami, FL · Member since 2013 · 377 posts · 258 votes5y
Originally posted by @Cj Powderhorn:
@Michael Quarles I would love to see your list as well. I'll connect with you as a fellow Memphis investor. Thanks!
@Timothy Lewis I'm curious about your opinions on 38127 and 38107? I have several homes in each of these zipcodes (as well as some others) and am looking at getting a few more there. I started investing in Memphis when I lived there (about 12 years ago) and now invest from Utah. I am actually surprised by the number of calls I get to sell my homes in 38127, 38107, 38109 and 38104. As I've been in these areas for a long time, maybe it is different - I know that the numbers are but I also have had long term tenants in most of my properties. Thanks!
@Dean Harris I LOVE your podcast - curious as to your opinion regarding different areas mentioned in the above post? Thanks!
38127 is Frayser and it has grown tremendously! Amazon is investing 200million dollars in a business facility there. Nike built a 300million dollar distribution center in Frasyer back in 2015. From what I hear from some Turn Key providers, they are gabbing everything they can from that area so that's going to also push property values up.
As far as 38107 goes in North Memphis, from my personal experience, anything west of I-69 has been hit or miss. Mostly miss. East of I-69 is a very very solid neighborhood.
Tim
- Investor · Miami, FL · Member since 2013 · 377 posts · 258 votes5y
Originally posted by @Chatoyer Woodland:
Thank you for the list of zipcodes. Are you a buy and hold investor or BRRRR investor in Memphis?
Originally posted by @Timothy Lewis:Hey @Takeshia Martin
I'm an out of state investor. I own a property up in Memphis and currently under contract for another. I created this list about a year ago so the quality of these areas have probably changed as Memphis is rapidly growing. Needless to say, it still will provide you a general idea of what areas to look at:
Good areas:- Raleigh 38128 (try to push as far east as you can)
- Bartlett- expensive, but solid
- Cordova - expensive, but strong. Still some unincorporated areas so those would be county only tax, very rare to find one
- East Memphis 38117, generally solid, drops off a bit south of Quince. E.
- East Memphis - 38111 -generally great, can get spotty when you go too west on the southern part of the zip code near the Orange Mound area. North of Southern Ave is $$ and University of Memphis. This is very street to street from 250k+ homes to shacks.
- Midtown/ Cooper young -38014, similar to 38111. Very complex area. Huge developments and improvements in this area. Really need to know your stuff if you're going to buy here.
- Whitehaven 38116, has its bad areas, but good investment areas. You'll find some rtv opportunities 1-1.5% here with less risk than Frayser. Working class neighborhoods
- Parkway Village and Hickory Hill -38118, 38115 similar to Whitehaven
- Westwood/west Whitehaven - 38109 - some good finds.
- Germantown - $$$, very few deals in general as it is similar to Collierville, maybe some on western edges, but those are very hard to find.
Areas to avoid:
- Frayser 38127
- Orange Mound 38114
- North Memphis - 38107
South Memphis - 38126, 38106
I hope this helps.
I do it all. I would prefer BRRRR due to the obvious better returns but they are just so hard to come by. I'm under contract now for a buy and hold and will keep pursuing those until I find a decent BRRRR to jump on.
- Scarsdale, NY · Member since 2020 · 17 posts · 4 votes5y
@Timothy Lewis, I want to start investing in Memphis, but I want to BRRRR. How did you find your boots on the ground in Memphis?
- Investor · UT · Member since 2020 · 84 posts · 91 votes5y
@Timothy Lewis- your response makes much more sense... in your first email you mention,
'Areas to avoid:
- Frayser 38127
- Orange Mound 38114
- North Memphis - 38107
South Memphis - 38126, 38106'
I actually think some of these are probably the only areas for new investors to start with in Memphis, as the returns may still work.
- 5yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
I know this is an old thread that got revived, but I want to make sure that anyone reading this gets a view point from a local investor.
Out of state investors must be very, very careful no matter where they are investing, but they also have to be very careful not to get ahead of themselves, especially as it relates to knowledge of an out of state market. I say this regardless of how often an investor is in an area and I'm certainly not knocking anyone commenting.
Memphis has a number of areas of town that struggle to keep up with the rest of the city. Frayser is one of those areas. At one time, this was a thriving area, but with the 1971 Supreme Court decision to re-route Interstate 40 around the city of Memphis, the area was cut off un-naturally from the rest of the city. A buffer was built and growth, funding, jobs transportation, etc. were all funneled away from North Memphis, Frayser in particular. To be clear, the same thing happened to south Memphis. It is called the Loop here in Memphis, but both North and South of Downtown Memphis were cut off from the city. This is an over-simplified explanation, but maps cannot show what is really happening on the ground.
The growth in pricing is fueled primarily by investors. The average value of homes in this area is still below $50K and the percentage of vacant properties continues to hover close to 10%. At its low point only 1 out of every 10 homes sold in this area were owner-occupant and a major effort including grants and intervention from different groups has only pushed this up slightly. So, as it relates to getting a little over our skis, my point is that every 10-12 years or so real estate markets can reset. Some more often, some less often. Every time this market resets, foreclosures skyrocket, values plummet, vacancies go way up and rents go in the opposite direction. It takes major capital and a super long-term horizon to be successful as a buy and hold investor in this zip code. Every time this market resets, the values will cut by more than half and when the market peaks again they reach the same values. It is a cycle and unfortunately they never get higher because the market itself has so many issues to overcome before values can actually re-establish and stick.
Thinking that these areas listed as zip codes to avoid are the only areas new investors can find returns that work is unfortunate to read. These areas are extremely challenging and any paper returns investors see here will be hard to materialize for long periods of time. These are challenged areas that are in need of basics. Grocery stores, doctors offices, dentists, locally owned shops, higher paying jobs but also just more jobs themselves, restaurants, etc... These areas are rife with poverty and when measuring average incomes, home values, access to services - no matter the metric - these zip codes are in the lower half.
There is so much more needed to bring these zip codes up. And in case you think I'm peddling something other than advice, I have personally invested millions into these zip codes in the past and lost. I thought I could change things and I was trying to be a steward for my city. Im not going to fluff this. I also thought I was smarter than everyone else and was going to make a lot of money by buying lower cost housing and making huge rental profits. I was wrong on all accounts. My investment in these zip codes almost crushed me economically during the last housing downturn. The next one is coming. The market cannot continue to go up and up. At some point it resets and pulls back and then begins growing again. Zip codes and areas like the ones in the recent posts are the ones that pay the heaviest prices over the last 4-5 cycles.
There are not very many Turnkey companies that are buying up everything they can. Those that are, promptly resell them getting them off their long-term books. That is the business model so you can't blame them. However, as the investor left holding the property, make sure you are well equipped to deal with the ups and downs too.
- Investor · UT · Member since 2020 · 84 posts · 91 votes5y
@Chris Clothier Thanks so much for the response!
What are your thoughts on the increased (?) work options with the Amazon and Nike businesses? What did you see rents drop to in the last downturn in these areas? Also, any thoughts on 38107? Where do you see the 'next' Memphis, if there is one in this current market?
Thanks,
Cj
- Investor · Miami, FL · Member since 2013 · 377 posts · 258 votes5y
Originally posted by @Cj Powderhorn:
@Timothy Lewis- your response makes much more sense... in your first email you mention,
'Areas to avoid:
- Frayser 38127
- Orange Mound 38114
- North Memphis - 38107
South Memphis - 38126, 38106'
I actually think some of these are probably the only areas for new investors to start with in Memphis, as the returns may still work.
My first post was from a list I created about a year ago so if def is a little out of date!
- Investor · Miami, FL · Member since 2013 · 377 posts · 258 votes5y
Originally posted by @Chatoyer Woodland:
@Timothy Lewis, I want to start investing in Memphis, but I want to BRRRR. How did you find your boots on the ground in Memphis?
To me completely transparent, I followed the steps David Greene mapped out in his book:
- 5yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Originally posted by @Cj Powderhorn:
@Chris Clothier Thanks so much for the response!
What are your thoughts on the increased (?) work options with the Amazon and Nike businesses? What did you see rents drop to in the last downturn in these areas? Also, any thoughts on 38107? Where do you see the 'next' Memphis, if there is one in this current market?
Thanks,
Cj
I love that Nike and Amazon have not only come to Memphis, but have expanded their operations as well. Amazon is also expanding in the surrounding counties which has a trickle effect into Memphis. However, a vast majority, probably over 80% of these jobs are hourly and I believe the average is just under $11. That is tough to afford a $500 rent on one income much less a $700 - $800 rent required by investors paying in the $70 to $80k ranger for houses near these distribution centers. The jobs are fantastic and being located near the heart of these communities is even better, but the areas are still challenged and there is still little appetite or demand from locals to own in these areas either as investors or owner occupants.
From 2007 to really 20011/2012 it was not so much that the rents dropped because of value, it was the challenge of being able to get a qualified resident into a property and keep them there. It was really tough and if you were an unlucky owner whose property was vacated and your management didn't know, there was a higher likelihood that you suffered vandalism. This is not uncommon from challenged areas in any major city so don't hear anything I am not saying. I love Memphis and think it is an amazing city with a ton of upside. But there are areas that still require a lot of work and they have artificially inflated in value and rent since the last downturn and it worries me that there will be a lot of economic destruction again when the market cools down and corrects.
As for 38107, I don't invest in this zip code anymore personally. It has the Vollentine/Evergreen district and Rhodes College as well as historic New Chicago, but again, there is huge disparity between the good and the bad. It is very spotty and street to street. As with other areas of the city, once I-40 was cut (now I-69 on the west side, traveling north and south) it cut off the area between the highway and the river from the rest of the city. Movement east left much of this area to slowly get strangled and left behind. You have to be very careful and have a solid partner and plan for success when investing in this zip code.
I think there is great value in secondary and tertiary markets. Smaller suburban areas that the big investors fly right by on their way to bag big deals in the top cities. I really like the southeast corner of the US from Texas all the way across to Florida. We operate in almost every state across that area including Oklahoma and Missouri so we personally invest in this part of the country. We've recently started operating in Alabama which I think has a lot of upside and we continue to look all the way over to the Carolinas. I'm not a fan of going any further North due to winter operating costs or West at this time. There are several good companies and several really good cities to invest in, but you have to be patient. The subtleties of knowing which neighborhoods, which streets and even more important, which renovations make these properties produce the best return is very important and often overlooked when investors are in a hurry. What I mean by that is that older homes that cost a resident $300 - $500 a month to heat or cool do not stay occupied for long. So, do your homework!
Best of luck!
- Accountant · Memphis, TN · Member since 2016 · 45 posts · 39 votes5y
@Chris Clothier and @Timothy Lewis have already told things straight, so this is mostly just seconding their opinions. Though the list of good areas may have changed slightly since @Timothy Lewis says he put it together, it is largely still true. I would say that some of the fringes of the good areas mentioned are seeing a lot of investor activity as prices rise and people try to squeeze the margins. For instance, the area of 38117 south of Quince is seeing a lot of flipping activity this year.
At the moment, I've been effectively priced out of the University District area where I have been investing, because I'm not convinced the higher rental rates used by other investors' calculations are going to hold up without significant risk of high vacancy costs. Out of town investors don't realize how long a unit might sit vacant before getting the "market rate" rent, but these vacancy costs could eat up all your proforma returns easily. I prefer to rent slightly below market rates to reduce vacancy costs, but then I need to get a better deal on the purchase price to hit my cash flow numbers. - Investor · San Diego, CA · Member since 2019 · 5 posts · 0 votes5y
Hi @Chris Clothier, I’ve been trying to break into the Memphis market. I’ve offered on older homes in 38107, 38112, 38108… Regarding HVAC efficiency is that better in older brick homes or equally bad in older brick and older frame homes?
Thank you for your insights into the various zip codes!
- 5yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Originally posted by @S Alessandra:
Hi @Chris Clothier, I’ve been trying to break into the Memphis market. I’ve offered on older homes in 38107, 38112, 38108… Regarding HVAC efficiency is that better in older brick homes or equally bad in older brick and older frame homes?
Thank you for your insights into the various zip codes!
I'll give you my opinion, but I don't have actual data to go by. I imagine that much of the efficiency is in the walls and ceilings of the homes as well as the windows. Older homes that lack proper maintenance are going to be poor in havoc efficiency regardless of whether they are brick or not. The best thing you can do is address insulation and make sure doors and windows are sealed. Proper insulation in the attic will go a long way. That was not a great answer to your actual question, but those are the big issues with vac efficiency out side of the unit and the duct work itself. Best of luck as you get going and I hope you win some offers!
- 5yLee RipmaPro MemberRental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
I've never been to Memphis, I am an out of state and in state investor in other areas. I created a B-class rental property map as a guide to where I like to invest out of state in affordable markets. This is a great starting point for areas. If I were to go into the Memphis market I would use this as my starting guide and still vet each location diligently. Remember it's location, location, location, not cashflow, cashflow, cashflow.
B-class rental property criteria: Major airport within 50 miles, Population of least 150k in the MSA, Zip code has: Household income of $30k or greater, 100-250k median home value, last 10 years the population growth is greater than zero (no declining populations) and forcasted population growth is greater than zero.
- Investor · Albuquerque, NM · Member since 2021 · 44 posts · 11 votes5y
@Takeshia Martin a good way to find the best zip codes and see where the most investors have been purchasing properties in the last 6/12 months is with listsources.com. you can create your list requirements and then when you're done click on purchase partial list and then select you only want to see the zip code data and then the site will show you the zip codes with their transaction number. You can have that list sent to your email and then sort the list by highest to lowest in transactions and you should be able to see the best areas to target.
- Member since 2024 · 36 posts · 21 votes2y
Hi Guys - I see this thread is now 3 years old.
How has the market changed in in 2024.
Any different suggestions on the zipcodes?
Join the conversationCreate a free account to reply, vote on answers and follow this thread.